Annual Report 2011

Transcription

Annual Report 2011

Annual Report
2011
Honda Motor Co., Ltd.
Year Ended March 31, 2011
Corporate Profile
Honda Motor Co., Ltd., operates under the basic principles of “Respect for the Individual” and
“The Three Joys”—expressed as “The Joy of Buying,” “The Joy of Selling” and “The Joy of
Creating.” “Respect for the Individual” reflects our desire to respect the unique character and
ability of each individual person, trusting each other as equal partners in order to do our best in
every situation. Based on this, “The Three Joys” express our belief and desire that each person
working in or coming into contact with our Company, directly or through our products, should
share a sense of joy through that experience.
In line with these basic principles, since its establishment in 1948, Honda has remained
on the leading edge by creating new value and providing products of the highest quality at a
reasonable price, for worldwide customer satisfaction. In addition, the Company has conducted
its activities with a commitment to protecting the environment and enhancing safety in a
mobile society.
The Company has grown to become the world’s largest motorcycle manufacturer and
one of the leading automakers. With a global network of 383* subsidiaries and 91* affiliates
accounted for under the equity method, Honda develops, manufactures and markets a wide
variety of products to earn the Company an outstanding reputation from customers worldwide.
*As of March 31, 2011
Caution with Respect to Forward-Looking Statements
This annual report contains “forward-looking statements” as defined in Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended. Such statements are based on management’s assumptions and beliefs, taking into account information
currently available to it. Therefore, please be advised that Honda’s actual results could differ materially from those described in these forward-looking
statements as a result of numerous factors, including general economic conditions in Honda’s principal markets; foreign exchange rates between the
Japanese yen and the U.S. dollar, the Euro and other major currencies; and extensive environmental and other governmental regulations, as well as other
factors detailed from time to time.
Contents
2
The Power of Dreams
2
Summary of Operating Results by Business
4
Financial Highlights
6
To Our Shareholders
14
Review of Operations
Motorcycle Business
30
32
Power Product and
Other Businesses
Automobile Business
Financial Services
Business
Medium- and Long-Term Management
Strategy and Management Target:
Preparing for the Next Leap Forward
Introducing Honda’s Activities and Publications
Risk Factors
CSR Report
Available on the Internet at the following URL:
http://world.honda.com/CSR/
37
Corporate Governance
Environmental Report
Available at the following URL:
http://world.honda.com/environment/report/
38
Board of Directors, Corporate
Auditors and Operating Officers
Philanthropy
Available on the Internet at the following URL:
http://world.honda.com/community/
On the cover:
41
Financial Section
76
Investor Information
Honda Civic (North American model)
The all-new Civic went on sale nationwide in the United States in April 2011.
This new Civic is the ninth-generation model, and features dynamic body
styling, a pleasant and refined interior, outstanding driving stability and
high fuel economy. The lineup includes seven types: the conventional
gasoline-powered Civic Sedan and Coupe, the HF-type high fuel economy
model, the gasoline-electric Civic Hybrid equipped with a lithium-ion
battery, the Civic Si Sedan and Coupe as well as the Civic Natural Gas model.
1
1,200
120
800
80
400
40
Summary of
Operating Results
by Business
0
07
08
09
10
0
11
Yen (billions)
Yen (billions)
160
1,600
Motorcycle Business
Yen (billions)
Yen (billions)
Yen (billions)
1,600
1,200
Yen (billions)
400
Yen (billions)
0
07
08
160 10
09
11
1,200
120
160
10,000
1,000
800
80
120
7,500
750
400
40
500
0
14.4%
Percentage
of Net5,000
Sales
80
by Business
800
Automobile Business
40
2,500
0
0
07
07
08
250
08
09
76.0%
09
10
0
11
190
0
11
10
9,178
9,178
Japan
1,690
202
185
North Europe
America
Asia
Other
Regions
120
Yen (billions)
80
40
Yen (billions)
810,000
09
8
8
8
10
11
7,500
750
200
100
2,500
250
0
0
-100
Yen (billions)
07
08
1,000 10
09
11
Yen (billions)
80
300
60
200
40
100
20
0
Yen (billions)
-100
07
08
80
09
08
09
20
10
09
11
10
10
11
600
2010
40
2,500
0
0
750
North Europe
America
Asia
500
Other
Regions
1,008
250
582
07
08
09
0
11
10
266
198
1,458
2011
2,500
300
0
0
1,000
1,690
5,000
Japan
450
150
North Europe
America
185
202
750
Yen (billions)
Asia
Asia
500
Other
Regions
150
08
100
09
80
266
60
198
300
10
Japan
100
250
0
0
-100
11
2,085
North Europe
America
Asia
40
Other
20
Regions
1,325
0
1,174
07
08
-20
11
09
388 10
537
50
1,458
07
08
09
0
11
10
2,085 Japan
North Europe
America
Yen (billions)
-20
Yen (billions)
200
80
266
60
198
300
150
200
40
Japan
100
North Europe
America
Asia
Other
20
Regions
0
0
Yen (billions)
Yen (billions)
537
200
600
388
150
450
Japan
300
North Europe
America
Asia
Other
100
Regions
Germany
150
Canada
50
U.K.
Dreams inspire
us to create innovative
products that enhance
mobility
and benefit society.
-100
-20
0
100
0
07
08
09
10
11
07
08
09
10Thailand
11 Japan
To meet the 50particular needs of customers in different regions around the world, we
150
Yen (billions)
0
07
08
0
2,085
1,325
Germany
100
537
200
600
388
important
environmental and safety
issues.
50
Canada
10
11
0
Japan
300
North Europe
America
Asia
50
07
08
09
10
11
2
Germany
Canada
2011
Brazil
0
2009
U.K.
2010
Other
100
Regions
150
0
2009
150
450
U.S.A.
Thailand Japan
2010
2011
U.S.A.
Brazil
base our11 sales networks, research and development centers and manufacturing facilities in
200 10
09
150
1,174
each
region. Furthermore, as a socially
responsible
corporate citizen,
U.K. we strive to address
Yen (billions)
Yen (billions)
09
Other
Regions
1,325
1,174
Yen
582(billions)
400
Asia
The Power of Dreams
450
300
Other
Regions
Yen (billions)
200
200
North Europe
America
07
Yen
582(billions)
400
1,008
0
11
5,000
Japan
Yen (billions)
190
7,500
2009
0
20
10
202
Japan
Yen (billions)
Yen (billions)
-20
40
600
09
80
9,178
-20
60
Yen (billions)
11
10,000
Years ended March 31
0
11
07
(Thousands)
250
10
08
185
0
Unit Sales by Region
500
400
09
40
07
190
7,500
1,008
750
Yen (billions)
60
0
500 Income (Loss) (right scale)
Operating
1,000
1,690
1,458
80
400
Yen (billions)
10,000
120
Yen (billions)
800
300
Years ended March
31
Net Sales (left scale)
5,000
0
160
1,200
Net Sales
/
Yen (billions)
1,000
Operating
Income 400
(Loss)
Yen (billions)
0
Yen (billions)
Yen (billions)
1,600
40
400
200
40
0
100
07
08
09
20
0
0
-100
-20
07
08
09
11
10
10
2,500
0
11
250
582
0
07
08
09
0
11
10
266
198
1,458
9,178
Japan
North Europe
America
Asia
1,008
Yen (billions)
Yen (billions)
Power
10,000 Product and
Other190
Businesses
202
185
7,500
Yen (billions)
5,000
Japan
450
2,500
300
0
150
07
08
100
09
50
09
500
Other
Regions
3.3%
100
250
0
0
-100
11
10
Japan
2,085
North Europe
America
Asia
08
2,085 Japan
Yen (billions)
80
266
60
198
200
40
100
North Europe
America
Germany
537
Asia
Other
20
Regions
-20
0
09
11
10
Asia
Japan
Thailand Japan
U.S.A.
North Europe
America
1,325
1,174
Yen (billions)
North Europe
America
Asia
600
388
North Europe
America
Asia
2011
388
Canada
50
U.K.
07
08
09
0
U.S.A.
10Thailand
11 Japan
Japan
North Europe
America
Brazil
Canada
U.K.
U.S.A.
Thailand Japan
2009
150
450
2010
1,17
Other
100
Regions
Germany
Germany
Yen (billions)
537
200
2,085
2009
Locations
2,085
Other
Regions
150
Japan
300
-100
2010
2011
Brazil
Germany
U.K.
Other
100
Regions
Thailand Japan
50
150
0
07
08
09
10
0
11
2009
Germany
2010
2011
2009
Canada
2010
U.K.
U.S.A.
Thailand Japan
Brazil
2009
2010
198
Canada
U.K.
Yen (billions)
537
200
450
150
Japan
300
1,325
1,325
600
388
0
08
Other
Region
582
-20
North Europe
America
Yen (billions)
0
07
40
Other
20
Regions
11
1,174
Yen
582(billions)
400
Japan
Asia
1,458
6.3%
09
388 10
1,008
300
North Europe
America
80
266
60
0
1,174
07
Japan
Yen (billions)
198
Financial
Services Business
300
0
11
10
Asia
Other
Regions
537
North Europe
America
Japan
388
202
Brazil
1,458
08
Yen
582(billions)
400
200
200
North Europe
America
150
07
750
Yen (billions)
600
0
1,000
1,690
1,325
185
190
1,174
2011
3
Financial Highlights
Financial Data
Yen
U.S. dollars
(millions except per share data)
(millions except per share data)
2009
2010
2011
¥10,011,241
¥ 8,579,174
¥ 8,936,867
$107,479
Operating income
189,643
363,775
569,775
6,852
Income before income taxes and
equity in income of affiliates
161,734
336,198
630,548
7,583
99,034
93,282
139,756
1,681
Net income attributable to Honda Motor Co., Ltd.
137,005
268,400
534,088
6,423
Cash dividends paid during the period
139,724
61,696
92,170
1,108
Net sales and other operating revenue
Equity in income of affiliates
2011
563,197
463,354
487,591
5,864
11,818,917
11,629,115
11,570,874
139,157
4,007,288
4,328,640
4,449,975
53,517
Capital expenditures
(excluding purchase of operating lease assets)
633,913
348,981
326,620
3,928
Depreciation
(excluding property on operating leases)
441,868
401,743
351,496
4,227
Research and development
Total assets
Total Honda Motor Co., Ltd. shareholders’ equity
Per share data
¥
Dividends paid
75.50
¥
147.91
¥
295.67
$
3.56
77
34
51
0.61
2,208.35
2,385.45
2,469.05
29.69
Note: U
nited States dollar amounts have been translated from yen solely for the convenience of the reader at the rate of ¥83.15=U.S.$1, the mean of the telegraphic transfer selling exchange
rate and the telegraphic transfer buying exchange rate prevailing on the Tokyo foreign exchange market on March 31, 2011. No representation is made that yen amounts could have
been, or could be, converted into U.S. dollars at that rate or any other rate on this or any other date or at all.
Net Sales and Other Operating Revenue
Yen
Yen
Yen
(billions)
(billions)
(billions)
Yen
Yen
Yen
(billions)
(billions)
(billions)
8,000
8,000
8,000
8,000
8,000
8,000
4,000
4,000
4,000
4,000
4,000
4,000
000
07
0708
08
0809
09
0910
10
1011
11
11
0 0 0 07
07
07
0708
08
0809
09
0910
10
1011
11
11
07
07
07
08
08
08
09
09
0910
10
1011
11
11
Operating
Operating
Operating
Income
Income
Income
(left
(left
(left
scale)
scale)
scale)
Income
Income
Income
(left
(left
(left
scale)
scale)
scale)
Operating
Operating
Operating
Margin
Margin
Margin
(right
(right
(right
scale)
scale)
scale)
Operating
Operating
Operating
Margin
Margin
Margin
(right
(right
(right
scale)
scale)
scale)
Net Income Attributable to Honda Motor
Co., Ltd. and Return on Equity (ROE)
Total Assets, Total Honda Motor Co., Ltd.
Shareholders’ Equity and Total Honda
Motor Co., Ltd. Shareholders’ Equity per
Common Share
Equity in Income of Affiliates
Yen
Yen
Yen
(billions)
(billions)
(billions)
Yen
Yen
Yen
(billions)
(billions)
(billions)
150
150
150
150
150
150
(Thousands)
(Thousands)
(Thousands)
(Thousands)
(Thousands)
(Thousands)
12,000
12,000
12,000
12,000
12,000
12,000
100
100
100
100
100
100
8,000
8,000
8,000
8,000
8,000
8,000
505050
505050
4,000
4,000
4,000
4,000
4,000
4,000
000
07
0708
08
0809
09
0910
10
1011
11
11
0 0 0 07
07
07
0708
08
0809
09
0910
10
1011
11
11
Capital Expenditures and Depreciation
(Excluding Property on Operating Leases)
000
07
070
0 0 0 07
07
07
070
10,000
10,000
10,000
10,000
10,000
10,000
(%)
(%)
(%)
Yen
Yen
Yen
(billions)
(billions)
(billions)
(Yen)
(Yen)
(Yen)
Yen
Yen
Yen
(billions)
(billions)
(billions)
Yen
Yen
Yen
(billions)
(billions)
(billions)
Yen
Yen
Yen
(billions)
(billions)
(billions)
(%)
(%)
(%)
600
600
600
20.0
20.0
20.0
600
600
600
20.0
20.0
20.0
450
450
450
15.0
15.0
15.0
450
450
450
15.0
15.0
15.0
300
300
300
10.0
10.0
10.0
300
300
300
10.0
10.0
10.0
150
150
150
5.0
5.0
5.0
150
150
150
5.0
5.0
5.0
000
000
07
0708
08
0809
09
0910
10
1011
11
11
0 0 0 07
000
Yen
Yen
Yen
(billions)
(billions)
(billions)
12,000
12,000
12,000
12,000
12,000
12,000
(Yen)
(Yen)
(Yen)
3,000
3,000
3,000
3,000
3,000
3,000
Yen
Yen
Yen
(billions)
(billions)
(billions)
600
600
600
600
600
600
Yen
Yen
Yen
(billions)
(billions)
(billions)
2,000
2,000
2,000
2,000
2,000
2,000
8,000
8,000
8,000
8,000
8,000
8,000
2,000
2,000
2,000
2,000
2,000
2,000
400
400
400
400
400
400
1,500
1,500
1,500
1,500
1,500
1,500
4,000
4,000
4,000
4,000
4,000
4,000
1,000
1,000
1,000
1,000
1,000
1,000
200
200
200
200
200
200
1,000
1,000
1,000
1,000
1,000
1,000
07
07
07
08
08
0809
09
09
10
1011
11
11
Net
Net
Net
Income
Income
Income
Attributable
Attributable
Attributable
to
to
to 10
Honda
Honda
Honda
Motor
Motor
Motor
Co.,
Co.,
Co.,
Ltd.
Ltd.
Ltd.
(left
(left
(left
scale)
scale)
Net
Net
Net
Income
Income
Income
Attributable
Attributable
Attributable
to
to
toscale)
Honda
Honda
Honda
Motor
Motor
Motor
Co.,
Co.,
Co.,
Ltd.
Ltd.
Ltd.
(left
(left
(left
scale)
scale)
scale)
ROE
ROE
ROE
(right
(right
(right
scale)
scale)
scale)
ROE
ROE
ROE
(right
(right
(right
scale)
scale)
scale)
4
(%)
(%)
(%)
(%)
(%)
(%)
1,000
1,000
1,000
10.0
10.0
10.0
1,000
1,000
1,000
10.0
10.0
10.0
7.5
7.5
7.5
750
750
750
7.5
7.5
7.5
750
750
750
5.0
5.0
5.0
500
500
500
5.0
5.0
5.0
500
500
500
2.5
2.5
2.5
250
250
250
2.5
2.5
2.5
250
250
250
000
000
07
0708
08
0809
09
0910
10
1011
11
11
0 0 0 07
000
12,000
12,000
12,000
12,000
12,000
12,000
Yen
Yen
Yen
(billions)
(billions)
(billions)
Operating Income and Operating Margin
Yen
Yen
Yen
(billions)
(billions)
(billions)
Yen
Yen
Yen
(billions)
(billions)
(billions)
000
07
0708
08
0809
09
0910
10
1011
11
11
0 0 0 07
07
07
07
08
08
08
09
09
0910
10
1011
11
11
Total
Total
Total
Assets
Assets
Assets
(left
(left
(left
scale)
scale)
scale)
Total
Total
Total
Honda
Honda
Honda
Motor
Motor
Motor
Co.,
Co.,
Co.,
Ltd.
Ltd.
Ltd.
Shareholders’
Shareholders’
Shareholders’
Assets
Assets
Assets
(left
(left
(left
scale)
scale)
scale)
Equity
Equity
Equity
(left
(left
(left
scale)
scale)
scale)
Total
Total
Total
Honda
Honda
Honda
Motor
Motor
Motor
Co.,
Co.,
Co.,
Ltd.
Ltd.
Ltd.
Shareholders’
Shareholders’
Shareholders’
Equity
Equity
Equity
(left
(left
(left
scale)
scale)
scale)
Total
Total
Total
Honda
Honda
Honda
Motor
Motor
Motor
Co.,
Co.,
Co.,
Ltd.
Ltd.
Ltd.
Shareholders’
Shareholders’
Shareholders’
Equity
Equity
Equity
per
per
Common
per
Common
Common
Share
Share
Share
(right
(right
(right
scale)
scale)
scale)
Total
Total
Total
Honda
Honda
Honda
Motor
Motor
Motor
Co.,
Co.,
Co.,
Ltd.
Ltd.
Ltd.
Shareholders’
Shareholders’
Shareholders’
Equity
Equity
Equity
per
per
Common
per
Common
Common
Share
Share
Share
(right
(right
(right
scale)
scale)
scale)
000
000
000
07
0708
08
0809
09
0910
10
1011
11
11
0 0 0 07
07
07
0708
08
0809
09
0910
10
1011
11
11
Capital
Capital
Capital
Expenditures
Expenditures
Expenditures
Depreciation
Depreciation
Depreciation
Capital
Capital
Capital
Expenditures
Expenditures
Expenditures
Depreciation
Depreciation
Depreciation
500
500
500
500
500
500
000
0 0 007
07
0708
0
07
07
0708
0
10
09
11
1011
1011 11
1
11
11
10
09
11
1011
1011 11
1
11
11
Operating Data
Motorcycles
2011 Change
2010
Unit Sales Breakdown (Thousands)
Automobiles
2011 Change
2010
Japan
190
190
0.0 %
North America
189
185
(2.1)
1,297
Europe
199
202
1.5
249
Asia
7,628
9,178
20.3
950
1,008
Other Regions
1,433
1,690
17.9
250
266
Total
9,639
11,445
3,392
3,512
Net Sales
Breakdown
Yen (millions)
Japan
Motorcycle Business
Automobile Business
2011 Change
2010
¥ 70,461 ¥ 70,244
¥1,383,855
¥1,310,734
(7.0)
3,013,432
3,252,852
2010
388
1,458 12.4
1,818
2,085
14.7
198 (20.5)
1,066
1,174
10.1
6.1
1,069
1,325
23.9
6.4
469
537
14.5
4,744
5,509
(9.9)%
3.5 %
¥ 24,635
¥ 26,349
7.9
553,169
503,960
(5.3)%
20.5%
16.1%
Power Product and Other
Businesses
2011 Change
2010
2011 Change
322
582
Financial Services Business
2011 Change
2010
(0.3)%
96,664
646
18.7 %
Power Products
2010
2011 Change
¥ 98,367
¥ 96,515
(8.9)
65,890
67,917
3.1
1.7
7.0 %
(1.9)%
North America
103,956
Europe
124,665
103,890 (16.7)
575,326
441,696 (23.2)
10,428
9,263 (11.2)
54,366
55,264
Asia
461,067
577,669 25.3
1,041,258
1,221,704 17.3
4,318
3,728 (13.7)
36,754
49,369 34.3
Other Regions
380,143
439,727 15.7
540,977
567,112
13,802
18,596 34.7
22,305
23,614
¥6,554,848
¥6,794,098
¥1,140,292 ¥1,288,194Yen13.0
%
(billions)
Total
4.8
¥606,352
¥561,896
Yen (billions)
3.6 %
12,000
Unit Sales
4,000
7.5
0
(Thousands)
(Thousands)
(Thousands)
8,000
8,000
8,000
8,000
4,000
4,000
4,000
4,000
250
3,000
3,000
3,000
3,000
(Thousands)
(Thousands)
(Thousands)
07
08
09
10
4,000
4,000
4,000
2,000
2,000
2,000
2,000
12,000
12,000
12,000
4,000
4,000
4,000
4,000
8,000
8,000
8,000
10,000
10,000
10,000
Yen
Yen
Yen
(billions)
(billions)
(billions)
1,500
1,500
1,500
1,500
2,000
2,000
2,000
4,000
4,000
4,0000 0 0 0
1,000
1,000
1,000
2,000
2,000
2,000
07
07
0708
08
0809
09
0910
10
1011
11
11
(%)
20.0
450
300(billions)
Yen Yen
(billions)
Yen
(billions)
Yen
(billions)
0
Yen
Yen
Yen
(billions)
(billions)
(billions)
7,500
7,500
7,500
7,500
07
10,000
10,000
10,000
600600600600
5.0
10,000
10,000
10,000
08
09
7,500
7,500
7,500
500500500500
1,000
1,000
1,000
2,500
2,500
2,500
2,500
5,000
5,000
5,000
0
0
07
07
0708
08
0809
09
0910
10
1011
11
11
(Yen)
12,000
3,000
07
Yen
Yen
Yen
(billions)
(billions)
(billions) 0
11 400400400
400
600
600
600
10
200
400
400
400200200200
Yen (billions)
600
Yen Yen
(billions)
Yen
(billions)
Yen
(billions)
(billions)
4,000
500500500500
1,000
200
0
0
10,000
10,000
10,000
0
400400400400
Yen
Yen
Yen
(billions)
(billions)
(billions)
07
08
09
10
500
500
500
300
300300300
Total Assets (left
scale)
11
Total Honda Motor Co., Ltd. Shareholders’
Equity (left400
scale)
400
400
200200200200
Total Honda Motor Co., Ltd. Shareholders’
Equity per Common Share (right scale)
07
Japan
07
07
0708
08
0809
09
0910
10
1011
11
11
000
North America
07
07
0708
08
0809
09
0910
10
1011
11
11
Europe
000
Asia
300
300
300
100100100100
Other Regions
07
07
0708
08
0809
09
0910
10
1011
11
11
08
Capital Expenditures
Depreciation
200
200
200
0 0 0 0
0 0 0 0
0 0 0 0
200
200
2000 0 0 0
0708
07
09
0809
08
10
0910
09
11
1011
10
11
11 07 0708
0708
07
09
0809
08
10
0910
09
11
1011
1011 11 07 0708
0708
07
09
0809
08
10
0910
09
11
1011
1011 11 07 0708
0708
07
09
0809
08
10
0910
09
11
1011
1011 11
500
500
500 07 0708
2,500
2,500
2,500
100
100
100
000
08
10,000
10,000
10,000
10,000
Power Product and2,000
Other Businesses400
10.0
Yen Yen
(billions)
Yen
(billions)
Yen
(billions)
(billions)
Net Income Attributable to
Honda
5,000
5,000
5,000
5,000Motor Co., Ltd. (left scale)
ROE (right scale)
1,000
1,000
1,000
1,000
1,500
1,500
1,500
000
Yen (billions)
10,000
10,000
10,000
10,000
8,000
Financial
Services Business
10,000
10,000
10,000
10,000
10,000
10,000
10,000 150
11
07 0708
0708
07
09
0809
08
10
0910
09
11
1011
1011 11
15.0
10,000
10,000
10,000
10,000
Automobile
Business
Yen Yen
(billions)
Yen
(billions)
Yen
(billions)
(billions)
2,000
2,000
2,000
2,000
10
50
6,000
6,000
6,000
2,000
2,000
2,000
2,000
07 0708
0708
07
09
0809
08
10
0910
09
11
1011
1011 11
Yen (billions)
Net Sales
09
100
Operating Margin (right scale)
600
10,000
10,000
10,000
10,000
Motorcycle
Business
08
8,000
8,000
8,000
4,000
4,000
4,000
4,000
Operating Income (left scale)
Yen (billions)
150
2.5
6,000
6,000
6,000
6,000
07
2,000
2,000
2,0000 0 0 0
000
07
07
0708
08
0809
09
0910
10
1011
11
11
8,000
8,000
8,000
8,000
Power Products
(Thousands)
(Thousands)
(Thousands)
5.4 %
5.0
(Thousands)
(Thousands)
(Thousands)
(Thousands)
0
11
3,000
3,000
3,000
1,000
1,000
1,000
1,000
0 0 0 0
07 0708
0708
07
09
0809
08
10
0910
09
11
1011
1011 11
4,000
4,000
4,000
000
500
Automobiles
Motorcycles
¥292,679
(%)
750
(Thousands)
(Thousands)
(Thousands)
(Thousands)
12,000
12,000
12,000
12,000
¥277,682
10.0
8,000
(Thousands)
(Thousands)
(Thousands)
(Thousands)
(7.3)%
1,000
5.9
000
07
07
0708
08
0809
09
0910
10
1011
11
11
5
To Our Shareholders
6
We would first like to thank
you, our shareholders, for your
continuing interest in Honda’s
business activities and for your
ongoing support.
We also would like to
express our deepest sympathies
to those who suffered losses
and injuries as a result of the
Great East Japan Earthquake
and tsunami. Our thoughts are
with them, and we express
our deepest sympathy from
the bottom of our hearts. To
our shareholders and others in
the stricken areas, we wish to
express our deepest sympathies
and our sincerest hopes that the
devastated areas will be able to
recover as quickly as possible.
Turning to the economic environment during the fiscal year, in the United States, personal
consumption and private capital investment increased gradually, and the economy was
on a moderate recovery trend; however, credit contraction and high rates of unemployment persisted. In Europe, economic conditions, in general, improved along with
increases in consumer spending and other developments, but unemployment remained
high, and there was concern regarding the financial system. In Asia, the economies of
China and India expanded, and the remaining countries in the region generally reported
recoveries. In Japan, the economy moved into a lull, and, although private capital investment showed some improvement, tough operating conditions continued as trends in
consumer spending were weak in some areas and unemployment remained high. It
is forecast that the Great East Japan Earthquake will have a depressing impact on the
economy for the near term.
Under these business conditions, Honda’s consolidated net sales and other operating
revenue for the fiscal year ended March 31, 2011 expanded over the previous fiscal year,
despite unfavorable currency translation effects, as a result of increases in the sales of
motorcycles, automobiles and other Honda products. Such adverse factors as higher
selling, general and administrative expenses, increased R&D expenditures, foreign currency movements and the effects of the earthquake had some negative impact. However,
operating income and net income attributable to Honda Motor Co., Ltd. grew, reflecting
such positive factors as the increase in net sales, changes in the mix of sales, the benefit
of higher production volume on costs and overall cost-cutting activities.
Motorcycle Business
Total unit sales of motorcycles increased from the previous fiscal year because of higher sales
in Asia and other regions, including South America.
In Asia, expansion in demand was robust, supported by strong economic performance.
In particular, sales in Thailand of Honda’s new Wave 110i and the Scoopy i as well as sales in
India of the new CB Twister and the Activa acted as driving forces in bringing a major gain
in sales. On the other hand, in North America, where demand did not fully recover, despite
a moderate recovery mainly in the sales of utility all-terrain vehicles (ATVs), recovery in the
sales of sports ATVs used mainly for recreation and motorcycles for recreation was lagging.
Sales in other areas, including South America, picked up after mid-year because of
the increased availability of credit and improvement in income. Sales of the CG150FAN,
NXR150, CG125 and other models were strong, mainly in the Brazilian market.
7
Automobile Business
Unit sales increased from the previous fiscal year, despite declines in Japan and Europe, as a
result of growth in unit sales in North America and Asia.
In Japan, operating conditions continued to be tough because of the reactionary decline
in demand in the latter half of the fiscal year following the termination of government subsidies. New models were introduced to boost sales, including the Fit Hybrid, but because
of the impact of shrinking demand, the adverse effects of the Great East Japan Earthquake
and other factors, unit sales decreased.
In Europe, in spite of the launch of the CR-Z as a new market entrant and other mea-
sures, sales in the region were generally stagnant because of the termination of sales support
policies in certain countries in the region, weakness in consumer spending trends and moreintense competition.
On the other hand, in North America, along with the moderate recovery in the United
States, sales of the new model Odyssey and light trucks expanded.
In Asia, demand in China was on a growth trend, and sales of the CR-V, in particular,
showed major expansion. Sales also grew in Thailand, Indonesia and elsewhere, amid favorable economic trends.
Power Products and Other Businesses
Total unit sales on a consolidated basis increased from the previous fiscal year on the strength
of higher sales in all geographical areas.
In North America, Europe, Japan and other regions, including South America, along with
the increase in demand for construction equipment accompanying the economic recovery,
unit sales of general-purpose engines, mainly on an OEM basis, increased. In Asia, unit sales
grew along with market expansion, agricultural subsidies provided by certain governments
in the region, the effects of weather conditions and other factors.
8
Initiatives Going Forward
In recent years, Honda has been experiencing a period of major change in business
conditions. Key factors causing this change have been increased awareness on a global
scale of issues related to the environment and economic growth in emerging countries,
which has brought structural change to the world economy. For Honda to continue to
grow and develop, it will be important to create and commercialize advanced environmental technologies, take quick action to strengthen our business position in the
markets of emerging countries and, at the same time, restructure our corporate organization to secure profitability.
With this awareness, we have positioned the next 10 years as a time for Honda
to reform in the direction of “delivering good products to our customers, with speed,
affordability and low CO2 emissions”, and right now we are taking aggressive action to
do just that. Delivering “good products” means that Honda must create attractive products that customers think are necessary based on our original technology, knowledge
and ingenuity. We must do this “with speed” without keeping our customers waiting,
and we must deliver them at affordable prices that will make customers think, “I’m glad
I bought a Honda”. I believe this is what we want to achieve, and, as a “personal mobility manufacturer”, we must make more-aggressive efforts than ever before to make
major reductions in CO2 emissions.
Motorcycles
Good Products at Affordable Prices
Among motorcycles, there are “commuter” types that play an essential role in providing
people with basic transportation, and there are “fun” types that people ride for the joy and
pleasure of riding. The market for commuter types in the emerging countries is expanding
along with economic growth. With this trend as a driving force, Honda sold approximately
17,952,000 motorcycles last year, the largest number in our history. The principal markets
for motorcycles are China, India, Indonesia and other countries that have large populations, and further growth in sales is expected in these countries. In addition, the nations in
the African region, especially Nigeria, are new and expanding markets, and we believe they
will provide support for Honda’s growth.
To respond to this strong demand for commuter-type motorcycles, we believe that
more and more affordable prices will be important. In recent years, Honda has taken initiatives to procure parts globally. We have standardized the basic architecture for models in
the region to enable us to enjoy economies of scale in parts procurement. We have also
promoted improvement activities among local parts manufacturers to set price standards
globally as we have also worked to realize synergies.
9
For example, in Brazil, which is an important emerging country, the market share of
Honda products is about 80%, but, by far, the most-important factor in Honda’s position
in that market is our entry-level models. These are Cub-style 100cc bikes that are light,
quick and offer an easy ride, which is exactly the kind of performance that a commuter
bike should provide. As we have evolved these bikes as Honda motorcycles, we have created supply systems that enable us to offer them at affordable prices.
Also, by making these bikes available at affordable prices, Honda is able to provide
products to customers in an even-wider range of markets. In mid-2011, Honda introduced
a new 125cc model in Nigeria, the largest bike market in Africa, where about 800,000
motorcycles are sold a year. By using highly competitive parts manufactured in China,
Honda is able to offer these bikes to customers in Nigeria at affordable prices. In new
markets, competition is tough because motorcycle manufacturers in China and India are
already marketing low-priced models, but, by drawing on Honda’s global resources, we
will take aggressive action in developing the African market, with Nigeria as the base.
Strengthening the Honda Brand with Distinctive Styling
Along with affordable prices based on cost-competitiveness, another important element
for success in the motorcycle business is having distinctive “Honda styling.” Particularly
for large and sport-type bikes targeted at customers who want to ride their bikes for fun,
Honda aims not only for performance and specifications but also pursues strong and individualistic styling that makes everyone who sees the bike aware that it is a Honda. Design
and styling that make potential customers think “I want that Honda bike. I love it.” are
key success factors.
Honda’s large bikes come in the VFR series and the CB series. The VFR series aims to of-
fer bikes that use the latest technology to make riding an interesting and fun experience.
On the other hand, the CB series bikes are in the tradition of styling and value that Honda
has created over the years in Japan and the United States. Having two series of bikes, one
targeting traditional needs and the other focusing on a new wave, is an advantage for a
top motorcycle manufacturer. Our next goal will be to make
Honda motorcycles even more unique in terms of design
and performance.
We are expecting major growth in the global
motorcycle market in the years ahead. As a leading
motorcycle manufacturer, Honda will work to offer
products at affordable prices, using our technology
and quality as a foundation. As we work to offer
design and styling that is even more unique to
Honda, we will continue to respond to the
expectations of our customers throughout
the world.
10
Automobiles
Internal Combustion Engine Evolution and the Spread of Hybrids
The current trend in the world automobile market toward more-compact cars with better
fuel economy has been accelerated by the growing awareness of environmental issues
and the instability of oil prices.
As a company providing “personal mobility”, Honda has moved forward with R&D on
a full range of environmental technologies and taken initiatives to reduce the burden on
the natural environment. Among the various alternatives, and this is especially true for
hybrids, we believe that environmental technology will be more valuable if it can appeal
to a wider range of customers. That is why we proceeded with the development of our
lightweight, compact IMA hybrid system, and, following this, have succeeded in offering
vehicles equipped with this system at affordable prices. This hybrid system is now available
on the Insight and CR-Z models, and in October 2011, Honda launched a Fit Hybrid model,
and will continue to work to expand the market penetration of these vehicles.
We believe that hybrid technology will become a mainstay product as one means to re-
duce the burden on the environment. But, we think that people do not just want a hybrid
vehicle, but also a vehicle with competitiveness and performance. In other words, these cars
must be more than just hybrids. They also must have good fuel economy, offer a pleasant
driving experience, and be available at affordable prices. That is why Honda is working to
improve fuel economy by improving both the gasoline engine and battery technology. Also,
with a target date in 2012, Honda will introduce a new lineup of gasoline engines and
transmissions and is working toward the development of medium-sized and larger “plugin” hybrid car models that can be recharged using household power outlets.
In addition to these initiatives, Honda is proceeding with the development of a Battery
Electric Vehicle (EV) that will apply technology it has created for a fuel cell electric vehicle
(FCEV). Work is also under way on developing a compact diesel engine for the European
market. The results that Honda has achieved by focusing our corporate resources on advanced technology will be applied to creating new products in the years ahead.
Strengthening Our Lineup of Small Cars as the World Shifts to Compacts
In response to the worldwide trend toward smaller cars, Honda is working to strengthen
our mini-vehicle lineup in Japan and is moving ahead with the development of a new model
BRIO compact car for Asia that is scheduled to launch in Thailand and India in 2011.
In the mini-vehicle segment, in Japan total new cars sold in 2010 amounted
to about 1.73 million units, while the number of registrated vehicles sold
was about 3.23 million units. Thus, in terms of units, mini-vehicles
accounted for more than 30% of new car sales. Because of issues
related to the rising cost of gasoline, customer demand for
smaller cars is expected to rise, and an important issue will
be how to increase competitiveness in mini-vehicles in the
domestic market.
11
To respond effectively to this trend, Honda is already upgrading our mini-vehicle en-
gines, transmissions and platforms. Therefore, an all-new mini-vehicle equipped with technology unique to Honda is expected to be launched in the near future.
The BRIO was launched in 2011 in Thailand as an eco-car with good fuel economy as
well as exported to other ASEAN member nations. Plans also call for launching the BRIO
as an entry-level car in India. To compete successfully in the rapidly expanding market for
compact cars in emerging markets, the key factor is “affordability”. Honda will draw on
the know-how we have accumulated in Asian countries as a motorcycle manufacturer to
enhance our competitiveness in automobiles.
Power Products and Other Businesses
Initiatives to Develop and Market New Energy-Generating Products
In power products business, Honda supplies general-purpose engines that power construction,
agricultural and other types of machinery and, thereby, supplies useful products that help
people get things done every day. In emerging markets, these products are even more
indispensable for people’s lives than motorcycles, and, as economic growth continues in
these countries, their markets are expected to expand. For example, in the African market,
demand for electric power generators is expanding, and Honda is drawing on the capabilities of our production bases in China and India to the fullest to expand sales by offering
attractive products at affordable prices.
Also, in India, along with previously available electric power generators, Honda has be-
gun to manufacture our first inverter power generators in that country, which can be used
with high-precision equipment, such as medical devices, and require advanced technology
to produce. In China, Honda has also become the first Japanese company to manufacture
small tillers in that country. Through these and other activities, Honda is responding to
demand in emerging markets by drawing on our technology and know-how to meet customers’ expectations and develop new markets.
In addition, as part of our power products business, Honda is working aggressively to develop and market new energy-creation products, such as solar
power panels and small cogeneration units for household use.
For Honda, the next 10 years will be crucial in determining whether we can
successfully survive the major changes taking place in business conditions:
namely, the “increased awareness on a global scale of issues related to the
natural environment” and “structural change in the world economy”. Honda must focus especially on further developing our advanced environmental
technologies, strengthening our business position in emerging markets and
bolstering our competitiveness in the small car business as we aim to make
new leaps forward by enhancing the core characteristics that make Honda
unique.
12
Returning Profit to Shareholders
Honda strives to conduct its business from a global perspective and to increase its corporate
value. We consider the allocation of profits to shareholders to be one of our most-important management responsibilities. Our basic policy for dividends is to make distributions
after taking into account our long-term consolidated earnings performance. Honda also
acquires its own shares with optimal timing with the goal of improving the efficiency of its
capital structure.
For fiscal 2011, Honda set a year-end cash dividend of ¥15 per share, bringing total
cash dividends for the fiscal year to ¥54 per share. This dividend comprised ¥12 per share
for the first quarter, ¥12 per share for the second quarter, ¥15 per share for the third quarter and the previously mentioned year-end dividend of ¥15 per share.
For the fiscal year ending March 31, 2012, we are scheduled to pay quarterly dividends of
¥15 per share, or ¥60 per share for the full year, which will be ¥6 per share higher than in fiscal
2011. We will continue to do our utmost to meet the expectations of our shareholders.
Honda is a company where each and every member of management and the organiza-
tion works to realize the dream of providing joy to Honda customers by setting challenging
objectives, aiming for progress and growth as we look toward a better future at all times
and working to open up the frontiers of the future. What we are aiming for today is “to
become a company that society wants to exist.” In the future, as in the past, Honda will
take up the challenges of advanced creativity inherent in the features and qualities that
are associated with the Honda brand by continuing to draw on “The Power of Dreams,”
respond to the expectations of society, bring joy to our customers, inspire them and give
them satisfaction.
We look forward to the continued understanding and support of our shareholders and
other investors. We are in this together, for the long term.
June 24, 2011
Takanobu Ito
President & Chief Executive Officer
13
4,000
6,000
10,000
3,000
4,000
300
7,500
200
2,000
2,000
1,000
0
Thousands
Japan
North America
8,000
Europe
Asia
4,000
Other Regions
Total
07
08
09
North America
10
11
Europe
Asia
09
10
2,500
0
11
10
0
11
190
189
185
(2.1)
199
202
1.5
7,628
9,178
20.3
1,433
11
1,690
17.9
4,000
150
1,000
07
08
07
07
08
08
09
09
09
Non-current
10
10
10
% change
190
6,000
300
1,500
0
0
2011
2010
8,000
450
2,000
2,000
0
500
Yen (billions)
Yen (millions)
2,000
3,000
Japan
1,500
2,000
North America
Europe
1,000
1,000
Asia
07
08
09
10
11
07
08
09
10
11
Other Regions
North America
Europe
Asia
11,445
9,639
11
07
08
09
07
08
09
07
08
09
08
09
6,000
Yen (billions)
500
4,500
0.0 % 400
3,000
300
1,500
200
0
100
18.7 %
0
11
Current
2011
2010
¥
300
5,000
150
2,500
07
07
08
08
09
09
Non-current
¥
% change
4,500
70,244
(0.3)%
103,956
96,664
(7.0)
124,665
103,890
(16.7)
461,067
577,669
25.3
380,143
10
11
10 11
439,727
15.7
70,461
¥1,140,292
Other Regions
09
6,000
Total
Thousands
08
Yen (billions)
450
7,500
0
0
07
Yen (billions)
Yen (billions)
Yen (billions)
600
10,000
4,000
Japan
08
Yen (billions)
Other Regions
Net Thousands
Sales
0
07
09
Yen (billions)
12,000
500
0
08
600
Thousands
Thousands
Japan
07
0
Unit Sales
0
5,000
100
¥1,288,194
3,000
1,500
0
07
13.0 %
Current
Yen (billions)
8,000
Yen (billions)
500
Percentage
of Net Sales by Business
10,000
6,000
400
（千台）
（十億円）
300
12,000
7,500
4,000
2,000
200
5,000
2,000
2,500
0
0
07
08
09
10
11
07
08
09
10
11
14.4%
1,500
8,000
100
1,000
0
4,000
0
07
08
09
10
11
500
07
Yen (billions)
Yen (billions)
600
Yen (billions)
6,000
08
09
10
11
0
500
450
4,500
（千台）
400
300
4,000
3,000
10,000
3,000
1,500
7,500
300
150
200
0
100
0
07
08
09
10
11
07
08
09
10
11
CBR250R (Japan)
2,000
0
0
Non-current
Current
08
09
10
07
08
09
11
2,500
07
08
09
10
11
0
Yen (billions)
（千台）
（十億円）
4,500
8,000
500
3,000
6,000
400
300
4,000
09
5,000
07
6,000
14
08
（十億円）
1,000
er Regions
07
Motorcycle Business
Honda’s unit sales of motorcycles and all-terrain vehicles (ATVs) totaled 11,445 thousand units, an
increase of 18.7% compared with the previous fiscal year, due mainly to an increase in unit sales in
Asia and Other Regions, including South America.
Revenue from external customers increased ¥147.9 billion, or 13.0%, to ¥1,288.1 billion
from the previous fiscal year, due mainly to increased unit sales and revenue related to licensing
agreements. Honda estimates that by applying Japanese yen exchange rates of the previous fiscal
year to the current fiscal year, net sales for the year would have increased by approximately ¥171.3
billion, or 15.0%, compared to the increase as reported of ¥147.9 billion, which includes the unfavorable foreign currency translation effects.
Operating income increased ¥79.7 billion, or 135.6%, to ¥138.5 billion from the previous
fiscal year, due mainly to an increase in income attributable to the increased net sales and income
related to licensing agreements.
15
Japan
Total industry demand for motorcycles in Japan in fiscal
2011 was approximately 420 thousand units*, approximately 3% higher than in the previous fiscal year. Although
the percentage of younger people in the total population
Four Trax Rancher (North America)
continued to decline and there were changes in consumer
preferences, unit sales grew primarily due to the introduction of new models.
Total unit sales on a consolidated basis were 190 thousand
units, and about the same level as in the previous fiscal year, as
sales of the scooters PCX and Giorno expanded.
In addition, the all-new electric-powered EV-neo, a
commercial-use scooter that emits zero CO2 emissions, was
made available on lease.
* Source: JAMA (Japan Automobile Manufacturers Association)
North America
Total demand for motorcycles and all-terrain vehicles (ATVs)
in the United States during calendar 2010 declined approximately 17% from the previous year, to about 700 thousand*
units. Although there were signs of recovery, mainly in sales
of utility ATVs, this did not lead to a full-scale recovery in
demand.
Honda’s consolidated unit sales in North America de-
clined 2.1%, to 185 thousand units. Unit sales of touring
models, such as Goldwing, as well as cruiser models includGiorno (Japan)
ing Shadow, were favorable, however, unit sales of sports
models such as CBR1000R and CRF230M motocross models decreased. As a result, unit sales of motorcycles were
down 8.2% from the previous fiscal year, to approximately
90 thousand units. However, unit sales of ATVs rose 4.4%,
to approximately 95 thousand units, because of strong demand for utility ATVs, including the Four Trax Rancher and
other models.
* Source: MIC (Motorcycle Industry Council)
16
Goldwing (North America)
Europe
Total demand for motorcycles in Europe* during calendar
2010 declined about 13%, to approximately 920 thousand
units. This major drop in demand was due to a number of
factors, including a reactionary decline following the end of
subsidies for motorcycle purchases in Italy and the impact of
an increase in the value-added tax (VAT) in Spain.
Honda’s consolidated unit sales in Europe increased 1.5%
compared with the previous fiscal year, to 202 thousand
units. Despite the effects of a decline in the market for 125cc
scooters, units sales of PCX motorcycles were favorable and
sales of the naked type CBF1000, the new VFR1200F sports
tourer and other models rose.
* Based on Honda research, the motorcycle registration market for Europe includes 10
countries: the United Kingdom, Germany, France, Italy, Spain, Switzerland, Portugal,
the Netherlands, Belgium and Austria.
PCX (Europe)
17
CB Twister (India)
Asia
Demand for motorcycles continued to expand in Asia,
despite price increases, including the price of gasoline, tighter credit and other factors in certain countries. In calendar
2010, total demand for motorcycles*1 rose about 10%, to
approximately 43.8 million units.
Unit sales in India rose about 29%, to approximately
11.3 million units, while sales in Indonesia increased about
26%, to approximately 7.36 million units, and sales in Thailand expanded approximately 12%, to approximately 1.85
million units.
Honda’s unit sales on a consolidated basis in Asia*2 for
the fiscal year increased 20.3%, to 9,178 thousand units.
This increase was due primarily to an expansion in sales of
Scoopy i (Thailand)
the CB Twister motorcycle and the Activa scooter in India,
unit sales of a new Wave 110i Cub-style 110cc motorcycle
and Scoopy i scooter in Thailand, as well as other factors.
With respect to production activities, Honda Motorcy-
cle & Scooter India Private Limited, Honda’s consolidated
subsidiary in India, announced it would further expand the
production capacity of a second plant that is already under
construction, and also build a third plant, to meet the rapidly expanding demand in the Indian market. Combined with
expansion in capacity at the existing plant, when the second
plant goes into operation in the first half of calendar 2012,
Honda Motorcycle & Scooter India is scheduled to have annual production capacity of approximately 2.8 million units.
Additionally, when the third plant goes into operation in the
18
first half of calendar 2013, it is scheduled to have annual
production capacity of approximately 4.0 million units.
Also, Honda Vietnam Co., Ltd., Honda’s consolidated
subsidiary in Vietnam, announced it would expand the capacity of its second plant to meet the favorable increase in
demand. By the latter half of calendar 2011, this expansion
in facilities is scheduled to bring total annual capacity to
approximately 2.0 million units.
In Indonesia, P.T. Astra Honda Motor, which is an af-
filiate accounted for under the equity method, made the
decision to build a new plant to respond to continued robust growth in demand. When this new facility goes into
operation in the latter half of calendar 2011, the annual
production capacity of Astra Honda Motor is scheduled to
increase to approximately 4.0 million units.
Honda resolved at a meeting of the Board of Directors on
December 16, 2010 to sell to its joint venture partners all the
shares held by Honda in Hero Honda Motors Limited, an affiliate of Honda accounted for under the equity method, for
the dissolution of the joint venture. Accordingly, Honda executed the share transfer agreement and new license agree-
Wave 110i (Thailand)
ments on January 22, 2011. In accordance with the terms
of the share transfer agreement, Honda sold all the shares it
held in the joint venture partners as of March 22, 2011.
* 1: B
ased on Honda research, the motorcycle registration market includes eight
countries: Thailand, Indonesia, Malaysia, the Philippines, Vietnam, India, Pakistan
and China.
* 2: T his total includes sales of completed products of the Company and its consolidated
subsidiaries and unit sales of parts for use in local production to Honda’s affiliates
accounted for under the equity method.
Other Regions
In Brazil, the principal market within Other Regions, total
CG150FAN (Brazil)
demand in calendar 2010 increased approximately 12%, to
about 1.8 million* units. This was due to improved consumer confidence accompanying increases in the employment
rate and personal income as well as increased availability of
credit starting from mid-year onward.
In Other Regions (including South America, the Middle
East, Africa, Oceania and other areas), unit sales rose 17.9%
over the previous fiscal year, to 1.69 million units. This was
the result of increased sales of mainstay models, including
the CG150FAN and NXR150 motorcycles in Brazil.
* S ource: ABRACICLO (the Brazilian association of motorcycle, moped and bicycle
manufacturers)
19
4,000
6,000
2,000
12,000
10,000
300
7,500
3,000
4,000
1,500
8,000
200
2,000
2,000
1,000
4,000
1,000
0
500
0
07
08
09
10
11
Thousands
4,000
Japan
Yen (billions)
2,000
3,000
North America
Europe
1,500
2,000
Asia
1,000
1,000
0
Other Regions
07
08
North America
07
08
09
09
10
Europe
10
Total
11
11
Asia
Yen (millions)
10,000
6,000
Japan
7,500
4,000
North America
Europe
5,000
2,000
Asia
Japan
08
08
09
10
09
09
2,500
0
11
10
10
0
11
11
07
08
07
07
08
08
09
582
1,297
1,458
249
198
950
1,008
6.1
11
250
266
6.4
10
09
09
10
10
Non-current
% change
646
4,000
150
5,000
0
0
2011
2010
6,000
300
7,500
2,000
0
2,500
07
08
09
10
11
07
08
09
10
11
North America
Europe
Other Regions
Total
Asia
Other Regions
Yen (billions)
600
Yen (billions)
08
09
07
08
09
07
08
09
3,392
11
11
3,512
07
08
09
08
09
6,000
Yen (billions)
500
4,500
(9.9)% 400
12.4
(20.5)
3,000
300
1,500
200
0
100
3.5 %
0
Current
Yen (billions)
6,000
2010
2011
¥1,383,855
¥1,310,734
3,013,432
3,252,852
575,326
441,696
1,041,258
1,221,704
17.3
10
11
540,977
10 11
567,112
4.8
¥6,554,848
¥6,794,098
450
400
300
（千台）
300
12,000
200
150
100
8,000
0
0
07
Yen (billions)
600
Thousands
Yen (billions)
8,000
450
10,000
Yen (billions)
Yen (billions)
600
500
8,000
Yen (billions)
0
07
07
Other Regions
Net Thousands
Sales
2,500
0
08
Yen (billions)
Thousands
Japan
07
0
0
Unit Sales
500
0
5,000
100
07
07
08
08
09
09
4,000
Non-current
0
Yen (billions)07
08
09
Current
10
11
% change
4,500
(5.3)%
7.9
(23.2)
（十億円）
3,000
2,000
1,500
1,500
0
1,000
3.6 %
07
500
0
07
08
09
07
08
09
07
08
09
6,000
Percentage
500
450
4,500
400
300
（千台）
3,000
4,000
（十億円）
1,500
3,000
7,500
10,000
300
150
200
0
100
0
07
08
09
10
11
07
08
09
10
11
Non-current
er Regions
Current
76.0%
0
2,000
07
08
09
10
11
1,000
0
5,000
2,500
07
08
09
10
11
0
Yen (billions)
6,000
4,500
3,000
（千台）
（十億円）
8,000
500
400
6,000
300
1,500
4,000
200
0
07
08
09
10
11
2,000
0
20
100
07
08
09
10
11
0
（十億円）
（十億円）
600
6,000
450
4,500
Automobile Business
Honda’s unit sales of automobiles totaled 3,512 thousand units, an increase of 3.5% compared with
the previous fiscal year, due mainly to an increase in unit sales in North America and Asia, which was
partially offset by decreases in unit sales in Japan and Europe.
Revenue from external customers increased ¥239.2 billion, or 3.6%, to ¥6,794.0 billion from
the previous fiscal year, due mainly to increased unit sales, which was partially offset by the unfavorable foreign currency translation effects. Honda estimates that by applying Japanese yen exchange
rates of the previous fiscal year to the current fiscal year, net sales for the year would have increased
by approximately ¥545.7 billion, or 8.3%, compared to the increase as reported of ¥239.2 billion,
which includes unfavorable foreign currency translation effects. Revenue including intersegment
sales increased ¥247.4 billion, or 3.8%, to ¥6,802.3 billion from the previous fiscal year.
Operating income increased ¥137.7 billion, or 108.7%, to ¥264.5 billion from the previous
fiscal year, due mainly to an increase in income attributable to the increased net sales and continuing cost reductions, which were partially offset by increased selling, general and administrative
expenses and R&D expenses, unfavorable foreign currency effects and the impact of the Great East
Japan Earthquake (the “Earthquake”), which occurred on March 11, 2011.
Civic si (North America)
21
Japan
Total industry automobile sales in Japan*1 for fiscal 2011
decreased about 6%, to approximately 4.6 million units. In
the first half of the fiscal year, automobile sales held firm
because of the positive effects of government policies that
provided tax breaks and subsidies for purchasing eco-cars
and other factors. However, these subsidies came to an end
in the latter half of the fiscal year, resulting in a reactionary
decline in sales.
Honda’s unit sales in Japan decreased 9.9% from the
previous fiscal year, to 582 thousand units. Although sales
of the new model the Freed Spike, the CR-Z, the StepWGN,
which earned the top spot in accumulated sales through
2010 in the minivan category, and the Fit Hybrid were quite
favorable, overall sales experienced a reactionary decline after the termination of subsidies for eco-cars.
Among production activities, unit output for the domes-
tic market decreased following the termination of the ecoFit Hybrid (Japan)
car subsidies, but exports increased, with particularly strong
unit sales of CR-V models in North America. During the fiscal year under review, Honda’s domestic unit production of
automobiles was approximately 912 thousand units, about
the same level as in the previous fiscal year.
Honda suspended production following the Earthquake,
and, as a result, unit output was about 39 thousand units
lower than the original plan.
* 1: S ource: JAMA (as measured by the number of regular vehicle registrations (661cc or
higher) and minivehicles (660cc or lower))
* 2: C
ertain sales of automobiles that are financed with residual value type auto loans by
our domestic finance subsidiaries are accounted for as operating leases in conformity
with U.S. generally accepted accounting principles. As a result, they are not included
in total sales of our automobile segment or in our measure of unit sales.
Freed Spike (Japan)
22
Europe
During calendar 2010, total demand in Europe*1 decreased
CR-Z (Europe)
approximately 5% from the previous year, to approximately
13.79 million units. During the first half of the year, the market was supported by government subsidies in some countries, but in the second half consumer confidence declined
significantly due to the impact of stringent credit policies in
the principal countries of the region, and marked declines
were reported, especially in markets targeting individual
retail customers. On the other hand, in Russia*2, sales increased about 30%, to approximately 1.91 million units.
Honda’s consolidated unit sales in Europe decreased
20.5%, to 198 thousand units due to the effects of the
slump in the retail sales market, increased competition and
other factors.
In the area of production, unit output at Honda’s U.K.
plant rose 40.0% over the prior fiscal year, to approximately
139 thousand units, in part because of temporarily suspended production in the prior year.
* 1: S ource: ACEA (Association des Constructeurs Europeens d’Automobiles (the
European Automobile Manufacturers’ Association) (New passenger car registrations
cover EU27 and EFTA3.))
* 2: Source: AEB (The Association of European Businesses)
North America
Acura TL (North America)
In calendar 2010, total industry sales in the United States*
increased about 11% over the previous year, to approximately 11.77 million units. Sales of light trucks were especially
strong and rose approximately 18% over the level in 2009.
Honda’s consolidated automobile unit sales in North
America rose 12.4%, to 1,458 thousand units. Sales of the
CR-V, Pilot, MDX, the all-new Odyssey that was launched
in September 2010 and light trucks were favorable. In addition, sales of the Accord Crosstour and the launching of
new models of the TSX Sports Wagon and TL contributed
to growth.
In production activities, Honda manufactured approxi-
mately 1,292 thousand units in North America, 12.1% higher
than in the previous fiscal year. This increase was led by higher
production of the popular CR-V and Pilot models and the allnew Odyssey.
* Source: Ward’s Auto
23
Odyssey (North America)
Asia
In Asia, total demand continued to increase due to robust
economic growth and the positive effects of new car model
launches. Unit sales in China rose about 32% over the previous
year to approximately 18.06 million units.*1 In Asia, excluding
China, units sales climbed 27%, to about 7.48 million units.*2
Honda’s unit sales in Asia outside Japan rose 6.1%, to
1,008 thousand units, supported by solid economic expansion
in the region. Sales of the CR-V in Thailand, Indonesia, Malaysia
and elsewhere in Asia, as well as sales of the City in Thailand,
continued to be favorable. Together with sales growth in China,
Honda’s overall sales in Asia expanded.
In the production area, in response to continued expansion
in demand in China’s automobile market, Guangqi Honda Automobile Co., Ltd., an affiliate accounted for under the equity
method, is scheduled to increase its annual production capacity
from the current 360 thousand to 480 thousand units by the
latter half of calendar 2011. In addition, Dongfeng Honda Automobile Co., Ltd., an affiliate accounted for under the equity
method, started construction of a second plant in response to
continued expansion in demand in China’s automobile market.
Within the latter half of calendar 2012, Dongfeng Honda‘s
Li Nian S1 (China)
total annual production capacity is scheduled to increase to 340
thousand units.
* 1: S ource: China Association of Automobile Manufacturers
* 2: T he total is based on Honda research and includes the following 10 countries:
Thailand, Indonesia, Malaysia, the Philippines, Vietnam, Singapore, Taiwan, South
Korea, India and Pakistan.
24
City (Thailand)
Other Regions
Total industry demand for automobiles in Brazil, one of the principal markets among the Other Regions, increased about 11%,
to approximately 3.33 million*1 units in calendar 2010. This
was the result of rising consumer confidence due to surges in
employment and income as well as an improvement in the purchasing environment for new automobiles due to lower interest
rates and increased availability of credit in Brazil. In Australia,
total demand for automobiles expanded about 11% over the
previous year, to approximately 1.04 million units, supported by
continued favorable economic conditions.*2
Honda’s total sales in Other regions expanded 6.4%, to
266 thousand units, due primarily to increased sales of the
City in Brazil, despite intensified competition in Australia and
decreased sales in the Middle East.
Fit (South America)
* 1: S ource: ANFAVEA (Associação Nacional dos Fabricantes de Veiculos Automotores
(the Brazilian automobile association, includes passenger cars and light commercial
vehicles))
* 2: S ource: FCAI (Federal Chamber of Automotive Industries (the Australian automobile
association))
25
4,000
6,000
10,000
4,000
Yen (billions)
2,000
3,000
3,000
4,000
7,500
1,500
2,000
2,000
2,000
5,000
1,000
1,000
1,000
0
2,500
500
0
0
0
0
Unit Sales
07
08
09
10
11
07
08
09
10
11
Thousands
8,000
Yen (billions)
Japan
10,000
6,000
North America
Asia
5,000
2,000
0
Japan
Other Regions
08
North America
07
08
09
09
10
10
Total
11
Europe
11
Asia
Other Regions
Yen (millions)
500
450
Japan
400
300
North America
300
Europe
150
200
er Regions
Japan
07
07
08
08
08
09
10
11
07
08
09
10
11
North America
Non-current
Europe
Current
150
12,000
200
2,000
0
100
8,000
0
0
2,500
0
11
10
10
0
11
11
Asia
07
08
07
07
09
08
08
09
09
Non-current
08
09
（千台）
300
3,000
4,000
Total
1,000
Other Regions
2011
2010
0
（千台）
3.3%
1,500
07
08
09
10
07
07
08
08
09
09
Non-current
07
08
09
1,174
10.1
1,069
1,325
23.9
11
469
537
14.5
0
100
1,500
07
08
09
16.1
0
%1,000
07
08
09
5,509
4,744
11
11
3,000
300
（十億円）
1,500
2,000
200
Current
10
500
0
Yen (billions)
11
2011
% change
¥ 98,367
¥ 96,515
65,890
67,917
3.1
54,366
55,264
1.7
36,754
49,369
34.3
23,614
5.9
¥277,682
¥292,679
Current
11
08
09
4,500
(1.9)%
1022,305
11
10 11
10
07
6,000
（十億円）
3,000
10,000
1,500
7,500
0
5,000
07
08
09
5.4 %2,500
0
07
08
09
07
08
09
07
08
09
（十億円）
400
300
200
100
07
08
09
10
11
Thin-film solar cells for
household use
0
（十億円）
6,000
BF60
450
4,500
300
3,000
150
1,500
0
その他の地域
20.5 % 400
500
600
アジア
500
4,500
1,066
10
10
10
% change
6,000
Yen (billions)
14.7
HF120 compact turbofan
engine (aircraft engine)
（十億円）
欧州
09
4,000
0
北米
08
2,085
6,000
ENEPO EU9iGB
Pianta FV200
07
1,818
2,000
11
09
388
8,000
3,000
08
322
2010
0
0
2,000
07
Yen (billions)
450
4,500
Other Regions
4,500
26
10
6,000
400
300
Yen (billions)
日本
09
09
150
1,500
3,000
Asia
07
09
600
Thousands
Yen (billions)
8,000
450
500
Percentage
6,000
0
08
Yen0(billions)
Yen (billions)07
600
6,000
600
Yen (billions)
0
07
4,000
Yen (billions)
Net Sales
0
100
200
5,000
100
300
（千台）
4,000
Europe
7,500
4,000
07
300
7,500
Yen (billions)
Thousands
2,500
0
10,000
07
08
長期
09
10
短期
11
0
Power Product and Other Businesses
Honda’s unit sales of power products totaled 5,509 thousand units, an increase of 16.1% compared with the previous fiscal year, due to increased unit sales in all the regions.
Revenue from external customers increased ¥14.9 billion, or 5.4%, to ¥292.6 billion from the previous fiscal
year, due mainly to the increased unit sales of power products, which were partially offset by unfavorable foreign currency translation effects. Honda estimates that by applying Japanese yen exchange rates of the previous fiscal year to
the current fiscal year, net sales for the year would have increased by approximately ¥27.5 billion, or 9.9%, compared
to the increase as reported of ¥14.9 billion, which includes negative foreign currency translation effects. Revenue
including intersegment sales increased ¥13.6 billion, or 4.5%, to ¥318.2 billion from the previous fiscal year.
The operating loss including that of other business was ¥5.5 billion, an improvement of ¥11.1 billion from the
previous fiscal year, due mainly to an increase in income attributable to increased net sales of power products, which
was partially offset by increased selling, general and administrative expenses and unfavorable foreign currency effects.
Japan
Other Regions
In the power products business during the fiscal year under
Unit sales in Other Regions increased 14.5% over the previous
review, Honda’s sales increased 20.5%, to 388 thousand units.
fiscal year, to 537 thousand units. Factors accounting for this
This was due to an increase in sales of general-purpose engines
increase were favorable sales of general-purpose engines for
for OEM use to manufacturers of construction machinery in the
OEM use for installation in construction machinery and pumps
United States and in the Middle East and Africa as well as an in-
to the Middle East and South America, due mainly to eco-
crease in Japan in sales of electric power generators, tillers, snow
nomic recovery.
blowers and other types of machinery. In May 2010, Honda newly launched the ENEPO EU9iGB, a gas-powered electric power
Solar Cell Business
generation unit that runs on household butane gas canisters.
In October 2007, Honda’s consolidated subsidiary Honda Soltec
North America
Co., Ltd. began production of thin-film solar cell modules for
household use, which have been sold through homebuilders,
Honda’s consolidated unit sales in North America increased
construction companies and other channels in Japan. In Octo-
14.7%, to 2,085 thousand units. This increase was due to higher
ber 2008, Honda Soltec began serving customers in the public
sales of general-purpose engines for OEM use to manufacturers
sector and industrial markets, including the Hanshin Koshien
of lawn mowers, construction machinery, pressure washers and
Stadium, logistics centers/warehouses and hospitals. In 2011,
other machinery as well as increased sales of generators accom-
new thin-film solar cells will go on sale that are even more com-
panying the recovery in the economies of the region.
pact and feature more-efficient conversion of solar energy to
Europe
electric power.
In Europe, consolidated unit sales increased 10.1% over the
Aviation Business
previous fiscal year, to 1,174 thousand units, because of strong
In April 2011, a Honda aero business subsidiary, Honda Aircraft
demand for general-purpose engines for OEM use in construc-
Company, Inc., completed construction of its plant for the fab-
tion machinery and generators as well as sales of snow blowers,
rication of aircraft fuselages at the Piedmont Triad International
despite intensified competition in the lawn mower market.
Airport in Greensboro, North Carolina, in the United States. In De-
Asia
cember 2010, the company successfully completed the first test
flight of the production model of HondaJet.
In Asia outside of Japan, consolidated unit sales increased
23.9%, to 1,325 thousand units. This increase was due to
aimed at obtaining type certifications from the Federal Aviation
Next, the aircraft will undergo flight, structural and other tests
favorable sales of engines for agricultural equipment and
Administration in the United States and the European Aviation
pumps, generators and brush cutters supported by economic
Safety Agency. Preparations are under way to begin production
expansion in the region, and continuation of government subsi-
in the first half of 2012, and the first HondaJets are slated to be
dies for farm households. Weather conditions also contributed
delivered to customers in the latter half of 2012.
to increased sales.
In the area of aircraft engine business, Honda Aero, Inc., a
wholly owned subsidiary of Honda that is responsible for aero
engine business, is making progress with certification tests with
the goal to obtain certification for its HF120 turbofan jet engines
before the end of the current fiscal year ending March 31, 2012.
27
4,000
8,000
Yen (billions)
3,000
10,000
6,000
10,000
6,000
500
200
300
（千台）
5,000
2,000
7,500
4,000
2,000
12,000
200
2,5000
1,000
5,000
2,000
Review
of Operations
0
2,500
0
0
Net Sales
08
09
10
11
100
2,000
07
08
09
0
1,500
11
07 08 09 10 11
07 08 09 10 11
Japan
North America
Asia
Other Regions
Total
07 08 09 10 11
07 08 09 10 11
North America
07
08
Europe
09
10
Yen (billions) Non-current
11
Asia
Other Regions
0
0
2,000
Finance
600 Receivables and Property on Operating Leases
6,000
Yen (billions)
450
6,000
Yen (millions)
09
Property on
Total
150
3,000
07
08
09
10
¥ 26,349
553,169
503,960
(8.9)
10,428
9,263
(11.2)
(13.7)
07 08 09 ¥606,352
10 11
07 08 09 10 11
¥561,896
Non-current
07
08
09
1,500
6,000
07
08
¥3,461,493
¥3,479,981
1,308,147
1,357,632
¥4,769,640
¥4,837,613
11
09
3,000
（十億円）
1,500
10,000
0
7,500
34.7
07
08
09
(7.3)%5,000
0
2011
10
08
2,500
2010
09
07
7.0 %
11
10
0
4,500
Current
09
（千台）
3,000
Operating
8,000Leases
% change
¥ 24,635
3,728
09
4,500
0
4,000
11
2011
18,596
08
Finance Receivables
300
4,500
10 11
2010
4,318
0
Yen (billions)
Current
08
1013,802
11
07
1,000
08
1,000
6,000
400
300
4,500
300
（千台）
150
3,000
4,000
200
1000
1,500
3,000
07
500
Yen (billions)
600
Yen 0
(billions)
Yen (billions)07
500
450
6,000
Yen (millions)
300
2,000
150
200
0
1,500
10
Yen (billions)
Europe
0
（十億円）
4,000
07
400
4,000
300
Japan
er Regions
100
8,000
0
0
07 08 09 10 11
07 08 09 10 11
Thousands
Yen (billions)
8,000
600
Yen (billions)
6,000
500
450
0
0
100
300
7,500
400
4,000
07
08
09
07
08
09
07
08
09
% change
0.5%
3.8
（十億円）
500
1.4%
400
300
200
0
07
08
Finance
Receivables
r Regions
09
10
2,000
11
Property on
Operating Leases
0
100
07
08
09
10
11
0
Percentage of Net Sales by Business
6.3%
（十億円）
（十億円）
600
6,000
450
4,500
300
3,000
150
1,500
0
日本
28
北米
欧州
アジア
その他の地域
07
08
長期
09
10
短期
11
0
To support the sale of its products, Honda provides retail lending
Operating income decreased ¥8.6 billion, or 4.4%, to ¥186.2
and leasing to customers and wholesale financing to dealers
billion from the previous fiscal year, due mainly to unfavorable
through our finance subsidiaries in Japan, the United States,
foreign currency effects, which was partially offset by a decrease
Canada, the United Kingdom, Germany, Brazil, Thailand and
in provisions for credit losses and losses on lease residual values.
other countries.
Our finance subsidiaries in North America have historically
The total amount of finance subsidiaries–receivables and
accounted for all leases as direct financing leases. However,
property on operating leases of finance subsidiaries increased
starting in the fiscal year ended March 31, 2007, some of the
by ¥67.9 billion, or 1.4%, to ¥4,837.6 billion from the previous
leases that do not qualify for direct financing leases account-
fiscal year, due mainly to an increase of finance subsidiaries–
ing treatment are accounted for as operating leases. Generally,
receivables attributable to the adoption of new accounting
direct financing lease revenues and interest income consist of
standards, which was partially offset by the negative foreign
the recognition of finance lease revenue at the inception of the
currency translation effects. Honda estimates that by applying
lease arrangement and subsequent recognition of the interest
the Japanese yen exchange rates of the previous fiscal year to
income component of total lease payments using the effective
the current fiscal year, the total amount of finance subsidiaries–
interest method. In comparison, operating lease revenues in-
receivables and property on operating leases of finance sub-
clude the recognition of the gross lease payment amounts on
sidiaries as of the end of the year would have increased by ap-
a straight-line basis over the term of the lease arrangement,
proximately ¥595.9 billion, or 12.5%, compared to the increase
and operating lease vehicles are depreciated to their estimated
as reported of ¥67.9 billion, which includes the negative foreign
residual value on a straight-line basis over the term of the lease.
currency translation effects.
It is not anticipated that the differences in accounting for oper-
Revenue from external customers in the financial services
ating leases and direct financing leases will have a material net
business decreased ¥44.4 billion, or 7.3%, to ¥561.8 billion
impact on Honda’s results of operations overall, however, oper-
from the previous fiscal year. Honda estimates that by apply-
ating lease revenues and the associated depreciation of leased
ing the Japanese yen exchange rates of the previous fiscal year
assets do result in differing presentations and timings compared
to the current fiscal year, revenue for the year would have de-
to those of direct financing leases.
creased by approximately ¥1.2 billion, or 0.2%, compared to
the decrease as reported of ¥44.4 billion, which includes the
ties (QSPEs) that were not consolidated as of March 31, 2010.
unfavorable foreign currency translation effects. Revenue in-
As a result, previously derecognized finance subsidiaries–receiv-
cluding intersegment sales decreased ¥45.3 billion, or 7.3%, to
ables held by former QSPEs increased in the Company’s consoli-
¥573.4 billion from the previous fiscal year.
dated balance sheet as of April 1, 2010. In addition, Honda is
Honda consolidated former qualifying special-purpose enti-
Operating costs and expenses decreased ¥36.7 billion, or
not recognizing certain gains or losses related to securitization
8.7%, to ¥387.1 billion from the previous fiscal year. Cost of
transactions, such as gains or losses attributable to the change
sales decreased ¥11.6 billion, or 3.6%, to ¥309.8 billion from
in the fair value of retained interests since the year ended March
the previous fiscal year, due mainly to a decrease in costs related
31, 2011.
to lease residual values. Selling, general and administrative expenses decreased ¥25.0 billion, or 24.5%, to ¥77.3 billion from
the previous fiscal year, due mainly to a decrease in provisions
for credit losses.
29
Medium- and Long-Term Management
Strategy and Management Target:
Preparing for the Next Leap Forward
Honda aims to achieve global growth by further encouraging and strengthening innovation and
creativity and creating quality products that please the customers and exceed their expectations.
1.
Research and Development
In connection with its efforts to develop the most effective safety and environmental
technologies, Honda will continue to be innovative in advanced technology and products.
Honda aims to create and introduce new value-added products to quickly respond to specific
needs in various markets around the world. Honda will also continue its efforts to conduct
research on experimental technologies for the future.
2.
Production Efficiency
Honda will establish and enhance efficient and flexible production systems at its global
production bases and supply high quality products, with the aim of meeting the needs of its
customers in each region.
3.
Sales Efficiency
Honda will remain proactive in its efforts to expand product lines through the innovative use
of IT and will show its continued commitment to different customers throughout the world by
upgrading its sales and service structure.
4.
Product Quality
In response to increasing customer demand, Honda will upgrade its quality control by enhancing
the functions of and coordination among the development, purchasing, production, sales and
service departments.
5.
Safety Technologies
Honda is working to develop safety technologies that enhance accident prediction and
prevention, technologies to help reduce the risk of injuries to passengers and pedestrians from
car accidents, and technologies that enhance compatibility between large and small vehicles,
as well as expand its lineup of products incorporating such technologies. Honda will reinforce
and continue to advance its contribution to traffic safety in motorized societies in Japan and
abroad. Honda also intends to remain active in a variety of traffic safety programs, including
advanced driving and motorcycling training programs provided by local dealerships.
6.
The Environment
Honda will step up its efforts to create better, cleaner and more fuel-efficient engine technologies
and to further improve recyclables throughout its product lines. Honda will also work to advance fuel cell technology and steadily promote its new solar cell business. In addition, Honda
will further its efforts to minimize its environmental impact. To this end, Honda sets global
targets to reduce the environmental burden as measured by the Life Cycle Assessment*, in all
areas of business, spanning production, logistics and sales.
*Life Cycle Assessment:
A comprehensive system for quantifying the impact Honda’s products have on the environment at the different stages in
their life cycles, from material procurement and energy consumption to waste disposal.
30
Therefore, in order to improve the competitiveness of its products, Honda will endeavor to
enhance its R&D, production and sales capabilities. Furthermore, Honda will continue to enhance
its social reputation in the community through Companywide activities. Honda recognizes that
further enhancing the following specific areas is essential to its success:
7.
Continuing to
Enhance Honda’s
Social Reputation
and Communication
with the Community
In addition to continuing to provide products incorporating Honda’s advanced safety and
environmental technologies, Honda will continue striving to enhance its social reputation by,
among other things, strengthening its corporate governance, compliance, and risk management as well as participating in community activities and making philanthropic contributions.
To achieve these targets, Honda will make all possible efforts in pursuit of its vision for the
Company as it moves towards 2020: “To provide good products in a timely fashion, at affordable prices, and with low CO2 emissions”.
8.
Immediate Issues for
Attention
The Company temporarily suspended production at its sites located in Japan due to the effects
of the Great East Japan Earthquake that occurred on March 11, 2011, which included a shortage of parts supplies. In addition, some of Honda’s business sites, such as Honda’s R&D subsidiaries located in Tochigi Prefecture, were heavily damaged. By April 11, 2011, the Company had
resumed production activities at all of its production sites; however, production of completed
automobiles at plants within Japan and production of components and parts for Honda’s
overseas sites had been operating at approximately half the normal rate. Production in Japan
had been nearly normalized in late June. Production at Honda’s automobile plants overseas has
been reduced as well and is expected to be nearly normalized around August to September.
In such circumstances, Honda will endeavor to normalize the supply chain continuously and
aims to return to normal production as soon as possible. Honda will work on sales pickup by
the recovery of production and bring about a recovery of its operations as soon as possible.
Taking into account this experience, Honda will strive to minimize risks that have surfaced due
to the earthquake disaster, including risks related to supply chain disruption.
In response to the occurrence of inappropriate activities at Honda Trading Corporation,
which is a subsidiary of the Company, and based on the investigation report and suggestion
for preventive countermeasures that was submitted to the Company’s Board of Directors by
the investigation committee established with external experts, the Company will build a system
to make appropriate business judgments in accordance with the applicable laws and regulations and will further enhance corporate governance, increasing compliance awareness and
strengthening the risk management systems, including through the reexamination of personnel management systems.
Through these Companywide activities, Honda will strive to be a company that its shareholders,
investors, customers and society want to exist.
31
Risk Factors
Risks Relating to the Great East Japan Earthquake and its Aftermath
The Great East Japan Earthquake occurred on March 11, 2011 and the Fukushima’s nuclear
power plant disaster have caused and will continue to cause significant damage to the Japanese economy. After March 11, 2011, Honda temporarily suspended or reduced production at
Honda’s automobile plants in and outside of Japan. However, the production in Japan has in
general returned to normal levels since late June, and production outside of Japan is expected
to be generally normalized from around August to September. In addition, although Honda’s
business sites, such as Honda’s R&D subsidiaries located in Tochigi Prefecture, were heavily damaged, currently we expect them to be restored. Although prospects for restoration of business
activities have become clear, as mentioned above, Honda’s production activities may be affected
depending on the status of the future supply of certain parts for which supply is currently
restricted, and on the status of infrastructure, such as the supply of electricity and logistics
services. Furthermore, sales in domestic and international markets may decline. Depending on
the magnitude of these effects, Honda’s results of operations may be adversely affected.
Risks Relating to Honda’s Industry
1.
Honda may be
adversely affected
by market
conditions
Honda conducts its operations in Japan and throughout the world, including North America,
Europe and Asia. A sustained loss of consumer confidence in these markets, which may be
caused by continued economic slowdown, recession, changes in consumer preferences, rising
fuel prices, financial crisis or other factors could trigger a decline in demand for automobiles,
motorcycles and power products that may adversely affect Honda’s results of operations.
2.
Prices for
automobiles,
motorcycles and
power products can
be volatile
Prices for automobiles, motorcycles and power products in certain markets may experience
sharp changes over short periods of time. This volatility is caused by many factors, including
fierce competition, which is increasing, short-term fluctuations in demand from instability in
underlying economic conditions, changes in tariffs, import regulations and other taxes, shortages of certain materials and components, high material prices and sales incentives by Honda
or other manufacturers or dealers. There can be no assurance that such price volatility will
not continue or intensify or that price volatility will not occur in markets that to date have not
experienced such volatility.
Overcapacity within the industry has increased and will likely continue to increase if the
economic downturn continues in Honda’s major markets or worldwide, leading, potentially, to
further increased price pressure. Price volatility in any or all of Honda’s markets could adversely
affect Honda’s results of operations in a particular period.
Risks Relating to Honda’s Business Generally
— Currency and Interest Rate Risks —
1.
32
Honda’s operations
are subject
to currency
fluctuations
Honda has manufacturing operations throughout the world, including Japan, and exports
products and components to various countries.
Honda purchases materials and components and sells its products and components in
foreign currencies. Therefore, currency fluctuations may affect Honda’s pricing of products sold
and materials purchased. Accordingly, currency fluctuations have an effect on Honda’s results
of operations and financial condition, as well as Honda’s competitiveness, which will over time
affect its results.
Since Honda exports many products and components, particularly from Japan, and gener-
ates a substantial portion of its revenues in currencies other than the Japanese yen, Honda’s
results of operations would be adversely affected by an appreciation of the Japanese yen
against other currencies, in particular the U.S. dollar.
2.
Honda’s hedging
of currency and
interest rate risk
exposes Honda to
other risks
Although it is impossible to hedge against all currency or interest rate risk, Honda uses derivative
financial instruments in order to reduce the substantial effects of currency fluctuations and interest rate exposure on our cash flow and financial condition. These instruments include foreign
currency forward contracts, currency swap agreements and currency option contracts, as well
as interest rate swap agreements. Honda has entered into, and expects to continue to enter
into, such hedging arrangements. As with all hedging instruments, there are risks associated
with the use of such instruments. While limiting to some degree our risk fluctuations in currency
exchange and interest rates by utilizing such hedging instruments, Honda potentially forgoes
benefits that might result from other fluctuations in currency exchange and interest rates. Honda is also exposed to the risk that its counterparties to hedging contracts will default on their
obligations. Honda manages exposure to counterparty credit risk by limiting the counterparties
to major international banks and financial institutions meeting established credit guidelines.
However, any default by such counterparties might have an adverse effect on Honda.
— Legal and Regulatory Risks —
1.
2.
The automobile,
motorcycle and power
product industries are
subject to extensive
environmental and other
governmental regulations,
including with respect to
global climate changes
Regulations regarding vehicle emission levels, fuel economy, noise and safety and noxious
Honda is reliant on
the protection and
preservation of its
intellectual property
Honda owns or otherwise has rights in a number of patents and trademarks relating to the
substances, as well as levels of pollutants from production plants, are extensive within the automobile, motorcycle and power product industries. These regulations are subject to change,
and are often made more restrictive, particularly in recent years, due to an increasing concern
with respect to possible global climate changes. The costs to comply with these regulations can
be significant to Honda’s operations.
products it manufactures, which have been obtained over a period of years. These patents
and trademarks have been of value in the growth of Honda’s business and may continue to be
of value in the future. Honda does not regard any of its businesses as being dependent upon
any single patent or related group of patents. However, an inability to protect this intellectual
property generally, or the illegal infringement of some or a large group of Honda’s intellectual
property rights, would have an adverse effect on Honda’s operations.
3.
Honda is
subject to legal
proceedings
Honda is and could be subject to suits, investigations and proceedings under relevant laws
and regulations of various jurisdictions. A negative outcome in any of the legal proceedings
pending against Honda could adversely affect Honda’s business, financial condition or results
of operations.
33
— Risks Relating to Honda‘s Operations —
1.
Honda’s financial
services business
conducts business
under highly
competitive conditions
in an industry with
inherent risks
Honda’s financial services business offers various financing plans to its customers designed to
increase the opportunity for sales of its products and to generate financing income. However,
customers can also obtain financing for the lease or purchase of Honda’s products through a
variety of other sources that compete with our financing services, including commercial banks
and finance and leasing companies. The financial services offered by us also involve credit risk
as well as risks relating to lease residual values, cost of capital and access to funding. Competition for customers and/or these risks may affect Honda’s results of operations in the future.
2.
Honda relies on
various suppliers
for the provision of
certain raw materials
and components
Honda purchases raw materials, and certain components and parts, from numerous external
suppliers, and relies on some key suppliers for some items and the raw materials it uses in the
manufacture of its products. Honda’s ability to continue to obtain these supplies in an efficient
and cost-effective manner is subject to a number of factors, some of which are not within
Honda’s control. These factors include the ability of its suppliers to provide a continued source
of supply and Honda’s ability to compete with other users in obtaining the supplies. Loss of a
key supplier in particular may affect our production and increase our costs.
3.
Honda conducts
its operations in
various regions
of the world
Honda conducts its businesses worldwide, and in several countries, Honda conducts businesses
through joint ventures with local entities, in part due to the legal and other requirements of
those countries. These businesses are subject to various regulations, including the legal and
other requirements of each country. If these regulations or the business conditions or policies of
these local entities change, it may have an adverse affect on Honda’s business, financial condition or results of operations.
4.
Honda may be adversely
affected by wars, use of
force by foreign countries,
terrorism, multinational
conflicts, political
uncertainty, natural
disasters, epidemics and
labor strikes
Honda conducts its businesses worldwide, and its operations may variously be subject to wars,
use of force by foreign countries, terrorism, multinational conflicts, political uncertainty, natural
disasters, epidemics, labor strikes and other events beyond our control which may delay or
disrupt Honda’s local operations in the affected regions, including the purchase of raw materials
and parts, the manufacture, sales and distribution of products and the provision of services.
Delays or disruptions in one region may in turn affect our global operations. If such delay or
disruption occurs and continues for a long period of time, Honda’s business, financial condition
or results of operations may be adversely affected.
5.
Honda may be
adversely affected
by inadvertent
disclosure of
confidential
information
Although Honda maintains internal controls through established procedures to keep confidential information including personal information of its customers and relating parties, such
information may be inadvertently disclosed. If this occurs, Honda may be subject to, and may be
adversely affected by, claims for damages from the customers or parties affected. Also, inadvertent disclosure of confidential business or technical information to third parties may result in a
loss of Honda’s competitiveness.
34
6.
Risks relating to
pension costs and
other postretirement
benefits
Honda has pension plans and provides other post-retirement benefits. The amounts of pension
benefits, lump-sum payments and other post-retirement benefits are primarily based on the
combination of years of service and compensation. The funding policy is to make periodic contributions as required by applicable regulations. Benefit obligations and pension costs are based
on assumptions of many factors, including the discount rate, the rate of salary increase and the
expected long-term rate of return on plan assets. Differences in actual expenses and costs or
changes in assumptions could affect Honda’s pension costs and benefit obligations, including
Honda’s cash requirements to fund such obligations, which could materially affect our financial
condition and results of operations.
7.
A holder of ADSs will
have fewer rights than a
shareholder has and such
holder will have to act
through the depositary to
exercise those rights
The rights of shareholders under Japanese law to take various actions, including exercising
voting rights inherent in their shares, receiving dividends and distributions, bringing derivative
actions, examining a company’s accounting books and records, and exercising appraisal rights,
are available only to holders 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 exercise
votes regarding the Shares underlying the ADSs as instructed by the holders and will pay to the
holders the dividends and distributions collected from the Company. However, in the capacity as
an ADS holder, such holder will not be able to bring a derivative action, examine our accounting
books or records or exercise appraisal rights through the depositary.
8.
Rights of shareholders
under Japanese law may
be more limited than
under the laws of other
jurisdictions
The Company’s Articles of Incorporation, Regulations of the Board of Directors, Regulations
of the Board of Corporate Auditors and the Company Law of Japan (the “Company Law”)
govern corporate affairs of the Company. Legal principles relating to such matters as the validity
of corporate procedures, directors’ and officers’ fiduciary duties, and shareholders’ rights may
be different from those that would apply if the Company were a U.S. company. Shareholders’
rights under Japanese law may not be as extensive as shareholders’ rights under the laws of the
United States. An ADS holder may have more difficulty in asserting his/her rights as a shareholder than such ADS holder would as a shareholder of a U.S. corporation. In addition, Japanese
courts may not be willing to enforce liabilities against the Company in actions brought in Japan
that are based upon the securities laws of the United States or any U.S. state.
9.
Because of daily price
range limitations under
Japanese stock exchange
rules, a holder of ADSs
may not be able to sell
his/her shares of the
Company’s Common
Stock at a particular price
on any particular trading
day, or at all
Stock prices on Japanese stock exchanges are determined on a real-time basis by the equilibrium
between bids and offers. These exchanges are order-driven markets without specialists or market makers to guide price formation. To prevent excessive volatility, these exchanges set daily
upward and downward price fluctuation limits for each stock, based on the previous day’s
closing price. Although transactions may continue at the upward or downward limit price if the
limit price is reached on a particular trading day, no transactions may take place outside these
limits. Consequently, an investor wishing to sell at a price above or below the relevant daily limit
may not be able to sell his or her shares at such price on a particular trading day, or at all.
35
10.
U.S. investors may have
difficulty in serving
process or enforcing a
judgment against the
Company or its directors,
executive officers or
corporate auditors
The Company is a limited liability, joint stock corporation incorporated under the laws of Japan.
Most of its directors, executive officers and corporate auditors reside in Japan. All or substantially
all of the Company’s assets and the assets of these persons are located in Japan and elsewhere
outside the United States. It may not be possible, therefore, for U.S. investors to effect service of
process within the United States upon the Company or these persons or to enforce against the
Company or these persons judgments obtained in U.S. Courts predicated upon the civil liability
provisions of the Federal securities laws of the United States. There is doubt as to the enforceability in Japan, in original actions or in actions for enforcement of judgment of U.S. courts, of
liabilities predicated solely upon the federal securities laws of the United States.
11.
The Company’s
shareholders of record
on a record date may not
receive the dividend they
anticipate
The customary dividend payout practice and relevant regulatory regime of publicly listed
companies in Japan may differ from that followed in foreign markets. The Company’s dividend
payout practice is no exception. While the Company may announce forecasts of year-end and
quarterly dividends prior to the record date, these forecasts are not legally binding. The actual payment of year-end dividends requires a resolution of the Company’s shareholders. If the
shareholders adopt such a resolution, the year-end dividend payment is made to shareholders as
of the applicable record date, which is currently specified as March 31 by the Company’s Articles
of Incorporation. However, such a resolution of the shareholders is usually made at an ordinary
general meeting of shareholders held in June. The payment of quarterly dividends requires
a resolution of the Company’s board of directors. If the board adopts such a resolution, the
dividend payment is made to shareholders as of the applicable record dates, which are currently
specified as June 30, September 30 and December 31 by the Articles of Incorporation. However,
the board usually does not adopt a resolution with respect to a quarterly dividend until after the
respective record dates.
Shareholders of record as of an applicable record date may sell shares after the record date in
anticipation of receiving a certain dividend payment based on the previously announced forecasts. However, since these forecasts are not legally binding and resolutions to pay dividends are
usually not adopted until after the record date, our shareholders of record on record dates for
year-end and quarterly dividends may not receive the dividend they anticipate.
Additional risks not currently known to Honda or that Honda now deems immaterial may also
harm Honda and affect your investment.
36
Corporate Governance
Companies listed on the New York Stock Exchange (the “NYSE”)
must comply with certain standards regarding corporate govern-
the corporate governance practices followed by U.S. listed com-
ance under Section 303A of the NYSE Listed Company Manual.
panies under Section 303A of the NYSE Listed Company Manual
and those followed by Honda.
However, listed companies that are foreign private issuers,
The following table shows the significant differences between
such as Honda, are permitted to follow home-country practice in
lieu of certain provisions of Section 303A.
Corporate Governance Practices Followed by
NYSE-Listed U.S. Companies
Corporate Governance Practices Followed by Honda
An NYSE-listed U.S. company must have a majority of directors
meeting the independence requirements under Section 303A of the
NYSE Listed Company Manual.
For Japanese companies which employ a corporate governance system based on a
board of corporate auditors (the “board of corporate auditors system”), including
Honda, Japan’s Company Law has no independence requirement with respect to
directors. The task of overseeing management and, together with the accounting
audit firm, accounting is assigned to the corporate auditors, who are separate
from the company’s management and meet certain independence requirements
under Japan’s Company Law. In the case of Japanese companies that employ
the board of corporate auditors system, including Honda, at least half of the
corporate auditors must be “outside” corporate auditors who must meet additional independence requirements under Japan’s Company Law. An outside corporate auditor is defined as a corporate auditor who has not served as a director,
accounting councilor, executive officer, manager, or any other employee of the
company or any of its subsidiaries. Currently, Honda has three outside corporate
auditors which constitute 60% of Honda’s five corporate auditors.
An NYSE-listed U.S. company must have an audit committee
composed entirely of independent directors, and the audit committee
must have at least three members.
Like a majority of Japanese companies, Honda employs the board of corporate
auditors system as described above. Under this system, the board of corporate
auditors is a legally separate and independent body from the board of directors. The main function of the board of corporate auditors is similar to that of
independent directors, including those who are members of the audit committee,
of a U.S. company: to monitor the performance of the directors, and review and
express an opinion on the method of auditing by the company’s accounting audit
firm and on such accounting audit firm’s audit reports, for the protection of the
company’s shareholders.
Japanese companies which employ the board of corporate auditors system,
including Honda, are required to have at least three corporate auditors. Currently,
Honda has five corporate auditors. Each corporate auditor has a four-year term. In
contrast, the term of each director of Honda is one year.
With respect to the requirements of Rule 10A-3 under the U.S. Securities
Exchange Act of 1934 relating to listed company audit committees, Honda relies
on an exemption under that rule which is available to foreign private issuers with
boards of corporate auditors meeting certain criteria.
An NYSE-listed U.S. company must have a nominating/corporate
governance committee composed entirely of independent directors.
Honda’s directors are elected at a meeting of shareholders. Its Board of Directors
does not have the power to fill vacancies thereon. Honda’s corporate auditors
are also elected at a meeting of shareholders. A proposal by Honda’s Board of
Directors to elect a corporate auditor must be approved by a resolution of its
Board of Corporate Auditors. The Board of Corporate Auditors is empowered
to request that Honda’s directors submit a proposal for election of a corporate
auditor to a meeting of shareholders. The corporate auditors have the right to
state their opinion concerning election of a corporate auditor at the meeting of
shareholders.
An NYSE-listed U.S. company must have a compensation committee
composed entirely of independent directors.
Maximum total amounts of compensation for Honda’s directors and corporate
auditors are proposed to, and voted on, by a meeting of shareholders. Once the
proposals for such maximum total amounts of compensation are approved at the
meeting of shareholders, each of the Board of Directors and Board of Corporate
Auditors determines the compensation amount for each member within the respective maximum total amounts.
An NYSE-listed U.S. company must generally obtain shareholder
approval with respect to any equity compensation plan.
Currently, Honda does not adopt stock option compensation plans. If Honda were
to adopt such a plan, Honda must obtain shareholder approval for stock options
only if the stock options are issued with specifically favorable conditions or price
concerning the issuance and exercise of the stock options.
37
Board of Directors, Corporate
Auditors and Operating Officers
Front row:
Back row:
38
Chairman and
Representative Director
President,
Chief Executive Officer and
Executive Vice President,
Executive Officer and
Koichi Kondo
Takanobu Ito
Akio Hamada
Senior Managing
Officer and Director
Senior
Managing Officer
Senior Managing
Senior Managing
Fumihiko Ike
Tetsuo Iwamura
Tatsuhiro Oyama
Tomohiko Kawanabe
Directors
Chairman and Representative Director
Koichi Kondo
Compliance Officer
President,
Chief Executive Officer and
Takanobu Ito
Chief Operating Officer for Automobile Operations
Executive Vice President,
Executive Officer and
Akio Hamada
Chief Operating Officer for Production Operations
Senior Managing Officer and Director
Tatsuhiro Oyama
Chief Operating Officer for Motorcycle Operations
Chief Officer of Driving Safety Promotion Center
Fumihiko Ike
Chief Operating Officer for Business Management Operations
Risk Management Officer
General Supervisor, Information Systems
Tomohiko Kawanabe
Quality, Certification & Regulation Compliance
Managing Officer and Director
Yoshiharu Yamamoto
President, Chief Executive Officer and Director of Honda R&D Co., Ltd.
Director
Kensaku Hogen
Director
Nobuo Kuroyanagi
Director and Advisor
Takeo Fukui
Operating Officer and Director
Takuji Yamada
Chief Operating Officer for Power Product Operations
Operating Officer and Director
Masahiro Yoshida
Chief Operating Officer for Business Support Operations
Chairman of The Bank of Tokyo-Mitsubishi UFJ, Ltd.
Note: Mr. Kensaku Hogen and Mr. Nobuo Kuroyanagi satisfy the required conditions for the outside director provided for in Article 2, Paragraph 1, Item 15 of the Company Law.
Corporate Auditors
Corporate Auditor (Full-time)
Toru Onda
Corporate Auditor (Full-time)
Hideki Okada
Corporate Auditor
Fumihiko Saito
Representative of the Saito Law Office
Corporate Auditor
Hirotake Abe
Certified Public Accountant Hirotake Abe Office
Corporate Auditor
Tomochika Iwashita
Note: C
orporate Auditors Mr. Fumihiko Saito, Mr. Hirotake Abe and Mr. Tomochika Iwashita are outside corporate auditors as provided for in Article 2, Paragraph 1, Item 16 of the
Company Law.
39
Executive Officers
President, Chief Executive Officer
Takanobu Ito
Chief Operating Officer for Automobile Operations
Executive Vice President
Akio Hamada
Chief Operating Officer for Production Operations
Senior Managing Officer
Tetsuo Iwamura
Chief Operating Officer for Regional Operations (North America)
President and Director of Honda North America, Inc.
President and Director of American Honda Motor Co., Inc.
Tatsuhiro Oyama
Chief Operating Officer for Motorcycle Operations
Chief Officer of Driving Safety Promotion Center
Fumihiko Ike
Chief Operating Officer for Business Management Operations
Risk Management Officer
General Supervisor, Information Systems
Tomohiko Kawanabe
Responsible for Quality, Certification and Regulation Compliance
Managing Officer
Takashi Yamamoto
General Manager of Automobile Production Office, Production Operations
Managing Officer
Masaya Yamashita
Chief Operating Officer for Purchasing Operations
Managing Officer
Hidenobu Iwata
President and Director of Honda of America Mfg., Inc.
Managing Officer
Manabu Nishimae
Chief Operating Officer for Regional Operations (Europe, the Middle & Near East and Africa)
President and Director of Honda Motor Europe Ltd.
Managing Officer
Koichi Fukuo
Executive in Charge of Business Unit No. 1, Automobile Operations
Managing Officer
Hiroshi Kobayashi
Chief Operating Officer for Regional Operations (Asia & Oceania)
President and Director of Asian Honda Motor Co., Ltd.
Managing Officer
Sho Minekawa
Chief Operating Officer for Regional Sales Operations (Japan)
Managing Officer
Yoshiharu Yamamoto
President, Chief Executive Officer and Director of Honda R&D Co., Ltd.
Managing Officer
Toshihiko Nonaka
Responsible for Products, Automobile Operations
Senior Managing Officer and Director, Honda R&D Co., Ltd.
Operating Officer
Takuji Yamada
Chief Operating Officer for Power Product Operations
Operating Officer
Masahiro Takedagawa
Chief Operating Officer for Regional Operations (Latin America)
President and Director of Honda South America Ltda.
President and Director of Moto Honda da Amazonia Ltda.
President and Director of Honda Automoveis do Brazil Ltda.
Operating Officer
Yoshiyuki Matsumoto
Operating Officer
Ko Katayama
General Manager of Saitama Factory of Production Operations
Operating Officer
Masahiro Yoshida
Chief Operating Officer for Business Support Operations
Operating Officer
Seiji Kuraishi
Chief Operating Officer for Regional Operations (China)
President of Honda Motor (China) Investment Co., Ltd.
Operating Officer
Takashi Nagai
President and Director of Honda Siel Cars India Ltd.
President and Director of Honda Motor India Private Ltd.
Operating Officer
Katsushi Watanabe
General Manager of Kumamoto Factory of Production Operations
Operating Officer
Toshiaki Mikoshiba
President of Guangqi Honda Automobile Co., Ltd.
Operating Officer
Yoshi Yamane
Executive Vice President of Honda Motor (China) Investment Co., Ltd.
Operating Officer
Takashi Sekiguchi
President and Director of Honda Canada Inc.
Operating Officer
Takahiro Hachigo
General Manager of Suzuka Factory of Production Operations
Operating Officer
Hiroshi Sasamoto
President, Chief Executive Officer and Director of Honda Engineering Co., Ltd.
Operating Officer
Hiroyuki Yamada
Chief Operating Officer for Customer Service Operations
Operating Officer
Chitoshi Yokota
Operating Officer
Michimasa Fujino
President and Director of Honda Aircraft Company, Inc.
Operating Officer
Soichiro Takizawa
Executive Vice President and Director of Honda Motor Europe Ltd.
President and Director of Honda of the U.K. Manufacturing Ltd.
Operating Officer
Yuji Shiga
Responsible for CIS countries, the Middle & Near East and Africa for Regional Operations
Operating Officer
Kohei Takeuchi
General Manager of Accounting Division for Business Management Operation
There is no family relationship between any director or executive officer and any other director or executive officer.
40
Financial Section
42 Financial Review
58 Consolidated Balance Sheets
60 Consolidated Statements of Income
61 Consolidated Statements of Changes in Equity
63 Consolidated Statements of Cash Flows
64 Segment Information
69 Basis of Translating Financial Statements
70 Consolidated Balance Sheets Divided into Non-Financial Services Businesses and Finance Subsidiaries
71 Consolidated Statements of Cash Flows Divided into Non-Financial Services Businesses and Finance Subsidiaries
72 Financial Summary
74 Selected Quarterly Financial Data
41
Financial Review
Operating and Financial Review
and administrative expenses and R&D expenses, negative foreign
currency effects and the impact of the Earthquake. Excluding
negative foreign currency effects of ¥137.6 billion, Honda estimates
Honda’s consolidated net sales and other operating revenue
operating income increased ¥343.6 billion.
(hereafter, “net sales”) for the fiscal year ended March 31, 2011,
With respect to the discussion above of the changes, management
increased ¥357.6 billion, or 4.2%, to ¥8,936.8 billion from the fiscal
identified the factors and used what it believes to be a reasonable
year ended March 31, 2010, due mainly to increased net sales in
method to analyze the respective changes in such factors.
automobile business and motorcycle business, which was partially
Management analyzed changes in these factors at the levels of the
offset by a decrease in net sales attributable to negative foreign
Company and its material consolidated subsidiaries. “Foreign
currency effects” consist of “translation adjustments”, which come
Japanese yen exchange rates of the previous fiscal year to the
from the translation of the currency of foreign subsidiaries’ financial
current fiscal year, net sales for the year would have increased by
statements into Japanese yen, and “foreign currency adjustments”,
approximately ¥743.3 billion, or 8.7%, compared to the increase as
which result from foreign-currency-denominated sales. With respect
reported of ¥357.6 billion, which includes negative foreign currency
to “foreign currency adjustments”, management analyzed foreign
translation effects.
currency adjustments primarily related to the following currencies:
U.S. dollar, Canadian dollar, Euro, British pound, Brazilian real and
Japanese yen, at the level of the Company and its material
consolidated subsidiaries.
Yen (billions)
12,000
Income before Income Taxes
10,000
and Equity in Income of Affiliates
8,000
Income before income taxes and equity in income of affiliates
6,000
increased ¥294.3 billion, or 87.6%, to ¥630.5 billion. Main factors of
4,000
this increase except factors relating to operating income are as
2,000
follows;
0
Unrealized gains and losses related to derivative instruments had
2007
2008
2009
2010
2011
a negative impact of ¥30.4 billion. Other income (expenses) excluding
unrealized gains and losses related to derivative instruments had a
positive impact of ¥118.8 billion, due mainly to a gain on sales of
Operating Costs and Expenses
investments in affiliates related to the dissolution of a joint venture
Operating costs and expenses increased ¥151.6 billion, or 1.8%, to
and an increase in foreign currency transaction gains.
¥8,367.0 billion from the previous fiscal year. Cost of sales increased
¥82.1 billion, or 1.3%, to ¥6,496.8 billion from the previous fiscal
Income Tax Expense
year, due mainly to an increase in costs attributable to increased net
Income tax expense increased ¥59.9 billion, or 40.8%, to ¥206.8
sales and the effect of raw material fluctuations, which was partially
billion from the previous fiscal year. The effective tax rate decreased
offset by continuing cost reduction and positive foreign currency
10.9 percentage points, to 32.8% from the previous fiscal year. The
effects. Selling, general and administrative expenses increased
decrease in the effective tax rate was due mainly to a decrease in a
¥45.3 billion, or 3.4%, to ¥1,382.6 billion from the previous fiscal
portion of unrecognized tax benefits related to transfer pricing
year, due mainly to an increase in selling expenses attributable to
matters of overseas transactions between the Company and foreign
increased net sales, the impact of the Earthquake, which was
affiliates.
partially offset by a decrease in provisions for credit losses in financial
services business, and positive foreign currency effects. R&D
Equity in Income of Affiliates
expenses increased by ¥24.2 billion, or 5.2%, to ¥487.5 billion from
Equity in income of affiliates increased ¥46.4 billion, or 49.8%, to
the previous fiscal year, due mainly to improving safety and
¥139.7 billion, due mainly to an increase in income attributable to
environmental technologies and enhancing of the attractiveness of
increased net sales and continuing cost reduction at affiliates in
the products.
Japan and Asia.
Operating Income
Net Income
Operating income increased ¥206.0 billion, or 56.6%, to ¥569.7
Net income increased ¥280.8 billion, or 99.4%, to ¥563.4 billion
billion from the previous fiscal year, due mainly to an increase in
from the previous fiscal year.
income attributable to increased net sales and continuing cost
reduction, which was partially offset by increased selling, general
42
Net Income Attributable to Noncontrolling Interests
Automobile Business
Net income attributable to noncontrolling interests increased ¥15.1
Honda’s unit sales of automobiles totaled 3,512 thousand units and
billion, or 106.8%, to ¥29.3 billion from the previous fiscal year.
increased by 3.5% from the previous fiscal year, due mainly to an
increase in unit sales in North America and Asia, which was partially
Net Income Attributable to Honda Motor Co., Ltd.
offset by a decrease in unit sales in Japan and Europe.
Net income attributable to Honda Motor Co., Ltd. increased ¥265.6
Revenue from external customers increased ¥239.2 billion, or
billion, or 99.0%, to ¥534.0 billion from the previous fiscal year.
3.6%, to ¥6,794.0 billion from the previous fiscal year, due mainly to
increased unit sales, which was partially offset by the negative foreign
Net Income Attributable to Honda Motor Co., Ltd.
and Net Income Attributable to Honda Motor Co., Ltd.
per Common Share
Japanese yen exchange rates of the previous fiscal year to the current
fiscal year, net sales for the year would have increased by approximately
Yen (billions)
(Yen)
800
400
600
300
400
200
200
100
¥545.7 billion, or 8.3%, compared to the increase as reported of
¥239.2 billion, which includes negative foreign currency translation
effects. Revenue including intersegment sales increased ¥247.4
0
2007
2008
2009
2010
2011
0
Net Income Attributable to Honda Motor Co., Ltd. (left)
Net Income Attributable to Honda Motor Co., Ltd. per Common Share (right)
billion, or 3.8%, to ¥6,802.3 billion from the previous fiscal year.
Operating costs and expenses increased ¥109.6 billion, or 1.7%,
to ¥6,537.7 billion from the previous fiscal year. Cost of sales
increased by ¥39.2 billion, or 0.8%, to ¥5,105.7 billion, due mainly
to an increase in costs attributable to increased net sales and the
effect of raw material fluctuations, which was partially offset by
continuing cost reduction and the positive foreign currency effects.
Selling, general and administrative expenses increased by ¥49.9
billion, or 5.0%, to ¥1,042.1 billion. R&D expenses increased by
¥20.4 billion, or 5.5%, to ¥389.8 billion, due mainly to improving
safety and environmental technologies and enhancing of the
Business Segments
attractiveness of the products.
Motorcycle Business
Honda’s unit sales of motorcycles and all-terrain vehicles (ATVs)
income attributable to increased net sales and continuing cost
totaled 11,445 thousand units and increased by 18.7% from the
reduction, which was partially offset by increased selling, general
previous fiscal year, due mainly to an increase in unit sales in Asia
and administrative expenses and R&D expenses, negative foreign
and Other Regions, including South America.
currency effects and the impact of the Earthquake.
13.0%, to ¥1,288.1 billion from the previous fiscal year, due mainly
to increased unit sales and revenue related to licensing agreements.
Honda’s unit sales of power products totaled 5,509 thousand units
Honda estimates that by applying Japanese yen exchange rates of
and increased by 16.1% from the previous fiscal year, due to
the previous fiscal year to the current fiscal year, net sales for the
increased unit sales in all the regions.
year would have increased by approximately ¥171.3 billion, or
15.0%, compared to the increase as reported of ¥147.9 billion,
5.4%, to ¥292.6 billion from the previous fiscal year, due mainly to
which includes negative foreign currency translation effects.
the increased unit sales of power products, which was partially
Operating costs and expenses increased ¥68.1 billion, or 6.3%,
offset by negative foreign currency translation effects. Honda
to ¥1,149.6 billion from the previous fiscal year. Cost of sales
estimates that by applying Japanese yen exchange rates of the
increased by ¥61.2 billion, or 7.4%, to ¥887.9 billion, due mainly to
previous fiscal year to the current fiscal year, net sales for the year
an increase in costs attributable to increased net sales, which was
would have increased by approximately ¥27.5 billion, or 9.9%,
partially offset by the positive foreign currency effects. Selling,
compared to the increase as reported of ¥14.9 billion, which includes
general and administrative expenses increased by ¥3.8 billion, or
negative foreign currency translation effects. Revenue including
2.0%, to ¥193.8 billion. R&D expenses increased by ¥3.0 billion, or
intersegment sales increased ¥13.6 billion, or 4.5%, to ¥318.2 billion
4.7%, to ¥67.8 billion.
from the previous fiscal year.
Operating costs and expenses increased ¥2.4 billion, or 0.8%, to
¥323.8 billion from the previous fiscal year. Cost of sales decreased
income attributable to increased net sales and income related to
by ¥0.7 billion, or 0.3%, to ¥238.6 billion, due mainly to continuing
licensing agreements.
cost reduction, which was partially offset by an increase in costs
43
attributable to increased net sales. Selling, general and administrative
accounted for as operating leases. Generally, direct financing lease
expenses increased by ¥2.4 billion, or 4.6%, to ¥55.2 billion. R&D
revenues and interest income consist of the recognition of finance
expenses increased by ¥0.7 billion, or 2.5%, to ¥29.9 billion.
lease revenue at inception of the lease arrangement and subsequent
The operating loss including that of other business was ¥5.5
recognition of the interest income component of total lease payments
billion, an improvement of ¥11.1 billion from the previous fiscal year,
using the effective interest method. In comparison, operating lease
due mainly to an increase in income attributable to increased net
revenues include the recognition of the gross lease payment
sales of power products, which was partially offset by increased
amounts on a straight-line basis over the term of the lease
selling, general and administrative expenses and negative foreign
arrangement, and operating lease vehicles are depreciated to their
currency effects.
estimated residual value on a straight-line basis over the term of the
lease. It is not anticipated that the differences in accounting for
operating leases and direct financing leases will have a material net
To support the sale of its products, Honda provides retail lending
impact on Honda’s results of operations overall, however, operating
and leasing to customers and wholesale financing to dealers through
lease revenues and associated depreciation of leased assets do
our finance subsidiaries in Japan, the United States, Canada, the
result in differing presentation and timing compared to those of
United Kingdom, Germany, Brazil, Thailand and other countries.
direct financing leases.
The total amount of finance subsidiaries–receivables and property
Honda consolidated former qualifying special-purpose entities
on operating leases of finance subsidiaries increased by ¥67.9 billion,
(QSPEs) that were not consolidated as of March 31, 2010. As a
or 1.4%, to ¥4,837.6 billion from the previous fiscal year, due mainly
result, previously derecognized finance subsidiaries–receivables
to an increase of finance subsidiaries–receivables attributable to the
held by former QSPEs increased in the Company’s consolidated
adoption of new accounting standards, which was partially offset by
balance sheet as of April 1, 2010. In addition, Honda does not
negative foreign currency translation effects. Honda estimates that by
recognize certain gains or losses related to securitization transactions,
applying Japanese yen exchange rates of the previous fiscal year to
such as gains or losses attributable to the change in the fair value of
the current fiscal year, the total amount of finance subsidiaries–
retained interests since the year ended March 31, 2011.
receivables and property on operating leases of finance subsidiaries
as of the end of the year would have increased by approximately
¥595.9 billion, or 12.5%, compared to the increase as reported of
Geographical Information
¥67.9 billion, which includes negative foreign currency translation
effects.
Japan
Revenue from external customers in a financial services business
In Japan, revenue from domestic and export sales increased ¥305.4
decreased ¥44.4 billion, or 7.3%, to ¥561.8 billion from the previous
billion, or 9.2%, to ¥3,611.2 billion from the previous fiscal year, due
fiscal year. Honda estimates that by applying Japanese yen exchange
mainly to an increase in revenue in automobile business and revenue
rates of the previous fiscal year to the current fiscal year, revenue for
related to licensing agreements. Operating income was ¥66.1 billion,
the year would have decreased by approximately ¥1.2 billion, or
an increase of ¥95.2 billion of operating income from the previous
0.2%, compared to the decrease as reported of ¥44.4 billion, which
fiscal year, due mainly to an increase in income attributable to
includes negative foreign currency translation effects. Revenue
increased net sales and model mix, continuing cost reductions and
including intersegment sales decreased ¥45.3 billion, or 7.3%, to
income related to licensing agreements, which was partially offset
¥573.4 billion from the previous fiscal year.
by increased selling, general and administrative expenses and R&D
Operating costs and expenses decreased ¥36.7 billion, or 8.7%,
expenses, negative foreign currency effects and the impact of the
to ¥387.1 billion from the previous fiscal year. Cost of sales decreased
Earthquake.
¥11.6 billion, or 3.6%, to ¥309.8 billion from the previous fiscal year,
44
due mainly to a decrease in costs related to lease residual values.
North America
Selling, general and administrative expenses decreased ¥25.0
In North America, which mainly consists of the United States,
billion, or 24.5%, to ¥77.3 billion from the previous fiscal year, due
revenue increased ¥239.6 billion, or 6.1%, to ¥4,147.8 billion from
mainly to a decrease in provisions for credit losses.
the previous fiscal year, due mainly to an increase in revenue in
Operating income decreased ¥8.6 billion, or 4.4%, to ¥186.2
automobile business, which was partially offset by negative foreign
billion from the previous fiscal year, due mainly to negative foreign
currency translation effects. Operating income increased ¥64.5
currency effects, which was partially offset by a decrease in
billion, or 27.3%, to ¥300.9 billion from the previous fiscal year, due
provisions for credit losses and losses on lease residual values.
mainly to an increase in income attributable to increased net sales
Our finance subsidiaries in North America have historically
and model mix, and a decrease in fixed costs per unit as a result of
accounted for all leases as direct financing leases. However, starting
increased production, which was partially offset by increased selling,
in the fiscal year ended March 31, 2007, some of the leases which
general and administrative expenses and negative foreign currency
do not qualify for direct financing leases accounting treatment are
effects.
Europe
Motorcycle Business
In Europe, revenue decreased ¥126.1 billion, or 15.3%, to ¥699.2
In the Motorcycle Business, Honda is committed to developing
billion from the previous fiscal year, due mainly to a decrease in
products with value-added features that meet the needs of
revenue in the automobile business and negative foreign currency
customers around the world and to implementing the timely local
translation effects. The operating loss was ¥10.2 billion, an
development of products suited to specific regions at its overseas
improvement of ¥0.6 billion from the previous fiscal year, due mainly
locations. Along with these activities, we are focusing on developing
to decreased selling, general and administrative expenses, which
technologies that address safety and environmental issues.
was partially offset by a decrease in income attributable to decreased
Major developments in fiscal 2011 included the launching of
net sales and model mix, negative foreign currency effects.
motorcycles in Japan, Thailand, India, Indonesia and Malaysia
powered by a newly developed double overhead camshaft (DOHC)
Asia
engine, which is outfitted with the world’s first roller rocker arm and
In Asia, revenue increased ¥322.5 billion, or 21.2%, to ¥1,841.1
other innovations that give non-slip, powerful performance from low
rotation to high rotation speeds, combined with good fuel economy.
revenue in automobile and motorcycle businesses, which was
We also introduced a globally strategic motorcycle, the CBR250R,
partially offset by negative foreign currency translation effects.
which is a light-weight super sports bike that incorporates a newly
designed frame with a truss structure that offers ease of handling
and maneuvering stability.
income attributable to increased net sales and model mix, which
In Japan, we began to offer the EV-neo with lease financing. The
was partially offset by increased selling, general and administrative
EV-neo is an electric-powered bike that responds to the needs of
expenses and negative foreign currency effects.
today’s new era by contributing to realizing a low-carbon society as
it provides transportation for people and cargo. Equipped with a
Other Regions
motor featuring good torque performance even at low speeds, the
In Other Regions, revenue increased ¥85.5 billion, or 9.5%, to
EV-neo offers strong starting performance, even when carrying
¥982.0 billion from the previous fiscal year, due mainly to an increase
cargo, and has a specially developed battery that can be fully
in revenue in motorcycle and automobile businesses and positive
recharged in about 30 minutes (at an ambient temperature of 25°C)
foreign currency translation effects. Operating income increased
as well as greater ease of recharging. In addition, in Japan, we
¥23.7 billion, or 51.8%, to ¥69.5 billion from the previous fiscal year,
introduced the Giorno, a motor scooter with a “round and cute”
due mainly to an increase in income attributable to increased net
design to appeal mainly to the fashion-conscious younger generation
sales and model mix, positive foreign currency effects, which was
but also to suit the tastes of a broad range of other customers. Also,
partially offset by increased selling, general and administrative
in Thailand, we introduced the WAVE 110i, a new model Cub-style
expenses.
bike which is the first Cub style equipped with the PGM-FI
electronically controlled fuel injection system that is more compact
than those equipped in previous models. WAVE 110i has a more-
Research and Development
secure, refined appearance as well as considerably more cargo
space, which can store a half helmet. In Indonesia, we relaunched
Honda and its consolidated subsidiaries use the most-advanced
the MegaPro, a sports model with wide, practical applicability, after
technologies to conduct R&D activities with the goal of creating
a full model change. The new MegaPro offers a new design and
distinctive products that are internationally competitive. To attain this
equipment that give it a more-luxurious and powerful appearance.
goal, the Group’s main R&D divisions operate independently as
Also, it is equipped with a new type engine that aims for improved
subsidiaries, allowing technicians to pursue their tasks with significant
fuel economy through the application of friction reducing and cooling
freedom. Product-related R&D is spearheaded by Honda R&D Co.,
technologies.
Ltd. in Japan; Honda R&D Americas, Inc. in the United States; and
R&D expenses in this segment in fiscal 2011 were ¥67.8 billion.
Honda R&D Europe (U.K.) Ltd. in the United Kingdom. R&D on
production technologies centers around Honda Engineering Co.,
Automobile Business
Ltd. in Japan and Honda Engineering North America, Inc. in the
In the Automobile Business segment, we are working to develop
United States. All of these entities work in close association with our
innovative technologies and create products with new value added
other entities and businesses in their respective regions.
to respond to customer needs. We are also actively developing
Total consolidated R&D expenses for the fiscal year ended March
technologies that provide advanced safety performance and address
31, 2011 amounted to ¥487.5 billion.
environment issues.
Among major achievements in Japan during fiscal 2011, we
launched the Freed Spike, which features ease of driving and a
spacious interior in a compact body. In addition, we made minor
45
model changes on the LEGEND to upgrade its drivetrain and
Europe) by boosting their continuous operating time by equipping
improve fuel performance, and it became the first Honda automobile
them with fuel-efficient, eco-friendly engines and enhancing their
to be outfitted with a newly developed six-speed automatic
power-generating capacity. We also launched our UMK 425 and
transmission. The LEGEND is also now the first car in the world
UMK 435 series of four-stroke lawn mowers in Europe, which feature
equipped with a noise suppressor device, which is installed on the
a large-sized deflector (antiscattering cover) with a redesigned shape
18-inch noise limiting aluminum wheels and reduces the noise
that substantially reduces jamming due to ingested grass and other
emitted from inside the tire. In addition, in Japan and Europe, we
vegetable matter. In Japan, we announced new thin-film solar cells,
launched the Fit Hybrid (sold in Europe as the Jazz Hybrid), a new
which are more compact than models already on the market and
type in the Fit series, which has its hybrid battery installed underneath
can be laid out and installed efficiently on roofs of widely varying
the baggage compartment and thus retains the interior comfort and
shapes. In addition, the tested prototypes of these solar cells attain
seat arrangement of the previous Fit models (sold in Europe as the
a module conversion ratio of 13.0%, which is the highest in the
Jazz models) while adding top-notch fuel economy and driving
world among similar thin-film solar cells currently on the market.
performance. In Asia outside Japan, we launched the new, low-
Looking to launch these units, we are working to further increase
priced BRIO in Thailand, which succeeds in offering a compact body
their module conversion ratio.
with a spacious interior. The BRIO also delivers good environmental
In other businesses in this segment, Honda Aircraft Company,
performance, as evidenced by its certification as an eco-car by Thai
Inc., our U.S. subsidiary in the jet aircraft business, reported that the
government standards because of its fuel economy and satisfaction
mass production model of HondaJet, a light business jet that has
of the Euro 4 gas emission standards.
been designed for obtaining approval from the U.S. Federal Aviation
Other R&D-related news included the announcement of the Fit EV
Administration (FAA), successfully completed its maiden flight.
Concept. This new electric vehicle (EV) concept model offers driving
mode options and delivers a lively response with a strong sense of
acceleration, similar to that of a 2.0 liter class engine, by drawing on
Fundamental Research
the features of having the motor on the same axle as the gearbox.
During fiscal 2011, Honda continued its research activities to develop
At the same time, it also offers a more-efficient ride and conserves
technologies in a diverse range of fields that will support the products
electric power. We also announced a new hybrid concept car that
of the future.
harnesses a specially developed 2.0 liter i-VTEC engine, which
Please note that expenses incurred in fundamental research are
delivers high efficiency and high fuel performance, together with two
allocated among Honda’s business segments.
high-power electric motors. This hybrid has three driving modes:
electric power, hybrid operation and gasoline engine and, as a
Patents and Licenses
“plug-in hybrid,” can be recharged by plugging into a household
At March 31, 2011, Honda owned more than 16,400 patents in
electric outlet. In addition, to verify results and support the realization
Japan and more than 24,600 patents abroad. Honda also had
of a low-carbon mobility society in the years to come, we have
applications pending for more than 14,800 patents in Japan and for
begun testing in real driving situations of the performance of EVs
more than 17,500 patents abroad. While Honda considers that, in
and plug-in hybrids in Japan and the United States.
the aggregate, Honda’s patents are important, it does not consider
any one of such patents, or any related group of them, to be of such
importance that the expiration or termination thereof would materially
affect Honda’s business.
In the Power Product and Other Businesses, we are working to
develop products that contribute to customers’ lifestyles, while
strengthening our lineup of offerings that address environmental
issues.
Principal developments in this segment included the re-launching
R&D Expenses and R&D Expenses
as a Percentage of Net Sales
600
(%)
6
400
4
200
2
Yen (billions)
of the BF115 outboard motor with full model changes in markets
around the world. This upgraded model incorporates the boosted
low-speed torque (BLAST) system, which is an air/fuel ratio and
injection-timing technology and lean-burn control mechanism, which
makes possible strong torque performance and acceleration over a
wide range of rotation speeds. Also, through lean-burn control, fuel
economy has been improved by 20% over previous types. In
2008
2009
2010
2011
2007
model change in our cylindrical electric power generators, EG4000,
R&D Expenses (left)
R&D Expenses as a Percentage of Net Sales (right)
EG5000 and EG6500 (sold as EG3600, EG4500 and EG5500 in
46
0
addition, in North America, Europe and Asia, we implemented a full
0
Total capital expenditures for the year amounted to ¥1,109.7
billion, up ¥236.0 billion from the previous year. Also, total capital
Capital expenditures in fiscal 2011 were applied to the introduction
expenditures, excluding property on operating leases, for the year
of new models, as well as the improvement, streamlining and
amounted to ¥311.3 billion, down ¥18.3 billion from the previous
modernization of production facilities, and improvement of sales and
year. Spending by business segment is shown below.
R&D facilities.
Fiscal years ended March 31,
2010
2011
Increase (Decrease)
Yen (millions)
Motorcycle Business
Automobile Business
Financial Services Business (Excluding Property on Operating Leases)
Power Product and Other Businesses ¥ 38,332
267,257
544,425
398
23,748
¥ 37,084
260,149
798,584
164
13,963
¥ (1,248)
(7,108)
254,159
(234)
(9,785)
Total
¥873,762
¥1,109,780
¥236,018
Total (Excluding Property on Operating Leases)
¥329,735
¥ 311,360
¥ (18,375)
Note: Intangible assets are not included in the table above.
In the motorcycle business, we made capital expenditures of
The estimated amounts of capital expenditures for the fiscal year
¥37,084 million in the fiscal year ended March 31, 2011. Funds were
ending March 31, 2012 are shown below.
allocated to the introduction of new models, as well as the
Fiscal year ending
March 31, 2012
Yen (millions)
Motorcycle Business
Automobile Business
¥ 65,300
350,000
300
14,400
Total
¥430,000
improvement, streamlining and modernization of production facilities,
and improvement of sales and R&D facilities.
In the automobile business, we made capital expenditures of
¥260,149 million in the fiscal year ended March 31, 2011. Funds
were allocated to the introduction of new models, as well as the
improvement, streamlining and modernization of production facilities,
and improvement of sales and R&D facilities. A new auto plant of
Honda Motor De Argentina S.A., which is one of the Company’s
consolidated subsidiaries, completed construction of its facilities in
Note: The estimated amount of capital expenditures for the Financial Services Business in
the above table does not include property on operating leases.
Intangible assets are not included in the table above.
March 2011.
In the financial services business segment, capital expenditures
excluding property on operating leases amounted to ¥164 million in
the fiscal year ended March 31, 2011, while capital expenditures for
Capital Expenditures and Depreciation
Yen (billions)
700
property on operating leases were ¥798,420 million. Capital
600
expenditures in power products and other businesses in the fiscal
500
year ended March 31, 2011, totaling ¥13,963 million, were deployed
400
to upgrade, streamline and modernize manufacturing facilities for
300
power products, and to improve R&D facilities for power products.
200
100
Plans after Fiscal 2011
We set out our original capital expenditure plans for the period from
the fiscal year ended March 31, 2011 during the preceding fiscal
0
2007
2008
2009
2010
2011
Depreciation
year. We have subsequently modified these plans as follows:
The new auto plant in Yorii-machi Osato-gun, Saitama, Japan
plans to start operation in 2013.
Yachiyo Industry Co., Ltd., which is one of the Company’s
consolidated subsidiaries, had stopped building a new auto plant in
Yokkaichi City, Mie, Japan.
Management mainly considers economic trends of each region,
demand trends, the situation of competitors and our business
strategy, such as introduction plans of new models in determining
the future of projects.
47
Liquidity and Capital Resources
Net cash used in financing activities amounted to ¥100.4 billion of
cash outflows. Cash outflows from financing activities decreased by
Overview of Capital Requirements, Sources and Uses
¥458.8 billion, compared with the previous fiscal year, due mainly to
The policy of Honda is to support its business activities by maintaining
an increase in debts which decreased in the previous fiscal year,
sufficient capital resources, a sufficient level of liquidity and a sound
which was partially offset by purchases of treasury stock and an
balance sheet.
increase in dividends paid.
Honda’s main business is the manufacturing and sale of
motorcycles, automobiles and power products. To support this
Liquidity
business, it also provides retail financing and automobile leasing
The ¥1,279.0 billion in cash and cash equivalents at the end of the
services for customers, as well as wholesale financing services for
fiscal year 2011 corresponds to approximately 1.7 months of net
dealers.
sales, and Honda believes it has sufficient liquidity for its business
Honda requires operating capital mainly to purchase parts and
operations.
raw materials required for production, as well as to maintain inventory
At the same time, Honda is aware of the possibility that various
of finished products and cover receivables from dealers and for
factors, such as recession-induced market contraction and financial
providing financial services. Honda also requires funds for capital
and foreign exchange market volatility, may adversely affect liquidity.
expenditures, mainly to introduce new models, upgrade, rationalize
For this reason, finance subsidiaries that carry total short-term
and renew production facilities, as well as to expand and reinforce
borrowings of ¥1,369.4 billion have committed lines of credit
sales and R&D facilities.
equivalent to ¥788.3 billion that serve as alternative liquidity for the
Honda meets its operating capital requirements primarily through
commercial paper issued regularly to replace debt. Honda believes it
cash generated by operations, bank loans and the issuance of
currently has sufficient credit limits, extended by prominent
corporate bonds. The year-end balance of liabilities associated with
international banks, as of the date of the filing of Honda’s Form 20-F
the Company and its subsidiaries’ funding for non-financial services
(as of June 23, 2011).
businesses was ¥399.8 billion as of March 31, 2011. In addition, the
Honda’s short- and long-term debt securities are rated by credit
Company’s finance subsidiaries fund financial programs for
rating agencies, such as Moody’s Investors Service, Inc., Standard
customers and dealers primarily from medium-term notes,
& Poor’s Rating Services, and Rating and Investment Information,
commercial paper, corporate bonds, bank loans, securitization of
Inc. The following table shows the ratings of Honda’s unsecured
finance receivables and intercompany loans. The year-end balance
debt securities by Moody’s, Standard & Poor’s and Rating and
of liabilities associated with these finance subsidiaries’ funding for
Investment Information as of March 31, 2011.
the Financial Services business was ¥4,207.9 billion as of March 31,
2011.
Cash Flows
Consolidated cash and cash equivalents for the year ended March
31, 2011 increased by ¥159.1 billion from March 31, 2010, to
¥1,279.0 billion. The reasons for the increases or decreases for each
cash flow activity are as follows:
Net cash provided by operating activities amounted to ¥1,070.8
billion of cash inflows. Cash inflows from operating activities
decreased by ¥473.3 billion compared with the previous fiscal year,
due mainly to increased payments for parts and raw materials
primarily due to an increase in automobile production, which was
partially offset by an increase in cash received from customers,
primarily due to increased unit sales in the automobile business.
Net cash used in investing activities amounted to ¥731.3 billion of
Moody’s Investors Service
Standard & Poor’s Rating Services
Rating and Investment Information
Credit Ratings for
Short-term
unsecured
debt securities
Long-term
unsecured
debt securities
P-1
A-1
a-1+
A1
A+
AA
The above ratings are based on information provided by Honda
and other information deemed credible by the rating agencies. They
are also based on the agencies’ assessment of credit risk associated
with designated securities issued by Honda. Each rating agency
may use different standards for calculating Honda’s credit rating,
and also makes its own assessment. Ratings can be revised or
nullified by agencies at any time. These ratings are not meant to
serve as a recommendation for trading in or holding Honda’s
unsecured debt securities.
cash outflows. Cash outflows from investing activities increased by
¥135.6 billion compared with the previous fiscal year, due mainly to
an increase in acquisitions of finance subsidiaries–receivables and
an increase in purchase of operating lease assets, which was
partially offset by an increase in collections of finance subsidiaries–
receivables and an increase in proceeds from sales of operating
lease assets.
48
Off-Balance Sheet Arrangements
Securitization
For the purpose of liquidity and funding, our finance subsidiaries
periodically securitize finance receivables. In these securitizations,
our finance subsidiaries transfer a portfolio of finance receivables to
a special-purpose entity, which is established for the limited purpose
Standards Update (ASU) 2009-16 “Accounting for Transfers of
of buying and re-transfer finance receivables. Our finance subsidiaries
Financial Assets”, and ASU 2009-17 “Improvements to Financial
remain as a servicer of the finance receivables and are paid a
Reporting by Enterprises Involved with Variable Interest Entities”,
servicing fee for our services. The special-purpose entity transfers
effective April 1, 2010. Upon the adoption of these standards, we
the receivables to a trust which is newly structured for each
consolidated all trusts as of April 1, 2010. As a result, we have no
securitization or bank conduit, which issues asset-backed securities
off-balance sheet arrangements in the fiscal year ended March 31,
or commercial paper, respectively, to investors. Our finance
2011. Information about ASU 2009-16 and 2009-17 is described in
subsidiaries retain certain subordinated interests in the transferred
note (1)(c) and information about variable interest entities and
receivables in the form of subordinated certificates, servicing assets
securitizations is described in note (4) to the accompanying
and residual interests in certain cash reserves provided as credit
consolidated financial statements.
enhancements for investors. Our finance subsidiaries apply
significant assumptions regarding prepayments, credit losses and
Guarantee
average interest rates in estimating expected cash flows from the
At March 31, 2011, we guaranteed ¥30.3 billion of employee bank
trust or bank conduit, which affect the recoverability of our retained
loans for their housing costs. If an employee defaults on his/her loan
interests in the transferred finance receivables. We periodically
payments, we are required to perform under the guarantee. The
evaluate these assumptions and adjust them, if appropriate, to
undiscounted maximum amount of our obligation to make future
reflect the performance of the finance receivables.
payments in the event of defaults is ¥30.3 billion. As of March 31,
We have not consolidated certain trusts since these trusts meet
2011, no amount was accrued for any estimated losses under the
the definitions of a former qualifying special-purpose entity before
obligations, as it was probable that the employees would be able to
the fiscal year ended March 31, 2011. We adopted Accounting
make all scheduled payments.
Tabular Disclosure of Contractual Obligations
The following table shows our contractual obligations at March 31, 2011:
Yen (millions)
Payments due by period
Total
Less than 1 year
1-3 years
3-5 years
After 5 years
Long-term debt
Operating leases
Purchase commitments*1
Interest payments*2
Contributions to defined benefit pension plans*3
¥3,005,695
102,783
28,466
218,226
92,815
¥ 962,455
19,100
28,466
92,907
92,815
¥1,369,943
24,370
—
97,696
—
¥555,551 15,115
—
25,112
—
¥117,746
44,198
—
2,511
—
Total
¥3,447,985
¥1,195,743
¥1,492,009
¥595,778
¥164,445
*1 Honda had commitments for purchases of property, plant and equipment at March 31, 2011.
*2 To estimate the schedule of interest payments, the Company utilized the balances and average interest rates of borrowings and debts and derivative instruments as of March 31, 2011.
*3 Since contributions beyond the next fiscal year are not currently determinable, contributions to defined benefit pension plans reflect only contributions expected for the next fiscal year.
If our estimates of unrecognized tax benefits and potential tax
Trend Information
benefits are not representative of actual outcomes, our consolidated
financial statements could be materially affected in the period of
The Great East Japan Earthquake
settlement or when the statutes of limitations expire, as we treat
The Great East Japan Earthquake occurred on March 11, 2011 and
these events as discrete items in the period of resolution. Since it is
the nuclear power plant disaster has caused and will continue to
difficult to estimate actual payment in the future related to our
cause significant damage to the Japanese economy. Honda’s
uncertain tax positions, unrecognized tax benefits totaled ¥46,265
business sites, such as Honda’s R&D subsidiaries located in Tochigi
million are not represented in the table above.
Prefecture, were heavily damaged. As a result, certain property,
At March 31, 2011, we had no material capital lease obligations
plant and equipment and inventories were damaged. On March 11,
or long-term liabilities reflected on our balance sheet under U.S.
2011, Honda temporarily suspended production and R&D activities
GAAP other than those set forth in the table above.
at its sites located in Japan due to the effects of this disaster, which
includes a shortage of parts supplies and damage on property, plant
and equipment.
49
As a result, Honda recognized ¥45.7 billion of costs and expenses,
Application of Critical Accounting Policies
of which ¥17.4 billion is included in cost of sales and ¥28.2 billion is
included in selling, general and administrative expenses in the
Critical accounting policies are those which require us to apply the
accompanying consolidated statement of income for the year ended
most difficult, subjective or complex judgments, often requiring us to
March 31, 2011. These costs and expenses mainly consist of
make estimates about the effect of matters that are inherently
unallocated fixed production overhead of ¥15.0 billion caused by
uncertain and which may change in subsequent periods, or for
temporary suspension of production which is included in cost of
which the use of different estimates that could have reasonably been
sales, and loss on damaged property, plant and equipment of ¥15.6
used in the current period would have had a material impact on the
billion which is included in selling, general and administrative
presentation of our financial condition and results of operations. A
expenses. Fixed costs of ¥7.7 billion pertaining to certain R&D
sustained loss of consumer confidence which may be caused by
activities incurred during the period when such activities were
changes in consumer preferences and rising fuel prices, effects of
suspended are not included in research and development, but
the Great East Japan Earthquake or other factors have combined to
selling, general and administrative expenses. Substantially all of
increase
these costs and expenses resulting from the disaster are included in
assumptions.
operating expenses of the automobile business segment. Honda will
The following is not intended to be a comprehensive list of all our
recognize the costs of future restoration activities as they are
accounting policies.
incurred. The effect of this disaster on Honda’s sales activities for the
We have identified the following critical accounting policies with
year ended March 31, 2011 was immaterial.
respect to our financial presentation.
the
uncertainty
inherent
in
such
estimates
and
By April 11, 2011, Honda had resumed production activities at all
of its production sites; however, production at Honda’s automobile
(Product Warranty)
plants both in and outside of Japan has been temporarily reduced.
We warrant our products for specific periods of time.
As of the date of the filing of Honda’s Form 20-F (as of June 23,
Product warranties vary depending upon the nature of the
2011), recovery from shortage of certain parts supplies is in sight.
product, the geographic location of their sales and other factors.
Honda expects its domestic production to have been nearly
We recognize costs for general warranties on products we sell
normalized by late June and its overseas production will be nearly
and product recalls. We provide for estimated warranty costs at the
normalized in the August/September timeframe except certain types
time products are sold to customers or the time new warranty
or models of automobile products which will have continuous
programs are initiated. Estimated warranty costs are provided based
restricted parts supplies.
on historical warranty claim experience with consideration given to
Concerning the impact on profit on the next year’s consolidated
the expected level of future warranty costs, including current sales
financial statements, Honda estimates factors which weigh on profit
trends, the expected number of units to be affected and the
mainly in the automobile business segment such as decreased net
estimated average repair cost per unit for warranty claims. Our
sales of automobile business attributable to a shortage of inventories,
products contain certain parts manufactured by third-party suppliers.
unallocated fixed production overhead as a result of temporary
Since suppliers typically warrant these parts, the expected
reduced production, and the costs of restoration activities can occur.
receivables from warranties of these suppliers are deducted from
On the other hand, net sales of automobile business is expected to
our estimates of accrued warranty obligations.
recover after normalization of production. Honda believes the impact
We believe our accrued warranty liability is a “critical accounting
of the Earthquake will not be severe on Honda’s consolidated
estimate” because changes in the calculation can materially affect
financial position or results of operations and will not continue over a
net income attributable to Honda Motor Co., Ltd., and require us to
long period.
estimate the frequency and amounts of future claims, which are
Honda’s R&D subsidiaries located in Tochigi Prefecture set up
inherently uncertain.
satellite offices within the plants and other offices as it would take
Our policy is to continuously monitor warranty cost accruals to
some time to restore its buildings and facilities, and resumed R&D
determine the adequacy of the accrual. Therefore, warranty expense
operations on March 28. As a result, Honda has been able to
accruals are maintained at an amount we deem adequate to cover
minimize the impact of the Earthquake on R&D activities. The satellite
estimated warranty expenses.
offices were dissolved in early June.
Actual claims incurred in the future may differ from the original
estimates, which may result in material revisions to the warranty
expense accruals.
50
The changes in provisions for those product warranties and net sales and other operating revenue for each of the years in the three-year
period ended March 31, 2011 are as follows:
Yen (millions)
Fiscal years ended March 31
2009
Provisions for product warranties
Balance at beginning of year
Warranty claims paid during the period
Liabilities accrued for warranties issued during the period
Changes in liabilities for pre-existing warranties during the period
Foreign currency translation
Balance at end of year
293,760
(123,509)
79,576
2,233
(18,081)
233,979 ¥ 233,979
(86,886)
79,520
(3,571)
2,996
226,038
¥ 226,038
(82,080)
84,920
(3,550)
(11,385)
213,943
¥10,011,241
¥8,579,174 ¥8,936,867
¥
2011
2010
(Credit Losses)
finance receivables through various stages of delinquency and
Our finance subsidiaries provide retail lending and leasing to
ultimately to charge-offs. Roll rates are projected based on historical
customers and wholesale financing to dealers primarily to support
results while also taking into consideration trends and changing
sales of our products. Honda classifies retail and direct financing
economic conditions. Similar to our portfolio of consumer finance
lease receivables derived from those services as finance
receivables, our portfolio of receivables on past due operating lease
subsidiaries–receivables. Operating leases are classified as property
rental payments is collectively evaluated for the allowance for credit
on operating leases. Certain finance receivables related to sales of
losses. Property on operating leases are also collectively evaluated
inventory are included in trade accounts and notes receivable and
for impairment losses to be realized upon early disposition.
other assets in the consolidated balance sheets. Receivables on
Wholesale receivables are considered to be impaired and
past due operating lease rental payments are included in other
recognized in the allowance for credit losses when it is probable that
current assets in the consolidated balance sheets.
it will be unable to collect all amounts due according to the original
The majority of the credit risk is with consumer financing and to a
terms of the contract. Our finance subsidiaries recognize estimated
lesser extent with dealer financing. Credit risk is affected by general
losses on them in allowance for credit losses. Credit risk on wholesale
economic conditions such as a rise in unemployment rates or
receivables is affected primarily by the financial strength of the
declines in used vehicle prices. Our finance subsidiaries estimate
dealers within the portfolio. Wholesale receivables are evaluated for
losses incurred on retail and direct financing lease receivables
impairment on an individual dealer basis. Ongoing evaluations of
(consumer finance receivables) and recognize them in the allowance
dealerships are performed to determine whether there is evidence of
for credit losses. Estimated losses on past due operating lease
impairment. Factors can include payment performance, overall
rental payments are also recognized in the allowance for credit
dealership financial performance or known difficulties experienced
losses. In the case of property on operating leases, estimated losses
by the dealership.
due to customer defaults are not recognized in the allowance for
We believe our allowance for credit losses and impairment losses
credit losses because a loss is realized on the disposition of the
on operating leases is a “critical accounting estimate” because it
property. Therefore, we present these losses as impairment losses
requires significant judgment about inherently uncertain items. We
on property on operating leases. Consumer finance receivables
regularly review the adequacy of the allowance for credit losses and
consist of a large number of smaller-balance homogenous loans
impairment losses on operating leases. The estimates are based on
and leases. Our finance subsidiaries segment these receivables into
information available as of the closing date of each fiscal year.
groups with common characteristics, and estimate collectively the
However, actual losses may differ from the original estimates as a
allowance for credit losses on consumer finance receivables by the
result of actual results varying from those assumed in our
group. Our finance subsidiaries take into consideration various
estimates.
methodologies when estimating the allowance including vintage loss
As an example of the sensitivity of the allowance calculation, the
rate analysis and delinquency roll rate analysis. When performing the
following scenario demonstrates the impact that a deviation in one
vintage loss rate analysis, consumer finance receivables are
of the primary factors estimated as a part of our allowance calculation
segregated between retail and direct financing leases, and further
would have on the provision and allowance for credit losses. If we
segmented into groups with common risk characteristics including
had experienced a 10% increase in net credit losses during fiscal
collateral type, credit grades and original terms. Loss rates are
2011, the provision for fiscal 2011 and the allowance balance at the
projected for these pools based on historical rates and adjusted for
end of fiscal 2011 would have increased by approximately ¥4.6
considerations of emerging trends and changing economic
billion and ¥2.8 billion, respectively. Note that this sensitivity analysis
conditions. The roll rate analysis is used primarily by our finance
may be asymmetric, and is specific to the base conditions in fiscal
subsidiaries in North America. This analysis tracks the migration of
2011.
51
Additional Narrative of the Change in Credit Loss
The following tables summarize our allowance for credit losses on finance receivables:
For the year ended March 31, 2009
Provisions for credit losses
Provision
Charge-offs
Recoveries
Change due to securitization activity
Adjustments from foreign currency translation
Yen (billions)
Retail
Direct financing lease
Wholesale
Total
¥ 31.4
49.1
(57.3)
14.7
(1.4)
(2.2)
¥ 2.5
3.2
(6.0)
2.1
—
(0.1)
¥ 0.7
1.9
(0.5)
0.0
—
(0.2)
¥ 34.8
54.4
(63.9)
16.9
(1.4)
(2.7)
¥ 34.3
¥ 1.8
¥ 1.8
¥ 38.0
Ending receivable balance
Average receivable balance, net
Net charge-offs as a % of average receivable balance
Allowance as a % of ending receivable balance ¥3,138.8
¥3,431.6
1.24%
1.09%
¥699.3
¥878.3
0.44%
0.27%
¥377.6
¥383.4
0.15%
0.50%
¥4,215.7
¥4,693.4
1.00%
0.90%
Yen (billions)
Retail
Wholesale
Total
Provision
Charge-offs
Recoveries
¥ 34.3
30.0
(43.7)
13.9
—
(0.6)
¥ 1.8
1.9
(3.2)
1.1
—
0.1
¥ 1.8
0.3
(0.6)
0.0
—
(0.0)
¥ 38.0
32.3
(47.6)
15.1
—
(0.5)
¥ 33.9
¥ 1.7
¥ 1.6
¥ 37.3
Allowance as a % of ending receivable balance
¥3,246.4
¥3,180.0
0.94%
1.05%
¥449.4
¥497.8
0.42%
0.40%
¥331.7
¥325.5
0.18%
0.49%
¥4,027.6
¥4,004.5
0.81%
0.93%
Yen (billions)
Retail
Wholesale
Total
¥ 33.9
¥ 1.7
¥ 1.6
¥ 37.3
0.8
34.8
10.3
(27.6)
11.1
—
(3.0)
—
1.7
0.7
(1.5)
0.5
—
(0.0)
—
1.6
0.3
(0.5)
0.0
—
(0.0)
0.8
38.2
11.3
(29.7)
11.7
—
(3.2)
¥ 25.5
¥ 1.4
¥ 1.4
¥ 28.4
Allowance as a % of ending receivable balance
¥3,368.0
¥3,346.5
0.49%
0.76%
¥362.1
¥374.9
0.26%
0.40%
¥301.6
¥309.5
0.15%
0.47%
¥4,031.7
¥4,031.0
0.45%
0.71%
Adjustment resulting from the adoption of new accounting standards
or variable interest entities
Adjusted balance at beginning of year
Provision
Charge-offs
Recoveries
The following table provides information related to losses on operating leases due to customer defaults:
52
Yen (billions)
2009
2010
2011
Provision for credit losses on past due rental payments
Impairment losses on operating leases due to early termination
¥2.0
¥8.7
¥1.9
¥3.3
¥1.6
¥0.8
Fiscal Year 2011 Compared with Fiscal Year 2010
be generated by the operating leases. If such operating leases are
The provision for credit losses on finance receivables decreased by
considered to be impaired, impairment losses to be recognized is
¥20.9 billion, or 65%, and net charge-offs decreased by ¥14.5
measured by the amount by which the carrying amount of the
billion, or 45%. Impairment losses on operating leases due to early
operating leases exceeds the estimated fair value of the operating
termination decreased by ¥2.4 billion, or 75%. These declines in
leases.
losses are due mainly to the improvement in the overall credit quality
We believe that our estimated losses on lease residual values and
of our North American portfolio and economic conditions and
impairment losses is a “critical accounting estimate” because it is
strength in used vehicle prices.
highly susceptible to market volatility and requires us to make
assumptions about future economic trends and lease residual
(Losses on Lease Residual Values)
values, which are inherently uncertain. We believe that the
Our finance subsidiaries in North America establish contract residual
assumptions used are appropriate. However, actual losses incurred
values of lease vehicles at lease inception based on expectations of
may differ from original estimates as a result of actual results varing
future used vehicle values, taking into consideration external industry
from those assumed in our estimates.
data. End customers of leased vehicles typically have an option to
If future auction values for all Honda and Acura vehicles in our
buy the leased vehicle for the contractual residual value of the vehicle
North American operating lease portfolio as of March 31, 2011,
or to return the vehicle to our finance subsidiaries through the dealer
were to decrease by approximately ¥10,000 per unit from our
at the end of the lease term. Likewise, dealers have the option to
present estimates, holding all other assumption constant, the total
buy the vehicle returned by the customer or to return the vehicle to
impact would be an increase in depreciation expense by
our finance subsidiaries. The likelihood that the leased vehicle will be
approximately ¥2.0 billion, which would be recognized over the
purchased varies depending on the difference between the
remaining lease terms. Similarly, if future return rates for our existing
contractual residual value and the actual market value of the vehicle
portfolio of all Honda and Acura vehicles were to increase by one
at the end of the lease term. We are exposed to risk of loss on the
percentage point from our present estimates, the total impact would
disposition of returned lease vehicles when the proceeds from the
be an increase in depreciation expense by approximately ¥0.2
sale of the vehicles are less than the contractual residual values at
billion, which would be recognized over the remaining lease terms.
the end of the lease term. For direct financing leases, our finance
With the same prerequisites shown above, if future auction values in
subsidiaries in North America purchase insurance to cover a portion
our North American direct financing lease portfolio were to decrease
of the estimated residual value.
by approximately ¥10,000 per unit from our present estimates, the
We periodically review the estimate of residual values. For vehicle
total impact would be an increase in losses on lease residual values
leases accounted for as operating leases, the adjustments to
by approximately ¥0.2 billion. And if future return rates were to
estimated residual values result in changes to the remaining
increase by one percentage point from our present estimates, the
depreciation expense to be recognized prospectively on a straight-
total impact would be slight. Note that this sensitivity analysis may
line basis over the remaining term of the lease.
be asymmetric, and are specific to the base conditions in fiscal
For vehicle leases accounted for as direct financing leases,
2011. Also, declines in auction values are likely to have a negative
downward adjustments are made for declines in estimated residual
effect on return rates which could affect the sensitivities.
values that are deemed to be other-than-temporary. The adjustments
on the uninsured portion of the vehicle’s residual value are recognized
Fiscal Year 2011 Compared with Fiscal Year 2010
as a loss in the period in which the estimate changed.
Used vehicle prices continued to improve during fiscal year 2011 due
The primary components in estimating losses on lease residual
in part to the low supply of used vehicles. Losses related to lease
values are the expected frequency of returns, or the percentage of
residual value of our finance subsidiaries in North America declined
leased vehicles we expect to be returned by customers at the end
because of higher estimates of lease residual values. No impairment
of the lease term, and the expected loss severity, or the expected
losses as a result of declines in estimated residual values were
difference between the residual value and the amount we receive
recognized during fiscal year 2011.
through sales of returned vehicles plus proceeds from insurance, if
Incremental depreciation on operating leases declined by ¥11.4
any. We estimate losses on lease residual values by evaluating
billion, or 81%. Losses on lease residual values on direct financing
several different factors, including trends in historical and projected
leases declined by ¥3.9 billion, or 56%.
used vehicle values and general economic measures.
We also test our operating leases for impairment whenever events
or changes in circumstances indicate that their carrying values may
not be recoverable.
Recoverability of operating leases to be held is measured by a
comparison of the carrying amount of operating leases to future net
cash flows (undiscounted and without interest charges) expected to
53
(Pension and Other Postretirement Benefits)
31, 2011 was 3.0% for Japanese plans. Our assumed discount rate
We have various pension plans covering substantially all of our
and rate of salary increase as of March 31, 2011 were 5.5~6.0% and
employees in Japan and certain employees in foreign countries.
1.5~4.6%, respectively, and our assumed expected long-term rate of
Benefit obligations and pension costs are based on assumptions of
return for fiscal 2011 was 6.5~8.0% for foreign plans.
many factors, including the discount rate, the rate of salary increase
We believe that the accounting estimates related to our pension
and the expected long-term rate of return on plan assets. The
plans is “critical accounting estimate” because changes in these
discount rate is determined mainly based on the rates of high quality
estimates can materially affect our financial condition and results of
corporate bonds currently available and expected to be available
operations.
during the period to maturity of the defined benefit pension plans.
Actual results may differ from our assumptions, and the difference
The salary increase assumptions reflect our actual experience as well
is accumulated and amortized over future periods. Therefore, the
as near-term outlook. Honda determines the expected long-term
difference generally will be reflected as our recognized expenses in
rate of return based on the investment policies. Honda considers the
future periods. We believe that the assumptions currently used are
eligible investment assets under investment policies, historical
appropriate, however, differences in actual expenses or changes in
experience, expected long-term rate of return under the investing
assumptions could affect our pension costs and obligations, including
environment and the long-term target allocations of the various asset
our cash requirements to fund such obligations.
categories. Our assumed discount rate and rate of salary increase as
The following table shows the effect of a 0.5% change in the
of March 31, 2011 were 2.0% and 2.2%, respectively, and our
assumed discount rate and the expected long-term rate of return on
assumed expected long-term rate of return for the year ended March
our funded status, equity and pension expense.
Japanese Plans
Assumptions
Yen (billions)
Percentage point change (%)
Funded status
Equity
Pension expense
Discount rate
+0.5/–0.5
–84.8/+95.5
+34.3/–45.3
–3.1/+4.0
Expected long-term rate of return
+0.5/–0.5
—
—
–3.8/+3.8
Percentage point change (%)
Funded status
Equity
Pension expense
Discount rate
+0.5/–0.5
–39.9/+45.7
+16.9/–19.9
–4.1/+4.1
Expected long-term rate of return
+0.5/–0.5
—
—
–1.8/+1.8
Foreign Plans
Assumptions
Yen (billions)
*1 Note that this sensitivity analysis may be asymmetric, and is specific to the base conditions at March 31, 2011.
*2 Funded status for fiscal 2011 is affected by March 31, 2011 assumptions.
Pension expense for fiscal 2011 is affected by March 31, 2010 assumptions.
(Income Taxes)
the probability of the outcome that could be realized upon ultimate
Honda is subject to income tax examinations in many tax jurisdictions
resolution. Our estimates may change in the future due to new
because Honda conducts its operations in various regions of the
developments.
world. We recognize the tax benefit from an uncertain tax position
We believe that our estimates and assumptions of unrecognized
based on the technical merits of the position when the position is
tax benefits are reasonable, however, if our estimates of unrecognized
more likely than not to be sustained upon examination. Benefits from
tax benefits and potential tax benefits are not representative of actual
tax positions that meet the more likely than not recognition threshold
outcomes, our consolidated financial statements could be materially
are measured at the largest amount of benefit that is greater than
affected in the period of settlement or when the statutes of limitations
50% likelihood of being realized upon ultimate resolution. We
expire, as we treat these events as discrete items in the period of
performed a comprehensive review for any uncertain tax positions.
resolution.
We believe our accounting for tax uncertainties is a “critical
accounting estimate” because it requires us to evaluate and assess
54
Quantitative and Qualitative Disclosure
about Market Risk
(Foreign Currency Exchange Rate Risk)
Foreign currency forward exchange contracts and purchased option
contracts are used to hedge currency risk of sale commitments
Honda is exposed to market risks, which are changes in foreign
denominated in foreign currencies (principally U.S. dollars).
currency exchanges rates, in interest rates and in prices of
Foreign currency written option contracts are entered into in
marketable equity securities. Honda is a party to derivative financial
combination with purchased option contracts to offset premium
instruments in the normal course of business in order to manage
amounts to be paid for purchased option contracts.
risks associated with changes in foreign currency exchange rates
The tables below provide information about our derivatives related
and in interest rates. Honda does not hold any derivative financial
to foreign currency exchange rate risk as of March 31, 2010 and
instruments for trading purposes.
2011. For forward exchange contracts and currency options, the
table presents the contract amounts and fair value. All forward
exchange contracts and currency contracts to which we are a party
have original maturities of less than one year.
Foreign Exchange Risk
Fiscal years ended March 31
2011
2010
Yen (millions)
Contract
amounts
Fair value
Average
contractual
rate (Yen)
Yen (millions)
Contract
amounts
Fair value
Forward Exchange Contracts
To sell US$
To sell EUR
To sell CA$
To sell GBP
To sell other foreign currencies
To buy US$
To buy other foreign currencies
Cross-currencies
¥257,822
32,188
24
29,931
20,761
3,207
3,537
231,657
¥(6,076)
456
57
(108)
(829)
102
34
(1,134)
¥ 90.80
126.70
88.58
139.69
various
90.02
various
various
¥285,212
34,183
19
13,857
58,330
8,175
3,046
223,587
¥(1,229)
(1,701)
(1)
(253)
(3,660)
41
65
(1,212)
Total
¥579,127
¥(7,498)
¥626,409
¥(7,950)
Currency Option Contracts
Option purchased to sell US$
Option written to sell US$
Option purchased to sell other currencies
Option written to sell other currencies
¥ 27,865
55,731
3,123
6,246
¥ 78
(829)
(50)
(26)
various
various
various
various
¥ 14,746
29,491
—
—
¥ 144
(108)
—
—
Total
¥ 92,965
¥ (827)
¥ 44,237
¥ 36
Average
contractual
rate (Yen)
¥ 82.77
111.63
83.44
131.40
various
82.73
various
various
various
various
—
—
(Interest Rate Risks)
different currencies, also serve to hedge foreign currency exchange
Honda is exposed to market risk for changes in interest rates related
risk as well as interest rate risk.
primarily to its debt obligations and finance receivables. In addition
to short-term financing such as commercial paper, Honda has long-
The following tables provide information about Honda’s financial
term debt with both fixed and floating rates. Our finance receivables
instruments that were sensitive to changes in interest rates at March
are primarily fixed rate. Interest rate swap agreements are mainly
31, 2010 and 2011. For finance receivables and long-term debt,
used to manage interest rate risk exposure and to convert floating
these tables present principal cash flows, fair value and related
rate financing (normally three-five years) to fixed rate financing in
weighted average interest rates. For interest rate swaps and currency
order to match financing costs with income from finance receivables.
and interest rate swaps, the table presents notional amounts, fair
Foreign currency and interest rate swap agreements used among
value and weighted average interest rates. Variable interest rates are
determined using formulas such as LIBOR+ and an index.
55
Finance Subsidiaries–Receivables
2010
2011
Yen (millions)
Yen (millions)
Expected maturity date
Total
Direct financing leases*1
JP¥
US$
Other
¥
Fair
value
Total
29,401
7,349
412,709
2-3
year
3-4
year
4-5
year
Thereafter
Average
interest
rate
Fair
value
1,063
—
1,744
—
—
—
* 4.39%
*
—
* 2.83%
* ¥ 362,136
2,807
—
*
¥ 449,459
Other finance
subsidiaries–receivables:
JP¥
US$
Other
¥ 456,525 449,776 ¥ 500,213
2,504,187 2,536,110 2,554,404
617,507 625,523
615,039
131,071 108,332
68,801
51,125
160,317 123,363 93,468 61,286 39,444 22,335
505,615 4.39%
926,042 626,043 476,240 323,853 160,972 41,254 2,588,307 4.81%
283,393 151,909 99,213 55,871 19,209 5,444
607,296 6.50%
¥3,578,219 3,611,409 ¥3,669,656 1,369,752 901,315 668,921 441,010 219,625 69,033 3,701,218
Retained interest in securitizations *2
Total*3
1-2
year
* ¥ 31,329
14,512
8,591
4,819
2,344
*
—
—
—
—
—
*
330,807 116,559 99,741 63,982 48,781
Total—Direct financing leases
Total—Other finance
subsidiaries–receivables:
Within
1 year
27,555
27,555
— —
¥4,055,233 ¥4,031,792
*1 Under U.S. generally accepted accounting principles, disclosure of fair values of direct financing leases is not required.
*2 The retained interest in securitizations is accounted for as “trading” securities and is reported at fair value.
*3 The finance subsidiaries–receivables include finance subsidiaries–receivables included in trade accounts and notes receivables and other assets in the consolidated balance sheets.
Long-Term Debt (including current portion)
2010
2011
Yen (millions)
Yen (millions)
Total
56
Within
1 year
323,852 ¥ 320,000
70,000
120,000
40,000
30,000
60,000
—
322,270 1.01%
Japanese yen bonds
Japanese yen mediumterm notes (Fixed rate)
Japanese yen mediumterm notes (Floating rate)
U.S. dollar mediumterm notes (Fixed rate)
U.S. dollar mediumterm notes (Floating rate)
Asset-backed notes
Loans and others—primarily
fixed rate
¥ 320,000
Total
¥3,035,331 3,125,045 ¥3,005,695 962,455
1-2
year
2-3
year
3-4
year
4-5
year
Thereafter
Fair
value
Average
interest
rate
Fair
value
Total
151,998
153,250
102,226
33,909
25,306
6,502
6,001
27,507
3,001
102,896 1.35%
114,676
114,599
80,619
16,504
58,614
3,501
—
2,000
—
80,770 0.49%
391,272
420,970
451,891
28,967
41,381 141,526
45,521
82,764 111,732
477,827 4.38%
211,685
311,222
213,695
316,596
297,285 146,160
453,802 239,339
8,276
5,361
42,872
—
299,014 0.98%
458,794 1.94%
1,534,478 1,582,083
1,299,872 427,576
310,459 313,575 160,431
84,818
89,963
148,699
10,014
60,403
—
—
3,013 1,322,989 3.31%
794,422 575,521 255,590 299,961 117,746 3,064,560
Interest Rate Swaps
2011
2010
Yen (millions)
Notional
principal
currency
Receive/
Pay
JP¥
US$
CA$
GBP
EUR
Float/Fix
Float/Fix
Fix/Float
Float/Float
Float/Fix
Fix/Float
Float/Fix
Float/Fix
Yen (millions)
Contract
amounts
¥
Fair
value
Contract
amount
770
(24) ¥ 420
2,476,108 (47,762) 2,357,658
525,362 24,473
519,895
—
—
12,473
525,099 (10,905)
458,092
233,677 10,036
179,904
45,075
(528)
32,134
—
—
6,029
¥3,806,091 (24,710) ¥3,566,605
Total
Fair
value
Average
receive
rate
Average
pay
rate
—
—
88,971
—
83,150 112,253
—
—
47,966
5,277
—
—
—
—
—
—
(14)
(20,292)
16,611
16
(4,218)
5,373
(136)
(17)
1.34%
0.37%
4.40%
0.74%
1.30%
5.29%
1.78%
0.88%
3.16%
1.84%
1.75%
0.60%
2.87%
2.68%
1.95%
2.24%
481,834 830,149 1,344,506 572,499 220,087 117,530
(2,677)
Average
receive
rate
Average
pay
rate
1.35%
0.76%
5.03%
1.29%
0.73%
1.09%
1.74%
2.81%
Within
1 year
1-2
year
2-3
year
3-4
year
4-5
year
Thereafter
—
—
180
240
305,929 594,618 940,725 427,415
29,103 61,336 183,762 50,291
— 12,473
—
—
71,298 97,491 141,507 94,553
51,401 51,401 77,102
—
21,422 10,712
—
—
2,681
2,118
1,230
—
Currency & Interest Rate Swaps
2011
2010
Yen (millions)
Yen (millions)
Receiving Paying
side
side
currency currency
Receive/
Pay
JP¥
US$
Other
Other
Fix/Float
¥124,721 29,735 ¥ 82,078 23,820 17,563 5,087
5,537
Float/Float 137,850 17,403 105,671 58,564 42,348 2,877
—
Fix/Float
405,289 12,613 313,576
— 88,093 100,068 125,415
Float/Float
51,104 (3,953) 47,774 27,962
—
— 19,812
27,734
1,882
—
—
2,337
—
—
—
21,523
25,179
6,444
(3,064)
¥718,964 55,798 ¥549,099 110,346 148,004 108,032 150,764
29,616
2,337
50,082
Total
Contract
amounts
Fair
value
Contract
amount
Within
1 year
1-2
year
2-3
year
3-4
year
4-5
year
Thereafter
Fair
value
(Equity Price Risk)
any plaintiff for general and special damages and court costs will be
Honda is exposed to equity price risk as a result of its holdings of
adequately covered by our insurance and accrued liabilities. Punitive
marketable equity securities. Marketable equity securities included
damages are claimed in certain of these lawsuits. Honda is also
in Honda’s investment portfolio are held for purposes other than
subject to potential liability under other various lawsuits and claims
trading, and are reported at fair value, with unrealized gains or
including 6 purported class actions in the United States.
losses, net of deferred taxes, included in accumulated other
Honda recognizes an accrued liability for loss contingencies when
comprehensive income (loss) in the equity section of the consolidated
it is probable that an obligation has been incurred and the amount of
balance sheets. At March 31, 2010 and 2011, the estimated fair
loss can be reasonably estimated. Honda reviews these pending
values of marketable equity securities were ¥94.5 billion and ¥92.4
lawsuits and claims periodically and adjusts the amounts recorded
billion, respectively.
for these contingent liabilities, if necessary, by considering the nature
of lawsuits and claims, the progress of the case and the opinions of
legal counsel. After consultation with legal counsel, and taking into
Legal Proceedings
account all known factors pertaining to existing lawsuits and claims,
Honda believes that the ultimate outcome of such lawsuits and
Various legal proceedings are pending against us. Honda believes
pending claims including 6 purported class actions in the United
that such proceedings constitute ordinary routine litigation incidental
States should not result in liability to Honda that would be likely to
to our business. With respect to product liability, personal injury claims
have an adverse material effect on its consolidated financial position,
or lawsuits, we believe that any judgment that may be recovered by
results of operations or cash flows.
57
Consolidated Balance Sheets
March 31, 2010 and 2011
Assets
Yen
(millions)
U.S. dollars
(millions)
2010
2011
2011
¥ 1,119,902
¥ 1,279,024
$ 15,382
883,476
787,691
9,473
1,100,158
1,131,068
13,603
Inventories 935,629
899,813
10,822
Deferred income taxes 176,604
202,291
2,433
Other current assets 397,955
390,160
4,692
Total current assets
4,613,724
4,690,047
56,405
Finance subsidiaries–receivables, net 2,361,335
2,348,913
28,249
Investments in and advances to affiliates 457,834
440,026
5,292
Other, including marketable equity securities
184,847
199,906
2,404
Total investments and advances
642,681
639,932
7,696
1,651,672
1,645,517
19,790
343,525
287,885
3,462
1,308,147
1,357,632
16,328
489,769
483,654
5,817
Buildings 1,509,821
1,473,067
17,716
Machinery and equipment
3,257,455
3,166,353
38,079
143,862
202,186
2,432
5,400,907
5,325,260
64,044
Less accumulated depreciation and amortization 3,314,244
3,385,904
40,720
Net property, plant and equipment 2,086,663
1,939,356
23,324
616,565
594,994
7,155
¥11,629,115
¥11,570,874
$139,157
Current assets:
Cash and cash equivalents
Trade accounts and notes receivable, net of allowance
for doubtful accounts of ¥8,555 million in 2010 and
¥7,904 million ($95 million) in 2011 Finance subsidiaries–receivables, net Investments and advances:
Property on operating leases:
Vehicles Less accumulated depreciation
Net property on operating leases Property, plant and equipment, at cost:
Land Construction in progress Other assets Total assets, net of allowance for doubtful accounts of
¥9,319 million in 2010 and ¥23,275 million in 2011 58
Liabilities and Equity
Yen
(millions)
U.S. dollars
(millions)
2010
2011
2011
¥ 1,066,344
¥ 1,094,740 $ 13,166
722,296
962,455 11,575
24,704
25,216 303
Accounts 802,464
691,520 8,317
Accrued expenses 542,521
525,540 6,320
Income taxes payable 23,947
31,960
384
Other current liabilities 236,854
236,761
2,848
Total current liabilities
3,419,130
3,568,192
42,913
Long-term debt, excluding current portion
2,313,035
2,043,240
24,573
Other liabilities
1,440,520
1,376,530
16,554
Total liabilities
7,172,685
6,987,962
84,040
86,067
86,067
1,035
Capital surplus 172,529
172,529
2,075
Legal reserves
45,463
46,330
557
Retained earnings
5,304,473 5,666,539
68,148
Accumulated other comprehensive income (loss), net
(1,208,162)
(1,495,380)
(17,984)
(71,730)
(26,110)
(314)
4,328,640 4,449,975
53,517
127,790
132,937
1,600
4,456,430
4,582,912
55,117
¥11,629,115
¥11,570,874
$139,157
Current liabilities:
Short-term debt Current portion of long-term debt Trade payables:
Notes Equity:
Honda Motor Co., Ltd. shareholders’ equity:
Common stock, authorized 7,086,000,000 shares in 2010 and 2011;
issued 1,834,828,430 shares in 2010 and 1,811,428,430 shares in 2011
Treasury stock, at cost 20,225,694 shares in 2010 and
9,126,716 shares in 2011
Noncontrolling interests
Total equity
Commitments and contingent liabilities
Total liabilities and equity
59
Consolidated Statements of Income
Years ended March 31, 2009, 2010 and 2011
Yen
(millions)
2009
2010
U.S. dollars
(millions)
2011
2011
¥10,011,241 ¥8,579,174
¥8,936,867
$107,479
Cost of sales
7,419,582 6,414,721
6,496,841
78,134
Selling, general and administrative
1,838,819 1,337,324
1,382,660
16,629
563,197 463,354
487,591
5,864
9,821,598 8,215,399
8,367,092
100,627
189,643 363,775
569,775
6,852
Interest income
41,235 18,232
23,577
284
Interest expense
(22,543)
(12,552)
(8,474)
(102)
Other, net
(46,601)
(33,257)
45,670
549
(27,909)
(27,577)
60,773
731
161,734
336,198
630,548
7,583
Current
68,062
90,263
76,647
922
Deferred
41,773
56,606
130,180
1,565
109,835
146,869
206,827
2,487
Income before equity in income of affiliates
51,899
189,329
423,721
5,096
99,034
93,282
139,756
1,681
150,933
282,611
563,477
6,777
13,928
14,211
29,389
354
137,005 ¥ 268,400
¥ 534,088
$ 6,423
Operating costs and expenses:
Operating income
Other income (expenses):
Income before income taxes and equity in income of affiliates
Income tax expense:
Net income
Less: Net income attributable to noncontrolling interests
¥
Yen
Basic net income attributable to
Honda Motor Co., Ltd. per common share
60
2009
¥
75.50
2010
¥
147.91
U.S. dollars
2011
2011
¥ 295.67
$ 3.56
Consolidated Statements of Changes in Equity
Common
Capital
Legal
Retained
stock
surplus
reserves
earnings
Yen (millions)
Accumulated
other
comprehensive
income (loss),
Treasury
net
stock
Total Honda Motor
Co., Ltd.
shareholders’ Noncontrolling
equity
interests
Total equity
Balance at March 31, 2008
¥86,067 ¥172,529 ¥39,811 ¥5,106,197 ¥ (782,198) ¥(71,927) ¥4,550,479 ¥141,806 ¥4,692,285
Transfer to legal reserves
4,154 (4,154)
—
—
Dividends paid to
Honda Motor Co., Ltd. shareholders
(139,724)
(139,724)
(139,724)
Dividends paid to
noncontrolling interests (10,841)
(10,841)
Capital transactions and others
(172)
(172)
Comprehensive income (loss):
Net income
137,005 137,005
13,928
150,933
Other comprehensive
income (loss), net of tax
Adjustments from foreign
currency translation
(477,316)
(477,316) (19,865) (497,181)
Unrealized gains (losses) on
available-for-sale securities, net
(25,063)
(25,063)
(60)
(25,123)
derivative instruments, net
(460)
(460)
(460)
Pension and other postretirement
benefits adjustments
(37,791)
(37,791)
(1,740)
(39,531)
Total comprehensive income (loss)
(403,625)
(7,737) (411,362)
Purchase of treasury stock
(62)
(62)
(62)
Reissuance of treasury stock
(57)
277 220
220
Retirement of treasury stock
—
¥86,067 ¥172,529 ¥43,965 ¥5,099,267 ¥(1,322,828) ¥(71,712) ¥4,007,288 ¥123,056 ¥4,130,344
1,498
(1,498)
—
—
Dividends paid to
(61,696)
(61,696)
(61,696)
Dividends paid to
noncontrolling interests (16,278)
(16,278)
127
127
Net income
268,400
268,400
14,211
282,611
Other comprehensive
91,097
91,097
5,750
96,847
23,107
23,107
111
23,218
(324)
(324)
(324)
786
786
813
1,599
383,066
20,885
403,951
(20)
(20)
(20)
2
2
2
—
¥86,067 ¥172,529 ¥45,463 ¥5,304,473 ¥(1,208,162) ¥(71,730) ¥4,328,640 ¥127,790 ¥4,456,430
61
Consolidated Statements of Changes in Equity–(Continued)
Common
Capital
Legal
Retained
stock
surplus
reserves
earnings
Yen (millions)
Accumulated
other
comprehensive
income (loss),
Treasury
net
stock
Total Honda Motor
Co., Ltd.
equity
interests
Total equity
¥86,067 ¥172,529 ¥45,463 ¥5,304,473 ¥(1,208,162) ¥(71,730) ¥4,328,640 ¥127,790 ¥4,456,430
Cumulative effect of adjustments
resulting from the adoption of new
accounting standards on variable
interest entities, net of tax
1,432
1,432
1,432
Adjustment balance at March 31, 2010 86,067 172,529 45,463 5,305,905 (1,208,162) (71,730) 4,330,072 127,790 4,457,862
867
(867)
—
—
Dividends paid to
(92,170)
(92,170)
(92,170)
Dividends paid to
noncontrolling interests
(16,232)
(16,232)
(946)
(946)
Net income
534,088
534,088
29,389
563,477
Other comprehensive
(290,745)
(290,745)
(6,796) (297,541)
575
575
(27)
548
168
168
168
2,784
2,784
(241)
2,543
246,870
22,325
269,195
(34,800)
(34,800)
(34,800)
3
3
3
(80,417) 80,417
—
—
¥86,067 ¥172,529 ¥46,330 ¥5,666,539 ¥(1,495,380) ¥(26,110) ¥4,449,975 ¥132,937 ¥4,582,912
U.S. dollars (millions)
Common
Capital
Legal
Retained
stock
surplus
reserves
earnings
Accumulated
other
comprehensive
income (loss),
Treasury
net
stock
Total Honda Motor
Co., Ltd.
equity
interests
Total equity
$1,035 $2,075 $547 $63,793 $(14,529)
$(862)
$52,059 $1,538 Cumulative effect of adjustments
resulting from the adoption of new
accounting standards on variable
interest entities, net of tax
17
17
Adjustment balance at March 31, 2010 1,035
2,075
547
63,810
(14,529)
(862)
52,076
1,538
10
(10)
—
Dividends paid to
(1,108)
(1,108)
Dividends paid to
(195)
(11)
Net income
6,423
6,423
353
Other comprehensive
(3,497)
(3,497)
(82)
7
7
(0)
2
2
33
33
(3)
2,968
268
(419)
(419)
0
0
(967)
967
—
$1,035
$2,075
$557
$68,148
$(17,984)
$(314)
$53,517
$1,600
62
$53,597
17
53,614
—
(1,108)
(195)
(11)
6,776
(3,579)
7
2
30
3,236
(419)
0
—
$55,117
Consolidated Statements of Cash Flows
Yen
(millions)
Cash flows from operating activities:
Net income
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation excluding property on operating leases
Depreciation of property on operating leases
Deferred income taxes
Dividends from affiliates
Gain on sales of investments in affiliates
Provision for credit and lease residual losses on finance subsidiaries–receivables
Impairment loss on investments in securities
Damaged and impairment loss on long-lived assets and goodwill excluding
property on operating leases
Impairment loss on property on operating leases
Loss (gain) on derivative instruments, net
Decrease (increase) in assets:
Trade accounts and notes receivable
Inventories
Other current assets
Other assets
Increase (decrease) in liabilities:
Trade accounts and notes payable
Accrued expenses
Income taxes payable
Other current liabilities
Other liabilities
Other, net
2009
¥
Net cash provided by operating activities
150,933
2010
U.S. dollars
(millions)
2011
2011
¥ 282,611 ¥ 563,477
$ 6,777
441,868 195,776 41,773 (99,034)
65,140 —
77,016 26,001 401,743
227,931
56,606
(93,282)
140,901
—
40,062
603
351,496
212,143
130,180
(139,756)
98,182
(46,756)
13,305
2,133
4,227
2,551
1,566
(1,681)
1,181
(562)
160
26
21,597 18,528 (15,506)
548
3,312
(37,753)
16,833
835
(7,788)
202
10
(94)
(30,025)
(262,782)
(82,838)
8,640 (6,910)
352,994
103,071
24,150
38,700
(33,676)
266
(40,729)
465
(405)
3
(490)
(133,662)
(102,711)
(12,861)
10,630 74,872 (9,714)
151,345
(20,457)
(14,524)
5,662
(30,146)
(44,255)
(55,331)
39,103
9,461
32,209
(83,115)
(30,335)
(665)
470
114
387
(1,000)
(364)
383,641
1,544,212
1,070,837
12,878
(19,419)
(11,412)
14,078
13,995
(5,871)
(262)
4,945
2,739
(21,181)
(179,951)
6,283
154,977
—
71,073
(392,062)
(318,543)
24,472
24,725
(1,448,146) (2,208,480)
1,595,235 2,109,904
(55,168)
—
(544,027)
(798,420)
245,110
408,265
(137)
168
(3)
33
(2,164)
1,864
855
(3,831)
297
(26,561)
25,375
—
(9,602)
4,910
Cash flows from investing activities:
Increase in investments and advances
Decrease in investments and advances
Payments for purchases of available-for-sale securities
Proceeds from sales of available-for-sale securities
Payments for purchases of held-to-maturity securities
Proceeds from redemptions of held-to-maturity securities
Proceeds from sales of investments in affiliates
Proceeds from sales of property, plant and equipment
Acquisitions of finance subsidiaries–receivables
Collections of finance subsidiaries–receivables
Sales (repurchases) of finance subsidiaries–receivables, net
Purchases of operating lease assets
Proceeds from sales of operating lease assets
(4,879)
1,921
(31,936)
26,896
(17,348)
32,667
—
(635,190)
18,843
(2,303,930)
2,023,031
324,672
(668,128)
100,017
Net cash used in investing activities
(1,133,364)
(595,751)
(731,390)
(8,796)
Cash flows from financing activities:
Increase (decrease) in short-term debt, net
Proceeds from long-term debt
Repayments of long-term debt
Dividends paid
Dividends paid to noncontrolling interests
Sales (purchases) of treasury stock, net
270,795
1,299,984
(889,483)
(139,724)
(10,841)
131
(649,641)
1,132,222
(963,833)
(61,696)
(16,278)
(18)
113,669
799,520
(870,406)
(92,170)
(16,232)
(34,797)
1,367
9,615
(10,469)
(1,108)
(195)
(418)
Net cash provided by (used in) financing activities
530,862
(559,244)
(100,416)
(1,208)
Effect of exchange rate changes on cash and cash equivalents
(141,672)
40,316
(79,909)
(960)
Net change in cash and cash equivalents
(360,533)
429,533
159,122
1,914
690,369
1,119,902
13,468
¥1,119,902 ¥1,279,024
$15,382
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year
1,050,902
¥
690,369
63
Segment Information
which separate financial information is available that is evaluated
regularly by the chief operating decision maker in deciding how to
Honda has four reportable segments: the Motorcycle business, the
allocate resources and in assessing performance. The accounting
Automobile business, the Financial services business and the Power
policies used for these reportable segments are consistent with the
product and other businesses, which are based on Honda’s
accounting policies used in Honda’s consolidated financial
organizational structure and characteristics of products and services.
statements.
Operating segments are defined as components of Honda’s about
Principal products and services, and functions of each segment are as follows:
Segment
Motorcycle business
Principal products and services
Functions
Motorcycles, all-terrain vehicles (ATVs),
Research & Development
and relevant parts
Manufacturing
Sales and related services
Automobile business
Automobiles and relevant parts
Manufacturing
Financial services business
Financial, insurance services
Power product and
Power products and relevant
Retail loan and lease related to Honda products
Others
other businesses
parts, and others
Manufacturing
Others
Segment Information
As of and for the year ended March 31, 2009
Yen (millions)
Financial
Motorcycle
Automobile
Services
Business
Business
Business
Net sales and other operating revenue:
External customers
¥1,411,511 ¥7,674,404
Intersegment —
—
Total
1,411,511
Cost of sales, SG&A and R&D expenses 1,311,598
Segment income (loss)
Assets
Investments in affiliates
Depreciation and amortization
Damaged and impairment losses on
long-lived assets and goodwill
Provision for credit and
lease residual losses on
finance subsidiaries–receivables
64
Power
Product
and Other
Businesses
Segment
Total
Reconciling
Items
¥ 582,261 ¥343,065 ¥10,011,241 ¥
—
14,264
25,840
40,104
(40,104)
7,674,404
7,649,861
596,525
515,854
368,905
384,389
10,051,345
9,861,702
(40,104)
(40,104)
Other
Adjustments
Consolidated
¥—
—
¥10,011,241
—
—
—
10,011,241
9,821,598
99,913
24,543
80,671
(15,484)
189,643
—
—
189,643
26,105
1,047,112
107,431
51,200
90,401
71,709
5,219,408
379,068
373,295
523,593
—
5,735,716
—
199,324
671,127
1,220
275,607
16,247
13,825
16,920
99,034
12,277,843
502,746
637,644
1,302,041
—
(458,926)
—
—
—
—
—
—
—
—
99,034
11,818,917
502,746
637,644
1,302,041
413
18,874
18,528
2,310
40,125
—
—
40,125
77,016 ¥
—
¥—
¥
— ¥
—
¥
77,016 ¥
— ¥
¥
77,016
Yen (millions)
Financial
Motorcycle
Automobile
Services
Business
Business
Business
External customers
¥1,140,292 ¥6,554,848
Intersegment —
—
Total
1,140,292
¥ 606,352 ¥277,682
12,459
26,936
Segment
Total
Reconciling
Items
¥ 8,579,174 ¥
—
39,395
(39,395)
Other
Adjustments
Consolidated
¥—
—
¥ 8,579,174
—
6,554,848
6,428,090
618,811
423,910
304,618
321,339
8,618,569
8,254,794
(39,395)
(39,395)
—
—
8,579,174
8,215,399
58,837
126,758
194,901
(16,721)
363,775
—
—
363,775
23,131
1,025,665
103,032
48,683
38,332
69,082
5,044,247
334,875
337,787
284,586
—
5,541,788
—
230,453
546,342
1,069
281,966
16,821
12,751
23,748
93,282
11,893,666
454,728
629,674
893,008
—
(264,551)
—
—
—
—
—
—
—
—
93,282
11,629,115
454,728
629,674
893,008
—
548
3,312
—
3,860
—
—
3,860
—
¥—
Assets
finance subsidiaries–receivables
Power
Product
and Other
Businesses
¥
— ¥
—
¥
40,062 ¥
—
¥
40,062 ¥
¥
40,062
Yen (millions)
Financial
Motorcycle
Automobile
Services
Business
Business
Business
External customers
¥1,288,194 ¥6,794,098
Intersegment —
8,218
Power
Product
and Other
Businesses
¥ 561,896 ¥292,679
11,562
25,600
Segment
Total
Reconciling
Items
Other
Adjustments
¥ 8,936,867 ¥ —¥ —
45,380
(45,380)
—
¥ 8,936,867
—
Total
1,288,194
6,802,316
6,537,766
573,458
387,179
318,279
323,804
138,594
264,550
186,279
(5,525)
583,898
Assets
finance subsidiaries–receivables 40,471
933,671
76,280
40,324
37,084
100,018
4,883,029
341,955
296,364
273,502
—
5,572,152
—
213,805
800,491
(733)
290,730
16,756
13,146
13,963
139,756
11,679,582
434,991
563,639
1,125,040
—
(108,708)
—
—
—
—
—
—
—
—
139,756
11,570,874
434,991
563,639
1,125,040
59
16,774
835
—
17,668
—
—
17,668
¥ 13,305 ¥ —¥ —
¥ 13,305
¥ — ¥ —
¥ 13,305 ¥ —
8,982,247
8,398,349
Consolidated
(45,380)
—
(45,380) 14,123
8,936,867
8,367,092
— (14,123)
569,775
65
Financial
Motorcycle
Automobile
Services
Business
Business
Business
Power
Product
and Other
Businesses
Segment
Total
Reconciling
Items
Other
Adjustments
Consolidated
External customers
Intersegment $15,492
—
$81,709
99
$ 6,758
139
$3,520
308
$107,479
546
$ —
(546)
$ —
—
$107,479
—
Total
Cost of sales, SG&A and R&D expenses
15,492
13,826
81,807
78,626
6,896
4,656
3,830
3,894
108,025
101,002
(546)
(546)
—
170
107,479
100,627
1,667
3,182
2,240
(67)
7,022
—
(170)
6,852
487
11,229
917
485
446
1,203
58,726
4,113
3,564
3,289
—
67,013
—
2,571
9,627
(9)
3,496
201
159
168
1,681
140,464
5,231
6,779
13,530
—
(1,307)
—
—
—
—
—
—
—
—
1,681
139,157
5,231
6,779
13,530
1
202
10
—
212
—
—
212
$ —
$ —
$ 160
$ —
$ 160
$ —
$ —
$ 160
Assets
Damaged and impairment loss on
finance subsidiaries–receivables Explanatory notes:
1. Segment income (loss) of each segment is measured in a consistent manner with consolidated operating income, which is income before
income taxes and equity in income of affiliates before other income (expenses), except Other Adjustments, which is out-of-period adjustments.
Expenses not directly associated with specific segments are allocated based on the most reasonable measures applicable. The amount of
out-of-period adjustments are not reported to or used by the chief operating decision maker in deciding how to allocate resources and in
assessing the Company’s operating performance. Therefore, the adjustments are not included in the Power product and other businesses
but as Other Adjustments for the year ended March 31, 2011.
2. Assets of each segment are defined as total assets, including derivative financial instruments, investments in affiliates, and deferred tax
assets. Segment assets are based on those directly associated with each segment and those not directly associated with specific segments
are allocated based on the most reasonable measures applicable except for the corporate assets described below.
3. Intersegment sales and revenues are generally made at values that approximate arm’s-length prices.
4. Unallocated corporate assets, included in reconciling items, amounted to ¥257,291 million as of March 31, 2009, ¥338,135 million as of
March 31, 2010, and ¥453,116 million as of March 31, 2011, which consist primarily of cash and cash equivalents and available-for-sale
securities and held-to-maturity securities held by the Company. Reconciling items also include elimination of intersegment transactions.
5. Depreciation and amortization of the Financial Services Business include ¥195,776 million for the year ended March 31, 2009, ¥227,931
million for the year ended March 31, 2010 and ¥212,143 million for the year ended March 31, 2011, respectively, of depreciation of property
on operating leases.
6. Capital expenditures of the Financial Services Business includes ¥668,128 million for the year ended March 31, 2009, ¥544,027 million for the
year ended March 31, 2010 and ¥798,420 million for the year ended March 31, 2011, respectively, related to purchases of operating lease
assets.
7. For the year ended March 31, 2011, substantially all of the ¥45,720 million of the costs and expenses resulting from the Great East Japan
Earthquake are included in Cost of sales, SG&A and R&D expenses of the Automobile business.
External Sales and Other Operating Revenue by Product or Service Groups
U.S. dollars
(millions)
2009
2010
2011
2011
Motorcycles and relevant parts
All-terrain vehicles (ATVs) and relevant parts
Automobiles and relevant parts
Financial, insurance services
Power products and relevant parts
Others
¥ 1,323,259
88,252
7,674,404
582,261
224,648
118,417
¥1,079,165
61,127
6,554,848
606,352
188,014
89,668
¥1,225,098
63,096
6,794,098
561,896
202,838
89,841
$ 14,734
759
81,709
6,758
2,439
1,080
Total
¥10,011,241
¥8,579,174 ¥8,936,867
$107,479
Years ended March 31:
66
Yen
(millions)
Geographical Information
Sales to external customers
Long-lived assets
Yen (millions)
Japan
United States
Other Countries
Total
¥1,871,962
1,140,316
¥3,990,729
1,835,163
¥4,148,550
566,445
¥10,011,241
3,541,924
Japan
United States
Other Countries
¥1,864,513
1,113,386
¥3,294,758
1,767,879
¥3,419,903
603,881
Japan
United States
Other Countries
¥1,834,003
1,053,168
¥3,504,765
1,766,814
¥3,598,099
571,591
Japan
United States
Long-lived assets
Yen (millions)
Total
¥8,579,174
3,485,146
Long-lived assets
Yen (millions)
Total
¥8,936,867
3,391,573
Long-lived assets
$22,057
12,666
$42,150
21,249
Other Countries
Total
$43,272
6,874
$107,479
40,789
The above information is based on the location of the Company and its subsidiaries.
67
Supplemental Geographical Information
In addition to the disclosure required by U.S. GAAP, Honda provides the following supplemental information in order to provide financial
statements users with useful information:
Supplemental geographical information based on the location of the Company and its subsidiaries
Yen (millions)
Japan
Net sales and other
operating revenue:
External customers
Transfers between
geographic areas
North
America
Europe
Asia
Other
Regions
Total
Reconciling
Items
¥1,871,962 ¥4,534,684 ¥1,191,540 ¥1,335,091 ¥1,077,964 ¥10,011,241 ¥
2,290,625
244,440
87,362
273,140
66,256
Other
Adjustments
Consolidated
—
¥—
¥10,011,241
2,961,823
(2,961,823)
—
—
Total
4,162,587
4,779,124 1,278,902
1,608,231
1,144,220 12,973,064
(2,961,823)
—
10,011,241
Cost of sales, SG&A and
R&D expenses
4,324,203
4,699,422 1,268,701
1,504,628
1,009,158 12,806,112
(2,984,514)
—
9,821,598
Operating income (loss)
¥ (161,616) ¥ 79,702 ¥ 10,201 ¥ 103,603 ¥ 135,062 ¥ 166,952 ¥ 22,691
¥—
¥ 189,643
Assets
Long-lived assets
¥3,078,478 ¥6,547,880 ¥ 766,594 ¥1,016,059 ¥ 450,081 ¥11,859,092 ¥ (40,175)
1,140,316 1,918,579
110,543 253,113 119,373 3,541,924 —
¥—
—
¥11,818,917
3,541,924
Yen (millions)
Japan
Net sales and other
operating revenue:
External customers
Transfers between
geographic areas
North
America
Europe
Asia
¥1,864,513 ¥3,752,417
¥769,857 ¥1,320,047
Other
Regions
Total
Reconciling
Items
¥872,340 ¥ 8,579,174 ¥ —
24,151
Other
Adjustments
¥—
Consolidated
¥ 8,579,174
1,441,264
155,799
55,615
198,533
1,875,362
(1,875,362)
—
—
Total
3,305,777
3,908,216
825,472
1,518,580
896,491 10,454,536
(1,875,362)
—
8,579,174
R&D expenses
3,334,912
3,671,837
836,344
1,405,574
850,683 10,099,350
(1,883,951)
—
8,215,399
¥ 363,775
¥ (29,135) ¥ 236,379
¥ (10,872) ¥ 113,006
¥ 45,808 ¥ 355,186 ¥ 8,589
¥—
Assets
Long-lived assets
¥2,947,764 ¥6,319,896
1,113,386 1,861,596
¥591,423 ¥1,050,727
107,262 240,704
¥619,345 ¥11,529,155 ¥ 99,960
162,198 3,485,146 —
¥—
¥11,629,115
— 3,485,146
Yen (millions)
Japan
Net sales and other
operating revenue:
External customers
Transfers between
geographic areas
Total
R&D expenses
68
North
America
Europe
Asia
¥1,834,003 ¥3,941,505
¥618,426 ¥1,594,058
1,777,204
206,392
80,872
247,109
3,611,207
4,147,897
699,298
1,841,167
3,545,089
3,846,975
709,501
1,690,530
Other
Regions
Total
Reconciling
Items
Other
Adjustments
Consolidated
¥948,875 ¥ 8,936,867 ¥ — ¥ — ¥ 8,936,867
33,208
2,344,785
(2,344,785)
—
—
982,083 11,281,652
(2,344,785)
—
8,936,867
912,534 10,704,629
(2,351,660)
14,123
8,367,092
¥ 66,118 ¥ 300,922
¥ (10,203) ¥ 150,637
¥ 69,549 ¥ 577,023 ¥ 6,875 ¥(14,123) ¥ 569,775
Assets
Long-lived assets
¥2,875,630 ¥6,209,145
1,053,168 1,852,542
¥564,678 ¥1,049,113
106,633 231,867
¥658,636 ¥11,357,202 ¥ 213,672 ¥ — ¥11,570,874
147,363 3,391,573 — — 3,391,573
U.S dollars (millions)
Japan
Net sales and other
operating revenue:
External customers
Transfers between
geographic areas
$22,057
Total
North
America
Europe
Asia
$47,402
$7,437
$19,171
Other
Regions
Total
$11,412
$107,479
Reconciling
Other
Items
Adjustments
$ —
$ —
Consolidated
$107,479
21,373
2,482
973
2,972
399
28,199
(28,199)
—
—
43,430
49,884
8,410
22,143
11,811
135,678
(28,199)
—
107,479
R&D expenses
42,635
46,265
8,533
20,331
10,974
128,738
(28,282)
171
100,627
$ 795
$ 3,619
$ (123)
$ 1,812
$ 837
$ 6,940
$ 83
$(171)
$ 6,852
Assets
Long-lived assets
$34,584
12,666
$74,674
22,280
$6,791
1,282
$12,617
2,789
$ 7,921
1,772
$136,587
40,789
$ 2,570
—
$ —
—
$139,157
40,789
Explanatory notes:
1. Major countries or regions in each geographic area:
North America
United States, Canada, Mexico
EuropeUnited Kingdom, Germany, France, Italy, Belgium
Asia
Thailand, Indonesia, China, India, Vietnam
Other Regions
Brazil, Australia
2. Operating income (loss) of each geographical region is measured in a consistent manner with consolidated operating income, which is
income before income taxes and equity in income of affiliates before other income (expenses), except Other Adjustments, which is out-ofperiod adjustments. The adjustments are not included in Japan but as Other Adjustments for the year ended March 31, 2011.
3. Assets of each geographical region are defined as total assets, including derivative financial instruments, investments in affiliates, and
deferred tax assets.
4. Sales and revenues between geographic areas are generally made at values that approximate arm’s-length prices.
5. Unallocated corporate assets, included in reconciling items, amounted to ¥257,291 million as of March 31, 2009, ¥338,135 million as of
March 31, 2010, and ¥453,116 million as of March 31, 2011, which consist primarily of cash and cash equivalents, available-for-sale
securities, and held-to-maturity securities held by the Company. Reconciling items also include elimination of transactions between
geographic areas.
6. Cost of sales, SG&A and R&D expenses of Japan includes ¥45,720 million for the year ended March 31, 2011 related to loss of the Great
East Japan Earthquake.
Basis of Translating Financial Statements
The consolidated financial statements are expressed in Japanese yen. However, the consolidated financial statements as of and for the year
ended March 31, 2011 have been translated into United States dollars at the rate of ¥83.15 = U.S.$1, the approximate exchange rate
prevailing on the Tokyo Foreign Exchange Market on March 31, 2011. Those U.S. dollar amounts presented in the consolidated financial
statements and related notes are included solely for the reader. This translation should not be construed as a representation that all the
amounts shown could be converted into U.S. dollars.
69
Consolidated Balance Sheets Divided into
Non-Financial Services Businesses and Finance Subsidiaries
At March 31, 2010 and 2011
Yen (millions)
2010
2011
Assets
Non-financial services businesses
¥ 3,535,061
¥ 3,587,110
1,100,695
1,252,362
Trade accounts and notes receivable, net
525,768
459,120
Inventories
935,629
899,813
Other current assets
972,969
975,815
Investments and advances
880,721
866,809
2,068,119
1,924,014
Current assets:
Property, plant and equipment, net
Other assets
Total assets
446,218
388,474
6,930,119
6,766,407
Finance Subsidiaries
19,207
26,662
Finance subsidiaries–short-term receivables, net
1,112,984
1,136,791
Finance subsidiaries–long-term receivables, net
2,362,813
2,356,090
Net property on operating leases
1,308,147
1,352,863
Other assets
Total assets
Reconciling items
Total assets
738,637
699,746
5,541,788
5,572,152
(842,792)
(767,685)
¥11,629,115
¥11,570,874
¥ 1,736,752
¥ 1,678,655
211,325
212,428
Liabilities and Equity
Non-financial services businesses
Current liabilities:
Short-term debt
24,795
45,301
Trade payables
833,326
727,607
Accrued expenses
457,146
463,624
Other current liabilities
210,160
229,695
174,197
142,108
Other liabilities
1,024,017
880,778
Total liabilities
2,934,966
2,701,541
1,385,032
1,369,485
Current portion of long-term debt
703,434
928,944
Accrued expenses
125,788
98,604
2,155,243
1,909,549
488,970
536,161
4,858,467
4,842,743
Current portion of long-term debt
Finance Subsidiaries
Short-term debt
Other liabilities
Total liabilities
(620,748)
(556,322)
Total liabilities
7,172,685
6,987,962
Honda Motor Co., Ltd. shareholders’ equity 4,328,640
4,449,975
Reconciling items
Noncontrolling interests
Total equity
Total liabilities and equity
70
127,790
132,937
4,456,430
4,582,912
¥11,629,115 ¥11,570,874
Consolidated Statements of Cash Flows Divided into
Non-Financial Services Businesses and Finance Subsidiaries
Yen (millions)
Years ended March 31, 2010 and 2011
Cash flows from operating activities:
Net income
Adjustments to reconcile net
income to net cash provided
by operating activities:
Depreciation
Deferred income taxes
Dividends from affiliates
Gain on sales of investments
in affiliates
Impairment loss on investments
in securities
Damaged and impairment loss on
Loss (gain) on derivative
instruments, net
Decrease (increase) in trade
accounts and notes receivable
Decrease (increase) in inventories
Increase (decrease) in trade
accounts and notes payable
Other, net
Net cash provided by (used in)
operating activities
Cash flows from investing activities:
Decrease (increase) in investments
and advances
Proceeds from sales of investments
in affiliates
Proceeds from sales of property,
plant and equipment
Decrease (increase) in finance
subsidiaries–receivables
Purchase of operating lease assets
Proceeds from sales of operating
lease assets
Net cash used in
investing activities
Cash flows from financing activities:
Increase (decrease) in short-term
debt, net
Proceeds from long-term debt
Repayment of long-term debt
Dividends paid
Dividends paid to
Sales (purchase) of treasury stock, net
Net cash provided by (used in)
financing activities
Effect of exchange rate changes
on cash and cash equivalents
Net change in cash and
cash equivalents
Cash and cash equivalents at
beginning of period
at end of period
2011
2010
Non-financial
services
Finance
Reconciling
businesses
subsidiaries
items
Consolidated
¥ 176,370 ¥ 106,241 ¥
Non-financial
services
Finance
businesses
subsidiaries
Reconciling
items
Consolidated
— ¥ 282,611 ¥ 456,181
¥107,296
¥ —
¥ 563,477
399,221
20,622
(93,282)
140,901
230,453
35,984
—
—
—
—
—
—
629,674
56,606
(93,282)
140,901
349,834
28,691
(139,756)
98,182
213,805
101,489
—
—
—
—
—
—
563,639
130,180
(139,756)
98,182
—
—
—
—
(46,756)
—
—
(46,756)
603
—
—
603
2,133
—
—
2,133
548
3,312
—
3,860
16,833
835
—
17,668
(6,683)
(31,070)
—
(37,753)
670
(8,458)
—
(7,788)
(67,982)
352,994
63,763
—
(2,691)
—
(6,910)
352,994
26,837
(33,676)
12,413
—
(550)
—
38,700
(33,676)
153,440
22,892
—
28,393
(2,095)
12,278
151,345
63,563
(50,618)
(73,797)
—
13,342
(4,713)
620
(55,331)
(59,835)
1,099,644
437,076
7,492
1,544,212
634,758
440,722
(4,643)
1,070,837
106,565
(5,878) (121,852)
(21,165)
(41,730)
4,951
16,865
(19,914)
—
(389,747)
—
(2,315)
—
—
—
(392,062)
71,073
(316,472)
—
(2,071)
—
—
71,073
(318,543)
24,132
340
—
24,472
24,089
636
—
24,725
—
—
87,571
(544,027)
4,350
—
91,921
(544,027)
—
—
(90,859)
(798,420)
(7,717)
—
(98,576)
(798,420)
—
245,110
—
245,110
—
408,265
—
408,265
(219,199) (117,502)
(595,751)
(263,040)
(477,498)
9,148
(731,390)
(458,642)
(304,264) 113,265
(649,641)
115,120 1,023,804
(6,702) 1,132,222
(25,285)
(941,995)
3,447
(963,833)
(61,696)
—
—
(61,696)
11,270
18,174
(27,539)
(92,170)
107,495
786,399
(848,511)
—
(5,096)
(5,053)
5,644
—
113,669
799,520
(870,406)
(92,170)
(259,050)
(16,278)
(18)
(446,799)
—
—
(16,278)
(18)
(16,232)
(34,797)
—
—
—
—
(16,232)
(34,797)
(222,455) 110,010
(559,244)
(141,294)
45,383
(4,505)
(100,416)
—
—
38,786
1,530
—
40,316
(78,757)
(1,152)
—
(79,909)
432,581
(3,048)
—
429,533
151,667
7,455
—
159,122
668,114
22,255
—
690,369
1,100,695
19,207
—
1,119,902
19,207 ¥
— ¥1,119,902 ¥1,252,362
¥ 26,662
¥ —
¥1,279,024
¥1,100,695 ¥
Notes:
1. Non-financial
services businesses lend to finance subsidiaries. These cash flows are included in the decrease (increase) in investments and advances, increase (decrease) in short-term
debt, proceeds from long-term debt, and repayment of long-term debt. The amount of the loans to finance subsidiaries is a ¥121,852 million decrease for the fiscal year ended March
31, 2010, and a ¥16,865 million increase for the fiscal year ended March 31, 2011, respectively.
2. D
ecrease (increase) in trade accounts and notes receivable for finance subsidiaries is due to the reclassification of finance subsidiaries–receivables which relate to sales of inventory in
the unaudited consolidated statements of cash flows presented above.
71
Financial Summary
Honda Motor Co., Ltd. and Subsidiaries
Years ended or at March 31
Sales, income, and dividends
Operating income
Income before income taxes and
equity in income of affiliates Income taxes
Net income attributable to noncontrolling interests
As percentage of sales
Interest expense
2001
¥6,463,830
401,438
2002
¥7,362,438
661,202
388,419
178,439
25,704
(3,443)
232,241
3.6%
22,412
352,829
21,400
2003
¥7,971,499
724,527
555,854
231,150
42,515
(4,512)
362,707
4.9%
24,360
395,176
16,769
2004
¥8,162,600
600,144
619,413
245,065
61,972
(9,658)
426,662
5.4% 30,176
436,863
12,207
653,680
252,740
75,151
(11,753)
464,338
5.7%
33,541
448,967
10,194
Assets, long-term debt, and shareholders’ equity
Total assets
¥5,719,020
¥7,064,787
¥7,821,403
¥8,380,549
Long-term debt
368,173
716,614
1,140,182
1,394,612
2,230,291
2,573,941
2,629,720
2,874,400
Capital expenditures (excluding purchase of
operating lease assets)
285,687
303,424
316,991
287,741
Purchase of operating lease assets
Depreciation (excluding property on operating leases)
170,342
194,944
220,874
213,445
Depreciation of property on operating leases
Per common share
Net income attributable to Honda Motor Co., Ltd.:
Basic
Diluted
Honda Motor Co., Ltd. shareholders’ equity
¥
119.17
119.17
11.5
1,144.43
¥
186.11
186.11
12.5
1,320.77
¥
219.71
219.71
15.5
1,367.34
¥
243.45
243.45
17.5
1,527.45
Sales progress
Sales amounts:*
Japan
Overseas
Total
¥1,740,340
27%
4,723,490
73%
¥6,463,830
100%
¥1,868,746
25%
5,493,692
75%
¥7,362,438
100%
¥1,748,706
22%
6,222,793
78%
¥7,971,499
100%
¥1,628,493
20%
6,534,107
80%
¥8,162,600
100%
Unit sales:
Motorcycles
Automobiles
Power Products
Number of employees
Exchange rate (yen amounts per U.S. dollar)
Rates for the period-end
Average rates for the period
*The geographic breakdown of sales amounts is based on the location of customers.
72
¥
5,118
2,580
3,884
6,095
2,666
3,926
8,080
2,888
4,584
9,206
2,983
5,047
114,300
120,600
126,900
131,600
124
111
¥
133
125
¥
120
122
¥
106
113
2005
¥8,650,105
630,920
2006
¥ 9,907,996
868,905
668,364
266,665
96,057
(11,559)
486,197
5.6%
47,797
467,754
11,655
2007
2008
¥11,087,140
851,879
829,904
317,189
99,605
(15,287)
597,033
6.0%
71,061
510,385
11,902
¥12,002,834
953,109
792,868
283,846
103,417
(20,117)
592,322
5.3%
140,482
551,847
12,912
2009
2010
¥10,011,241 189,643 ¥ 8,579,174
363,775
161,734 109,835 99,034 (13,928)
137,005 1.4%
139,724 563,197 22,543 895,841
387,436
118,942
(27,308)
600,039
5.0%
152,590
587,959
16,623
336,198
146,869
93,282
(14,211)
268,400
3.1%
61,696
463,354
12,552
Yen
(millions)
U.S. dollars
(millions)
2011
2011
¥ 8,936,867
569,775
$107,479
6,852
630,548
206,827
139,756
(29,389)
534,088
6.0%
92,170
487,591
8,474
7,583
2,487
1,681
(354)
6,423
1,108
5,864
102
¥10,631,400
1,879,000
4,125,750
¥12,036,500
1,905,743
4,488,825
¥12,615,543
1,836,652
4,550,479
¥11,818,917 1,932,637 4,007,288 ¥11,629,115
2,313,035
4,328,640
¥11,570,874
2,043,240
4,449,975
$139,157
24,573
53,517
373,980
457,841
225,752
262,225
627,066
366,795
361,747
9,741
654,030
839,261
417,393
101,032
633,913 668,128 441,868 195,776 348,981
544,027
401,743
227,931
326,620
798,420
351,496
212,143
3,928
9,602
4,227
2,551
¥9,368,236
1,559,500
3,289,294
¥
260.34
260.34
25.5
1,778.24
¥1,699,205
20%
6,950,900
80%
¥8,650,105
100%
¥
324.33
324.33
38.5
2,259.26
¥ 1,694,044
17%
8,213,952
83%
¥ 9,907,996
100%
¥
324.62
324.62
77
2,463.69
¥ 1,681,190
15%
9,405,950
85%
¥11,087,140
100%
¥
330.54
330.54
84
2,507.79
¥ 1,585,777
13%
10,417,057
87%
¥12,002,834
100%
¥
75.50
75.50
77
2,208.35
¥ 1,446,541
14%
8,564,700
86%
¥10,011,241
100%
¥
147.91
147.91
34
2,385.45
Yen
U.S. dollars
¥ 295.67
295.67
51
2,469.05
$ 3.56
3.56
0.61
29.69
Yen
(millions)
U.S. dollars
(millions)
¥ 1,577,318
¥ 1,503,842
18%
17%
7,001,856
7,433,025
82%
83%
¥ 8,579,174
¥ 8,936,867
100%
100%
$ 18,086
89,393
$107,479
Thousands
¥
10,482
3,242
5,300
10,271
3,391
5,876
10,369
3,652
6,421
9,320
3,925
6,057
10,114
3,517
5,187
9,639
3,392
4,744
11,445
3,512
5,509
137,827
144,785
167,231
178,960
181,876
176,815
179,060
93
93
¥ 83
86
107
108
¥
117
113
¥
118
117
¥
100
114
¥
98
101
¥
73
Selected Quarterly Financial Data
Yen (millions except per share amounts)
Year ended March 31, 2011
Year ended March 31, 2010
I
II
III
IV
Net sales and
other operating revenue ¥2,002,212 ¥2,056,655 ¥2,240,740 ¥2,279,567
Operating income
25,164
65,543
176,971
96,097
Income before
income taxes and equity
in income of affiliates 5,458
66,140
171,013
93,587
Net income attributable to
7,560
54,037
134,627
72,176
Basic net income attributable
to Honda Motor Co., Ltd.
¥4.17
¥29.78
¥74.19
¥39.78
Tokyo Stock Exchange:
(TSE) (in yen)
High
¥3,070
¥3,230
¥3,170
¥3,410
Low
2,390
2,300
2,590
2,951
New York Stock Exchange:
(NYSE) (in U.S. dollars)
High
$31.00
$32.99
$34.52
$37.23
Low
24.83
25.00
28.82
33.27
74
I
II
III
IV
¥2,361,463 ¥2,251,911 ¥2,110,414 ¥2,213,079
234,443
163,473
125,653
46,206
256,149
166,204
131,580
76,615
272,487
135,929
81,118
44,554
¥150.27
¥75.24
¥45.01
¥24.72
¥3,405
2,570
¥3,065
2,470
¥3,315
2,713
¥3,745
2,820
$36.16
28.33
$35.89
28.43
$39.69
33.82
$44.54
36.51
75
Company Information
Established
September 24, 1948
Lines of Business
Motorcycles, Automobiles, Financial Services and Power Products and Others
Fiscal Year-end
March 31
Independent Registered
Public Accounting Firm
KPMG AZSA LLC
Web Site
• Corporate Web Site
http://www.honda.co.jp
• IR Web Sites
Japanese: http://www.honda.co.jp/investors/
English: http://world.honda.com/investors/
Stock Information
76
IR Offices
Securities Code
7267
Japan
Number of Shares Authorized
7,086,000,000 shares
Total Number of Shares Issued
1,811,428,430 shares
1-1, 2-chome, Minami-Aoyama, Minato-ku,
Tokyo 107-8556, Japan
TEL: 81-(0)3-3423-1111 (Switchboard)
Number of Shareholders
202,129
Number of Shares per Trading Unit 100 shares
U.S.A.
Honda North America, Inc.
Stock Exchange Listings
Japan: Tokyo, Osaka
stock exchanges
Overseas: New York,
London stock
exchanges
New York Office
156 West 56th Street, 20th Floor,
New York, NY 10019, U.S.A.
TEL: 1-212-707-9920
General Meeting of Shareholders
June
Record Dates for Dividends
June 30
September 30
December 31
March 31
Shareholders’ Register Manager for
Common Stock
Depositary and Transfer Agent
for American Depositary Receipts
The Chuo Mitsui Trust and Banking Co., Ltd.
JPMorgan Chase Bank, N.A.
33-1, Shiba 3-chome, Minato-ku,
1 Chase Manhattan Plaza, Floor 58,
New York, NY 10005, U.S.A.
Contact Address:
Contact Address:
The Chuo Mitsui Trust and Banking Co., Ltd.
JPMorgan Service Center
P.O. Box 64504
St. Paul, MN 55164-0504, U.S.A.
TEL: 1-800-990-1135
E-mail: [email protected]
Ratio: 1 ADR = 1 share of underlying stock
Ticker symbol: HMC
Stock Transfer Agency Dept. Operation Center
8-4, Izumi 2-chome, Suginami-ku,
TEL: 81-(0)3-3323-7111
TEL: 0120-78-2031 (toll free within Japan)
Note: With respect to taxation and other matters relating to the acquisition, holding,
and disposition of the Company’s common stock or ADRs by non-residents of
Japan, please also refer to “Item 10E. Taxation” of Form 20-F included in the
“Investor Relations” section on our web site.
Major Shareholders
Number of shares held
(thousands)
Individual or Organization
Japan Trustee Services Bank, Ltd. (Trust Account)
The Master Trust Bank of Japan, Ltd. (Trust Account)
Moxley & Co.
JPMorgan Chase Bank 380055
Tokio Marine & Nichido Fire Insurance Co., Ltd.
Meiji Yasuda Life Insurance Company
The Bank of Tokyo–Mitsubishi UFJ, Ltd.
Mitsui Sumitomo Insurance Co., Ltd.
Sompo Japan Insurance Inc.
Nippon Life Insurance Company
Percentage of total
shares outstanding (%)
136,341
77,869
74,903
66,214
56,361
51,199
36,686
35,039
34,766
34,700
7.5
4.3
4.1
3.7
3.1
2.8
2.0
1.9
1.9
1.9
Breakdown of Shareholders by Type
Treasury stock
stock 0.5
0.5%
%
Treasury
Foreign institutions
institutions and
and individuals
individuals 35.0
35.0%
%
Foreign
9.7%
%
Individuals 9.7
Individuals
0.0%
%
Government and
and municipal
municipal corporations
corporations 0.0
Government
43.3%
%
Financial institutions
institutions 43.3
Financial
Domestic companies
companies and
and others
others 9.9
9.9%
%
Domestic
Securities companies
companies 1.6
1.6%
%
Securities
Honda’s Stock Price and Trading Volume on the Tokyo Stock Exchange
Yen
Yen
5,000
5,000
4,000
4,000
3,000
3,000
Stock (millions)
(millions)
Stock
Share prices
prices prior
prior to
to stock
stock split
split have
have been
been
Share
adjusted to
to their
their effective
effective
adjusted
post-adjustment values.
values.
post-adjustment
Volume
Volume
← High
High
←
← Low
Low
←
2,000
2,000
300
300
200
200
1,000
1,000
100
100
00
2005
2005
2006
2006
2007
2007
2008
2008
2009
2009
2010
2010
2011
2011
00
(CY)
(CY)
Note: The Company executed a two-for-one stock split for the Company’s common stock effective July 1, 2006. The prices of shares on the Tokyo Stock Exchange prior to the
split have been adjusted retroactively for consistency. Consequently, the prices shown here are not the actual prices of shares on the Tokyo Stock Exchange.
77
Printed in Japan

Annual Report 2011

Transcription

Similar documents

Honda CB450 Restoration

av fairgrounds lancaster, ca

4/28/13 Akila gujarati news portal www.akilanews.com/2704

Sponsors

Nardy Honda St. James, NY

More Information

For sale is a Classic 1959 Feather Craft boat

the pdf

Introducing the all-new Honda City.

righteous look. right price.