Form 6-K
Table of Contents

 

 

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 6-K

REPORT OF FOREIGN PRIVATE ISSUER

PURSUANT TO RULE 13a-16 OR 15d-16

UNDER THE SECURITIES EXCHANGE ACT OF 1934

FOR THE MONTH OF NOVEMBER 2014

COMMISSION FILE NUMBER: 1-07628

HONDA GIKEN KOGYO KABUSHIKI KAISHA

(Name of registrant)

HONDA MOTOR CO., LTD.

(Translation of registrant’s name into English)

1-1, Minami-Aoyama 2-chome, Minato-ku, Tokyo 107-8556, Japan

(Address of principal executive offices)

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F:

Form 20-F  x    Form 40-F  ¨

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):  ¨

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):  ¨

 

 

 


Table of Contents

Contents

Exhibit 1:

On November 7, 2014, Honda Motor Co., Ltd. filed its consolidated financial statements for the fiscal second quarter ended September 30, 2014 with Financial Services Agency in Japan.


Table of Contents

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

HONDA GIKEN KOGYO KABUSHIKI KAISHA

( HONDA MOTOR CO., LTD. )

/s/    Hideo Moroe

Hideo Moroe
General Manager
Finance Division
Honda Motor Co., Ltd.

Date: December 01, 2014


Table of Contents

HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Consolidated Financial Statements

September 30, 2014


Table of Contents

HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Consolidated Balance Sheets

March 31, 2014 and September 30, 2014

 

     Yen (millions)  
Assets    March 31,
2014
     September 30,
2014
 
     unaudited      unaudited  

Current assets:

     

Cash and cash equivalents

   ¥ 1,168,914       ¥ 1,162,705   

Trade accounts and notes receivable, net of allowance for doubtful accounts of ¥9,677 million as of March 31, 2014 and ¥8,737 million as of September 30, 2014 (note 3)

     1,158,671         1,061,633   

Finance subsidiaries-receivables, net (notes 2 and 3)

     1,464,215         1,575,834   

Inventories (note 4)

     1,302,895        1,384,676   

Deferred income taxes

     202,123         194,330   

Other current assets (notes 3, 5 and 9)

     474,448        490,778   
  

 

 

    

 

 

 

Total current assets

     5,771,266         5,869,956   
  

 

 

    

 

 

 

Finance subsidiaries-receivables, net (notes 2 and 3)

     3,317,553        3,491,702   

Investments and advances:

     

Investments in and advances to affiliates

     564,266        603,479   

Other, including marketable equity securities (notes 3 and 5)

     253,661         277,765   
  

 

 

    

 

 

 

Total investments and advances

     817,927        881,244   
  

 

 

    

 

 

 

Property on operating leases:

     

Vehicles

     2,718,131        3,135,087   

Less accumulated depreciation

     481,410         534,347   
  

 

 

    

 

 

 

Net property on operating leases

     2,236,721        2,600,740   
  

 

 

    

 

 

 

Property, plant and equipment, at cost:

     

Land

     521,806        530,421   

Buildings

     1,895,140         1,994,837   

Machinery and equipment

     4,384,255        4,613,056   

Construction in progress

     339,093         354,286   
  

 

 

    

 

 

 
     7,140,294        7,492,600   

Less accumulated depreciation and amortization

     4,321,862         4,539,706   
  

 

 

    

 

 

 

Net property, plant and equipment

     2,818,432        2,952,894   
  

 

 

    

 

 

 

Other assets, net of allowance for doubtful accounts of ¥22,100 million as of March 31, 2014 and ¥21,896 million as of September 30, 2014 (notes 3 and 9)

     660,132         676,022   
  

 

 

    

 

 

 

Total assets

   ¥ 15,622,031       ¥ 16,472,558   
  

 

 

    

 

 

 


Table of Contents

HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Consolidated Balance Sheets

March 31, 2014 and September 30, 2014

 

     Yen (millions)  
Liabilities and Equity    March 31,
2014
    September 30,
2014
 
     unaudited     unaudited  

Current liabilities:

    

Short-term debt

   ¥ 1,319,344      ¥ 1,560,838   

Current portion of long-term debt

     1,303,464        1,325,411   

Trade payables:

    

Notes

     28,501        27,809   

Accounts

     1,071,179        1,047,031   

Accrued expenses (note 10)

     626,503        613,964   

Income taxes payable

     43,085        48,504   

Other current liabilities (note 9)

     319,253        340,476   
  

 

 

   

 

 

 

Total current liabilities

     4,711,329        4,964,033   
  

 

 

   

 

 

 

Long-term debt, excluding current portion

     3,234,066        3,398,044   

Other liabilities (note 10)

     1,563,238        1,593,710   
  

 

 

   

 

 

 

Total liabilities

     9,508,633        9,955,787   
  

 

 

   

 

 

 

Equity:

    

Honda Motor Co., Ltd. shareholders’ equity:

    

Common stock, authorized 7,086,000,000 shares as of March 31, 2014 and as of September 30, 2014; issued 1,811,428,430 shares as of March 31, 2014 and as of September 30, 2014

     86,067        86,067   

Capital surplus

     171,117        171,117   

Legal reserves

     49,276        50,964   

Retained earnings (note 11(a))

     6,431,682        6,639,104   

Accumulated other comprehensive income (loss), net (notes 5, 7 and 9)

     (793,014     (608,583

Treasury stock, at cost 9,137,234 shares as of March 31, 2014 and 9,139,220 shares as of September 30, 2014

     (26,149     (26,156
  

 

 

   

 

 

 

Total Honda Motor Co., Ltd. shareholders’ equity

     5,918,979        6,312,513   
  

 

 

   

 

 

 

Noncontrolling interests

     194,419        204,258   
  

 

 

   

 

 

 

Total equity

     6,113,398        6,516,771   
  

 

 

   

 

 

 

Commitments and contingent liabilities (note 10)

    

Total liabilities and equity

   ¥ 15,622,031      ¥ 16,472,558   
  

 

 

   

 

 

 

 

See accompanying notes to consolidated financial statements.


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HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Consolidated Statements of Income

For the six months ended September 30, 2013 and 2014

 

     Yen (millions)  
     September 30,
2013
    September 30,
2014
 
     unaudited     unaudited  

Net sales and other operating revenue

   ¥ 5,724,316      ¥ 6,003,055  

Operating costs and expenses:

    

Cost of sales

     4,275,221        4,509,159  

Selling, general and administrative

     799,924        825,986   

Research and development

     292,757        305,425  
  

 

 

   

 

 

 
     5,367,902        5,640,570   
  

 

 

   

 

 

 

Operating income

     356,414        362,485  

Other income (expenses):

    

Interest income

     11,920        11,609  

Interest expense

     (5,812     (8,799

Other, net (notes 5 and 9)

     (24,900     13,383  
  

 

 

   

 

 

 
     (18,792     16,193   
  

 

 

   

 

 

 

Income before income taxes and equity in income of affiliates

     337,622        378,678  

Income tax expense (note 1(c)):

    

Current

     103,008        138,144  

Deferred

     37,261        (6,004
  

 

 

   

 

 

 
     140,269        132,140  
  

 

 

   

 

 

 

Income before equity in income of affiliates

     197,353        246,538   

Equity in income of affiliates (note 1(d))

     63,453        61,339  
  

 

 

   

 

 

 

Net income

     260,806        307,877   

Less: Net income attributable to noncontrolling interests

     17,939        19,467  
  

 

 

   

 

 

 

Net income attributable to Honda Motor Co., Ltd.

   ¥ 242,867      ¥ 288,410   
  

 

 

   

 

 

 
     Yen  
     September 30,
2013
    September 30,
2014
 

Basic net income attributable to Honda Motor Co., Ltd. per common share (note 13)

   ¥ 134.75      ¥ 160.02  
  

 

 

   

 

 

 

 

See accompanying notes to consolidated financial statements.


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HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Consolidated Statements of Comprehensive Income

For the six months ended September 30, 2013 and 2014

 

     Yen (millions)  
     September 30,
2013
     September 30,
2014
 
     unaudited      unaudited  

Net income

   ¥ 260,806       ¥ 307,877   

Other comprehensive income (loss), net of tax:

     

Adjustments from foreign currency translation

     165,750         180,781   

Unrealized gains (losses) on available-for-sale securities, net

     18,450         9,979   

Unrealized gains (losses) on derivative instruments, net

     346         —     

Pension and other postretirement benefits adjustments (note 6)

     81,394         (104
  

 

 

    

 

 

 

Other comprehensive income (loss), net of tax (note 7)

     265,940         190,656  
  

 

 

    

 

 

 

Comprehensive income (loss)

     526,746         498,533   

Less: Comprehensive income attributable to noncontrolling interests

     23,139        25,692   
  

 

 

    

 

 

 

Comprehensive income (loss) attributable to Honda Motor Co., Ltd.

   ¥ 503,607       ¥ 472,841   
  

 

 

    

 

 

 

 

See accompanying notes to consolidated financial statements.


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HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Consolidated Statements of Income

For the three months ended September 30, 2013 and 2014

 

     Yen (millions)  
     September 30,
2013
    September 30,
2014
 
     unaudited     unaudited  

Net sales and other operating revenue

   ¥ 2,890,221      ¥ 3,014,776   

Operating costs and expenses:

    

Cost of sales

     2,150,812       2,270,897  

Selling, general and administrative

     416,863        417,146   

Research and development

     151,095       162,291  
  

 

 

   

 

 

 
     2,718,770        2,850,334   
  

 

 

   

 

 

 

Operating income

     171,451        164,442  

Other income (expenses):

    

Interest income

     5,928       6,457  

Interest expense

     (2,838     (4,386

Other, net (notes 5 and 9)

     (8,954 )     13,352  
  

 

 

   

 

 

 
     (5,864     15,423   
  

 

 

   

 

 

 

Income before income taxes and equity in income of affiliates

     165,587        179,865  

Income tax expense (note 1(c)):

    

Current

     59,142       59,577  

Deferred

     10,288        (9,233
  

 

 

   

 

 

 
     69,430        50,344  
  

 

 

   

 

 

 

Income before equity in income of affiliates

     96,157        129,521   

Equity in income of affiliates (note 1(d))

     31,686        22,751   
  

 

 

   

 

 

 

Net income

     127,843        152,272   

Less: Net income attributable to noncontrolling interests

     7,475        10,374   
  

 

 

   

 

 

 

Net income attributable to Honda Motor Co., Ltd.

   ¥ 120,368      ¥ 141,898   
  

 

 

   

 

 

 
     Yen  
     September 30,
2013
    September 30,
2014
 

Basic net income attributable to Honda Motor Co., Ltd. per common share (note 13)

   ¥ 66.79      ¥ 78.73   
  

 

 

   

 

 

 

 

See accompanying notes to consolidated financial statements.

 


Table of Contents

HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Consolidated Statements of Comprehensive Income

For the three months ended September 30, 2013 and 2014

 

     Yen (millions)  
     September 30,
2013
    September 30,
2014
 
     unaudited     unaudited  

Net income

   ¥ 127,843      ¥ 152,272   

Other comprehensive income (loss), net of tax:

    

Adjustments from foreign currency translation

     (23,796 )     236,107  

Unrealized gains (losses) on available-for-sale securities, net

     9,756        1,695   

Unrealized gains (losses) on derivative instruments, net

     (241 )     —     

Pension and other postretirement benefits adjustments (note 6)

     78,709        4,622   
  

 

 

   

 

 

 

Other comprehensive income (loss), net of tax (note 7)

     64,428        242,424  
  

 

 

   

 

 

 

Comprehensive income (loss)

     192,271        394,696   

Less: Comprehensive income attributable to noncontrolling interests

     4,164        20,540   
  

 

 

   

 

 

 

Comprehensive income (loss) attributable to Honda Motor Co., Ltd.

   ¥ 188,107      ¥ 374,156   
  

 

 

   

 

 

 

 

See accompanying notes to consolidated financial statements.


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HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Consolidated Statements of Cash Flows

For the six months ended September 30, 2013 and 2014

 

     Yen (millions)  
     September 30,
2013
    September 30,
2014
 
     unaudited     unaudited  

Cash flows from operating activities:

    

Net income

   ¥ 260,806      ¥ 307,877   

Adjustments to reconcile net income to net cash provided by operating activities:

    

Depreciation excluding property on operating leases

     216,736        235,389   

Depreciation of property on operating leases

     164,334        195,580  

Deferred income taxes

     37,261        (6,004

Equity in income of affiliates

     (63,453     (61,339 )

Dividends from affiliates

     8,060        19,743   

Provision for credit and lease residual losses on finance subsidiaries-receivables

     10,341        8,273  

Impairment loss on property on operating leases

     1,322        1,887   

Loss (gain) on derivative instruments, net

     (39,142     (2,959 )

Decrease (increase) in assets:

    

Trade accounts and notes receivable

     99,663        117,890  

Inventories

     39,676        (44,031

Other current assets

     22,522        3,199  

Other assets

     (7,883     (26,220

Increase (decrease) in liabilities:

    

Trade accounts and notes payable

     (1,393     (24,587

Accrued expenses

     (16,923     (19,663 )

Income taxes payable

     (15,829     3,523   

Other current liabilities

     27,696        5,988  

Other liabilities

     (6,138     (2,332

Other, net

     (66,154     (54,850 )
  

 

 

   

 

 

 

Net cash provided by operating activities

     671,502        657,364   

Cash flows from investing activities:

    

Increase in investments and advances

     (23,411     (16,424

Decrease in investments and advances

     25,214        16,131  

Payments for purchases of available-for-sale securities

     (27,590     (11,806

Proceeds from sales of available-for-sale securities

     4,085        9,608  

Payments for purchases of held-to-maturity securities

     (58     (18,443

Proceeds from redemptions of held-to-maturity securities

     1,753        20,862  

Capital expenditures

     (355,990     (350,158

Proceeds from sales of property, plant and equipment

     14,588        28,098  

Proceeds from insurance recoveries for damaged property, plant and equipment

     6,800        —     

Acquisitions of finance subsidiaries-receivables

     (1,582,865     (1,287,722 )

Collections of finance subsidiaries-receivables

     1,219,326        1,269,162   

Purchases of operating lease assets

     (582,206     (723,222 )

Proceeds from sales of operating lease assets

     310,900        334,421   

Other, net

     —          328  
  

 

 

   

 

 

 

Net cash used in investing activities

     (989,454     (729,165

Cash flows from financing activities:

    

Proceeds from short-term debt

     4,307,274        3,849,955   

Repayments of short-term debt

     (4,133,849     (3,680,867 )

Proceeds from long-term debt

     821,199        607,425   

Repayments of long-term debt

     (688,583     (625,855 )

Dividends paid (note 11(a))

     (70,289     (79,300

Dividends paid to noncontrolling interests

     (8,467     (13,070 )

Sales (purchases) of treasury stock, net

     (10     (7

Other, net

     (17,581     (24,303 )
  

 

 

   

 

 

 

Net cash provided by financing activities

     209,694        33,978   

Effect of exchange rate changes on cash and cash equivalents

     34,413        31,614  
  

 

 

   

 

 

 

Net change in cash and cash equivalents

     (73,845     (6,209

Cash and cash equivalents at beginning of period

     1,206,128        1,168,914  
  

 

 

   

 

 

 

Cash and cash equivalents at end of period

   ¥ 1,132,283      ¥ 1,162,705   
  

 

 

   

 

 

 

 

See accompanying notes to consolidated financial statements.


Table of Contents

 

1

 

HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

 

(1) General and Summary of Significant Accounting Policies

 

(a) Financial Statements

The accompanying consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (U.S. GAAP). In the opinion of management, all adjustments which are necessary for a fair presentation have been included. The results for interim periods are not necessarily indicative of results which may be expected for any other interim period or for the year. For further information, refer to the March 31, 2014 consolidated financial statements and notes thereto included in Honda Motor Co., Ltd. and Subsidiaries Annual Report for the year ended March 31, 2014.

 

(b) Basis of Presenting Consolidated Financial Statements

The Company and its Japanese subsidiaries maintain their books of account in conformity with financial accounting standards of Japan, and its foreign subsidiaries generally maintain their books of account in conformity with those of the countries of their domicile.

The consolidated financial statements presented herein have been prepared in a manner and reflect the adjustments which are necessary to conform them with U.S. GAAP.

 

(c) Accounting Policies Specifically Applied for Quarterly Consolidated Financial Statements

Income taxes

Honda computes interim income tax expense (benefit) by multiplying reasonably estimated annual effective tax rate, which includes the effects of deferred taxes, by year-to-date income before income taxes and equity in income of affiliates for the six months ended September 30, 2014. If a reliable estimate cannot be made, Honda utilizes the actual year-to-date effective tax rate.

 

(d) Impairment Loss on Investments in Affiliates

For the three months ended September 30, 2014, Honda recognized impairment loss of ¥15,901 million on certain investments in affiliates which have quoted market values because of other-than-temporary decline in fair value below their carrying values. The fair values of the investments were based on quoted market price. The impairment loss is included in equity in income of affiliates in the accompanying consolidated statement of income.

(2) Allowances for Finance Subsidiaries-receivables

 

     Yen (millions)  
     March 31,
2014
     September 30,
2014
 

Finance subsidiaries-receivables

     

Allowance for credit losses

   ¥ 21,559       ¥ 22,817   

Allowance for losses on lease residual values

     2,131         1,820   


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2

 

HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

 

(3) Credit Quality of Finance Receivables and Allowance for Credit Losses

The finance subsidiaries of the Company provide retail lending and leasing to customers and wholesale financing to dealers primarily to support sales of our products. Honda classifies retail and direct financing lease receivables (consumer finance receivables) derived from those services as finance subsidiaries-receivables. Operating leases are classified as property on operating leases. Certain finance receivables related to sales of inventory are included in trade accounts and notes receivable and other assets in the consolidated balance sheets.

Finance subsidiaries-receivables, net, consisted of the following at March 31, 2014 and September 30, 2014:

 

     Yen (millions)  
     March 31,
2014
     September 30,
2014
 

Retail

   ¥ 4,678,741       ¥ 4,963,557   

Direct financing lease

     422,936         439,740   

Wholesale flooring

     434,219         376,166   

Commercial loans

     63,176         75,629   
  

 

 

    

 

 

 

Total finance receivables

     5,599,072         5,855,092   

Less:

     

Allowance for credit losses

     24,851         26,197   

Allowance for losses on lease residual values

     2,131         1,820   

Unearned interest income and fees

     38,093         39,909   
  

 

 

    

 

 

 
     5,533,997         5,787,166   

Less:

     

Finance receivables included in trade accounts and notes receivables, net

     498,230         453,591   

Finance receivables included in other assets, net

     253,999         266,039   
  

 

 

    

 

 

 

Finance subsidiaries-receivables, net

     4,781,768         5,067,536   

Less current portion

     1,464,215         1,575,834   
  

 

 

    

 

 

 

Noncurrent finance subsidiaries-receivables, net

   ¥ 3,317,553       ¥ 3,491,702   
  

 

 

    

 

 

 

Allowance for credit losses

The majority of the credit risk is with consumer financing and to a lesser extent with dealer financing. Credit risk is affected by general economic conditions. The allowance for credit losses is management’s estimate of probable losses incurred on finance receivables.

Consumer finance receivables are collectively evaluated for impairment. Delinquencies and losses are continuously monitored and this historical experience provides the primary basis for estimating the allowance. Various methodologies are utilized when estimating the allowance for credit losses including models that incorporate vintage loss and delinquency migration analysis. The models take into consideration attributes of the portfolio including loan-to-value ratios, internal and external credit scores, and collateral types. Economic factors such as used vehicle prices, unemployment rates, and consumer debt service burdens are also incorporated when estimating losses.

Wholesales receivables are individually evaluated for impairment when specifically identified as impaired. Wholesales receivables are considered to be impaired when it is probable that our finance subsidiaries will be unable to collect all amounts due according to the original terms of the loan. The determination of whether dealer loans are impaired is based on evaluations of dealerships’ payment history, financial condition and cash flows, and their ability to perform under the terms of the loans. Dealer loans that have not been specifically identified as impaired are collectively evaluated for impairment.


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3

 

HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

 

Honda regularly reviews the adequacy of the allowance for credit losses. The estimates are based on information available as of each reporting date. However, actual losses may differ from the original estimates as a result of actual results varying from those assumed in our estimates with inherently uncertain items.

The following tables present the changes in the allowance for credit losses on finance receivables for the six months ended September 30, 2013 and 2014.

For the six months ended September 30, 2013

 

     Yen (millions)  
     Retail     Direct
financing
lease
    Wholesale     Total  

Balance at beginning of period

   ¥ 17,643      ¥ 789      ¥ 1,284      ¥ 19,716   

Provision

     9,048        232        202        9,482   

Charge-offs

     (12,231     (302     (78     (12,611

Recoveries

     4,470        51        10        4,531   

Adjustments from foreign currency translation

     678        18        110        806   
  

 

 

   

 

 

   

 

 

   

 

 

 

Balance at end of period

   ¥ 19,608      ¥ 788      ¥ 1,528      ¥ 21,924   
  

 

 

   

 

 

   

 

 

   

 

 

 

For the six months ended September 30, 2014

 

     Yen (millions)  
     Retail     Direct
financing
lease
    Wholesale     Total  

Balance at beginning of period

   ¥ 21,637      ¥ 636      ¥ 2,578      ¥ 24,851   

Provision

     8,129        216        169        8,514   

Charge-offs

     (13,148     (300     (121     (13,569

Recoveries

     5,332        58        56        5,446   

Adjustments from foreign currency translation

     883        16        56        955   
  

 

 

   

 

 

   

 

 

   

 

 

 

Balance at end of period

   ¥ 22,833      ¥ 626      ¥ 2,738      ¥ 26,197   
  

 

 

   

 

 

   

 

 

   

 

 

 

In the finance subsidiaries of the Company in North America, retail and direct financing lease receivables are charged off when they become 120 days past due or earlier if they have been specifically identified as uncollectible. Wholesale receivables are charged off when they have been individually identified as uncollectible. In the finance subsidiaries of the Company in other areas except for North America, finance receivables are charged off when they have been identified as substantially uncollectible according to the internal standards of each subsidiary.


Table of Contents

 

4

 

HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

 

Delinquencies

In the finance subsidiaries of the Company in North America, retail and direct financing lease receivables are considered delinquent if more than 10% of a monthly scheduled payment is contractually past due on a cumulative basis. Wholesale receivables are considered delinquent when any principal payments are past due. In the finance subsidiaries of the Company in other areas except for North America, finance receivables are considered delinquent when any principal payments are past due.

The following tables present the age analysis of past due finance receivables at March 31, 2014 and September 30, 2014.

As of March 31, 2014

 

     Yen (millions)  
     30-59 days
past due
     60-89 days
past due
     90 days and
greater
past due
     Total
past due
     Current*      Total finance
receivables
 

Retail

                 

New auto

   ¥ 15,948       ¥ 2,069       ¥ 2,745       ¥ 20,762       ¥ 4,044,290       ¥ 4,065,052   

Used & certified auto

     5,557         689         281         6,527         424,872         431,399   

Others

     1,239         507         1,800         3,546         178,744         182,290   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total retail

     22,744         3,265         4,826         30,835         4,647,906         4,678,741   

Direct financing lease

     1,106         214         384         1,704         421,232         422,936   

Wholesale

                 

Wholesale flooring

     526         227         758         1,511         432,708         434,219   

Commercial loans

     —           —           133         133         63,043         63,176   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total wholesale

     526         227         891         1,644         495,751         497,395   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total finance receivables

   ¥ 24,376       ¥ 3,706       ¥ 6,101       ¥ 34,183       ¥ 5,564,889       ¥ 5,599,072   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

As of September 30, 2014

 

     Yen (millions)  
     30-59 days
past due
     60-89 days
past due
     90 days and
greater
past due
     Total
past due
     Current*      Total finance
receivables
 

Retail

                 

New auto

   ¥ 19,450       ¥ 3,344       ¥ 2,763       ¥ 25,557       ¥ 4,307,538       ¥ 4,333,095   

Used & certified auto

     7,007         1,222         466         8,695         424,489         433,184   

Others

     1,549         683         1,958         4,190         193,088         197,278   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total retail

     28,006         5,249         5,187         38,442         4,925,115         4,963,557   

Direct financing lease

     1,044         260         349         1,653         438,087         439,740   

Wholesale

                 

Wholesale flooring

     212         233         944         1,389         374,777         376,166   

Commercial loans

     —           —           110         110         75,519         75,629   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total wholesale

     212         233         1,054         1,499         450,296         451,795   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total finance receivables

   ¥ 29,262       ¥ 5,742       ¥ 6,590       ¥ 41,594       ¥ 5,813,498       ¥ 5,855,092   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

* Includes recorded investment of finance receivables that are less than 30 days past due.


Table of Contents

 

5

 

HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

 

Credit quality indicators

The collection experience of consumer finance receivables provides an indication of the credit quality of consumer finance receivables. The likelihood of accounts charging off becomes significantly higher once an account becomes 60 days delinquent. The table below segments the Company’s portfolio of consumer finance receivables between groups the Company considers to be performing and nonperforming. Accounts that are delinquent for 60 days or greater are included in the nonperforming group and all other accounts are considered to be performing.

The following tables present the balances of consumer finance receivables by this credit quality indicator at March 31, 2014 and September 30, 2014.

As of March 31, 2014

 

     Yen (millions)  
     Performing      Nonperforming      Total consumer
finance receivables
 

Retail

        

New auto

   ¥ 4,060,238       ¥ 4,814       ¥ 4,065,052   

Used & certified auto

     430,429         970         431,399   

Others

     179,983         2,307         182,290   
  

 

 

    

 

 

    

 

 

 

Total retail

     4,670,650         8,091         4,678,741   

Direct financing lease

     422,338         598         422,936   
  

 

 

    

 

 

    

 

 

 

Total

   ¥ 5,092,988       ¥ 8,689       ¥ 5,101,677   
  

 

 

    

 

 

    

 

 

 
As of September 30, 2014         
     Yen (millions)  
     Performing      Nonperforming      Total consumer
finance receivables
 

Retail

        

New auto

   ¥ 4,326,988       ¥ 6,107       ¥ 4,333,095   

Used & certified auto

     431,496         1,688         433,184   

Others

     194,637         2,641         197,278   
  

 

 

    

 

 

    

 

 

 

Total retail

     4,953,121         10,436         4,963,557   

Direct financing lease

     439,131         609         439,740   
  

 

 

    

 

 

    

 

 

 

Total

   ¥ 5,392,252       ¥ 11,045       ¥ 5,403,297   
  

 

 

    

 

 

    

 

 

 


Table of Contents

 

6

 

HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

 

A credit quality indicator for wholesale receivables is the internal risk ratings for the dealerships. Dealerships are assigned an internal risk rating based primarily on their financial condition. At a minimum, risk ratings for dealerships are updated annually and more frequently for dealerships with weaker risk ratings. The table below presents outstanding wholesale receivables balances by the internal risk rating group. Group A includes the loans of dealerships with the highest credit quality characteristics in the strongest risk rating tier. Group B includes the loans of all remaining dealers and are considered to have weaker credit quality characteristics. Although the likelihood of losses can be higher for dealerships in Group B, the overall risk of losses is not considered to be significant.

The following tables present the balances of wholesale receivables by this credit quality indicator at March 31, 2014 and September 30, 2014.

As of March 31, 2014

 

     Yen (millions)  
     Group A      Group B      Total  

Wholesale

        

Wholesale flooring

   ¥ 245,019       ¥ 189,200       ¥ 434,219   

Commercial loans

     36,364         26,812         63,176   
  

 

 

    

 

 

    

 

 

 

Total

   ¥ 281,383       ¥ 216,012       ¥ 497,395   
  

 

 

    

 

 

    

 

 

 

As of September 30, 2014

 

     Yen (millions)  
     Group A      Group B      Total  

Wholesale

        

Wholesale flooring

   ¥ 216,845       ¥ 159,321       ¥ 376,166   

Commercial loans

     46,496         29,133         75,629   
  

 

 

    

 

 

    

 

 

 

Total

   ¥ 263,341       ¥ 188,454       ¥ 451,795   
  

 

 

    

 

 

    

 

 

 

Other finance receivables

Except for the finance subsidiaries-receivables, the other finance receivables about which credit quality information and the allowance for credit losses are required to be disclosed of ¥29,605 million and ¥25,123 million are included in other current assets, investments and advances-other and other assets in the consolidated balance sheets at March 31, 2014 and September 30, 2014, respectively. Honda estimates, individually, the collectibility of the other finance receivables based on the financial condition of the debtor. The impaired finance receivables amounted to ¥20,094 million and ¥20,082 million at March 31, 2014 and September 30, 2014, respectively, for which the allowance for credit losses were ¥19,996 million and ¥19,984 million at March 31, 2014 and September 30, 2014, respectively.

Regarding the other finance receivables which are not impaired, there are no past due receivables.


Table of Contents

 

7

 

HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

 

(4) Inventories

Inventories at March 31, 2014 and September 30, 2014 are summarized as follows:

 

    Yen (millions)  
    March 31,
2014
    September 30,
2014
 

Finished goods

  ¥ 759,099      ¥ 807,546   

Work in process

    69,731        77,267   

Raw materials

    474,065        499,863   
 

 

 

   

 

 

 

Total

  ¥ 1,302,895      ¥ 1,384,676   
 

 

 

   

 

 

 
(5) Investments and Advances-Other    

Investments and advances at March 31, 2014 and September 30, 2014 consist of the following:

  

 
    Yen (millions)  
    March 31,
2014
    September 30,
2014
 

Current:

   

Corporate debt securities

  ¥      11,050      ¥      11,625   

Government bonds

    2,000        —     

Local bonds

    6,620        5,242   

Advances

    1,028        1,476   

Certificates of deposit

    1,558        3,558   

Other

    15,012        16,031   
 

 

 

   

 

 

 

Total

  ¥ 37,268      ¥ 37,932   
 

 

 

   

 

 

 

Investments and advances due within one year are included in other current assets in the consolidated balance sheets.

  

 
    Yen (millions)  
    March 31,
2014
    September 30,
2014
 

Noncurrent:

   

Auction rate securities

  ¥        6,999      ¥        7,443   

Marketable equity securities

    138,476        160,051   

Corporate debt securities

    8,542        8,647   

Local bonds

    15,850        17,950   

U.S. government agency debt securities

    5,455        5,910   

Non-marketable equity securities accounted for under the cost method

   

Non-marketable preferred stocks

    969        969   

Other

    10,316        7,735   

Guaranty deposits

    18,742        18,248   

Advances

    1,998        1,891   

Other

    46,314        48,921   
 

 

 

   

 

 

 

Total

  ¥ 253,661      ¥ 277,765   
 

 

 

   

 

 

 


Table of Contents

 

8

 

HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

 

Certain information with respect to available-for-sale securities and held-to-maturity securities at March 31, 2014 and September 30, 2014 are summarized below:

 

     Yen (millions)  
     March 31,
2014
     September 30,
2014
 

Available-for-sale:

     

Cost

   ¥ 84,820       ¥ 89,426   

Fair value

     185,960         212,277   

Gross unrealized gains

     101,917         123,873   

Gross unrealized losses

     777         1,022   

Held-to-maturity:

     

Amortized cost

   ¥ 34,650       ¥   33,818   

Fair value

     34,667         33,819   

Gross unrealized gains

     17         1   

Gross unrealized losses

     —           —     

Maturities of debt securities classified as available-for-sale at September 30, 2014 are as follows:

 

     Yen
(millions)
 

Due within one year

   ¥ 2,627   

Due after one year through five years

     15,104   

Due after five years through ten years

     8,756   

Due after ten years

           15,761   
  

 

 

 

Total

   ¥   42,248   
  

 

 

 

Maturities of debt securities classified as held-to-maturity at September 30, 2014 are as follows:

 

     Yen
(millions)
 

Due within one year

   ¥   20,824   

Due after one year through five years

     523   

Due after five years through ten years

           11,640   

Due after ten years

     831   
  

 

 

 

Total

   ¥   33,818   
  

 

 

 

There were no significant realized gains and losses from available-for-sale securities included in other income (expenses) – other, net for the six months and the three months ended September 30, 2013 and 2014.


Table of Contents

 

9

 

HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

 

Gross unrealized losses on available-for-sale securities and fair value of the related securities, aggregated by length of time that individual securities have been in a continuous unrealized loss position at March 31, 2014 and September 30, 2014 are as follows:

 

     Yen (millions)  
     March 31, 2014      September 30, 2014  
     Fair value      Unrealized
losses
     Fair value      Unrealized
losses
 

Less than 12 months

   ¥ 8,877       ¥ 224       ¥ 16,911       ¥ 487   

12 months or longer

     7,351         553         7,801         535   
  

 

 

    

 

 

    

 

 

    

 

 

 

Total

   ¥ 16,228       ¥ 777       ¥ 24,712       ¥ 1,022   
  

 

 

    

 

 

    

 

 

    

 

 

 

Honda does not believe the decline in fair value of any of its investment securities to be other than temporary, based on factors such as financial and operating conditions of the issuer, the industry in which the issuer operates, degree and period of the decline in fair value and other relevant factors.

There were no held-to-maturity securities in a loss position at March 31, 2014 and September 30, 2014.

(6) Pension and Other Postretirement Benefits

In September 2013, certain consolidated subsidiaries in North America amended their defined benefit pension plans, effective January 1, 2014. Following this plan amendment, certain employees of these consolidated subsidiaries elected to move from the defined benefit pension plans to the defined contribution pension plan in October 2013. This plan amendment resulted in a reduction of the projected benefit obligation and recognition of the prior service benefit at the date of the plan amendment which is amortized over the average remaining service period from the date of the plan amendment. The consolidated subsidiaries also remeasured their projected benefit obligation and the fair value of related plan assets at the date of the plan amendment. The effects of the plan amendment and the remeasurement were recognized in other comprehensive income (loss), net of tax for the three months ended September 30, 2013.


Table of Contents

 

10

 

HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

 

(7) Other Comprehensive Income (Loss)

The following tables present the changes in accumulated other comprehensive income (loss) by component for the six months and the three months ended September 30, 2013 and 2014.

For the six months ended September 30, 2013

 

     Yen (millions)  
     Adjustments
from foreign
currency
translation
    Unrealized gains
(losses) on
available-for-sale
securities, net
     Unrealized gains
(losses) on
derivative
instruments, net
    Pension and
other
postretirement
benefits
adjustments
    Total  

Balance at beginning of period

   ¥ (969,583   ¥ 44,131       ¥ (237   ¥ (311,103   ¥ (1,236,792

Other comprehensive income (loss) before reclassifications*1

     165,750        18,225         459        76,301        260,735   

Amounts reclassified from accumulated other comprehensive income (loss)

     —          225         (113     5,093        5,205   
  

 

 

   

 

 

    

 

 

   

 

 

   

 

 

 

Net other comprehensive income (loss)

     165,750        18,450         346        81,394        265,940   
  

 

 

   

 

 

    

 

 

   

 

 

   

 

 

 

Less: Other comprehensive income attributable to noncontrolling interests

     5,097        16         —          87        5,200   
  

 

 

   

 

 

    

 

 

   

 

 

   

 

 

 

Balance at end of period

   ¥ (808,930   ¥ 62,565       ¥ 109      ¥ (229,796   ¥ (976,052
  

 

 

   

 

 

    

 

 

   

 

 

   

 

 

 

 

*1 

The tax effects for other comprehensive income (loss) before reclassifications of Pension and other postretirement benefits adjustments include ¥44,862 million loss for the six months ended September 30, 2013.


Table of Contents

 

11

 

HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

 

For the six months ended September 30, 2014

 

     Yen (millions)  
     Adjustments
from foreign
currency
translation
    Unrealized gains
(losses) on
available-for-sale
securities, net
     Unrealized gains
(losses) on
derivative
instruments, net
     Pension and
other
postretirement
benefits
adjustments
    Total  

Balance at beginning of period

   ¥ (649,159   ¥ 59,350       ¥ —         ¥ (203,205   ¥ (793,014

Other comprehensive income (loss) before reclassifications

     178,215        9,824         —           (1,944     186,095   

Amounts reclassified from accumulated other comprehensive income (loss)

     2,566        155         —           1,840        4,561   
  

 

 

   

 

 

    

 

 

    

 

 

   

 

 

 

Net other comprehensive income (loss)

     180,781        9,979         —           (104     190,656   
  

 

 

   

 

 

    

 

 

    

 

 

   

 

 

 

Less: Other comprehensive income attributable to noncontrolling interests

     4,647        15         —           1,563        6,225   
  

 

 

   

 

 

    

 

 

    

 

 

   

 

 

 

Balance at end of period

   ¥ (473,025   ¥ 69,314       ¥ —         ¥ (204,872   ¥ (608,583
  

 

 

   

 

 

    

 

 

    

 

 

   

 

 

 


Table of Contents

 

12

 

HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

 

For the three months ended September 30, 2013

 

     Yen (millions)  
     Adjustments
from foreign
currency
translation
    Unrealized gains
(losses) on
available-for-sale
securities, net
    Unrealized gains
(losses) on
derivative
instruments, net
    Pension and
other
postretirement
benefits
adjustments
    Total  

Balance at beginning of period

   ¥ (788,480   ¥ 52,800      ¥ 350      ¥ (308,461   ¥ (1,043,791

Other comprehensive income (loss) before reclassifications*2

     (23,796     9,749        109        76,503        62,565   

Amounts reclassified from accumulated other comprehensive income (loss)

     —          7        (350     2,206        1,863   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net other comprehensive income (loss)

     (23,796     9,756        (241     78,709        64,428   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Less: Other comprehensive income attributable to noncontrolling interests

     (3,346     (9     —          44        (3,311
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Balance at end of period

   ¥ (808,930   ¥ 62,565      ¥ 109      ¥ (229,796   ¥ (976,052
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

*2 

The tax effects for other comprehensive income (loss) before reclassifications of Pension and other postretirement benefits adjustments include ¥44,930 million loss for the three months ended September 30, 2013.


Table of Contents

 

13

 

HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

 

For the three months ended September 30, 2014

 

     Yen (millions)  
     Adjustments
from foreign
currency
translation
    Unrealized gains
(losses) on
available-for-sale
securities, net
     Unrealized gains
(losses) on
derivative
instruments, net
     Pension and
other
postretirement
benefits
adjustments
    Total  

Balance at beginning of period

   ¥ (700,500   ¥ 67,635       ¥ —         ¥ (207,976   ¥ (840,841

Other comprehensive income (loss) before reclassifications

     236,107        1,483         —           2,970        240,560   

Amounts reclassified from accumulated other comprehensive income (loss)

     —          212         —           1,652        1,864   
  

 

 

   

 

 

    

 

 

    

 

 

   

 

 

 

Net other comprehensive income (loss)

     236,107        1,695         —           4,622        242,424   
  

 

 

   

 

 

    

 

 

    

 

 

   

 

 

 

Less: Other comprehensive income attributable to noncontrolling interests

     8,632        16         —           1,518        10,166   
  

 

 

   

 

 

    

 

 

    

 

 

   

 

 

 

Balance at end of period

   ¥ (473,025   ¥ 69,314       ¥ —         ¥ (204,872   ¥ (608,583
  

 

 

   

 

 

    

 

 

    

 

 

   

 

 

 


Table of Contents

 

14

 

HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

 

The following tables present the reclassifications out of accumulated other comprehensive income (loss) by component for the six months and the three months ended September 30, 2013 and 2014.

For the six months ended September 30, 2013 and 2014

 

    Yen (millions)

Details about accumulated other comprehensive income (loss)
components

  September 30,
2013
    September 30,
2014
   

Affected line items in the statement
where net income is presented

Adjustments from foreign currency translation

     
  ¥ —        ¥ (2,613   Other income (expenses)—Other, net
    —          47      Income tax expense
 

 

 

   

 

 

   
  ¥ —        ¥ (2,566   Net income
 

 

 

   

 

 

   

Unrealized gains (losses) on available-for-sale securities, net

     
  ¥ (347   ¥ (239   Other income (expenses)—Other, net
    122        84      Income tax expense
 

 

 

   

 

 

   
  ¥ (225   ¥ (155   Net income
 

 

 

   

 

 

   

Unrealized gains (losses) on derivative instruments, net

     
  ¥ 183      ¥ —        Other income (expenses)—Other, net
    (70     —        Income tax expense
 

 

 

   

 

 

   
  ¥ 113      ¥ —        Net income
 

 

 

   

 

 

   

Pension and other postretirement benefits adjustments

     
  ¥ (7,902   ¥ (3,055   *
    2,809        1,215      Income tax expense
 

 

 

   

 

 

   
  ¥ (5,093   ¥ (1,840   Net income
 

 

 

   

 

 

   

Total reclassifications for the period

  ¥ (5,205   ¥ (4,561  
 

 

 

   

 

 

   

 

* This accumulated other comprehensive income (loss) component is included in the computation of net periodic pension cost.


Table of Contents

 

15

 

HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

 

For the three months ended September 30, 2013 and 2014

 

    Yen (millions)

Details about accumulated other comprehensive income (loss)
components

  September 30,
2013
    September 30,
2014
   

Affected line items in the statement

where net income is presented

Unrealized gains (losses) on available-for-sale securities, net

     
  ¥ (11   ¥ (327   Other income (expenses)—Other, net
    4        115      Income tax expense
 

 

 

   

 

 

   
  ¥ (7   ¥ (212   Net income
 

 

 

   

 

 

   

Unrealized gains (losses) on derivative instruments, net

     
  ¥ 564      ¥ —        Other income (expenses)—Other, net
    (214     —        Income tax expense
 

 

 

   

 

 

   
  ¥ 350      ¥ —        Net income
 

 

 

   

 

 

   

Pension and other postretirement benefits adjustments

     
  ¥ (3,420   ¥ (2,692   *
    1,214        1,040      Income tax expense
 

 

 

   

 

 

   
  ¥ (2,206   ¥ (1,652   Net income
 

 

 

   

 

 

   

Total reclassifications for the period

  ¥ (1,863   ¥ (1,864  
 

 

 

   

 

 

   

 

* This accumulated other comprehensive income (loss) component is included in the computation of net periodic pension cost.


Table of Contents

 

16

 

HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

 

(8) Fair Value Measurements

In accordance with the FASB Accounting Standards Codification (ASC) 820 “Fair Value Measurements and Disclosures”, Honda uses a three-level hierarchy when measuring fair value. The following is a description of the three hierarchy levels:

 

Level 1    Quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to access as of the measurement date
Level 2    Inputs other than quoted prices included within Level 1 that are observable for the assets or liabilities, either directly or indirectly
Level 3    Unobservable inputs for the assets or liabilities

The level in the fair value hierarchy within which a fair value measurement in its entirety falls is based on the lowest input that is significant to the fair value measurement in its entirety.

The following tables present the assets and liabilities measured at fair value on a recurring basis as of March 31, 2014 and September 30, 2014.

As of March 31, 2014

 

     Yen (millions)  
     Level 1      Level 2     Level 3      Gross
fair value
    Netting
adjustment
    Net
amount
 

Assets:

              

Derivative instruments

              

Foreign exchange instruments (note 9)

   ¥ —         ¥ 11,036      ¥ —         ¥ 11,036      ¥ —        ¥ —     

Interest rate instruments (note 9)

     —           19,814        —           19,814        —          —     
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

   

 

 

 

Total derivative instruments

     —           30,850        —           30,850        (10,804     20,046   
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

   

 

 

 

Available-for-sale securities

              

Marketable equity securities

     138,476         —          —           138,476        —          138,476   

Auction rate securities

     —           —          6,999         6,999        —          6,999   

Debt securities

     —           31,905        —           31,905        —          31,905   

Others

     5,146         3,434        —           8,580        —          8,580   
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

   

 

 

 

Total available-for-sale securities

     143,622         35,339        6,999         185,960        —          185,960   
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

   

 

 

 

Total

   ¥  143,622       ¥ 66,189      ¥  6,999       ¥  216,810      ¥ (10,804   ¥ 206,006   
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

   

 

 

 

Liabilities:

              

Derivative instruments

              

Foreign exchange instruments (note 9)

   ¥ —         ¥ (14,852   ¥ —         ¥ (14,852   ¥ —        ¥ —     

Interest rate instruments (note 9)

     —           (10,887     —           (10,887     —          —     
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

   

 

 

 

Total derivative instruments

     —           (25,739     —           (25,739     10,804        (14,935
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

   

 

 

 

Total

   ¥ —         ¥ (25,739   ¥ —         ¥ (25,739   ¥ 10,804      ¥ (14,935
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

   

 

 

 


Table of Contents

 

17

 

HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

 

As of September 30, 2014

 

     Yen (millions)  
     Level 1      Level 2     Level 3      Gross
fair value
    Netting
adjustment
    Net
amount
 

Assets:

              

Derivative instruments

              

Foreign exchange instruments (note 9)

   ¥ —         ¥ 4,657      ¥ —         ¥ 4,657      ¥ —        ¥ —     

Interest rate instruments (note 9)

     —           20,415        —           20,415        —          —     
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

   

 

 

 

Total derivative instruments

     —           25,072        —           25,072        (6,744     18,328   
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

   

 

 

 

Available-for-sale securities

              

Marketable equity securities

     160,051         —          —           160,051        —          160,051   

Auction rate securities

     —           —          7,443         7,443        —          7,443   

Debt securities

     —           34,805        —           34,805        —          34,805   

Others

     6,239         3,739        —           9,978        —          9,978   
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

   

 

 

 

Total available-for-sale securities

     166,290         38,544        7,443         212,277        —          212,277   
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

   

 

 

 

Total

   ¥  166,290       ¥ 63,616      ¥  7,443       ¥ 237,349      ¥ (6,744   ¥ 230,605   
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

   

 

 

 

Liabilities:

              

Derivative instruments

              

Foreign exchange instruments (note 9)

   ¥ —         ¥ (17,184   ¥ —         ¥ (17,184   ¥ —        ¥ —     

Interest rate instruments (note 9)

     —           (7,406     —           (7,406     —          —     
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

   

 

 

 

Total derivative instruments

     —           (24,590     —           (24,590     6,744        (17,846
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

   

 

 

 

Total

   ¥ —         ¥ (24,590   ¥ —         ¥ (24,590   ¥ 6,744      ¥ (17,846
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

   

 

 

 

Derivative asset and liability positions are presented net by counterparty on the consolidated balance sheets when valid master netting agreement exists and the other conditions set out in ASC 210-20 “Balance Sheet-Offsetting” are met.


Table of Contents

 

18

 

HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

 

The following tables present reconciliation during the six months ended September 30, 2013 and 2014 for all Level 3 assets and liabilities measured at fair value on a recurring basis.

For the six months ended September 30, 2013

 

     Yen (millions)  
     Auction rate securities  

Balance at beginning of period

   ¥ 6,928   

Total realized/unrealized gains or losses

  

Included in earnings

     —     

Included in other comprehensive income (loss)

     99   

Purchases, issuances, settlements and sales

  

Purchases

     —     

Issuances

     —     

Settlements

     —     

Sales

     (790

Foreign currency translation

     312   
  

 

 

 

Balance at end of period

   ¥ 6,549   
  

 

 

 

The amounts of total gains or losses for the period attributable to the change in unrealized gains or losses relating to assets and liabilities still held at the reporting date

  

Included in earnings

   ¥ —     

Included in other comprehensive income (loss)

     —     

For the six months ended September 30, 2014

 

     Yen (millions)  
     Auction rate securities  

Balance at beginning of period

   ¥ 6,999   

Total realized/unrealized gains or losses

  

Included in earnings

     —     

Included in other comprehensive income (loss)

     —     

Purchases, issuances, settlements and sales

  

Purchases

     —     

Issuances

     —     

Settlements

     —     

Sales

     —     

Foreign currency translation

     444   
  

 

 

 

Balance at end of period

   ¥ 7,443   
  

 

 

 

The amounts of total gains or losses for the period attributable to the change in unrealized gains or losses relating to assets and liabilities still held at the reporting date

  

Included in earnings

   ¥ —     

Included in other comprehensive income (loss)

     —     


Table of Contents

 

19

 

HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

 

The valuation methodologies for the assets and liabilities measured at fair value on a recurring basis are as follows:

Foreign exchange and interest rate instruments (note 9)

The fair values of foreign currency forward exchange contracts and foreign currency option contracts are estimated by using market observable inputs such as spot exchange rates, discount rates and implied volatility. Fair value measurements for foreign currency forward exchange contracts and foreign currency option contracts are classified as Level 2. The fair values of currency swap agreements and interest rate swap agreements are estimated by discounting future cash flows using market observable inputs such as LIBOR rates, swap rates, and foreign exchange rates. Fair value measurements for these currency swap agreements and interest rate swap agreements are classified as Level 2.

The credit risk of Honda and its counterparties are considered in the valuation of foreign exchange and interest rate instruments.

Marketable equity securities

The fair value of marketable equity securities is estimated by using quoted market prices. Fair value measurement for marketable equity securities is classified as Level 1.

Auction rate securities

The subsidiary’s auction rate securities holdings were AAA rated and are insured by qualified guarantee agencies, and reinsured by the Secretary of Education and United States Government, and are guaranteed about 95% by the United States Government. To estimate fair value of auction rate securities, Honda uses a third-party-developed valuation model which obtains a wide array of market observable inputs, as well as unobservable inputs including probability of passing or failing auction at each auction. Fair value measurement for auction rate securities is classified as Level 3.

Debt securities

Debt securities consist mainly of corporate bonds and local bonds and the fair values are estimated based on proprietary pricing models provided by specialists and/or market makers and the models obtain a wide array of market observable inputs such as credit ratings and discount rates. Fair value measurement for debt securities is classified as Level 2.

Honda did not have significant assets and liabilities measured at fair value on a nonrecurring basis as of and for the year ended March 31, 2014. For the three months ended September 30, 2014, Honda measured certain investments in affiliates which have quoted market values at fair value on a nonrecurring basis due to the recognition of impairment loss (note 1(d)). The fair value of the investments was ¥21,454 million and estimated by using quoted market price. Fair value measurement for the investment is classified as Level 1.

Honda has not elected the fair value option for the year ended March 31, 2014 and the six months ended September 30, 2014.


Table of Contents

 

20

 

HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

 

The estimated fair values of significant financial instruments at March 31, 2014 and September 30, 2014 are as follows:

 

     Yen (millions)  
     March 31, 2014     September 30, 2014  
     Carrying
amount
    Estimated
fair value
    Carrying
amount
    Estimated
fair value
 

Finance subsidiaries-receivables*

   ¥ 5,140,064      ¥ 5,175,564      ¥ 5,376,554      ¥ 5,404,542   

Held-to-maturity securities

     34,650        34,667        33,818        33,819   

Debt

     (5,856,874     (5,917,087     (6,284,293     (6,341,107

 

* The carrying amounts of finance subsidiaries-receivables at March 31, 2014 and September 30, 2014 in the table exclude ¥393,933 million and ¥410,612 million, respectively, of direct financing leases, net, classified as finance subsidiaries-receivables in the consolidated balance sheets. The carrying amounts of finance subsidiaries-receivables at March 31, 2014 and September 30, 2014 in the table also include ¥752,229 million and ¥719,630 million of finance receivables classified as trade accounts and notes receivable and other assets in the consolidated balance sheets, respectively.

The estimated fair values have been determined using relevant market information and appropriate valuation methodologies. However, these estimates are subjective in nature and involve uncertainties and matters of significant judgment and, therefore, cannot be determined with precision. The effect of using different assumptions and/or estimation methodologies may be significant to the estimated fair values.

The methodologies and assumptions used to estimate the fair values of financial instruments are as follows:

Cash and cash equivalents, trade receivables and trade payables

The carrying amounts approximate fair values because of the short maturity of these instruments.

Finance subsidiaries-receivables

The fair values of retail receivables and commercial loans are estimated by discounting future cash flows using the current rates for these instruments of similar remaining maturities. Given the short maturities of wholesale flooring receivables, the carrying amount of those receivables approximates fair value. Fair value measurements for retail receivables and commercial loans are mainly classified as Level 3.

Held-to-maturity securities

The fair value of Government bonds is estimated by using quoted market prices. Fair value measurement of those Government bonds is classified as Level 1. The fair values of corporate bonds and local bonds are estimated based on proprietary pricing models provided by specialists and/or market makers and the models obtain a wide array of market observable inputs such as credit ratings and discount rates. Fair value measurement for these securities is classified as Level 2.

Debt

The fair values of bonds are estimated by using quoted market prices. Fair value measurement of those bonds is mainly classified as Level 1. The fair values of short-term loans and long-term loans are estimated by discounting future cash flows using interest rates currently available for loans of similar terms and remaining maturities. Fair value measurements for these loans are mainly classified as Level 2.


Table of Contents

 

21

 

HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

 

(9) Risk Management Activities and Derivative Financial Instruments

Honda uses derivative financial instruments in the normal course of business to reduce their exposure to fluctuations in foreign exchange rates and interest rates (note 8). Currency swap agreements are used to manage currency risk exposure on foreign currency denominated debt. Foreign currency forward exchange contracts and purchased option contracts are used to hedge currency risk of sale commitments denominated in foreign currencies (principally U.S. dollars). Foreign currency written option contracts are entered into in combination with purchased option contracts to offset premium amounts to be paid for purchased option contracts. Interest rate swap agreements are mainly used to manage interest rate risk exposure and to convert floating rate financing, such as commercial paper, to (normally three-five years) fixed rate financing in order to match financing costs with income from finance receivables. These instruments involve, to varying degrees, elements of credit, exchange rate and interest rate risks in excess of the amount recognized in the consolidated balance sheets.

The aforementioned instruments contain an element of risk in the event the counterparties are unable to meet the terms of the agreements. However, Honda minimizes the risk exposure by limiting the counterparties to major international banks and financial institutions meeting established credit guidelines. Management of Honda does not expect any counterparty to default on its obligations and, therefore, does not expect to incur any losses due to counterparty default. Honda currently does not require or place collateral for these financial instruments with any counterparties.

Contract amounts outstanding for foreign currency forward exchange contracts, foreign currency option contracts and currency swap agreements and the notional principal amounts of interest rate swap agreements at March 31, 2014 and September 30, 2014 are as follows:

Derivatives not designated as hedging instruments

 

     Yen (millions)  
     March 31,
2014
     September 30,
2014
 

Foreign currency forward exchange contracts

   ¥ 506,734       ¥ 487,676   

Foreign currency option contracts

     3,721         3,378   

Currency swap agreements

     366,031         234,564   
  

 

 

    

 

 

 

Total foreign exchange instruments

   ¥ 876,486       ¥ 725,618   
  

 

 

    

 

 

 

Interest rate swap agreements

   ¥ 4,809,037       ¥ 5,330,702   
  

 

 

    

 

 

 

Total interest rate instruments

   ¥ 4,809,037       ¥ 5,330,702   
  

 

 

    

 

 

 


Table of Contents

 

22

 

HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

 

Cash flow hedges

The Company applies hedge accounting for certain foreign currency forward exchange contracts related to forecasted foreign currency transactions between the Company and its subsidiaries. Changes in the fair value of derivative financial instruments designated as cash flow hedges are recognized in other comprehensive income (loss). The amounts are reclassified into earnings in the same period when forecasted hedged transactions affect earnings. The Company did not hold any derivative financial instruments designated as cash flow hedges and there was no amount recognized in accumulated other comprehensive income (loss) at March 31, 2014.

The period that hedges the changes in cash flows related to the risk of foreign currency rate was at most around two months for the year ended March 31, 2014. There were no derivative financial instruments where hedge accounting had been discontinued due to the forecasted transaction no longer being probable. The Company excluded financial instruments’ time value component from the assessment of hedge effectiveness. There was no portion of hedging instruments that had been assessed ineffective.

There are no derivative financial instruments designated as cash flow hedges for the six months ended September 30, 2014.

Derivative financial instruments not designated as accounting hedges

Changes in the fair value of derivative financial instruments not designated as accounting hedges are recognized in earnings in the period of the change.

The estimated fair values of derivative instruments at March 31, 2014 and September 30, 2014 are as follows:

As of March 31, 2014

Derivatives not designated as hedging instruments

 

     Yen (millions)  
     Gross fair value     Balance sheet location  
     Asset
derivatives
    Liability
derivatives
    Other current
assets
     Other
assets
     Other current
liabilities
 

Foreign exchange instruments

   ¥ 11,036      ¥ (14,852   ¥ 4,910       ¥ 2,288       ¥ (11,014

Interest rate instruments

     19,814        (10,887     593         12,255         (3,921
  

 

 

   

 

 

   

 

 

    

 

 

    

 

 

 

Total

   ¥ 30,850      ¥ (25,739   ¥ 5,503       ¥ 14,543       ¥ (14,935
  

 

 

   

 

 

   

 

 

    

 

 

    

 

 

 

Netting adjustment

     (10,804     10,804           
  

 

 

   

 

 

         

Net amount

   ¥ 20,046      ¥ (14,935        
  

 

 

   

 

 

         

As of September 30, 2014

Derivatives not designated as hedging instruments

 

     Yen (millions)  
     Gross fair value     Balance sheet location  
     Asset
derivatives
    Liability
derivatives
    Other current
assets
     Other
assets
     Other current
liabilities
 

Foreign exchange instruments

   ¥ 4,657      ¥ (17,184   ¥ 3,101       ¥ —         ¥ (15,628

Interest rate instruments

     20,415        (7,406     1,540         13,687         (2,218
  

 

 

   

 

 

   

 

 

    

 

 

    

 

 

 

Total

   ¥ 25,072      ¥ (24,590   ¥ 4,641       ¥ 13,687       ¥ (17,846
  

 

 

   

 

 

   

 

 

    

 

 

    

 

 

 

Netting adjustment

     (6,744     6,744           
  

 

 

   

 

 

         

Net amount

   ¥ 18,328      ¥ (17,846        
  

 

 

   

 

 

         

Derivative asset and liability positions are presented net by counterparty on the consolidated balance sheets when valid master netting agreement exists and the other conditions set out in the FASB Accounting Standards Codification (ASC) 210-20 “Balance Sheet-Offsetting” are met.


Table of Contents

 

23

 

HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

 

The pre-tax effects of derivative instruments on the Company’s results of operations for the six months and the three months ended September 30, 2013 and 2014 are as follows:

For the six months ended September 30, 2013

Derivatives designated as hedging instruments

Cash flow hedges:

 

    Yen (millions)  
    Gain (Loss)
recognized in other
comprehensive

income (loss)
(effective portion)
   

Gain (Loss) reclassified
from accumulated other
comprehensive income
(loss) into earnings

(effective portion)

    Gain (Loss) recognized in
earnings (financial instruments’
time value component excluded
from the assessment of hedge
effectiveness)
 
    Amount    

Location

  Amount     Location   Amount  

Foreign exchange instruments

    ¥ 740     

Other income (expenses) -

Other, net

  ¥ 183      Other income
(expenses) -

Other, net

  ¥ (85

 

Derivatives not designated as hedging instruments

 

         
        Yen (millions)  
        Gain (Loss) recognized in earnings  
        Location   Amount  

Foreign exchange instruments

      Other income (expenses) - Other, net   ¥ (13,151

Interest rate instruments

      Other income (expenses) - Other, net     (8,627
           

 

 

 

Total

      ¥ (21,778
           

 

 

 

 

For the six months ended September 30, 2014

 

Derivatives designated as hedging instruments

 

Cash flow hedges:

 

           
    Yen (millions)  
    Gain (Loss)
recognized in other
comprehensive

income (loss)
(effective portion)
   

Gain (Loss) reclassified
from accumulated other
comprehensive income
(loss) into earnings

(effective portion)

    Gain (Loss) recognized in
earnings (financial instruments’
time value component excluded
from the assessment of hedge
effectiveness)
 
    Amount    

Location

  Amount     Location   Amount  

Foreign exchange instruments

    ¥ —       

Other income (expenses) -

Other, net

  ¥ —        Other income  
(expenses) -  

Other, net  

  ¥ —     

 

Derivatives not designated as hedging instruments

 

         
        Yen (millions)  
        Gain (Loss) recognized in earnings  
        Location   Amount  

Foreign exchange instruments

      Other income (expenses) - Other, net   ¥ (22,731

Interest rate instruments

      Other income (expenses) - Other, net     1,228   
           

 

 

 

Total

            ¥ (21,503
           

 

 

 


Table of Contents

 

24

 

HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

 

For the three months ended September 30, 2013

Derivatives designated as hedging instruments

Cash flow hedges:

 

    Yen (millions)  
    Gain (Loss)
recognized in other
comprehensive
income (loss)
(effective portion)
   

Gain (Loss) reclassified
from accumulated other
comprehensive income
(loss) into earnings

(effective portion)

    Gain (Loss) recognized in
earnings (financial instruments’
time value component excluded
from the assessment of hedge
effectiveness)
 
    Amount    

Location

  Amount     Location   Amount  

Foreign exchange instruments

    ¥ 176     

Other income (expenses) -

Other, net

  ¥ 564      Other income
(expenses) -

Other, net

  ¥ (151

 

Derivatives not designated as hedging instruments

 

         
        Yen (millions)  
        Gain (Loss) recognized in earnings  
        Location   Amount  

Foreign exchange instruments

      Other income (expenses) - Other, net   ¥ 10,168   

Interest rate instruments

      Other income (expenses) - Other, net     (3,598
           

 

 

 

Total

      ¥ 6,570   
           

 

 

 

 

For the three months ended September 30, 2014

 

Derivatives designated as hedging instruments

 

Cash flow hedges:

 

           
    Yen (millions)  
    Gain (Loss)
recognized in other
comprehensive
income (loss)
(effective portion)
   

Gain (Loss) reclassified
from accumulated other
comprehensive income
(loss) into earnings
(effective portion)

    Gain (Loss) recognized in
earnings (financial instruments’
time value component excluded
from the assessment of hedge
effectiveness)
 
    Amount    

Location

  Amount     Location   Amount  

Foreign exchange instruments

    ¥ —       

Other income (expenses) -

Other, net

  ¥ —        Other income  
(expenses) -  

Other, net  

  ¥ —     

 

Derivatives not designated as hedging instruments

 

 

         
        Yen (millions)  
        Gain (Loss) recognized in earnings  
        Location   Amount  

Foreign exchange instruments

      Other income (expenses) - Other, net   ¥ (19,571

Interest rate instruments

      Other income (expenses) - Other, net     306   
           

 

 

 

Total

            ¥ (19,265
           

 

 

 

The gains and losses are included in other income (expenses) – other, net on a net basis with related items, such as foreign currency translation.


Table of Contents

 

25

 

HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

 

(10) Contingent Liabilities

Honda has entered into various guarantee and indemnification agreements. At March 31, 2014 and September 30, 2014, Honda has guaranteed ¥25,368 million and ¥23,795 million of bank loans of employees for their housing costs, respectively. If an employee defaults on his/her loan payments, Honda is required to perform under the guarantee. The undiscounted maximum amount of Honda’s obligation to make future payments in the event of defaults at March 31, 2014 and September 30, 2014 are ¥25,368 million and ¥23,795 million, respectively. At September 30, 2014, no amount has been accrued for any estimated losses under the obligations, as it is probable that the employees will be able to make all scheduled payments.

Honda warrants its products for specific periods of time. Honda also provides specific warranty programs, including product recalls, as needed. Product warranties vary depending upon the nature of the product, the geographic location of its sale and other factors.

The changes in the accrued liabilities for those product warranties for the year ended March 31, 2014 and the six months ended September 30, 2014 are as follows:

 

     Yen (millions)  
     March 31,
2014
    September 30,
2014
 

Balance at beginning of period

   ¥ 208,033      ¥ 269,620   

Warranty claims paid during the period

     (104,090     (64,533

Liabilities accrued for warranties issued during the period

     153,898        69,707   

Changes in liabilities for pre-existing warranties during the period

     397        (1,278

Foreign currency translation

     11,382        10,673   
  

 

 

   

 

 

 

Balance at end of period

   ¥ 269,620      ¥ 284,189   
  

 

 

   

 

 

 

With respect to product liability, personal injury claims or lawsuits, Honda believes that any judgment that may be recovered by any plaintiff for general and special damages and court costs will be adequately covered by Honda’s insurance and accrued liabilities. Punitive damages are claimed in certain of these lawsuits. Honda is also subject to potential liability under other various lawsuits and claims. Honda recognizes an accrued liability for loss contingencies when it is probable that an obligation has been incurred and the amount of loss can be reasonably estimated. Honda reviews these pending lawsuits and claims periodically and adjusts the amounts recorded 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 account all known factors pertaining to existing lawsuits and claims, Honda believes that the ultimate outcome of such lawsuits and pending claims should not result in liability to Honda that would be likely to have an adverse material effect on its consolidated financial position, results of operations or cash flows.


Table of Contents

 

26

 

HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

 

(11) Information Related to Honda Motor Co., Ltd. Shareholders’ Equity

For the six months ended September 30, 2013

 

  (a) Information concerning dividends

 

  1. Dividend payout

 

Resolution

   The ordinary general meeting of shareholders on June 19, 2013

Type of shares

   Common stock

Total amount of dividends (million yen)

   34,243

Dividend per share of common stock (yen)

   19.00

Record date

   March 31, 2013

Effective date

   June 20, 2013

Resource for dividend

   Retained earnings

Resolution

   The board of directors meeting on July 31, 2013

Type of shares

   Common stock

Total amount of dividends (million yen)

   36,045

Dividend per share of common stock (yen)

   20.00

Record date

   June 30, 2013

Effective date

   August 26, 2013

Resource for dividend

   Retained earnings

 

  2. Dividends payable of which record date was in the six months ended September 30, 2013, effective after the period

 

Resolution

   The board of directors meeting on October 30, 2013

Type of shares

   Common stock

Total amount of dividends (million yen)

   36,045

Dividend per share of common stock (yen)

   20.00

Record date

   September 30, 2013

Effective date

   November 28, 2013

Resource for dividend

   Retained earnings

 

  (b) Significant changes in Honda Motor Co., Ltd. shareholders’ equity

None


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27

 

HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

 

For the six months ended September 30, 2014

 

  (a) Information concerning dividends

 

  1. Dividend payout

 

Resolution

   The ordinary general meeting of shareholders on June 13, 2014

Type of shares

   Common stock

Total amount of dividends (million yen)

   39,650

Dividend per share of common stock (yen)

   22.00

Record date

   March 31, 2014

Effective date

   June 16, 2014

Resource for dividend

   Retained earnings

Resolution

   The board of directors meeting on July 29, 2014

Type of shares

   Common stock

Total amount of dividends (million yen)

   39,650

Dividend per share of common stock (yen)

   22.00

Record date

   June 30, 2014

Effective date

   August 25, 2014

Resource for dividend

   Retained earnings

 

  2. Dividends payable of which record date was in the six months ended September 30, 2014, effective after the period

 

Resolution

   The board of directors meeting on October 28, 2014

Type of shares

   Common stock

Total amount of dividends (million yen)

   39,650

Dividend per share of common stock (yen)

   22.00

Record date

   September 30, 2014

Effective date

   November 28, 2014

Resource for dividend

   Retained earnings

 

  (b) Significant changes in Honda Motor Co., Ltd. shareholders’ equity

None


Table of Contents

 

28

 

HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

 

(12) Segment Information

Honda has four reportable segments: Motorcycle business, Automobile business, Financial services business and Power product and other businesses, which are based on Honda’s organizational structure and characteristics of products and services. Operating segments are defined as components of Honda’s about which separate financial information is available that is evaluated regularly by the chief operating decision maker in deciding how to allocate resources and in assessing performance. The accounting policies used for these reportable segments are consistent with the accounting policies used in Honda’s consolidated financial statements.

Principal products and services, and functions of each segment are as follows:

 

Segment

  

Principal products and services

  

Functions

Motorcycle Business   

Motorcycles, all-terrain vehicles

(ATVs) and relevant parts

  

Research & Development

Manufacturing

Sales and related services

Automobile Business    Automobiles and relevant parts   

Research & Development

Manufacturing

Sales and related services

Financial Services Business    Financial, insurance services   

Retail loan and lease related to Honda products

Others

Power Product and Other Businesses   

Power products and relevant parts,

and others

  

Research & Development

Manufacturing

Sales and related services

Others


Table of Contents

 

29

 

HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

 

Segment Information

As of and for the six months ended September 30, 2013

 

     Yen (millions)  
     Motorcycle
Business
     Automobile
Business
     Financial
Services
Business
     Power Product
and Other
Businesses
    Segment
Total
     Reconciling
Items
    Consolidated  

Net sales and other operating revenue:

                  

External customers

   ¥ 814,959       ¥ 4,425,595       ¥ 335,412       ¥ 148,350      ¥ 5,724,316       ¥ —        ¥ 5,724,316   

Intersegment

     —           8,590         5,159         5,557        19,306         (19,306     —     
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 

Total

   ¥ 814,959       ¥ 4,434,185       ¥ 340,571       ¥ 153,907      ¥ 5,743,622       ¥ (19,306   ¥ 5,724,316   
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 

Segment income (loss)

   ¥ 88,124       ¥ 176,530       ¥ 91,228       ¥ 532      ¥ 356,414       ¥ —        ¥ 356,414   
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 

Segment assets

   ¥ 1,220,606       ¥ 5,906,273       ¥ 7,404,632       ¥ 334,588      ¥ 14,866,099       ¥ (357,905   ¥ 14,508,194   

Depreciation and amortization

   ¥ 22,110       ¥ 188,703       ¥ 165,122       ¥ 5,135      ¥ 381,070       ¥ —        ¥ 381,070   

Capital expenditures

   ¥ 26,147       ¥ 294,398       ¥ 584,140       ¥ 6,632      ¥ 911,317       ¥ —        ¥ 911,317   
As of and for the six months ended September 30, 2014     
     Yen (millions)  
     Motorcycle
Business
     Automobile
Business
     Financial
Services
Business
     Power Product
and Other
Businesses
    Segment
Total
     Reconciling
Items
    Consolidated  

Net sales and other operating revenue:

                  

External customers

   ¥ 846,111       ¥ 4,629,996       ¥ 379,683       ¥ 147,265      ¥ 6,003,055       ¥ —        ¥ 6,003,055   

Intersegment

     —           10,247         5,302         5,174        20,723         (20,723     —     
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 

Total

   ¥ 846,111       ¥ 4,640,243       ¥ 384,985       ¥ 152,439      ¥ 6,023,778       ¥ (20,723   ¥ 6,003,055   
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 

Segment income (loss)

   ¥ 82,115       ¥ 178,985       ¥ 100,084       ¥ 1,301      ¥ 362,485       ¥ —        ¥ 362,485   
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 

Segment assets

   ¥ 1,284,029       ¥ 6,605,208       ¥ 8,659,064       ¥ 373,544      ¥ 16,921,845       ¥ (449,287   ¥ 16,472,558   

Depreciation and amortization

   ¥ 23,820       ¥ 204,804       ¥ 197,060       ¥ 5,285      ¥ 430,969       ¥ —        ¥ 430,969   

Capital expenditures

   ¥ 21,093       ¥ 297,268       ¥ 725,022       ¥ 4,235      ¥ 1,047,618       ¥ —        ¥ 1,047,618   
For the three months ended September 30, 2013     
     Yen (millions)  
      Motorcycle
Business
     Automobile
Business
     Financial
Services
Business
     Power Product
and Other
Businesses
    Segment
Total
     Reconciling
Items
    Consolidated  

Net sales and other operating revenue:

                  

External customers

   ¥ 418,089       ¥ 2,229,004       ¥ 170,016       ¥ 73,112      ¥ 2,890,221       ¥ —        ¥ 2,890,221   

Intersegment

     —           4,186         2,567         2,839        9,592             (9,592     —     
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 

Total

   ¥    418,089       ¥ 2,233,190       ¥    172,583       ¥   75,951      ¥   2,899,813       ¥ (9,592   ¥   2,890,221   
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 

Segment income (loss)

   ¥ 45,542       ¥ 80,153       ¥ 46,585       ¥ (829   ¥ 171,451       ¥ —        ¥ 171,451   
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 
For the three months ended September 30, 2014     
     Yen (millions)  
      Motorcycle
Business
     Automobile
Business
     Financial
Services
Business
     Power Product
and Other
Businesses
    Segment
Total
     Reconciling
Items
    Consolidated  

Net sales and other operating revenue:

                  

External customers

   ¥ 438,369       ¥ 2,310,402       ¥ 192,982       ¥ 73,023      ¥ 3,014,776       ¥ —        ¥ 3,014,776   

Intersegment

     —           6,089         2,665         2,415        11,169             (11,169     —     
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 

Total

   ¥    438,369       ¥ 2,316,491       ¥    195,647       ¥   75,438      ¥   3,025,945       ¥ (11,169   ¥   3,014,776   
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 

Segment income (loss)

   ¥ 38,130       ¥ 79,149       ¥ 48,250       ¥ (1,087   ¥ 164,442       ¥ —        ¥ 164,442   
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 


Table of Contents

 

30

 

HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

 

 

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). Expenses not directly associated with specific segments are allocated based on the most reasonable measures applicable.

 

2. Segment 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 ¥300,860 million as of September 30, 2013 and ¥281,684 million as of September 30, 2014, respectively, 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 intersegment transactions.

 

5. Depreciation and amortization of Financial services business include ¥164,334 million for the six months ended September 30, 2013 and ¥195,580 million for the six months ended September 30, 2014, respectively, of depreciation of property on operating leases.

 

6. Capital expenditure of Financial services business includes ¥582,206 million for the six months ended September 30, 2013 and ¥723,222 million for the six months ended September 30, 2014, respectively, of purchase of operating lease assets.


Table of Contents

 

31

 

HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

 

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 additional useful information:

Supplemental geographical information based on the location of the Company and its subsidiaries

As of and for the six months ended September 30, 2013

 

    Yen (millions)  
    Japan     North
America
    Europe     Asia     Other
Regions
    Total     Reconciling
Items
    Consolidated  

Net sales and other operating revenue:

               

External customers

  ¥ 938,540      ¥ 2,790,218      ¥ 313,679      ¥ 1,167,258      ¥ 514,621      ¥ 5,724,316      ¥ —        ¥ 5,724,316   

Transfers between geographic areas

    1,051,814        183,003        36,778        233,363        6,547        1,511,505        (1,511,505     —     
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total

  ¥ 1,990,354      ¥ 2,973,221      ¥ 350,457      ¥ 1,400,621      ¥ 521,168      ¥ 7,235,821      ¥ (1,511,505   ¥ 5,724,316   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Operating income (loss)

  ¥ 111,468      ¥ 117,887      ¥ (23,314   ¥ 113,775      ¥ 24,066      ¥ 343,882      ¥ 12,532      ¥ 356,414   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Assets

  ¥ 3,234,347      ¥ 8,239,650      ¥ 619,640      ¥ 1,751,665      ¥ 747,168      ¥ 14,592,470      ¥ (84,276   ¥ 14,508,194   

Long-lived assets

  ¥ 1,210,069      ¥ 2,735,896      ¥ 128,953      ¥ 489,710      ¥ 154,364      ¥ 4,718,992      ¥ —        ¥ 4,718,992   
As of and for the six months ended September 30, 2014     
    Yen (millions)  
    Japan     North
America
    Europe     Asia     Other
Regions
    Total     Reconciling
Items
    Consolidated  

Net sales and other operating revenue:

               

External customers

  ¥ 1,061,977      ¥ 2,882,771      ¥ 343,745      ¥ 1,260,464      ¥ 454,098      ¥ 6,003,055      ¥ —        ¥ 6,003,055   

Transfers between geographic areas

    901,505        175,061        35,689        261,970        1,189        1,375,414        (1,375,414     —     
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total

  ¥ 1,963,482      ¥ 3,057,832      ¥ 379,434      ¥ 1,522,434      ¥ 455,287      ¥ 7,378,469      ¥ (1,375,414   ¥ 6,003,055   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Operating income (loss)

  ¥ 122,040      ¥ 106,434      ¥ (9,014   ¥ 133,773      ¥ 13,782      ¥ 367,015      ¥ (4,530   ¥ 362,485   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Assets

  ¥ 3,510,627      ¥ 9,530,735      ¥ 643,254      ¥ 2,159,892      ¥ 765,941      ¥ 16,610,449      ¥ (137,891   ¥ 16,472,558   

Long-lived assets

  ¥ 1,286,249      ¥ 3,472,527      ¥ 139,316      ¥ 629,015      ¥ 177,074      ¥ 5,704,181      ¥ —        ¥ 5,704,181   
For the three months ended September 30, 2013     
    Yen (millions)  
    Japan     North
America
    Europe     Asia     Other
Regions
    Total     Reconciling
Items
    Consolidated  

Net sales and other operating revenue:

               

External customers

  ¥ 505,002      ¥ 1,384,716      ¥ 154,810      ¥ 568,889      ¥ 276,804      ¥ 2,890,221      ¥ —        ¥ 2,890,221   

Transfers between geographic areas

    509,468        87,197        19,665        124,989        3,645        744,964           (744,964     —     
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total

  ¥ 1,014,470      ¥ 1,471,913      ¥ 174,475      ¥    693,878      ¥ 280,449      ¥   3,635,185      ¥ (744,964   ¥   2,890,221   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Operating income (loss)

  ¥ 49,281      ¥ 46,029      ¥ (13,574   ¥ 60,020      ¥ 18,651      ¥ 160,407      ¥ 11,044      ¥ 171,451   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

For the three months ended September 30, 2014

  

 
    Yen (millions)  
    Japan     North
America
    Europe     Asia     Other
Regions
    Total     Reconciling
Items
    Consolidated  

Net sales and other operating revenue:

               

External customers

  ¥ 514,195      ¥ 1,428,983      ¥ 169,497      ¥ 655,733      ¥ 246,368      ¥ 3,014,776      ¥ —        ¥ 3,014,776   

Transfers between geographic areas

    461,328        83,255        15,344        133,272        655        693,854           (693,854     —     
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total

  ¥    975,523      ¥ 1,512,238      ¥ 184,841      ¥    789,005      ¥ 247,023      ¥   3,708,630      ¥ (693,854   ¥   3,014,776   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Operating income (loss)

  ¥ 59,891      ¥ 38,921      ¥ (7,527   ¥ 68,495      ¥ 9,189      ¥ 168,969      ¥ (4,527   ¥ 164,442   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 


Table of Contents

 

32

 

HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

 

 

Explanatory notes:

 

1. Major countries or regions in each geographic area:

 

North America

   United States, Canada, Mexico

Europe

   United Kingdom, Germany, France, Belgium, Russia

Asia

   Thailand, Indonesia, China, India, Vietnam

Other Regions