Edgar Filing: HONDA MOTOR CO LTD

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Form 6-K

No.1-7628

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 2009

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): ¨

Note: Regulation S-T Rule 101(b)(1) only permits the submission in paper of a Form 6-K if submitted solely to provide an attached annual report to security holders.

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): ¨

Indicate by check mark whether by furnishing the information contained in this Form, the registrant is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.

Yes ¨ No ¨

If “Yes” is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b):82-

Contents

Exhibit 1:

Honda Motor Co., Ltd. filed its consolidated financial statements for the fiscal three months ended September 30, 2009 with Financial Services Agency in Japan.

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/ Yoichi Hojo

Yoichi Hojo

Director

Chief Operating Officer for

Business Management Operations

Honda Motor Co., Ltd.

Date: November 30, 2009

HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Consolidated Financial Statements

September 30, 2009

HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Consolidated Balance Sheets

September 30, 2009 and March 31, 2009


	Yen (millions)
Assets	September 30, 2009		March 31, 2009
	unaudited		audited
Current assets:
Cash and cash equivalents	¥	945,764	¥	690,369
Trade accounts and notes receivable, net of allowance for doubtful accounts of ¥7,499 million at September 30, 2009 and ¥7,455 million at March 31, 2009 (note 5)		702,952		854,214
Finance subsidiaries-receivables, net (notes 2 and 5)		1,031,946		1,172,030
Inventories (notes 3 and 5)		908,966		1,243,961
Deferred income taxes (note 6)		207,303		198,158
Other current assets (notes 4, 8 and 9)		377,618		462,446

Total current assets		4,174,549		4,621,178


Finance subsidiaries-receivables, net (notes 2 and 5)		2,334,371		2,400,282

Investments and advances:
Investments in and advances to affiliates		490,449		505,835
Other, including marketable equity securities (note 4)		158,354		133,234

Total investments and advances		648,803		639,069


Property on operating leases:
Vehicles		1,582,837		1,557,060
Less accumulated depreciation		309,343		269,261

Net property on operating leases		1,273,494		1,287,799


Property, plant and equipment, at cost (note 5):
Land		470,528		469,279
Buildings		1,470,022		1,446,090
Machinery and equipment		3,152,375		3,133,439
Construction in progress		171,364		159,567

		5,264,289		5,208,375
Less accumulated depreciation and amortization		3,156,661		3,060,654

Net property, plant and equipment		2,107,628		2,147,721


Other assets (notes 6, 8 and 9)		719,177		722,868

Total assets	¥	11,258,022	¥	11,818,917

HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Consolidated Balance Sheets

September 30, 2009 and March 31, 2009


	Yen (millions)
Liabilities and Equity	September 30, 2009			March 31, 2009
	unaudited			audited
Current liabilities:
Short-term debt	¥	949,134		¥	1,706,819
Current portion of long-term debt		762,337			977,523
Trade payables:
Notes		21,471			31,834
Accounts		675,852			674,498
Accrued expenses (note 10)		513,504			562,673
Income taxes payable		22,532			32,614
Other current liabilities (notes 8 and 9)		220,286			251,407

Total current liabilities		3,165,116			4,237,368


Long-term debt, excluding current portion		2,474,729			1,932,637
Other liabilities (note 10)		1,471,441			1,518,568

Total liabilities		7,111,286			7,688,573


Equity:
Honda Motor Co., Ltd. shareholders’ equity (note 7):
Common stock, authorized 7,086,000,000 shares at September 30, 2009 and at March 31, 2009; issued 1,834,828,430 shares at September 30, 2009 and at March 31, 2009		86,067			86,067
Capital surplus		172,529			172,529
Legal reserves		44,838			43,965
Retained earnings (note 11(a))		5,130,958			5,099,267
Accumulated other comprehensive income (loss), net (notes 4 and 9)		(1,331,991	)		(1,322,828	)
Treasury stock, at cost 20,222,627 shares at September 30, 2009 and 20,219,430 shares at March 31, 2009		(71,720	)		(71,712	)

Total Honda Motor Co., Ltd. shareholders’ equity		4,030,681			4,007,288


Noncontrolling interests (note 7)		116,055			123,056

Total equity (note 7)		4,146,736			4,130,344


Commitments and contingent liabilities (note 10)
Total liabilities and equity	¥	11,258,022		¥	11,818,917

See note 1(c)1.

See accompanying notes to consolidated financial statements.

HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Consolidated Statements of Income

For the six months ended September 30, 2008 and 2009


	Yen (millions)
	September 30, 2008		September 30, 2009
	unaudited		unaudited
Net sales and other operating revenue	¥	5,694,086	¥	4,058,867

Operating costs and expenses:
Cost of sales		4,109,548		3,110,373
Selling, general and administrative		951,438		644,694
Research and development		273,773		213,093

		5,334,759		3,968,160

Operating income		359,327		90,707

Other income:
Interest		22,392		8,772
Other (notes 4 and 9)		20,774		713

		43,166		9,485

Other expenses:
Interest		11,414		7,124
Other (notes 4 and 9)		17,393		21,470

		28,807		28,594

Income before income taxes and equity in income of affiliates		373,686		71,598

Income tax expense (note 6):
Current		63,199		36,674
Deferred		66,529		6,983

		129,728		43,657

Income before equity in income of affiliates		243,958		27,941

Equity in income of affiliates		65,481		36,592
Net income		309,439		64,533

Less: Net income attributable to noncontrolling interests		12,726		2,936

Net income attributable to Honda Motor Co., Ltd.	¥	296,713	¥	61,597


	Yen
	September 30, 2008		September 30, 2009
Basic net income attributable to Honda Motor Co., Ltd. per common share (note 13(b)):	¥	163.52	¥	33.95

See note 1(c).

See accompanying notes to consolidated financial statements.

HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Consolidated Statements of Income

For the three months ended September 30, 2008 and 2009


	Yen (millions)
	September 30, 2008		September 30, 2009
	unaudited		unaudited
Net sales and other operating revenue	¥	2,826,865	¥	2,056,655

Operating costs and expenses:
Cost of sales		2,058,223		1,556,549
Selling, general and administrative		483,165		323,062
Research and development		136,626		111,501

		2,678,014		1,991,112

Operating income		148,851		65,543

Other income:
Interest		11,551		3,944
Other (notes 4 and 9)		11,468		5,617

		23,019		9,561

Other expenses:
Interest		5,262		3,313
Other (notes 4 and 9)		17,146		5,651

		22,408		8,964

Income before income taxes and equity in income of affiliates		149,462		66,140

Income tax expense (note 6):
Current		25,481		23,496
Deferred		21,977		9,662

		47,458		33,158

Income before equity in income of affiliates		102,004		32,982

Equity in income of affiliates		27,288		22,349
Net income		129,292		55,331

Less: Net income attributable to noncontrolling interests		5,976		1,294

Net income attributable to Honda Motor Co., Ltd.	¥	123,316	¥	54,037


	Yen
	September 30, 2008		September 30, 2009
Basic net income attributable to Honda Motor Co., Ltd. per common share (note 13(b)):	¥	67.96	¥	29.78

See note 1(c)1.

See accompanying notes to consolidated financial statements.

HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Consolidated Statements of Cash Flows

For the six months ended September 30, 2008 and 2009


	Yen (millions)
	September 30, 2008			September 30, 2009
	unaudited			unaudited
Cash flows from operating activities:
Net income	¥	309,439		¥	64,533
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation excluding property on operating leases		205,057			200,493
Depreciation of property on operating leases		92,757			116,537
Deferred income taxes		66,529			6,983
Equity in income of affiliates		(65,481	)		(36,592	)
Dividends from affiliates		26,759			71,806
Provision for credit and lease residual losses on finance subsidiaries-receivables		37,524			25,355
Impairment loss on investments in securities		13,673			286
Impairment loss on long-lived assets and goodwill excluding property on operating leases		3,577			—
Impairment loss on property on operating leases		4,898			2,855
Loss (gain) on derivative instruments, net		(56,015	)		(37,391	)
Decrease (increase) in assets:
Trade accounts and notes receivable		67,991			155,332
Inventories		(155,200	)		350,426
Other current assets		(19,471	)		107,541
Other assets		8,544			24,441
Increase (decrease) in liabilities:
Trade accounts and notes payable		(92,139	)		22,695
Accrued expenses		(7,812	)		(36,767	)
Income taxes payable		4,405			(15,441	)
Other current liabilities		19,926			17,378
Other liabilities		36,253			(33,343	)
Other, net		(14,564	)		(32,128	)

Net cash provided by operating activities		486,650			974,999

Cash flows from investing activities:
Increase in investments and advances		(1,265	)		(17,559	)
Decrease in investments and advances		1,486			10,224
Payments for purchases of available-for-sale securities		(31,537	)		(2,624	)
Proceeds from sales of available-for-sale securities		1,309			1,609
Payments for purchases of held-to-maturity securities		(14,458	)		—
Proceeds from redemptions of held-to-maturity securities		10,513			—
Capital expenditures		(314,465	)		(205,132	)
Proceeds from sales of property, plant and equipment		11,437			8,552
Acquisitions of finance subsidiaries-receivables		(1,555,101	)		(697,795	)
Collections of finance subsidiaries-receivables		1,110,815			795,003
Sales (purchases) of finance subsidiaries-receivables, net		123,090			(31,345	)
Purchases of operating lease assets		(437,093	)		(276,142	)
Proceeds from sales of operating lease assets		53,995			72,334

Net cash used in investing activities		(1,041,274	)		(342,875	)

Cash flows from financing activities:
Increase (decrease) in short-term debt, net		228,914			(748,274	)
Proceeds from long-term debt		870,684			881,529
Repayments of long-term debt		(540,316	)		(457,951	)
Dividends paid (note 11(a))		(79,842	)		(29,033	)
Dividends paid to noncontrolling interests		(9,473	)		(13,078	)
Sales (purchases) of treasury stock, net		(6	)		(8	)

Net cash provided by (used in) financing activities		469,961			(366,815	)

Effect of exchange rate changes on cash and cash equivalents		(11,831	)		(9,914	)

Net change in cash and cash equivalents		(96,494	)		255,395
Cash and cash equivalents at beginning of the period		1,050,902			690,369

Cash and cash equivalents at end of the period	¥	954,408		¥	945,764

See note 1(c).

See accompanying notes to consolidated financial statements.

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). Honda adopted Statement of Financial Accounting Standards (SFAS) No. 168, “The FASB Accounting Standards Codification and the Hierarchy of Generally Accepted Accounting Principles – a replacement of FASB Statement No. 162” effective July 1, 2009. SFAS No. 168 prescribes the change which divides non-governmental U.S. GAAP into the authoritative FASB Accounting Standards Codification (ASC) and guidance that is nonauthoritative, abolishing the previous four-level hierarchy. Upon the adoption of SFAS No. 168, references to previously issued accounting standards have been replaced by ASC references. The adoption of SFAS No. 168 did not have a material impact on the Company’s consolidated financial position or results of operations. SFAS No. 168 is now codified in ASC 105, “Generally Accepted Accounting Principles”. 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, 2009 consolidated financial statements and notes thereto included in Honda Motor Co., Ltd. and Subsidiaries Annual Report for the year ended March 31, 2009. Consolidated financial statements for the year ended March 31, 2009 are derived from the audited consolidated financial statements, while consolidated financial statements for the three months and six months ended September 30, 2009 are unaudited.

(b)

Basis of Presenting Consolidated Financial Statements

The Company and its domestic 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)

Changes in Accounting Procedures for Consolidated Quarterly Financial Results

1.	Noncontrolling Interests in Consolidated Financial Statements

Honda adopted the FASB Accounting Standards Codification (ASC) 810 “Consolidation”, which is previously known as Statement of Financial Accounting Standards No. 160, “Noncontrolling Interests in Consolidated Financial Statements—an amendment of ARB No. 51”, effective April 1, 2009. This statement requires that a noncontrolling interest in a subsidiary is an ownership interest in the consolidated entity that should be reported as equity in the consolidated financial statements, and requires that changes in a parent’s ownership interest while the parent retains its controlling financial interest in its subsidiary shall be accounted for as equity transactions. Upon the adoption of ASC 810, noncontrolling interests, which were previously referred to as minority interests and classified between total liabilities and stockholders’ equity on the consolidated balance sheets, are now included as a separate component of total equity. In addition, the presentation of consolidated statements of income and cash flows has been changed. As the presentation and disclosure requirements of ASC 810 have been applied retrospectively, Honda has made reclassifications to the prior consolidated financial statements to conform to the presentation used for the three months and six months periods ended September 2009. The adoption of ASC 810 did not have a material impact on the Company’s consolidated financial position or results of operations.

HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

2.	Adjustment resulting from change in fiscal year-end of a subsidiary

During the fiscal year ended March 31, 2009, a subsidiary of the Company changed its fiscal year-end from December 31 to March 31. As a result, the Company eliminated the previously existing three months difference between the reporting periods of the Company and the subsidiary in the consolidated financial statements. The elimination of the lag period which was adjusted in the three months ended March 31, 2009 represented a change in accounting principles and was reported by retrospective application. The impact on the retained earnings balance as of April 1, 2008 was ¥6,214 million. Honda adjusted its consolidated financial statements for the six months ended September 30, 2008 to conform to the presentation used for the fiscal year ended March 31, 2009.

(d)

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, 2009. If a reliable estimate cannot be made, Honda utilizes the actual year-to-date effective tax rate.

(e)

Reclassifications

Certain reclassifications have been made to the consolidated financial statements for the three months and six months ended September 30, 2008 and for the year ended March 31, 2009 to conform to the presentation used for the three months and six months ended September 30, 2009.

(2) Allowances for Finance Subsidiaries-receivables

(3) Inventories

Inventories at September 30, 2009 and March 31, 2009 are summarized as follows:


	Yen (millions)
	September 30, 2009		March 31, 2009
Finished goods	¥	563,005	¥	830,973
Work in process		39,984		45,196
Raw materials		305,977		367,792

	¥	908,966	¥	1,243,961

HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(4) Investments and Advances-Other

Investments and advances at September 30, 2009 and March 31, 2009 consist of the following:


	Yen (millions)
	September 30, 2009		March 31, 2009
Current
Corporate debt securities	¥	93	¥	235
Government bonds		—		1,000
Money Market Fund (non-marketable)		2,340		3,913
Advances		877		473

	¥	3,310	¥	5,621

Investments and advances due within one year are included in other current assets.


	Yen (millions)
	September 30, 2009		March 31, 2009
Noncurrent
Auction rate securities (non-marketable)	¥	8,143	¥	9,906
Marketable equity securities		80,113		54,807
Government bonds		1,999		1,999
U.S. government and agency debt securities		1,967		—
Non-marketable equity securities accounted for under the cost method
Non-marketable preferred stocks		2,000		2,000
Other		10,792		13,824
Guaranty deposits		26,791		28,755
Advances		1,632		1,717
Other		24,917		20,226

	¥	158,354	¥	133,234

HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Certain information with respect to marketable securities at September 30, 2009 and March 31, 2009 is summarized below:


	Yen (millions)
	September 30, 2009		March 31, 2009
Available-for-sale
Cost	¥	36,798	¥	34,331
Fair value		80,113		54,807
Gross unrealized gains		44,544		23,531
Gross unrealized losses		1,229		3,055

Held-to-maturity
Amortized cost	¥	4,059	¥	3,234
Fair value		4,156		3,320
Gross unrealized gains		99		86
Gross unrealized losses		2		—

Maturities of debt securities classified as held-to-maturity at September 30, 2009 are as follows:


	Yen (millions)
Due within one year	¥	93
Due after one year through five years		3,966
Due after five years through ten years		—

Total	¥	4,059

Realized gains and losses from available-for-sale securities included in other expenses (income) – other for the six months period ended September 30, 2009 was ¥3 million net losses. There was no realized gains and losses from available-for-sale securities included in other expenses (income) – other for the three months period ended September 30, 2009.

Gross unrealized losses on marketable 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 September 30, 2009 and March 31, 2009 are as follows:


	Yen (millions)
	September 30, 2009					March 31, 2009
	Fair value		Unrealized gains (losses)			Fair value		Unrealized gains (losses)
Available-for-sale
Less than 12 months	¥	1,196	¥	(214	)	¥	7,190	¥	(2,556	)
12 months or longer		2,627		(1,015	)		494		(499	)

	¥	3,823	¥	(1,229	)	¥	7,684	¥	(3,055	)

Held-to-maturity
Less than 12 months	¥	1,965	¥	(2	)	¥	—	¥	—
12 months or longer		—		—			—		—

	¥	1,965	¥	(2	)	¥	—	¥	—

Honda does not believe the decline in fair value of any of its investment securities to be other than temporary, which is 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.

HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(5) Pledged Assets

Pledged assets at September 30, 2009 and March 31, 2009 are as follows:


	Yen (millions)
	September 30, 2009		March 31, 2009
Trade accounts and notes receivable	¥	5,749	¥	—
Inventories		3,456		—
Property, plant and equipment		21,181		24,750
Finance subsidiaries-receivables		278,281		—

Starting in the period ended June 30, 2009, as the special purpose entity (SPE) established and utilized in the securitization has not met the criteria for qualified special purpose entity anymore, our finance subsidiary in the United States has consolidated the SPE as variable interest entity (VIE). In addition, our finance subsidiary has treated the securitization transactions with such SPE that no longer meet the transfer requirement as secured financing transactions. As a result, the finance subsidiaries-receivables pledged as collateral and related secured debt obligations have increased in the Company’s consolidated financial statements.

Because the changes of account treatment in securitization and consolidation of VIE, except for the increase in finance subsidiaries-receivables which are subject to collateral and related secured debt obligations, do not have a material impact on the Company’s consolidated financial positions or results of operations, we have omitted the certain disclosures required by U.S. GAAP.

(6) Income Taxes

Because of operating losses for the six months ended September 30, 2009, certain subsidiaries of the Company have recorded valuation allowances over their deferred tax assets as of September 30, 2009. Due primarily to this accounting treatment, the effective tax rates of Honda for the three months and six months ended September 30, 2009 differs from Honda’s statutory income tax rate, which is 40% for the fiscal year ending March 31, 2010.

HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(7) Equity

The change in equity for the three months and six months ended September 30, 2008 and 2009 are as follows (see note 1(c)2):

For the six months ended September 30, 2008


	Yen (millions)
	Honda Motor Co., Ltd. shareholders’ equity			Noncontrolling interests			Total equity
Balance at March 31, 2008	¥	4,544,265		¥	141,806		¥	4,686,071

Adjustment resulting from change in fiscal year-end of a subsidiary, net of tax		6,214			—			6,214

Adjusted balances at March 31, 2008	¥	4,550,479		¥	141,806		¥	4,692,285

Dividends paid to Honda Motor Co., Ltd. shareholders		(79,842	)		—			(79,842	)
Dividends paid to noncontrolling interests		—			(9,473	)		(9,473	)

Comprehensive income (loss):
Net income		296,713			12,726			309,439
Other comprehensive income (loss), net of tax		—			—			—
Adjustments from foreign currency translation		2,931			(3,502	)		(571	)
Unrealized gains (losses) on marketable securities, net		(12,786	)		8			(12,778	)
Unrealized gains (losses) on derivative instruments, net		(48	)		—			(48	)
Pension and other postretirement benefits adjustments		4,669			40			4,709

Total comprehensive income (loss)		291,479			9,272			300,751

Purchase of treasury stock		(43	)		—			(43	)
Reissuance of treasury stock		37			—			37

Balance at September 30, 2008	¥	4,762,110		¥	141,605		¥	4,903,715

HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

For the six months ended September 30, 2009


	Yen (millions)
	Honda Motor Co., Ltd. shareholders’ equity			Noncontrolling interests			Total equity
Balance at March 31, 2009	¥	4,007,288		¥	123,056		¥	4,130,344

Dividends paid to Honda Motor Co., Ltd. shareholders		(29,033	)		—			(29,033	)
Dividends paid to noncontrolling interests		—			(13,078	)		(13,078	)

Comprehensive income (loss):
Net income		61,597			2,936			64,533
Other comprehensive income (loss), net of tax
Adjustments from foreign currency translation		(25,733	)		2,956			(22,777	)
Unrealized gains (losses) on marketable securities, net		14,086			99			14,185
Unrealized gains (losses) on derivative instruments, net		178			—			178
Pension and other postretirement benefits adjustments		2,306			86			2,392

Total comprehensive income (loss)		52,434			6,077			58,511

Purchase of treasury stock		(10	)		—			(10	)
Reissuance of treasury stock		2			—			2

Balance at September 30, 2009	¥	4,030,681		¥	116,055		¥	4,146,736

HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

For the three months ended September 30, 2008


	Yen (millions)
	Honda Motor Co., Ltd. shareholders’ equity			Noncontrolling interests			Total equity
Balance at June 30, 2008	¥	4,762,229		¥	141,060		¥	4,903,289

Dividends paid to Honda Motor Co., Ltd. shareholders		(39,921	)		—			(39,921	)
Dividends paid to noncontrolling interests		—			(5,993	)		(5,993	)

Comprehensive income (loss):
Net income		123,316			5,976			129,292
Other comprehensive income (loss), net of tax
Adjustments from foreign currency translation		(72,960	)		599			(72,361	)
Unrealized gains (losses) on marketable securities, net		(13,235	)		(57	)		(13,292	)
Unrealized gains (losses) on derivative instruments, net		444			—			444
Pension and other postretirement benefits adjustments		2,244			20			2,264

Total comprehensive income (loss)		39,809			6,538			46,347

Purchase of treasury stock		(33	)		—			(33	)
Reissuance of treasury stock		26			—			26

Balance at September 30, 2008	¥	4,762,110		¥	141,605		¥	4,903,715

HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

For the three months ended September 30, 2009


	Yen (millions)
	Honda Motor Co., Ltd. shareholders’ equity			Noncontrolling interests			Total equity
Balance at June 30, 2009	¥	4,060,782		¥	120,941		¥	4,181,723

Dividends paid to Honda Motor Co., Ltd. shareholders		(14,517	)		—			(14,517	)
Dividends paid to noncontrolling interests		—			(4,712	)		(4,712	)

Comprehensive income (loss):
Net income		54,037			1,294			55,331
Other comprehensive income (loss), net of tax
Adjustments from foreign currency translation		(72,212	)		(1,582	)		(73,794	)
Unrealized gains (losses) on marketable securities, net		392			71			463
Unrealized gains (losses) on derivative instruments, net		178			—			178
Pension and other postretirement benefits adjustments		2,024			43			2,067

Total comprehensive income (loss)		(15,581	)		(174	)		(15,755	)

Purchase of treasury stock		(4	)		—			(4	)
Reissuance of treasury stock		1			—			1

Balance at September 30, 2009	¥	4,030,681		¥	116,055		¥	4,146,736

HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(8) Fair Value Measurement

The FASB Accounting Standards Codification (ASC) 820 “Fair Value Measurements and Disclosures” defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction, and emphasizes that a fair value measurement should be determined based on the assumptions that market participants would use in pricing an asset or liability.

This statement establishes a three-level hierarchy to be used 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 table presents the assets and liabilities measured at fair value on a recurring basis as of September 30, 2009.


	Yen (millions)
	Level 1		Level 2			Level 3			Gross fair value			Netting adjustment			Net amount
Assets:
Retained interests in securitizations	¥	—	¥	—		¥	32,876		¥	32,876		¥	—		¥	32,876
Derivative instruments
Foreign exchange instruments (notes 9)		—		120,982			—			120,982			—			—
Interest rate instruments (notes 9)		—		38,133			1,651			39,784			—			—

Total derivative instruments		—		159,115			1,651			160,766			(50,255	)		110,511

Available-for-sale securities		80,113		2,340			8,143			90,596			—			90,596

Total	¥	80,113	¥	161,455		¥	42,670		¥	284,238		¥	(50,255	)	¥	233,983


Liabilities:
Derivative instruments
Foreign exchange instruments (notes 9)	¥	—	¥	(4,956	)	¥	—		¥	(4,956	)	¥	—		¥	—
Interest rate instruments (notes 9)		—		(80,588	)		(37	)		(80,625	)		—			—

Total derivative instruments		—		(85,544	)		(37	)		(85,581	)		50,255			(35,326	)

Total	¥	—	¥	(85,544	)	¥	(37	)	¥	(85,581	)	¥	50,255		¥	(35,326	)

HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

The following table presents the assets and liabilities measured at fair value on a recurring basis as of March 31, 2009.


	Yen (millions)
	Level 1		Level 2			Level 3			Gross fair value			Netting adjustment			Net amount
Assets:
Retained interests in securitizations	¥	—	¥	—		¥	45,648		¥	45,648		¥	—		¥	45,648
Derivative instruments
Foreign exchange instruments (note 9)		—		71,735			—			71,735			—			—
Interest rate instruments (note 9)		—		51,818			2,437			54,255			—			—

Total derivative instruments		—		123,553			2,437			125,990			(68,251	)		57,739

Available-for-sale securities		54,807		3,913			9,906			68,626			—			68,626

Total	¥	54,807	¥	127,466		¥	57,991		¥	240,264		¥	(68,251	)	¥	172,013


Liabilities:
Derivative instruments
Foreign exchange instruments (note 9)	¥	—	¥	(25,880	)	¥	—		¥	(25,880	)	¥	—		¥	—
Interest rate instruments (note 9)		—		(114,406	)		(143	)		(114,549	)		—			—

Total derivative instruments		—		(140,286	)		(143	)		(140,429	)		68,251			(72,178	)

Total	¥	—	¥	(140,286	)	¥	(143	)	¥	(140,429	)	¥	68,251		¥	(72,178	)

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.

The following table presents a reconciliation for the six months ended September 30, 2009 for all Level 3 assets and liabilities measured at fair value on a recurring basis.


	Yen (millions)
	Retained interests in securitizations			Interest rate instruments (note 9)			Available-for-sale securities			Total
Balance at beginning of the year	¥	45,648		¥	2,294		¥	9,906		¥	57,848
Total realized/unrealized gains or losses
Included in earnings		6,600			746			—			7,346
Included in other comprehensive income (loss)		—			—			(859	)		(859	)
Purchases, issuances, and settlements, net		(17,091	)		(1,300	)		(167	)		(18,558	)
Foreign currency translation		(2,281	)		(126	)		(737	)		(3,144	)

Balance at end of the period	¥	32,876		¥	1,614		¥	8,143		¥	42,633


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	¥	4,617		¥	399		¥	—		¥	5,016
Included in other comprehensive income (loss)		—			—			(859	)		(859	)

HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

The following table presents a reconciliation for the three months ended September 30, 2009 for all Level 3 assets and liabilities measured at fair value on a recurring basis.


	Yen (millions)
	Retained interests in securitizations			Interest rate instruments (note 9)			Available-for-sale securities			Total
Balance at beginning of the period	¥	36,962		¥	1,801		¥	8,744		¥	47,507
Total realized/unrealized gains or losses
Included in earnings		2,337			546			—			2,883
Included in other comprehensive income (loss)		—			—			—			—
Purchases, issuances, and settlements, net		(4,385	)		(640	)		(75	)		(5,100	)
Foreign currency translation		(2,038	)		(93	)		(526	)		(2,657	)

Balance at end of the period	¥	32,876		¥	1,614		¥	8,143		¥	42,633


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	¥	1,851		¥	539		¥	—		¥	2,390
Included in other comprehensive income (loss)		—			—			—			—

Total realized/unrealized gains or losses related to retained interests in securitizations, including those held at the reporting date, are included in net sales and other operating revenue in the consolidated statements of income.

Total realized/unrealized gains or losses related to interest rate instruments, including those held at the reporting date, are included in other income or other expenses in the consolidated statements of income.

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

Retained interests in securitizations

The fair values of the retained interests in securitizations are estimated by calculating the present value of the future cash flows using a discount rate commensurate with the risks involved. In order to estimate cash flows, Honda utilizes various significant assumptions including market observable inputs such as forward interest rates, as well as internally developed inputs, such as prepayment speeds, delinquency levels and credit losses. Fair value measurement for retained interests in securitization is classified as Level 3.

HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Foreign exchange and interest rate instruments (see note 9)

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

The fair values of a limited number of interest rate swap agreements related to certain off-balance sheet securitizations are estimated using significant assumptions including market observable inputs, as well as internally developed prepayment assumptions as an input into the model, in order to forecast future notional amounts on these structured derivative contracts. Accordingly, fair value measurement for these derivative contracts is classified as Level 3.

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

Available-for-sale securities

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

The fair value of money market funds classified as short-term investments are estimated based on market observable inputs such as the average of the net asset value price. Fair value measurement for its money market funds is classified as Level 2.

The subsidiary’s auction rate securities (ARS) 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. Since the ARS market had been illiquid as of September 30, 2009 and no readily observable prices exist, Honda measures the fair value of the ARS based on the discounted cash flows of the expected interest payments to maturity dates of the ARS and the insurance by qualified guarantee agencies, reinsurance and guarantees by the United States Government. Fair value measurement for auction rate securities is classified as Level 3.

Honda does not have financial assets and financial liabilities measured at fair value on a nonrecurring basis as of and for the three months and six months ended September 30, 2009 and as of and for the year ended March 31, 2009.

Honda also adopted the FASB Accounting Standards Codification (ASC) 820 “Fair Value Measurements and Disclosures”, which is previously known as Statement of Financial Accounting Standards (SFAS) No. 157, “Fair Value Measurements” for nonfinancial assets and nonfinancial liabilities, except for items that are recognized or disclosed at fair value in the financial statements on a recurring basis (at least annually) effective April 1, 2009. Honda does not have significant nonfinancial assets and nonfinancial liabilities on a nonrecurring basis as of and for the three months and six months ended September 30, 2009.

Honda has not elected the fair value option for the six months ended September 30, 2009 and the year ended March 31, 2009.

HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

The estimated fair values of significant financial instruments at September 30, 2009 and March 31, 2009 are as follows (see note 9):


	Yen (millions)
	September 30, 2009						March 31, 2009
	Carrying amount			Estimated fair value			Carrying amount			Estimated fair value
Finance subsidiaries-receivables (a)	¥	3,392,426		¥	3,464,943		¥	3,526,073		¥	3,471,727
Available-for-sale securities		90,596			90,596			68,626			68,626
Held-to-maturity securities		4,059			4,156			3,234			3,320
Debt		(4,186,200	)		(4,250,899	)		(4,616,979	)		(4,492,595	)
Derivative instruments (b)
Asset position	¥	110,511		¥	110,511		¥	57,739		¥	57,739
Liability position		(35,326	)		(35,326	)		(72,178	)		(72,178	)

Net	¥	75,185		¥	75,185		¥	(14,439	)	¥	(14,439	)

(a)

The carrying amounts of finance subsidiaries-receivables at September 30, 2009 and March 31, 2009 in the table exclude ¥451,412 million and ¥641,721 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 September 30, 2009 and March 31, 2009 in the table also include ¥477,521 million and ¥595,482 million of finance receivables classified as trade receivables and other assets in the consolidated balance sheets, respectively.

(b)	The derivative instruments are included in other assets and other current assets and/or liabilities in the consolidated balance sheets as follows:


	Yen (millions)
	September 30, 2009			March 31, 2009
Other current assets	¥	28,177		¥	6,307
Other assets		82,334			51,432
Other current liabilities		(35,326	)		(72,178	)

	¥	75,185		¥	(14,439	)

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.

HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

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 term loans to dealers were estimated by discounting future cash flows using the current rates for these instruments of similar remaining maturities. Given the short maturities of wholesale receivables, the carrying amount of those receivables approximates fair value.

Held-to-maturity securities

The fair value of held-to-maturity securities was estimated using quoted market prices.

Debt

The fair values of bonds and notes were estimated based on the quoted market prices for the same or similar issues. The fair value of long-term loans was estimated by discounting future cash flows using rates currently available for loans of similar terms and remaining maturities. The carrying amounts of short-term bank loans and commercial paper approximate fair values because of the short maturity of these instruments.

(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. (see 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.

HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

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 September 30, 2009 and March 31, 2009 are as follows:

Derivatives designated as hedging instruments:


	Yen (millions)
	September 30, 2009		March 31, 2009
Foreign currency forward exchange contracts	¥	19,625	¥	—

Foreign exchange instruments	¥	19,625	¥	—

Derivatives not designated as hedging instruments:


	Yen (millions)
	September 30, 2009		March 31, 2009
Foreign currency forward exchange contracts	¥	491,416	¥	531,615
Foreign currency option contracts		96,112		76,099
Currency swap agreements		724,756		667,011

Foreign exchange instruments	¥	1,312,284	¥	1,274,725


Interest rate swap agreements	¥	3,782,674	¥	4,327,124

Interest rate instruments	¥	3,782,674	¥	4,327,124

Cash flow hedge

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 amount recognized in accumulated other comprehensive income (loss) was ¥178 million gain for the six months ended September 30, 2009. All amount recorded in accumulated other comprehensive income (loss) as of September 30, 2009 is expected to be recognized in earnings within the next twelve months. The period that hedges the changes in cash flows related to the risk of foreign currency rate is at most around two months.

There are no derivative financial instruments where hedge accounting has been discontinued due to the forecasted transaction no longer being probable. The Company excludes financial instruments’ time value component from the assessment of hedge effectiveness. There is no portion of hedging instruments that has been assessed as hedge ineffectiveness.

HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

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 September 30, 2009 are as follows.

Derivatives 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	¥	1,041	¥	(95	)	¥	1,041	¥	—	¥	(95	)

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	¥	119,941		¥	(4,861	)	¥	30,799		¥	78,726	¥	5,555
Interest rate instruments		39,784			(80,625	)		(3,663	)		3,608		(40,786	)

Total	¥	159,725		¥	(85,486	)	¥	27,136		¥	82,334	¥	(35,231	)

Netting adjustment		(50,255	)		50,255

Net amount	¥	109,470		¥	(35,231	)

HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

The estimated fair values of derivative instruments at March 31, 2009 are as follows.

Derivatives designated as hedging instruments:

The Company does not hold derivatives designated as hedging instruments at March 31, 2009.

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	¥	71,735		¥	(25,880	)	¥	9,104		¥	50,254	¥	(13,503	)
Interest rate instruments		54,255			(114,549	)		(2,797	)		1,178		(58,675	)

Total	¥	125,990		¥	(140,429	)	¥	6,307		¥	51,432	¥	(72,178	)

Netting adjustment		(68,251	)		68,251

Net amount	¥	57,739		¥	(72,178	)

HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

The effect of derivative instruments on Honda’s results of operations for the three months and six months ended September 30, 2009 are as follows:


	Yen (millions)
	For the six months ended September 30, 2009			For the three months ended September 30, 2009
Derivatives designated as hedging instruments
Cash flow hedge:
Foreign exchange instruments:

Gain (loss) recognized in other comprehensive income (loss) (effective portion)	¥	471		¥	471

Gain (loss) reclassified from accumulated other comprehensive income (loss) into earnings (effective portion)		(293	)		(293	)

Gain (loss) recognized in earnings (financial instruments’ time value component excluded from the assessment of hedge effectiveness)		160			160

	Yen (millions)
	For the six months ended September 30, 2009			For the three months ended September 30, 2009
Derivatives not designated as hedging instruments
Foreign exchange instruments	¥	86,256		¥	62,363
Interest rate instruments		(20,565	)		(8,975	)

Total	¥	65,691		¥	53,388

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

HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(10) Contingent Liabilities

Honda has entered into various guarantee and indemnification agreements. At September 30 and March 31, 2009, Honda has guaranteed ¥32,240 million and ¥33,691 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 is ¥32,240 million and ¥33,691 million, respectively, at September 30 and March 31, 2009. At September 30, 2009, 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. Product warranties vary depending upon the nature of the product, the geographic location of its sale and other factors.

The changes in provisions for those product warranties for the six months ended September 30, 2009 and the year ended March 31, 2009 are as follows:


	Yen (millions)
	September 30, 2009			March 31, 2009
Balance at beginning of the period	¥	233,979		¥	293,760
Warranty claims paid during the period		(45,326	)		(123,509	)
Liabilities accrued for warranties issued during the period		26,950			79,576
Changes in liabilities for pre-existing warranties during the period		769			2,233
Foreign currency translation		(1,960	)		(18,081	)

Balance at end of the period	¥	214,412		¥	233,979

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 including 71 purported class actions in the United States. Honda records a contingent liability 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. Honda does not record liabilities for lawsuits or potential claims that it believes an unfavorable outcome is not probable or when a reasonable estimate of the amount or range of loss cannot be determined. 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 including 71 purported class actions in the United States 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.

HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

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

For six months ended September 30, 2009

(a)

Information concerning dividends

Dividend payout


Resolution		The ordinary general meeting of shareholders on June 23, 2009
Type of shares		Common stock
Total amount of dividends (million yen)		14,516
Dividend per share of common stock (yen)		8.00
Record date		March 31, 2009
Effective date		June 24, 2009
Resource for dividend		Retained earnings

Resolution		The board of directors meeting on July 29, 2009
Type of shares		Common stock
Total amount of dividends (million yen)		14,516
Dividend per share of common stock (yen)		8.00
Record date		June 30, 2009
Effective date		August 24, 2009
Resource for dividend		Retained earnings

Dividends payable of which record date was in the six months ended September 30, 2009, effective after the period


Resolution		The board of directors meeting on October 27, 2009
Type of shares		Common stock
Total amount of dividends (million yen)		14,516
Dividend per share of common stock (yen)		8.00
Record date		September 30, 2009
Effective date		November 25, 2009
Resource for dividend		Retained earnings

(b)

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

None

HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(12) Segment Information

Honda has four reportable segments: the Motorcycle business, the Automobile business, the Financial services business and the 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 management 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. (see note 1 (c) 2)

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), personal watercrafts 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

Segment Information

For the three months ended September 30, 2008


	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	¥	401,090	¥	2,170,632	¥	158,523	¥	96,620		¥	2,826,865	¥	—		¥	2,826,865
Intersegment		—		—		4,149		6,474			10,623		(10,623	)		—

Total	¥	401,090	¥	2,170,632	¥	162,672	¥	103,094		¥	2,837,488	¥	(10,623	)	¥	2,826,865

Segment income (loss)	¥	46,395	¥	79,063	¥	24,317	¥	(924	)	¥	148,851	¥	—		¥	148,851

For the three months ended September 30, 2009


	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	¥	275,312	¥	1,560,501	¥	155,044	¥	65,798		¥	2,056,655	¥	—		¥	2,056,655
Intersegment		—		—		3,091		7,223			10,314		(10,314	)		—

Total	¥	275,312	¥	1,560,501	¥	158,135	¥	73,021		¥	2,066,969	¥	(10,314	)	¥	2,056,655

Segment income (loss)	¥	9,319	¥	13,708	¥	47,182	¥	(4,666	)	¥	65,543	¥	—		¥	65,543

HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

As of and for the six months ended September 30, 2008


	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	¥	794,138	¥	4,398,645	¥	304,328	¥	196,975		¥	5,694,086	¥	—		¥	5,694,086
Intersegment		—		—		7,868		12,960			20,828		(20,828	)		—

Total	¥	794,138	¥	4,398,645	¥	312,196	¥	209,935		¥	5,714,914	¥	(20,828	)	¥	5,694,086

Segment income (loss)	¥	77,548	¥	229,404	¥	53,090	¥	(715	)	¥	359,327	¥	—		¥	359,327

Assets	¥	1,220,216	¥	5,884,158	¥	6,473,585	¥	289,721		¥	13,867,680	¥	(494,205	)	¥	13,373,475
Depreciation and amortization	¥	25,692	¥	171,834	¥	93,189	¥	7,099		¥	297,814	¥	—		¥	297,814
Capital expenditures	¥	44,669	¥	245,550	¥	437,508	¥	7,116		¥	734,843	¥	—		¥	734,843

As of and for the six months ended September 30, 2009


	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	¥	531,678	¥	3,083,930		¥	310,947	¥	132,312		¥	4,058,867	¥	—		¥	4,058,867
Intersegment		—		—			6,458		13,937			20,395		(20,395	)		—

Total	¥	531,678	¥	3,083,930		¥	317,405	¥	146,249		¥	4,079,262	¥	(20,395	)	¥	4,058,867

Segment income (loss)	¥	14,962	¥	(7,668	)	¥	94,028	¥	(10,615	)	¥	90,707	¥	—		¥	90,707

Assets	¥	976,764	¥	4,901,706		¥	5,403,975	¥	282,779		¥	11,565,224	¥	(307,202	)	¥	11,258,022
Depreciation and amortization	¥	23,668	¥	168,454		¥	118,189	¥	6,719		¥	317,030	¥	—		¥	317,030
Capital expenditures	¥	22,024	¥	131,848		¥	277,365	¥	17,632		¥	448,869	¥	—		¥	448,869

Explanatory notes:

Segment income (loss) is measured in a consistent manner with consolidated operating income, which is net income before other income, other expenses, income tax (benefit) expense, net income attributable to noncontrolling interests, and equity in income of affiliates. Expenses not directly associated with specific segments are allocated based on the most reasonable measures applicable.

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.

Unallocated corporate assets, included in reconciling items, amounted to ¥336,896 million as of September 30, 2008 and ¥308,177 million as of September 30, 2009 respectively, which consist primarily of cash and cash equivalents and marketable securities held by the Company. Reconciling items also include elimination of intersegment transactions.

5.	Depreciation and amortization of Financial Services Business include ¥92,757 million for the six months ended September 30, 2008 and ¥116,537 million for the six months ended September 30, 2009, respectively, of depreciation of property on operating leases.

6.	Capital expenditure of Financial Services Business includes ¥437,093 million for the six months ended September 30, 2008 and ¥276,142 million for the six months ended September 30, 2009 respectively, of purchase of operating lease assets.

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 as required by Financial Instruments and Exchange Law:

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

For the three months ended September 30, 2008


	Yen (millions)
	Japan		North America		Europe		Asia		Other Regions		Total		Reconciling Items			Consolidated
Net sales and other operating revenue:
External customers	¥	504,141	¥	1,297,927	¥	322,591	¥	373,578	¥	328,628	¥	2,826,865	¥	—		¥	2,826,865
Transfers between geographic areas		689,385		72,125		28,133		78,258		20,913		888,814		(888,814	)		—

Total	¥	1,193,526	¥	1,370,052	¥	350,724	¥	451,836	¥	349,541	¥	3,715,679	¥	(888,814	)	¥	2,826,865

Operating income (loss)	¥	40,934	¥	22,526	¥	8,301	¥	36,631	¥	48,796	¥	157,188	¥	(8,337	)	¥	148,851

For the three months ended September 30, 2009


	Yen (millions)
	Japan			North America		Europe		Asia		Other Regions		Total		Reconciling Items			Consolidated
Net sales and other operating revenue:
External customers	¥	448,368		¥	865,031	¥	201,158	¥	318,562	¥	223,536	¥	2,056,655	¥	—		¥	2,056,655
Transfers between geographic areas		355,975			34,409		15,787		52,286		5,150		463,607		(463,607	)		—

Total	¥	804,343		¥	899,440	¥	216,945	¥	370,848	¥	228,686	¥	2,520,262	¥	(463,607	)	¥	2,056,655

Operating income (loss)	¥	(25,710	)	¥	47,694	¥	1,873	¥	27,556	¥	9,948	¥	61,361	¥	4,182		¥	65,543

HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

As of and for the six months ended September 30, 2008


	Yen (millions)
	Japan		North America		Europe		Asia		Other Regions		Total		Reconciling Items			Consolidated
Net sales and other operating revenue:
External customers	¥	969,420	¥	2,732,962	¥	655,322	¥	734,059	¥	602,323	¥	5,694,086	¥	—		¥	5,694,086
Transfers between geographic areas		1,373,708		130,268		59,940		154,020		41,012		1,758,948		(1,758,948	)		—

Total	¥	2,343,128	¥	2,863,230	¥	715,262	¥	888,079	¥	643,335	¥	7,453,034	¥	(1,758,948	)	¥	5,694,086

Operating income (loss)	¥	78,844	¥	117,109	¥	19,594	¥	74,093	¥	85,103	¥	374,743	¥	(15,416	)	¥	359,327

Assets	¥	3,142,058	¥	7,505,511	¥	926,033	¥	1,148,474	¥	709,834	¥	13,431,910	¥	(58,435	)	¥	13,373,475
Long-lived assets	¥	1,091,368	¥	1,985,283	¥	157,589	¥	269,588	¥	150,428	¥	3,654,256	¥	—		¥	3,654,256

As of and for the six months ended September 30, 2009


	Yen (millions)
	Japan			North America		Europe		Asia		Other Regions		Total		Reconciling Items			Consolidated
Net sales and other operating revenue:
External customers	¥	853,838		¥	1,800,922	¥	409,087	¥	602,228	¥	392,792	¥	4,058,867	¥	—		¥	4,058,867
Transfers between geographic areas		687,069			74,310		26,051		90,017		11,336		888,783		(888,783	)		—

Total	¥	1,540,907		¥	1,875,232	¥	435,138	¥	692,245	¥	404,128	¥	4,947,650	¥	(888,783	)	¥	4,058,867

Operating income (loss)	¥	(30,382	)	¥	54,877	¥	3,630	¥	47,907	¥	9,469	¥	85,501	¥	5,206		¥	90,707

Assets	¥	2,947,913		¥	6,069,575	¥	635,443	¥	962,156	¥	554,753	¥	11,169,840	¥	88,182		¥	11,258,022
Long-lived assets	¥	1,146,720		¥	1,825,284	¥	110,725	¥	245,732	¥	154,648	¥	3,483,109	¥	—		¥	3,483,109

Explanatory notes:

1.	Major countries or regions in each geographic area:


North America		United States, Canada, Mexico
Europe		United Kingdom, Germany, France, Italy, Belgium
Asia		Thailand, Indonesia, China, India
Other Regions		Brazil, Australia

2.	Operating income (loss) of each geographical region is measured in a consistent manner with consolidated operating income, which is net income before other income, other expenses, income tax (benefit) expense, net income attributable to noncontrolling interests, and equity in income of affiliates.

3.	Assets of each geographical region are defined as total assets, including derivative financial instruments, investments in affiliates, and deferred tax assets.

4.	Sales and revenues between geographic areas are generally made at values that approximate arm’s-length prices.

HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(2) Overseas sales and revenues based on the location of the customer

For the three months ended September 30, 2008


	Yen (millions)
	September 30, 2008
North America	¥	1,293,583
Europe		320,102
Asia		435,298
Other regions		387,096

For the three months ended September 30, 2009


	Yen (millions)
	September 30, 2009
North America	¥	861,774
Europe		200,257
Asia		368,296
Other regions		240,365

For the six months ended September 30, 2008


	Yen (millions)
	September 30, 2008
North America	¥	2,721,646
Europe		650,225
Asia		871,829
Other regions		707,937

For the six months ended September 30, 2009


	Yen (millions)
	September 30, 2009
North America	¥	1,794,886
Europe		407,170
Asia		713,458
Other regions		425,108

Explanatory notes:

Major countries or regions in each geographic area:


North America		United States, Canada, Mexico
Europe		United Kingdom, Germany, France, Italy, Belgium
Asia		Thailand, Indonesia, China, India
Other Regions		Brazil, Australia

HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(13) Per Share Data

(a)

Honda Motor Co., Ltd. shareholders’ equity per share

(b)

Net income attributable to Honda Motor Co., Ltd. per common share (see note 1(c)2)

Net income attributable to Honda Motor Co., Ltd. per common share for the three months and six months ended September 30, 2008 and 2009 are as follows:

For the six months ended September 30, 2008 and 2009

* Diluted net income attributable to Honda Motor Co., Ltd. per common share is not provided as there is no potential dilution effect.

* The bases of computation of basic net income attributable to Honda Motor Co., Ltd. per common share are as follows:


	Yen (millions)
	September 30, 2008		September 30, 2009
Net income attributable to Honda Motor Co., Ltd.	¥	296,713	¥	61,597
Amount not applicable to common stock		—		—
Net income attributable to Honda Motor Co., Ltd. applicable to common stock	¥	296,713	¥	61,597
Weighted average number of common shares		1,814,538,088 shares		1,814,607,190 shares

For the three months ended September 30, 2008 and 2009

* Diluted net income attributable to Honda Motor Co., Ltd. per common share is not provided as there is no potential dilution effect.

* The bases of computation of basic net income attributable to Honda Motor Co., Ltd. per common share are as follows:


	Yen (millions)
	September 30, 2008		September 30, 2009
Net income attributable to Honda Motor Co., Ltd.	¥	123,316	¥	54,037
Amount not applicable to common stock		—		—
Net income attributable to Honda Motor Co., Ltd. applicable to common stock	¥	123,316	¥	54,037
Weighted average number of common shares		1,814,537,399 shares		1,814,606,417 shares

(14) Subsequent Events

No relevant information.

The Company has evaluated subsequent events through the date of the filing of the original document for this Form 6-K.

Yen
(millions)

September 30,
2009

March 31,
2009

Finance subsidiaries-receivables

Allowance for credit losses

Allowance for losses on lease residual values