Form 6-K
Table of Contents

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 AUGUST 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:

SWEPSONVILLE, N.C., U.S.A., August 6, 2014 - Honda Power Equipment Manufacturing, Inc. (HPE) today marked the 30th anniversary of operations at its Swepsonville facility by announcing a new $8.5 million investment in plant operations to innovate production processes and add new products. Among other changes, the plant will add a new line for the production of two-stage snow blowers and prepare for the addition of Honda generators to its already diverse production lineup.

Exhibit 2:

On August 8, 2014, Honda Motor Co., Ltd. filed its consolidated financial statements for the fiscal first quarter ended June 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/ Kohei Takeuchi

Kohei Takeuchi
Operating Officer and Director
Chief Financial Officer
Honda Motor Co., Ltd.

Date: September 10, 2014


Table of Contents

Honda Power Equipment Manufacturing, Inc. Celebrates 30 Years of Production with New $8.5 Million Capital Investment

SWEPSONVILLE, N.C., U.S.A., August 6, 2014 - Honda Power Equipment Manufacturing, Inc. (HPE) today marked the 30th anniversary of operations at its Swepsonville facility by announcing a new $8.5 million investment in plant operations to innovate production processes and add new products. Among other changes, the plant will add a new line for the production of two-stage snow blowers and prepare for the addition of Honda generators to its already diverse production lineup.

For details, please refer to the website of Honda Motor Co., Ltd

http://world.honda.com/news/2014/c140806Honda-Power-Equipment-Manufacturing-Celebrates-30-Years/index.html


Table of Contents

HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Consolidated Financial Statements

June 30, 2014


Table of Contents

HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Consolidated Balance Sheets

March 31, 2014 and June 30, 2014

 

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

Current assets:

     

Cash and cash equivalents

   ¥ 1,168,914       ¥ 1,107,647   

Trade accounts and notes receivable, net of allowance for doubtful accounts of ¥9,677 million as of March 31, 2014 and ¥9,070 million as of June 30, 2014 (note 3)

     1,158,671         1,048,694   

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

     1,464,215         1,478,573   

Inventories (note 4)

     1,302,895         1,289,093   

Deferred income taxes

     202,123         182,655   

Other current assets (notes 3, 5 and 8)

     474,448         453,722   
  

 

 

    

 

 

 

Total current assets

     5,771,266         5,560,384   
  

 

 

    

 

 

 

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

     3,317,553         3,292,260   

Investments and advances:

     

Investments in and advances to affiliates

     564,266         595,647   

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

     253,661         262,185   
  

 

 

    

 

 

 

Total investments and advances

     817,927         857,832   
  

 

 

    

 

 

 

Property on operating leases:

     

Vehicles

     2,718,131         2,794,472   

Less accumulated depreciation

     481,410         482,073   
  

 

 

    

 

 

 

Net property on operating leases

     2,236,721         2,312,399   
  

 

 

    

 

 

 

Property, plant and equipment, at cost:

     

Land

     521,806         519,775   

Buildings

     1,895,140         1,931,841   

Machinery and equipment

     4,384,255         4,388,157   

Construction in progress

     339,093         308,058   
  

 

 

    

 

 

 
     7,140,294         7,147,831   

Less accumulated depreciation and amortization

     4,321,862         4,342,350   
  

 

 

    

 

 

 

Net property, plant and equipment

     2,818,432         2,805,481   
  

 

 

    

 

 

 

Other assets, net of allowance for doubtful accounts of ¥22,100 million as of March 31, 2014 and ¥21,898 million as of June 30, 2014 (notes 3 and 8)

     660,132         659,465   
  

 

 

    

 

 

 

Total assets

   ¥ 15,622,031       ¥ 15,487,821   
  

 

 

    

 

 

 


Table of Contents

HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Consolidated Balance Sheets

March 31, 2014 and June 30, 2014

 

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

Current liabilities:

    

Short-term debt

   ¥ 1,319,344      ¥ 1,463,290   

Current portion of long-term debt

     1,303,464        1,175,081   

Trade payables:

    

Notes

     28,501        27,735   

Accounts

     1,071,179        946,753   

Accrued expenses (note 9)

     626,503        566,381   

Income taxes payable

     43,085        62,882   

Other current liabilities (note 8)

     319,253        349,723   
  

 

 

   

 

 

 

Total current liabilities

     4,711,329        4,591,845   
  

 

 

   

 

 

 

Long-term debt, excluding current portion

     3,234,066        3,204,962   

Other liabilities (note 9)

     1,563,238        1,522,845   
  

 

 

   

 

 

 

Total liabilities

     9,508,633        9,319,652   
  

 

 

   

 

 

 

Equity:

    

Honda Motor Co., Ltd. shareholders’ equity:

    

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

     86,067        86,067   

Capital surplus

     171,117        171,117   

Legal reserves

     49,276        50,922   

Retained earnings (note 10(a))

     6,431,682        6,536,898   

Accumulated other comprehensive income (loss), net (notes 5, 6 and 8)

     (793,014     (840,841

Treasury stock, at cost 9,137,234 shares as of March 31, 2014 and 9,137,831 shares as of June 30, 2014

     (26,149     (26,151
  

 

 

   

 

 

 

Total Honda Motor Co., Ltd. shareholders’ equity

     5,918,979        5,978,012   
  

 

 

   

 

 

 

Noncontrolling interests

     194,419        190,157   
  

 

 

   

 

 

 

Total equity

     6,113,398        6,168,169   
  

 

 

   

 

 

 

Commitments and contingent liabilities (note 9)

    

Total liabilities and equity

   ¥ 15,622,031      ¥ 15,487,821   
  

 

 

   

 

 

 

 

See accompanying notes to consolidated financial statements.


Table of Contents

HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Consolidated Statements of Income

For the three months ended June 30, 2013 and 2014

 

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

Net sales and other operating revenue

   ¥ 2,834,095      ¥ 2,988,279   

Operating costs and expenses:

    

Cost of sales

     2,124,409        2,238,262   

Selling, general and administrative

     383,061        408,840   

Research and development

     141,662        143,134   
  

 

 

   

 

 

 
     2,649,132        2,790,236   
  

 

 

   

 

 

 

Operating income

     184,963        198,043   

Other income (expenses):

    

Interest income

     5,992        5,152   

Interest expense

     (2,974     (4,413

Other, net (notes 5 and 8)

     (15,946     31   
  

 

 

   

 

 

 
     (12,928     770   
  

 

 

   

 

 

 

Income before income taxes and equity in income of affiliates

     172,035        198,813   

Income tax expense (note 1(c)):

    

Current

     43,866        78,567   

Deferred

     26,973        3,229   
  

 

 

   

 

 

 
     70,839        81,796   
  

 

 

   

 

 

 

Income before equity in income of affiliates

     101,196        117,017   

Equity in income of affiliates

     31,767        38,588   
  

 

 

   

 

 

 

Net income

     132,963        155,605   

Less: Net income attributable to noncontrolling interests

     10,464        9,093   
  

 

 

   

 

 

 

Net income attributable to Honda Motor Co., Ltd.

   ¥ 122,499      ¥ 146,512   
  

 

 

   

 

 

 
     Yen  
     June 30,
2013
    June 30,
2014
 

Basic net income attributable to Honda Motor Co., Ltd. per common share (note 12)

   ¥ 67.97      ¥ 81.29   
  

 

 

   

 

 

 

 

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 June 30, 2013 and 2014

 

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

Net income

   ¥ 132,963       ¥ 155,605   

Other comprehensive income (loss), net of tax:

     

Adjustments from foreign currency translation

     189,546         (55,326

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

     8,694         8,284   

Unrealized gains (losses) on derivative instruments, net

     587         —     

Pension and other postretirement benefits adjustments

     2,685         (4,726
  

 

 

    

 

 

 

Other comprehensive income (loss), net of tax (note 6)

     201,512         (51,768
  

 

 

    

 

 

 

Comprehensive income (loss)

     334,475         103,837   

Less: Comprehensive income attributable to noncontrolling interests

     18,975         5,152   
  

 

 

    

 

 

 

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

   ¥ 315,500       ¥ 98,685   
  

 

 

    

 

 

 

 

See accompanying notes to consolidated financial statements.


Table of Contents

HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Consolidated Statements of Cash Flows

For the three months ended June 30, 2013 and 2014

 

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

Cash flows from operating activities:

    

Net income

   ¥ 132,963      ¥ 155,605   

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

    

Depreciation excluding property on operating leases

     108,313        117,312   

Depreciation of property on operating leases

     80,397        94,947   

Deferred income taxes

     26,973        3,229   

Equity in income of affiliates

     (31,767     (38,588

Dividends from affiliates

     5,735        7,156   

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

     4,623        3,528   

Impairment loss on property on operating leases

     615        385   

Loss (gain) on derivative instruments, net

     (21,038     627   

Decrease (increase) in assets:

    

Trade accounts and notes receivable

     92,404        92,913   

Inventories

     38,389        (3,515

Other current assets

     5,742        21,177   

Other assets

     1,022        (8,833

Increase (decrease) in liabilities:

    

Trade accounts and notes payable

     (101,821     (71,829

Accrued expenses

     (52,262     (48,100

Income taxes payable

     (2,065     20,876   

Other current liabilities

     46,310        37,092   

Other liabilities

     (12,524     (6,440

Other, net

     (17,819     (22,871
  

 

 

   

 

 

 

Net cash provided by operating activities

     304,190        354,671   

Cash flows from investing activities:

    

Increase in investments and advances

     (9,696     (7,821

Decrease in investments and advances

     14,132        8,310   

Payments for purchases of available-for-sale securities

     (16,453     (5,351

Proceeds from sales of available-for-sale securities

     1,597        3,568   

Payments for purchases of held-to-maturity securities

     (10     (357

Proceeds from redemptions of held-to-maturity securities

     1,707        16   

Capital expenditures

     (210,696     (194,225

Proceeds from sales of property, plant and equipment

     8,079        13,897   

Proceeds from insurance recoveries for damaged property, plant and equipment

     6,800        —     

Acquisitions of finance subsidiaries-receivables

     (745,780     (652,357

Collections of finance subsidiaries-receivables

     559,386        632,364   

Purchases of operating lease assets

     (271,474     (361,262

Proceeds from sales of operating lease assets

     164,237        175,340   

Other, net

     —          328   
  

 

 

   

 

 

 

Net cash used in investing activities

     (498,171     (387,550

Cash flows from financing activities:

    

Proceeds from short-term debt

     1,928,544        2,025,424   

Repayments of short-term debt

     (1,856,102     (1,876,723

Proceeds from long-term debt

     378,042        192,788   

Repayments of long-term debt

     (320,903     (303,734

Dividends paid (note 10(a))

     (34,243     (39,650

Dividends paid to noncontrolling interests

     (5,889     (5,053

Sales (purchases) of treasury stock, net

     (6     (2

Other, net

     (8,399     (11,142
  

 

 

   

 

 

 

Net cash provided by (used in) financing activities

     81,044        (18,092

Effect of exchange rate changes on cash and cash equivalents

     46,009        (10,296
  

 

 

   

 

 

 

Net change in cash and cash equivalents

     (66,928     (61,267

Cash and cash equivalents at beginning of period

     1,206,128        1,168,914   
  

 

 

   

 

 

 

Cash and cash equivalents at end of period

   ¥ 1,139,200      ¥ 1,107,647   
  

 

 

   

 

 

 

 

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 three months ended June 30, 2014. If a reliable estimate cannot be made, Honda utilizes the actual year-to-date effective tax rate.

(2) Allowances for Finance Subsidiaries-receivables

 

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

Finance subsidiaries-receivables

     

Allowance for credit losses

   ¥ 21,559       ¥ 21,814   

Allowance for losses on lease residual values

     2,131         1,813   


Table of Contents

 

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 June 30, 2014:

 

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

Retail

   ¥ 4,678,741       ¥ 4,673,915   

Direct financing lease

     422,936         421,832   

Wholesale flooring

     434,219         397,312   

Commercial loans

     63,176         63,369   
  

 

 

    

 

 

 

Total finance receivables

     5,599,072         5,556,428   

Less:

     

Allowance for credit losses

     24,851         24,927   

Allowance for losses on lease residual values

     2,131         1,813   

Unearned interest income and fees

     38,093         38,404   
  

 

 

    

 

 

 
     5,533,997         5,491,284   

Less:

     

Finance receivables included in trade accounts and notes receivables, net

     498,230         457,035   

Finance receivables included in other assets, net

     253,999         263,416   
  

 

 

    

 

 

 

Finance subsidiaries-receivables, net

     4,781,768         4,770,833   

Less current portion

     1,464,215         1,478,573   
  

 

 

    

 

 

 

Noncurrent finance subsidiaries-receivables, net

   ¥ 3,317,553       ¥ 3,292,260   
  

 

 

    

 

 

 

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.


Table of Contents

 

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 three months ended June 30, 2013 and 2014.

For the three months ended June 30, 2013

 

     Yen (millions)  
     Retail     Direct
financing
lease
    Wholesale     Total  

Balance at beginning of period

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

Provision

     4,269        65        14        4,348   

Charge-offs

     (5,631     (114     (17     (5,762

Recoveries

     2,437        24        3        2,464   

Adjustments from foreign currency translation

     955        11        60        1,026   
  

 

 

   

 

 

   

 

 

   

 

 

 

Balance at end of period

   ¥ 19,673      ¥ 775      ¥ 1,344      ¥ 21,792   
  

 

 

   

 

 

   

 

 

   

 

 

 

For the three months ended June 30, 2014

 

     Yen (millions)  
     Retail     Direct
financing
lease
    Wholesale     Total  

Balance at beginning of period

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

Provision

     3,578        102        1        3,681   

Charge-offs

     (6,228     (149     (143     (6,520

Recoveries

     2,928        23        20        2,971   

Adjustments from foreign currency translation

     (69     5        8        (56
  

 

 

   

 

 

   

 

 

   

 

 

 

Balance at end of period

   ¥ 21,846      ¥ 617      ¥ 2,464      ¥ 24,927   
  

 

 

   

 

 

   

 

 

   

 

 

 

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 June 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 June 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

   ¥ 17,691       ¥ 3,098       ¥ 2,746       ¥ 23,535       ¥ 4,046,998       ¥ 4,070,533   

Used & certified auto

     6,452         1,097         408         7,957         409,537         417,494   

Others

     1,373         626         1,845         3,844         182,044         185,888   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total retail

     25,516         4,821         4,999         35,336         4,638,579         4,673,915   

Direct financing lease

     952         232         333         1,517         420,315         421,832   

Wholesale

                 

Wholesale flooring

     85         196         489         770         396,542         397,312   

Commercial loans

     —           —           114         114         63,255         63,369   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total wholesale

     85         196         603         884         459,797         460,681   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total finance receivables

   ¥ 26,553       ¥ 5,249       ¥ 5,935       ¥ 37,737       ¥ 5,518,691       ¥ 5,556,428   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

* 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 June 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 June 30, 2014

 

     Yen (millions)  
     Performing      Nonperforming      Total consumer
finance receivables
 

Retail

        

New auto

   ¥ 4,064,689       ¥ 5,844       ¥ 4,070,533   

Used & certified auto

     415,989         1,505         417,494   

Others

     183,417         2,471         185,888   
  

 

 

    

 

 

    

 

 

 

Total retail

     4,664,095         9,820         4,673,915   

Direct financing lease

     421,267         565         421,832   
  

 

 

    

 

 

    

 

 

 

Total

   ¥ 5,085,362       ¥ 10,385       ¥ 5,095,747   
  

 

 

    

 

 

    

 

 

 

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.


Table of Contents

 

6

 

HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

 

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

 

     Yen (millions)  
     Group A      Group B      Total  

Wholesale

        

Wholesale flooring

   ¥ 237,198       ¥ 160,114       ¥ 397,312   

Commercial loans

     37,908         25,461         63,369   
  

 

 

    

 

 

    

 

 

 

Total

   ¥ 275,106       ¥ 185,575       ¥ 460,681   
  

 

 

    

 

 

    

 

 

 

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 ¥25,588 million are included in other current assets, investments and advances-other and other assets in the consolidated balance sheets at March 31, 2014 and June 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 ¥20,057 million at March 31, 2014 and June 30, 2014, respectively, for which the allowance for credit losses were ¥19,996 million and ¥19,959 million at March 31, 2014 and June 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 June 30, 2014 are summarized as follows:

 

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

Finished goods

   ¥ 759,099       ¥ 743,777   

Work in process

     69,731         73,523   

Raw materials

     474,065         471,793   
  

 

 

    

 

 

 

Total

   ¥ 1,302,895       ¥ 1,289,093   
  

 

 

    

 

 

 

(5) Investments and Advances-Other

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

 

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

Current

     

Corporate debt securities

   ¥      11,050       ¥        8,807   

Government bonds

     2,000         2,000   

Local bonds

     6,620         7,071   

Advances

     1,028         2,004   

Certificates of deposit

     1,558         1,558   

Other

     15,012         17,522   
  

 

 

    

 

 

 

Total

   ¥ 37,268       ¥ 38,962   
  

 

 

    

 

 

 

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

 

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

Noncurrent

     

Auction rate securities

   ¥        6,999       ¥        6,892   

Marketable equity securities

     138,476         149,973   

Corporate debt securities

     8,542         8,616   

Local bonds

     15,850         15,609   

U.S. government agency debt securities

     5,455         5,980   

Non-marketable equity securities accounted for under the cost method

     

Non-marketable preferred stocks

     969         969   

Other

     10,316         7,785   

Guaranty deposits

     18,742         18,528   

Advances

     1,998         1,921   

Other

     46,314         45,912   
  

 

 

    

 

 

 

Total

   ¥ 253,661       ¥ 262,185   
  

 

 

    

 

 

 


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 June 30, 2014 are summarized below:

 

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

Available-for-sale

     

Cost

   ¥ 84,820       ¥ 85,347   

Fair value

     185,960         198,748   

Gross unrealized gains

     101,917         114,184   

Gross unrealized losses

     777         783   

Held-to-maturity

     

Amortized cost

   ¥ 34,650       ¥ 34,960   

Fair value

     34,667         34,966   

Gross unrealized gains

     17         6   

Gross unrealized losses

     —           —     

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

 

     Yen
(millions)
 

Due within one year

   ¥ 2,534   

Due after one year through five years

     15,305   

Due after five years through ten years

     7,805   

Due after ten years

     14,291   
  

 

 

 

Total

   ¥   39,935   
  

 

 

 

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

 

     Yen
(millions)
 

Due within one year

   ¥   22,874   

Due after one year through five years

     469   

Due after five years through ten years

     10,788   

Due after ten years

     829   
  

 

 

 

Total

   ¥   34,960   
  

 

 

 

There were no significant realized gains and losses from available-for-sale securities included in other income (expenses) – other, net for the three months ended June 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 June 30, 2014 are as follows:

 

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

Less than 12 months

   ¥ 8,877       ¥ 224       ¥ 7,884       ¥ 260   

12 months or longer

     7,351         553         7,233         523   
  

 

 

    

 

 

    

 

 

    

 

 

 

Total

   ¥ 16,228       ¥ 777       ¥ 15,117       ¥ 783   
  

 

 

    

 

 

    

 

 

    

 

 

 

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 June 30, 2014.

(6) Other Comprehensive Income (Loss)

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

For the three months ended June 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

     189,546        8,476         350        (202     198,170   

Amounts reclassified from accumulated other comprehensive income (loss)

     —          218         237        2,887        3,342   
  

 

 

   

 

 

    

 

 

   

 

 

   

 

 

 

Net current-period other comprehensive income (loss)

     189,546        8,694         587        2,685        201,512   
  

 

 

   

 

 

    

 

 

   

 

 

   

 

 

 

Less: Other comprehensive income attributable to noncontrolling interests

     8,443        25         —          43        8,511   
  

 

 

   

 

 

    

 

 

   

 

 

   

 

 

 

Balance at end of period

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

 

 

   

 

 

    

 

 

   

 

 

   

 

 

 


Table of Contents

 

10

 

HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

 

For the three months ended June 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

     (57,892     8,341        —           (4,914     (54,465

Amounts reclassified from accumulated other comprehensive income (loss)

     2,566        (57     —           188        2,697   
  

 

 

   

 

 

   

 

 

    

 

 

   

 

 

 

Net current-period other comprehensive income (loss)

     (55,326     8,284        —           (4,726     (51,768
  

 

 

   

 

 

   

 

 

    

 

 

   

 

 

 

Less: Other comprehensive income attributable to noncontrolling interests

     (3,985     (1     —           45        (3,941
  

 

 

   

 

 

   

 

 

    

 

 

   

 

 

 

Balance at end of period

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

 

 

   

 

 

   

 

 

    

 

 

   

 

 

 


Table of Contents

 

11

 

HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

 

The following table presents the reclassifications out of accumulated other comprehensive income (loss) by component for the three months ended June 30, 2013 and 2014.

For the three months ended June 30, 2013 and 2014

 

    Yen (millions)

Details about accumulated other comprehensive income (loss)
components

  June 30,
2013
    June 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

     
  ¥ (336   ¥ 88      Other income (expenses)—Other, net
    118        (31   Income tax expense
 

 

 

   

 

 

   
  ¥ (218   ¥ 57      Net income
 

 

 

   

 

 

   

Unrealized gains (losses) on derivative instruments, net

     
  ¥ (381   ¥ —        Other income (expenses)—Other, net
    144        —        Income tax expense
 

 

 

   

 

 

   
  ¥ (237   ¥ —        Net income
 

 

 

   

 

 

   

Pension and other postretirement benefits adjustments

     
  ¥ (4,482   ¥ (363   *
    1,595        175      Income tax expense
 

 

 

   

 

 

   
  ¥ (2,887   ¥ (188   Net income
 

 

 

   

 

 

   

Total reclassifications for the period

  ¥ (3,342   ¥ (2,697  
 

 

 

   

 

 

   

 

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


Table of Contents

 

12

 

HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

 

(7) 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 June 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 8)

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

Interest rate instruments (note 8)

     —           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 8)

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

Interest rate instruments (note 8)

     —           (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

 

13

 

HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

 

As of June 30, 2014

 

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

Assets:

              

Derivative instruments

              

Foreign exchange instruments (note 8)

   ¥ —         ¥ 9,703      ¥ —         ¥ 9,703      ¥ —        ¥ —     

Interest rate instruments (note 8)

     —           20,595        —           20,595        —          —     
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

   

 

 

 

Total derivative instruments

     —           30,298        —           30,298        (8,950     21,348   
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

   

 

 

 

Available-for-sale securities

              

Marketable equity securities

     149,973         —          —           149,973        —          149,973   

Auction rate securities

     —           —          6,892         6,892        —          6,892   

Debt securities

     —           33,043        —           33,043        —          33,043   

Others

     5,271         3,569        —           8,840        —          8,840   
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

   

 

 

 

Total available-for-sale securities

     155,244         36,612        6,892         198,748        —          198,748   
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

   

 

 

 

Total

   ¥ 155,244       ¥ 66,910      ¥ 6,892       ¥ 229,046      ¥ (8,950   ¥ 220,096   
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

   

 

 

 

Liabilities:

              

Derivative instruments

              

Foreign exchange instruments (note 8)

   ¥ —         ¥ (13,742   ¥ —         ¥ (13,742   ¥ —        ¥ —     

Interest rate instruments (note 8)

     —           (8,457     —           (8,457     —          —     
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

   

 

 

 

Total derivative instruments

     —           (22,199     —           (22,199     8,950        (13,249
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

   

 

 

 

Total

   ¥ —         ¥ (22,199   ¥ —         ¥ (22,199   ¥ 8,950      ¥ (13,249
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

   

 

 

 

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

 

14

 

HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

 

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

For the three months ended June 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

     369   
  

 

 

 

Balance at end of period

   ¥ 6,606   
  

 

 

 

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 three months ended June 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

     (107
  

 

 

 

Balance at end of period

   ¥ 6,892   
  

 

 

 

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

 

15

 

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 8)

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 does not have significant assets and liabilities measured at fair value on a nonrecurring basis for the year ended March 31, 2014 and the three months ended June 30, 2014.

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


Table of Contents

 

16

 

HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

 

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

 

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

Finance subsidiaries-receivables*

   ¥ 5,140,064      ¥ 5,175,564      ¥ 5,098,054      ¥ 5,135,055   

Held-to-maturity securities

     34,650        34,667        34,960        34,966   

Debt

     (5,856,874     (5,917,087     (5,843,333     (5,903,938

 

* The carrying amounts of finance subsidiaries-receivables at March 31, 2014 and June 30, 2014 in the table exclude ¥393,933 million and ¥393,230 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 June 30, 2014 in the table also include ¥752,229 million and ¥720,451 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

 

17

 

HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

 

(8) 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 7). 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 June 30, 2014 are as follows:

Derivatives not designated as hedging instruments

 

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

Foreign currency forward exchange contracts

   ¥ 506,734       ¥ 438,235   

Foreign currency option contracts

     3,721         3,745   

Currency swap agreements

     366,031         315,301   
  

 

 

    

 

 

 

Total foreign exchange instruments

   ¥ 876,486       ¥ 757,281   
  

 

 

    

 

 

 

Interest rate swap agreements

   ¥ 4,809,037       ¥ 4,838,306   
  

 

 

    

 

 

 

Total interest rate instruments

   ¥ 4,809,037       ¥ 4,838,306   
  

 

 

    

 

 

 


Table of Contents

 

18

 

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 three months ended June 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 June 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 June 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

   ¥ 9,703      ¥ (13,742   ¥ 1,772       ¥ 3,939       ¥ (9,750

Interest rate instruments

     20,595        (8,457     1,051         14,586         (3,499
  

 

 

   

 

 

   

 

 

    

 

 

    

 

 

 

Total

   ¥ 30,298      ¥ (22,199   ¥ 2,823       ¥ 18,525       ¥ (13,249
  

 

 

   

 

 

   

 

 

    

 

 

    

 

 

 

Netting adjustment

     (8,950     8,950           
  

 

 

   

 

 

         

Net amount

   ¥ 21,348      ¥ (13,249        
  

 

 

   

 

 

         

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

 

19

 

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 three months ended June 30, 2013 and 2014 are as follows:

For the three months ended June 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

    ¥ 564     

Other income (expenses) -

Other, net

  ¥ (381   Other income
(expenses) -

Other, net

  ¥ 66   

 

Derivatives not designated as hedging instruments

 

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

Foreign exchange instruments

      Other income (expenses) - Other, net   ¥ (23,319

Interest rate instruments

      Other income (expenses) - Other, net     (5,029
           

 

 

 

Total

      ¥ (28,348
           

 

 

 

 

For the three months ended June 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   ¥ (3,160

Interest rate instruments

      Other income (expenses) - Other, net     922   
           

 

 

 

Total

            ¥ (2,238
           

 

 

 

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

 

20

 

HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

 

(9) Contingent Liabilities

Honda has entered into various guarantee and indemnification agreements. At March 31, 2014 and June 30, 2014, Honda has guaranteed ¥25,368 million and ¥24,454 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 June 30, 2014 are ¥25,368 million and ¥24,454 million, respectively. At June 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 three months ended June 30, 2014 are as follows:

 

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

Balance at beginning of period

   ¥ 208,033      ¥ 269,620   

Warranty claims paid during the period

     (104,090     (34,131

Liabilities accrued for warranties issued during the period

     153,898        44,480   

Changes in liabilities for pre-existing warranties during the period

     397        887   

Foreign currency translation

     11,382        (1,068
  

 

 

   

 

 

 

Balance at end of period

   ¥ 269,620      ¥ 279,788   
  

 

 

   

 

 

 

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

 

21

 

HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

 

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

For the three months ended June 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

 

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

 

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

 

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

None


Table of Contents

 

22

 

HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

 

For the three months ended June 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

 

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

 

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

 

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

None


Table of Contents

 

23

 

HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

 

(11) 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

 

24

 

HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

 

Segment Information

As of and for the three months ended June 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

   ¥ 396,870       ¥ 2,196,591       ¥ 165,396       ¥ 75,238       ¥ 2,834,095       ¥ —        ¥ 2,834,095   

Intersegment

     —           4,404         2,592         2,718         9,714         (9,714     —     
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Total

   ¥ 396,870       ¥ 2,200,995       ¥ 167,988       ¥ 77,956       ¥ 2,843,809       ¥ (9,714   ¥ 2,834,095   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Segment income (loss)

   ¥ 42,582       ¥ 96,377       ¥ 44,643       ¥ 1,361       ¥ 184,963       ¥ —        ¥ 184,963   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Segment assets

   ¥ 1,182,953       ¥ 5,852,034       ¥ 7,206,853       ¥ 334,441       ¥ 14,576,281       ¥ (377,965   ¥ 14,198,316   

Depreciation and amortization

   ¥ 12,145       ¥ 92,554       ¥ 80,755       ¥ 3,256       ¥ 188,710       ¥ —        ¥ 188,710   

Capital expenditures

   ¥ 13,026       ¥ 165,344       ¥ 272,287       ¥ 3,611       ¥ 454,268       ¥ —        ¥ 454,268   

As of and for the three months ended June 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

   ¥ 407,742       ¥ 2,319,594       ¥ 186,701       ¥ 74,242       ¥ 2,988,279       ¥ —        ¥ 2,988,279   

Intersegment

     —           4,158         2,637         2,759         9,554         (9,554     —     
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Total

   ¥ 407,742       ¥ 2,323,752       ¥ 189,338       ¥ 77,001       ¥ 2,997,833       ¥ (9,554   ¥ 2,988,279   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Segment income (loss)

   ¥ 43,985       ¥ 99,836       ¥ 51,834       ¥ 2,388       ¥ 198,043       ¥ —        ¥ 198,043   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Segment assets

   ¥ 1,207,203       ¥ 6,317,177       ¥ 8,009,019       ¥ 365,019       ¥ 15,898,418       ¥ (410,597   ¥ 15,487,821   

Depreciation and amortization

   ¥ 11,962       ¥ 102,050       ¥ 95,659       ¥ 2,588       ¥ 212,259       ¥ —        ¥ 212,259   

Capital expenditures

   ¥ 9,273       ¥ 139,971       ¥ 362,199       ¥ 1,976       ¥ 513,419       ¥ —        ¥ 513,419   

 

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 ¥285,682 million as of June 30, 2013 and ¥253,224 million as of June 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 ¥80,397 million for the three months ended June 30, 2013 and ¥94,947 million for the three months ended June 30, 2014, respectively, of depreciation of property on operating leases.

 

6. Capital expenditure of Financial services business includes ¥271,474 million for the three months ended June 30, 2013 and ¥361,262 million for the three months ended June 30, 2014, respectively, of purchase of operating lease assets.


Table of Contents

 

25

 

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 three months ended June 30, 2013

 

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

Net sales and other operating revenue:

               

External customers

  ¥ 433,538      ¥ 1,405,502      ¥ 158,869      ¥ 598,369      ¥ 237,817      ¥ 2,834,095      ¥ —        ¥ 2,834,095   

Transfers between geographic areas

    542,346        95,806        17,113        108,374        2,902        766,541        (766,541     —     
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total

  ¥ 975,884      ¥ 1,501,308      ¥ 175,982      ¥ 706,743      ¥ 240,719      ¥ 3,600,636      ¥ (766,541   ¥ 2,834,095   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Operating income (loss)

  ¥ 62,187      ¥ 71,858      ¥ (9,740   ¥ 53,755      ¥ 5,415      ¥ 183,475      ¥ 1,488      ¥ 184,963   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Assets

  ¥ 3,219,164      ¥ 8,062,987      ¥ 629,302      ¥ 1,688,083      ¥ 739,109      ¥ 14,338,645      ¥ (140,329   ¥ 14,198,316   

Long-lived assets

  ¥ 1,186,448      ¥ 2,679,540      ¥ 126,393      ¥ 466,100      ¥ 156,205      ¥ 4,614,686      ¥ —        ¥ 4,614,686   

As of and for the three months ended June 30, 2014

 

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

Net sales and other operating revenue:

               

External customers

  ¥ 547,782      ¥ 1,453,788      ¥ 174,248      ¥ 604,731      ¥ 207,730      ¥ 2,988,279      ¥ —        ¥ 2,988,279   

Transfers between geographic areas

    440,177        91,806        20,345        128,698        534        681,560        (681,560     —     
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total

  ¥ 987,959      ¥ 1,545,594      ¥ 194,593      ¥ 733,429      ¥ 208,264      ¥ 3,669,839      ¥ (681,560   ¥ 2,988,279   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Operating income (loss)

  ¥ 62,149      ¥ 67,513      ¥ (1,487   ¥ 65,278      ¥ 4,593      ¥ 198,046      ¥ (3   ¥ 198,043   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Assets

  ¥ 3,443,404      ¥ 8,780,234      ¥ 679,266      ¥ 1,999,224      ¥ 748,039      ¥ 15,650,167      ¥ (162,346   ¥ 15,487,821   

Long-lived assets

  ¥ 1,272,648      ¥ 3,099,387      ¥ 138,779      ¥ 584,700      ¥ 165,113      ¥ 5,260,627      ¥ —        ¥ 5,260,627   

 

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

   Brazil, Australia

 

2. Operating income (loss) of each geographical region is measured in a consistent manner with consolidated operating income, which is income before income taxes and equity in income of affiliates before other income (expenses).

 

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

 

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

 

5. Unallocated corporate assets, included in reconciling items, amounted to ¥285,682 million as of June 30, 2013 and ¥253,224 million as of June 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 transactions between geographic areas.


Table of Contents

 

26

 

HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

 

(12) Per Share Data

Basic net income attributable to Honda Motor Co., Ltd. per common share and the bases of computation are as follows:

For the three months ended June 30, 2013 and 2014

 

     Yen  
     June 30,
2013
     June 30,
2014
 

Basic net income attributable to Honda Motor Co., Ltd. per common share

   ¥ 67.97       ¥ 81.29   

 

     Yen (millions)  
     June 30,
2013
     June 30,
2014
 

The bases of computation

     

Net income attributable to Honda Motor Co., Ltd.

   ¥ 122,499       ¥ 146,512   

Amount not applicable to common stock

     —           —     

Net income attributable to Honda Motor Co., Ltd. applicable to common stock

   ¥ 122,499       ¥ 146,512   

Weighted average number of common shares

     1,802,296,557 shares         1,802,290,925 shares   

 

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