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 May 2013

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        *         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):                    

 

 

 

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Contents

Exhibit 1:

CELAYA, Mexico, May 2, 2013 - Honda de Mexico, S.A. de C.V. announced plans to construct a new transmission plant in Celaya, near the city of Guanajuato, on the same site as the new automobile plant currently under construction that will begin production of the Honda Fit in Spring 2014.

Exhibit 2:

The Board of Directors of Honda Motor Co., Ltd. (the “Company”), at its meeting held on May 16, 2013, resolved to propose a matter of “Amendments to Articles of Incorporation” as follows as an agenda item for the Company’s 89th ordinary general meeting of shareholders scheduled to be held on June 19, 2013.

Exhibit 3:

The Board of Directors of Honda Motor Co., Ltd., at its meeting held on May 16, 2013, resolved to convene the Company’s 89th ordinary general meeting of shareholders as follows.

Exhibit 4:

Notice of Convocation of the 89th Ordinary General Meeting of Shareholders of Honda Motor Co., Ltd. (the “Company”) has become available on May 29, 2013 on the Company’s website written below.

http://world.honda.com/investors/stock_bond/meeting/

Exhibit 5:

The English translation of unconsolidated financial information for the fiscal year ended March 31, 2013 included in exhibit of Notice of Convocation of the 89th Ordinary General Meeting of Shareholders of Honda Motor Co., Ltd.

Exhibit 6:

BEIJING, China, May 28, 2013 - Guangqi Honda Automobile Co., Ltd., an automobile production and sales joint venture of Honda in China, held a ceremony to commemorate the start of construction of a third production line and an engine plant within the property of the existing ZengCheng Plant.

Exhibit 7:

Bengaluru, India, May 28, 2013 - Honda Motorcycle & Scooter India Pvt. Ltd., the second largest motorcycle company in India inaugurated its most advanced and latest third motorcycle production plant at Narsapura Area, District Kolar (Karnataka) today.

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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.

 

Date: June 14, 2013

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Honda to Build New Transmission Plant in Celaya, Mexico

CELAYA, Mexico, May 2, 2013—Honda de Mexico, S.A. de C.V. announced plans to construct a new transmission plant in Celaya, near the city of Guanajuato, on the same site as the new automobile plant currently under construction that will begin production of the Honda Fit in Spring 2014.

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

http://world.honda.com/news/2013/c130502New-Transmission-Plant-Mexico/index.html

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[Translation]

May 16, 2013

 

To:		Shareholders of Honda Motor Co., Ltd.
From:		Honda Motor Co., Ltd.
		1-1, Minami-Aoyama 2-chome,
		Minato-ku, 107-8556 Tokyo
		Takanobu Ito
		President and Representative Director

Notice Concerning Partial Amendments to Articles of Incorporation

The Board of Directors of Honda Motor Co., Ltd. (the “Company”), at its meeting held on May 16, 2013, resolved to propose a matter of “Amendments to Articles of Incorporation” as follows as an agenda item for the Company’s 89th ordinary general meeting of shareholders scheduled to be held on June 19, 2013.

Particulars

 

1.	Reasons for Amendments

The amendments are for making an addition to the Company’s business objects for the purpose of conducting electricity generation using renewable energy, etc. and the supply and sale of such electricity (Article 2 of the proposed amendments).

 

- 1 -

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2.	Contents of amendments

Portions of the existing Articles of Incorporation will be amended as follows:

(The underlines indicate the portions to be amended.)

 

Present Articles		Proposed Amendments
Chapter I.    General Provisions		Chapter I.    General Provisions
(Objects)		(Objects)
Article 2.		Article 2.
The object of the Company shall be to carry on the following business:		The object of the Company shall be to carry on the following business:
1.		1.
|    [Provisions omitted]		|    [Same as at present]
8.		8.
[Newly established]		9. Electricity generation and supply and sale of electricity
9. [Provisions omitted]		10. [Same as at present]

 

3.

Schedule

Scheduled date of the ordinary general meeting of shareholders for the purpose of the amendments to the Articles of Incorporation:

Wednesday, June 19, 2013

Scheduled date when amendments to the Articles of Incorporation come into effect:

Wednesday, June 19, 2013

 

- 2 -

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[Translation]

May 16, 2013

 

To:		Shareholders of Honda Motor Co., Ltd.
From:		Honda Motor Co., Ltd.
		1-1, Minami-Aoyama 2-chome,
		Minato-ku, 107-8556 Tokyo
		Takanobu Ito
		President and Representative Director

Notice Concerning 89th Ordinary General Meeting of Shareholders

The Board of Directors of Honda Motor Co., Ltd., (the “Company”), at its meeting held on May 16, 2013, resolved to convene the Company’s 89th ordinary general meeting of shareholders as follows.

Particulars

 

1.	Date and time

10:00 a.m. on Wednesday, June 19, 2013

 

2.

Place

GRAND PACIFIC LE DAIBA

Palais Royal on the first basement level

2-6-1 Daiba, Minato-Ku, Tokyo

 

3.

Agenda:

Matters to be reported:

 

1.

Report on the business report, consolidated financial statements and unconsolidated financial statements for the 89th Fiscal Year (from April 1, 2012 to March 31, 2013); and

 

2.

Report on the results of the audit of the consolidated financial statements for the 89th Fiscal Year (from April 1, 2012 to March 31, 2013) by the independent auditors and the Board of Corporate Auditors.

Matters to be resolved:

First Item:

Distribution of Dividends

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Second Item:

Partial Amendments to the Articles of Incorporation

Third Item:

Election of Thirteen (13) Directors

Fourth Item:

Election of One (1) Corporate Auditor

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				Securities Code Number: 7267

NOTICE OF CONVOCATION OF

THE 89TH ORDINARY GENERAL MEETING OF SHAREHOLDERS

TO BE HELD AT GRAND PACIFIC LE DAIBA, TOKYO, JAPAN

ON JUNE 19, 2013 AT 10:00 A.M.

(This is a translation of the original notice

in the Japanese language mailed on May 29, 2013

to stockholders in Japan, and is for reference purposes only.)

HONDA MOTOR CO., LTD.

(HONDA GIKEN KOGYO KABUSHIKI KAISHA)

TOKYO, JAPAN

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[Translation]

May 29, 2013

To Stockholders:

Notice of Convocation of the 89th

Ordinary General Meeting of Shareholders

Dear Stockholders:

You are hereby notified that the 89th Ordinary General Meeting of Shareholders will be held as stated below. You are respectfully requested to attend the meeting.

Please note that, if you do not plan to attend the annual meeting, you may vote by the method outlined below. We request that you exercise your vote after examining the reference documents and other materials enclosed that are related to the annual meeting.

Vote by mail: Please indicate whether you are in favor of, or opposed to, the proposals on the enclosed Annual Meeting Proxy Card, and then send the proxy card to arrive no later than 6:00 p.m. on Tuesday, June 18, 2013.

 

Request: We request that when arriving at the meeting you present the voting right exercise form enclosed herewith to the meeting hall receptionist.

 

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Particulars

 

1. Time and Date:		10:00a.m. on June 19, 2013 (Wednesday)
2. Place:		GRAND PACIFIC LE DAIBA
		Palais Royal on the first basement level, at 2-6-1 Daiba, Minato-ku, Tokyo

3. Agenda:

Matters to be reported:

 

1.

Report on the Business Report, Consolidated Balance Sheets and Consolidated Statements of Income for the 89th Fiscal Year (from April 1, 2012 to March 31, 2013);

 

2.

Report on the results of the audit of the consolidated financial statements for the 89th Fiscal Year (from April 1, 2012 to March 31, 2013) by the independent auditors and the Board of Corporate Auditors.

Matters to be resolved:

First Item:

Distribution of Dividends

Second Item:

Partial Amendments to the Articles of Incorporation

Third Item:

Election of Thirteen (13) Directors

Fourth Item:

Election of One (1) Corporate Auditor

4. Matters to Be Resolved at the Meeting

 

(1)	When proxies submitted show no indication of approval or disapproval on the voting right exercise form, these will be treated as votes of approval for proposals.

 

(2)	When proxy voting rights are exercised through indications on the voting right exercise form and, in addition, through voting via the Internet and, therefore, voting rights are exercised more than once, the votes submitted via the Internet will be regarded as the effective votes.

 

(3)	When voting rights are exercised more than once via the Internet, the last votes submitted via the Internet will be regarded as the effective votes.

Details regarding these agenda items are contained in the “Business Report for the 89th Fiscal Year,” which is appended to this Notice of Convocation.

 

*	In the case that revisions are made to the general shareholders’ meeting reference materials or attached materials, the revised items will be posted on the Company’s website.

Japanese    http://www.honda.co.jp/investors    English     http://world.honda.com/investors

 

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REFERENCE DOCUMENTS

CONCERNING EXERCISE OF VOTING RIGHT

Reference matters with respect to the proposals:

FIRST ITEM: Distribution of Dividends

The Company strives to maintain a global perspective, to develop its operations in many countries throughout the world and to increase its corporate value.

With respect to the distribution of profits, the Company regards the distribution of profits to its stockholders to be one of the most important issues for management. The Company will make dividend distributions after taking into account its long-term strategy and consolidated earnings performance and will also acquire its own stock from time to time with the objectives of improving capital efficiency and flexibly implementing capital policies.

Retained earnings will be allocated toward financing R&D activities that are essential for the future growth of the Company and toward capital expenditures and investment programs that will expand the Company’s operations for the purpose of improving business results and strengthening the Company’s financial condition.

Regarding the year-end dividends for the fiscal year under review, the following conditions are proposed:

(1) Conditions and Total Value of Dividend Assets Allocated to Stockholders

¥19 per share of common stock

Total value of ¥34,243,648,510

(2) Effective Date of Distribution of Dividends

June 20, 2013

 

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SECOND ITEM: Partial Amendments to the Articles of Incorporation

(1) Reasons for Amendments

The amendments were made to make an addition to the Company’s business objects for the purpose of conducting electricity generation using renewable energy, etc. and the supply and sale of such electricity (Article 2 of the proposed amendments).

(2) Contents of Amendments

Portions of the existing Articles of Incorporation will be amended as follows:

(The underlines indicate the portions to be amended.)

 

Present Articles		Proposed Amendments
Chapter I.   (Objects)   Article 2.   The object of the Company shall be to carry on the following business:   1.   |    [Provisions omitted]   8.   9. [Provisions omitted]		Chapter I.   (Objects)   Article 2.   The object of the Company shall be to carry on the following business:   1.   |    [Same as at present]   8.   9. Electricity generation and supply and sale of electricity   10. [Same as at present]

 

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THIRD ITEM: Election of Thirteen (13) Directors

The term of office of each of the twelve (12) current Directors is due to expire at the close of this meeting. It is proposed that the total number of directors be increased by one in order to further strengthen the management system so that thirteen (13) Directors will be appointed at this meeting. The names and particulars of the candidates for the position of Director are provided below.

 

Candidate No.		Name (Date of birth)		Resume, current position and responsibilities * denotes important concurrent positions in other companies or organizations		Number of shares of the Company held		Special interest between the candidate and the Company
1.		Fumihiko Ike		Joined Honda in February 1982		27,400		None
		(May 26, 1952)		Chief Operating Officer for Power Product Operations in April 2003
				Director of the Company in June 2003
				Chief Operating Officer for Business Management Operations in April 2006
				Managing Director of the Company in June 2007
				Chief Operating Officer for Regional Operations (Asia & Oceania) in April 2008
				President and Director of Asian Honda Motor Co., Ltd. in April 2008
				Senior Managing Officer and Director of the Company in April 2011
				Chief Operating Officer for Business Management Operations in April 2011
				Risk Management Officer in April 2011
				General Supervisor, Information Systems in April 2011
				Chief Operating Officer for IT Operations in April 2012
				Government & Industrial Affairs in April 2012
				Chairman and Representative Director of the Company in April 2013 (present)
2.		Takanobu Ito		Joined Honda in April 1978		26,400		None
		(August 29, 1953)		Executive Vice President of Honda R&D Americas, Inc. in April 1998
				Director of the Company in June 2000
				Senior Managing Director of Honda R&D Co., Ltd. in June 2001
				Managing Director of the Company in June 2003
				Motor Sports in June 2003
				President and Director of Honda R&D Co., Ltd. in June 2003
				General Supervisor, Motor Sports in April 2004
				General Manager of Suzuka Factory of Production Operations in April 2005
				Managing Officer of the Company in June 2005
				Chief Operating Officer for Automobile Operations in April 2007
				Senior Managing Director of the Company in June 2007
				President and Director of Honda R&D Co., Ltd. in April 2009
				President and Director of the Company in June 2009
				President, Chief Executive Officer and Representative Director of the Company in April 2011 (present)
				Chief Operating Officer for Automobile Operations in April 2011

 

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Candidate No.		Name (Date of birth)		Resume, current position and responsibilities * denotes important concurrent positions in other companies or organizations		Number of shares of the Company held		Special interest between the candidate and the Company
3.		Tetsuo Iwamura		Joined Honda in April 1978		26,400		None
		(May 30, 1951)		Chief Operating Officer for Parts Operations in April 2000
				Director of the Company in June 2000
				Chief Operating Officer for Regional Operations (Latin America) in April 2003
				President and Director of Honda South America Ltda. in April 2003
				President and Director of Moto Honda da Amazonia Ltda. in April 2003
				President and Director of Honda Automoveis do Brasil Ltda. in April 2003
				Managing Director of the Company in June 2006
				Chief Operating Officer for Regional Operations (North America) in April 2007 (present)
				President and Director of Honda North America, Inc. in April 2007 (present)
				President and Director of American Honda Motor Co., Inc. in April 2007 (present)
				Senior Managing Director of the Company in June 2008
				Senior Managing Officer and Director of the Company in April 2011
				Senior Managing Officer of the Company in June 2011
				Executive Vice President and Executive Officer in April 2012 (present)
				Representative Director of the Company in June 2012 (present)
				Chief Operating Officer for Automobile Operations in April 2013 (present)
				Risk Management Officer in April 2013 (present)
				(Important concurrent positions in other companies or organizations)
				*  President and Director of Honda North America, Inc.
				*  President and Director of American Honda Motor Co., Inc.

 

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Candidate No.		Name (Date of birth)		Resume, current position and responsibilities * denotes important concurrent positions in other companies or organizations		Number of shares of the Company held		Special interest between the candidate and the Company
4.		Takashi Yamamoto		Joined Honda in April 1977		18,400		None
		(January 12, 1953)		General Manager of Automobile Purchasing Division 1 for Purchasing Operations in April 2000
				Director of the Company in June 2000
				Quality, Certification & Regulation Compliance and Service Technology in April 2002
				Quality, Certification & Regulation Compliance in April 2004
				President and Director of Honda Manufacturing of Alabama, LLC in April 2005
				Operating Officer of the Company in June 2005
				General Manager of Saitama Factory of Production Operations in April 2007
				Managing Officer of the Company in June 2007
				President and Director of Yutaka Giken Co., Ltd. in June 2009
				Managing Officer of the Company in April 2011
				General Manager of Automobile Production Planning Office in Production Operations in April 2011
				Senior Managing Officer of the Company in April 2012 (present)
				Chief Operating Officer for Production Operations in April 2012
				Director of the Company in June 2012 (present)
				Production Operation in April 2013 (present)
				General Manager of Automobile Production Oversight Unit for Automobile Operations in April 2013 (present)
5.		Yoshiharu Yamamoto		Joined Honda in April 1973		18,400		None
		(March 19, 1953)		Managing Director of Honda R&D Co., Ltd. in June 2005
				Senior Managing Director of Honda R&D Co., Ltd. in June 2007
				Executive Vice President and Director of Honda R&D Co., Ltd. in June 2010
				Managing Officer of the Company in April 2011
				President, Chief Executive Officer and Director of Honda R&D Co., Ltd. in April 2011 (present)
				Managing Officer and Director of the Company in June 2011
				Senior Managing Officer of the Company in April 2012 (present)
				Chief Operating Officer for IT Operations in April 2013 (present)
				(Important concurrent positions in other companies or organizations)
				* President, Chief Executive Officer and Director of Honda R&D Co., Ltd.

 

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Candidate No.		Name (Date of birth)		Resume, current position and responsibilities * denotes important concurrent positions in other companies or organizations		Number of shares of the Company held		Special interest between the candidate and the Company
6.		Masahiro Yoshida		Joined Honda in April 1979		22,100		None
		(March 5, 1957)		Human Resources and Associate Relations for Business Support Operations in April 2007
				Operating Officer of the Company in June 2007
				General Manager of Hamamatsu Factory of Production Operations in April 2008
				Chief Operating Officer for Business Support Operations in April 2010 (present)
				Director of the Company in June 2010
				Operating Officer and Director of the Company in April 2011
				Compliance Officer in April 2012 (present)
				Managing Officer and Director of the Company in April 2013 (present)
7.		Outside Director candidate Kensaku Hogen (August 2, 1941)		Ambassador to Canada in April 2001 Director of the Company in June 2005 (present) (Attendance record) Attended all 10 meetings of the Board of Directors		2,500		None
8.		Outside Director candidate Nobuo Kuroyanagi (December 18, 1941)		President and CEO of Mitsubishi UFJ Financial Group, Inc. (MUFG) in October 2005		1,900		None
				Chairman of The Bank of Tokyo-Mitsubishi UFJ, Ltd. (BTMU) in April 2008
				Director of the Company in June 2009 (present)
				Director of MUFG in April 2010
				Advisor of BTMU in April 2012 (present)
				(Important concurrent positions in other companies or organizations)
				*  Advisor of BTMU
				*  Outside Director of Isetan Mitsukoshi Holdings Ltd.
				*  Outside Director of Mitsubishi Research Institute, Inc.
				*  Outside Director of Tokio Marine & Nichido Fire Insurance Co., Ltd.
				*  Outside Corporate Auditor of Mitsubishi Heavy Industries, Ltd.
				(Attendance record)
				Attended 9 of 10 meetings of the Board of Directors

 

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Candidate No.		Name (Date of birth)		Resume, current position and responsibilities * denotes important concurrent positions in other companies or organizations		Number of shares of the Company held		Special interest between the candidate and the Company
9.		Takeo Fukui		Joined Honda in April 1969		45,400		None
		(November 28, 1944)		President and Director of Honda Racing Corporation in May 1987
				Managing Director of Honda R&D Co., Ltd. in May 1987 Director of the Company in June 1988
				Senior Managing Director of Honda R&D Co., Ltd. in June 1990
				Executive Vice President and Director of Honda of America Mfg., Inc. in June 1994
				Managing Director of the Company in June 1996
				President and Director of Honda of America Mfg., Inc. in June 1996
				President and Director of Honda R&D Co., Ltd. in June 1998
				Motor Sports in June 1999
				Senior Managing Director of the Company in June 1999
				President and Director of the Company in June 2003
				Director and Advisor of the Company in June 2009 (present)
10.		Yuji Shiga		Joined Honda in April 1982		10,400		None
		(October 7, 1958)		General Manager of Operation Office No. 1 in Regional Operations (North America) in April 2009
				General Manager of Operation Office No. 2 in Regional Operations (Asia & Oceania) in April 2010
				Operating Officer of the Company in April 2011
				Responsible for CIS countries, the Middle & Near East and Africa for Regional Operations in April 2011
				Chief Operating Officer for Power Product Operations in April 2012 (present)
				Operating Officer and Director of the Company in June 2012 (present)
11.		Kohei Takeuchi†		Joined Honda in April 1982		10,200		None
		(February 10, 1960)		General Manager of Accounting Division for Business Management Operations in April 2010
				Operating Officer of the Company in April 2011 (present)
				Chief Operating Officer for Business Management
				Operations in April 2013 (present)
12.		Shinji Aoyama†		Joined Honda in April 1986		6,400		None
		(December 25, 1963)		General Manager of Motorcycle Business Planning Office for Motorcycle Operations in April 2011
				Operating Officer of the Company in April 2012 (present)
				Chief Operating Officer for Motorcycle Operations in April 2013 (present)
13.		Noriya Kaihara†		Joined Honda in April 1984		3,000		None
		(August 4, 1961)		General Manager of Parts Sales and Service Division for Customer Service Operations in April 2010
				General Manager of Automobile Quality Assurance Division in April 2012
				Operating Officer of the Company in April 2013 (present)
				Responsible for Quality in April 2013 (present)

 

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Notes:		1. † denotes new candidates.
		2. Matters related to Outside Director candidates are as follows:
		(1) Kensaku Hogen and Nobuo Kuroyanagi are candidates for the position of Outside Director as defined in Article 2, Paragraph 3, Item 7 of the Enforcement Regulations of the Company Law.
		(2) Kensaku Hogen has been registered as an Independent Director as provided for in the rules of the Tokyo Stock Exchange and the Osaka Securities Exchange, and if he is elected, he is scheduled to continue to serve as an Independent Director.
		(3) Reasons for selection of candidates for the position of Outside Director   Kensaku Hogen is proposed as a candidate because the Company wishes to receive his advice about the Company’s activities given from an objective, broad-ranging and high-level perspective, and based on his rich experience and high level of insight regarding diplomacy. Although he has no experience of being engaged in corporate management other than having served as an outside officer in the past, the Company believes that he can perform the duties of an Outside Director based on his experience and insight mentioned above.
		Nobuo Kuroyanagi is proposed as a candidate because the Company wishes to receive his advice on the Company’s activities given from an objective, broad-ranging and high-level perspective, and based on his rich experience and high level of insight regarding corporate management.
		(4) Outline of contents of the limited liability contracts with candidates for the position of Outside Directors
		Based on Article 427, Paragraph 1 of the Company Law and Article 28 of the Articles of Incorporation, the Company has entered into contracts with both candidates which limit their liabilities, in accordance with Article 423, Paragraph 1 of the Company Law, to the minimum liability amount that is stipulated in Article 425, Paragraph 1 of the Company Law.
		If both candidates are re-elected, the Company plans to extend the term of each of their limited liability contracts.
		(5) Incidence of inappropriate corporate operations at other companies for which the candidate was serving as an officer (during the past five years), acts which were done to prevent the occurrence of such incidences and acts which were done as measures taken after the occurrence of such incidence
		At The Senshu Ikeda Bank, Ltd., where Nobuo Kuroyanagi served as an Outside Director from June 2010 until June 2012, the following were discovered: an incidence of embezzlement of customers’ savings by a part-time worker in November 2010, an incidence of fraudulent withdrawal by an employee through the misuse of the maximum amount of overdraft in March 2011 and, finally, an incidence of embezzlement of customers’ savings by an employee in June 2011. While Nobuo Kuroyanagi was unaware of such facts in advance, he made various recommendations regarding legal compliance, at meetings of the board of directors, on a regular basis and, after the discovery of the aforesaid incidence, Nobuo Kuroyanagi has proactively advised the Company on the implementation of measures to prevent the recurrence of such incidence through the strengthening of the Company’s internal systems for checks, etc. and the enhancement of employee training, etc.
		(6) Number of years since the candidate initially assumed the position of Outside Director (up to the end of this general meeting of shareholders)

		Kensaku Hogen		Eight years
		Nobuo Kuroyanagi		Four years

 

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FOURTH ITEM: Election of One (1) Corporate Auditor

The term of office of the Corporate Auditor Hideki Okada is due to expire at the close of this meeting. It is proposed that one (1) Corporate Auditor be elected at this meeting. The name and particulars of the candidate for the position of Corporate Auditor are provided below. The Board of Corporate Auditors has consented to the submission of this item to this meeting.

 

Candidate No.		Name (Date of birth)		Resume, current position and important concurrent positions in other companies or organizations		Number of shares of the Company held		Special interest between the candidate and the Company
1.		Kunio Endo		Joined Honda in April 1981		4,000		None
		(August 23, 1957)		General Manager of Finance Division in Business
				Management Operations in April 2006
				General Manager of Accounting Division for Business
				Management Operations in April 2007
				President and Director of American Honda Finance Corp. in November 2010
				President and Director of Honda Canada Finance Inc. in November 2010

 

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Business Report for the 89th Fiscal Year

For the Period From: April 1, 2012 To: March 31, 2013

1. OUTLINE OF BUSINESS

(1) Review of Operations

Honda’s consolidated net sales and other operating revenue for the year amounted to ¥9,877.9 billion, an increase of 24.3% from the previous fiscal year, due primarily to increased revenue in automobile business operations as production recovered from the impact of the Great East Japan Earthquake and the floods in Thailand as well as favorable foreign currency translation effects.

Consolidated operating income for the year amounted to ¥544.8 billion, an increase of 135.5% from the previous fiscal year, due primarily to an increase in sales volume and model mix as well as cost reductions, despite increased SG&A and R&D expenses.

Consolidated income before income taxes and equity in income of affiliates for the year totaled ¥488.8 billion, an increase of 89.9% from the previous fiscal year.

Equity in income of affiliates amounted to ¥82.7 billion for the year, a decrease of 17.6% from the previous fiscal year.

Consolidated net income attributable to Honda Motor Co., Ltd. for the fiscal year ended March 31, 2013 totaled ¥367.1 billion, an increase of 73.6% from the previous fiscal year. Basic net income attributable to Honda Motor Co., Ltd. per common share for the fiscal year amounted to ¥203.71, an increase of ¥86.37 from ¥117.34 for the previous fiscal year.

Motorcycle Business

For the years ended March 31, 2012 and 2013

 

		Unit (thousands)
		Honda Group Unit Sales																Consolidated Unit Sales
		Year ended Mar. 31, 2012				Year ended Mar. 31, 2013				Change				(%)				Year ended Mar.31, 2012				Year ended Mar. 31, 2013				Change				(%)
Motorcycle business			15,061				15,494				433				2.9				8,650				9,510				860				9.9
Japan			220				217				-3				-1.4				220				217				-3				-1.4
North America			200				250				50				25.0				200				250				50				25.0
Europe			198				179				-19				-9.6				198				179				-19				-9.6
Asia			12,412				13,035				623				5.0				6,001				7,051				1,050				17.5
Other Regions			2,031				1,813				-218				-10.7				2,031				1,813				-218				-10.7

 

Note:

Honda Group Unit Sales is the total unit sales of completed products of Honda, its consolidated subsidiaries and its affiliates accounted for under the equity method. Consolidated Unit Sales is the total unit sales of completed products corresponding to consolidated net sales to external customers, which consists of unit sales of completed products of Honda and its consolidated subsidiaries.

With respect to Honda’s sales for the year by business segment, in motorcycle business operations, revenue from sales to external customers decreased 0.7%, to ¥1,339.5 billion from the previous fiscal year, due mainly to unfavorable foreign currency translation effects, despite increased consolidated unit sales. Operating income totaled ¥110.2 billion, a decrease of 22.7% from the previous fiscal year, due primarily to unfavorable foreign currency effects, despite an increase in cost reductions.

 

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Automobile Business

For the years ended March 31, 2012 and 2013

 

		Unit (thousands)
		Honda Group Unit Sales																Consolidated Unit Sales
		Year ended Mar. 31, 2012				Year ended Mar. 31, 2013				Change				(%)				Year ended Mar. 31, 2012				Year ended Mar. 31, 2013				Change				(%)
Automobile business			3,108				4,014				906				29.2				2,482				3,408				926				37.3
Japan			588				692				104				17.7				580				685				105				18.1
North America			1,323				1,731				408				30.8				1,323				1,731				408				30.8
Europe			158				171				13				8.2				158				171				13				8.2
Asia			837				1,122				285				34.1				219				523				304				138.8
Other Regions			202				298				96				47.5				202				298				96				47.5

 

Note:

Honda Group Unit Sales is the total unit sales of completed products of Honda, its consolidated subsidiaries and its affiliates accounted for under the equity method. Consolidated Unit Sales is the total unit sales of completed products corresponding to consolidated net sales to external customers, which consists of unit sales of completed products of Honda and its consolidated subsidiaries. Certain sales of automobiles that are financed with residual value type auto loans by our Japanese finance subsidiaries are accounted for as operating leases in conformity with U.S. generally accepted accounting principles and are not included in consolidated net sales to the external customers in our automobile business. As a result, they are not included in Consolidated Unit Sales, but are included in Honda Group Unit Sales of our automobile business.

In automobile business operations, revenue from sales to external customers increased 32.8%, to ¥7,709.2 billion, from the previous fiscal year due mainly to an increase in consolidated unit sales and favorable foreign currency translation effects. Operating income totaled ¥285.9 billion, an increase of ¥363.1 billion from the previous fiscal year, due primarily to an increase in sales volume and model mix as well as cost reductions, despite increased SG&A expenses and R&D expenses.

Financial Service Business

Revenue from customers in the financial services business increased 6.3%, to ¥548.5 billion, from the previous fiscal year due mainly to an increase in revenue from operating leases and favorable foreign currency translation effects. Operating income decreased 7.0%, to ¥158.1 billion, from the previous fiscal year due mainly to an increase of expenses for lease residual values.

Power Product and Other Businesses

For the years ended March 31, 2012 and 2013

 

		Unit (thousands)
		Honda Group Unit Sales/Consolidated Unit Sales
		Year ended Mar. 31, 2012				Year ended Mar. 31, 2013				Change				(%)
Power product business			5,819				6,071				252				4.3
Japan			392				314				-78				-19.9
North America			2,314				2,604				290				12.5
Europe			1,121				1,004				-117				-10.4
Asia			1,472				1,572				100				6.8
Other Regions			520				577				57				11.0

 

Note:

Honda Group Unit Sales is the total unit sales of completed products of Honda, its consolidated subsidiaries and its affiliates accounted for under the equity method. Consolidated Unit Sales is the total unit sales of completed products corresponding to consolidated net sales to external customers, which consists of unit sales of completed products of Honda and its consolidated subsidiaries. In power product business, there is no discrepancy between Honda Group Unit Sales and Consolidated Unit Sales for the year ended March 31, 2012 and for the year ended March 31, 2013, since no affiliate accounted for under the equity method was involved in the sale of Honda power products.

Revenue from sales to external customers in power product and other businesses increased 1.3%, to ¥280.6 billion, from the previous fiscal year, due mainly to an increase in consolidated unit sales of power products and favorable foreign currency translation effects, despite decreased revenue in other businesses. Honda reported an operating loss of ¥9.5 billion, a deterioration of ¥5.5 billion from the previous fiscal year due mainly to increased R&D expenses.

 

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¡ Net Sales Breakdown

 

		Yen (millions)
Business Segment		FY2012 From April 1, 2011 to March 31, 2012 (reference)				FY2013 From April 1, 2012 to March 31, 2013				Change from the previous fiscal year (reference)
														(%)
Grand Total			7,948,095				9,877,947				1,929,852				24.3
Japan			1,517,927				1,652,995				135,068				8.9
North America			3,480,732				4,586,412				1,105,680				31.8
Europe			515,739				534,517				18,778				3.6
Asia			1,458,799				2,093,034				634,235				43.5
Other Regions			974,898				1,010,989				36,091				3.7
Motorcycle Business (motorcycles only)			1,348,828				1,339,549				-9,279				-0.7
Japan (motorcycles only)			72,915				72,949				34				0.0
North America (motorcycles only)			97,306				112,176				14,870				15.3
Europe (motorcycles only)			96,146				86,424				-9,722				-10.1
Asia (motorcycles only)			579,562				667,473				87,911				15.2
Other Regions (motorcycles only)			502,899				400,527				-102,372				-20.4
Automobile Business			5,805,975				7,709,216				1,903,241				32.8
Japan			1,329,645				1,462,664				133,019				10.0
North America			2,855,683				3,905,276				1,049,593				36.8
Europe			355,963				388,464				32,501				9.1
Asia			836,301				1,385,449				549,148				65.7
Other Regions			428,383				567,363				138,980				32.4
Financial Services Business			516,148				548,506				32,358				6.3
Japan			28,926				34,282				5,356				18.5
North America			455,558				484,275				28,717				6.3
Europe			8,175				7,256				-919				-11.2
Asia			2,878				3,145				267				9.3
Other Regions			20,611				19,548				-1,063				-5.2
Power Product & Other Businesses			277,144				280,676				3,532				1.3
Japan			86,441				83,100				-3,341				-3.9
North America			72,185				84,685				12,500				17.3
Europe			55,455				52,373				-3,082				-5.6
Asia			40,058				36,967				-3,091				-7.7
Other Regions			23,005				23,551				546				2.4

 

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(2) Capital Expenditures

Capital expenditures during the fiscal year totaled ¥593,628 million. The breakdown of capital expenditures by business segment was as follows:

 

		Yen (millions), %
Business Segment		FY2012 (reference)				FY2013				Change in  amount (reference)				Change (%) (reference)
Motorcycle Business			62,075				73,513				11,438				18.4
Automobile Business			334,196				505,045				170,849				51.1
Financial Services Business			316				551				235				74.4
Power Product & Other Businesses			10,005				14,519				4,514				45.1
Total			406,592				593,628				187,036				46.0
Operating Lease Assets			683,767				793,118				109,351				16.0

Note: Intangible assets are not included in the table above.

In addition to investments for new model introductions, the Company’s capital investments were predominantly utilized for expanding, rationalizing and renovating manufacturing facilities as well as for expanding sales and R&D facilities.

(3) Liquidity and Capital Resources

Funds for financing capital investments in Honda’s manufacturing and sales businesses are provided mainly from cash generated by operating activities, bank loans and the issuance of commercial paper. The outstanding balance of funds for Honda’s manufacturing and sales businesses at the end of the fiscal year under review was ¥540.2 billion.

Honda funds its financial programs for customers and dealers primarily from medium-term notes, bank loans, securitization of monetary assets, commercial paper, corporate bonds and from operating companies. The outstanding balance of funds for Honda’s financial services subsidiaries at the end of the fiscal year under review was ¥4,863.5 billion.

(4) Preparing for the Future

Honda aims to achieve global growth by further encouraging and strengthening innovation and creativity and creating quality products that please the customers and exceed their expectations.

Honda will focus all its energies on the tasks set out below, aiming to get back on a growth trajectory as it pursues the vision toward 2020 of “providing good products to customers with speed, affordability and low CO₂ emissions.”

 

1.	Research and Development

In connection with its efforts to develop the most effective safety and environmental technologies, Honda will continue to be innovative in advanced technology and products. Honda aims to create and introduce new value-added products to quickly respond to specific needs in various markets around the world. Honda will also continue its efforts to conduct research on experimental technologies for the future.

 

2.	Production Efficiency

Honda will establish and enhance efficient and flexible production systems at its global production bases and supply high quality products, with the aim of meeting the needs of its customers in each region. Learning from the experience of disasters such as the Great East Japan Earthquake and the Thai floods, Honda will work at improving its global supply chain, implementing disaster prevention measures at each place of business and devising more effective business continuity plans (BCPs).

 

3.	Sales Efficiency

Honda will remain proactive in its efforts to expand product lines through the innovative use of IT and will show its continued commitment to different customers throughout the world by upgrading its sales and service structure.

 

4.	Product Quality

In response to increasing customer demand, Honda will upgrade its quality control by enhancing the functions of and coordination among the development, purchasing, production, sales and service departments.

 

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5.	Safety Technologies

Honda is working to develop safety technologies that enhance accident prediction and prevention, technologies to help reduce the risk of injuries to passengers and pedestrians from car accidents and technologies that enhance compatibility between large and small vehicles, as well as expand its lineup of products incorporating such technologies. Honda will reinforce and continue to advance its contribution to traffic safety in motorized societies in Japan and abroad. Honda also intends to remain active in a variety of traffic safety programs, including advanced driving and motorcycling training programs provided by local dealerships.

 

6.	The Environment

Honda will step up its efforts to create better, cleaner and more fuel-efficient engine technologies and to further improve recyclables throughout its product lines. Honda has now set a target to reduce CO₂ emissions from its global products by 30% by the end of 2020 compared to year 2000 levels. In addition to reducing CO₂ emissions during production and its supply chain, Honda will strengthen its efforts to realize reductions in CO₂ emissions through its entire corporate activities. Furthermore, Honda will strengthen its efforts in advancing technologies in the area of total energy management, to reduce CO₂ emissions through mobility and people’s everyday lives.

 

7.	Continuing to Enhance Honda’s Social Reputation and Communication with the Community

In addition to continuing to provide products incorporating Honda’s advanced safety and environmental technologies, Honda will continue striving to enhance its social reputation by, among other things, strengthening its corporate governance, compliance and risk management as well as participating in community activities and making philanthropic contributions.

Through these company-wide activities, Honda will strive to be a company that its shareholders, investors, customers and society want to exist.

(5) Employees of the Group and the Parent Company

(a) Honda Employees

 

Business Segment		Number of Employees
		FY2012 (reference)								FY2013								Change (reference)
Motorcycle Business			39,954				(14,540	)			40,430				(14,404	)			476				(-136	)
Automobile Business			134,357				(10,405	)			138,443				(13,052	)			4,086				(2,647	)
Financial Services Business			2,145				(95	)			2,157				(113	)			12				(18	)
Power Product & Other Businesses			10,638				(2,924	)			9,308				(3,354	)			-1,330				(430	)
Total			187,094				(27,964	)			190,338				(30,923	)			3,244				(2,959	)
(b) Employees of the Parent Company
		FY2012 (reference)								FY2013								Change (reference)
Number of employees			24,888				(2,909	)			23,983				(4,261	)			-905				(1,352	)
Average age			43.6								44.3								0.7
Average number of years employed by the Company			22.5								23.0								0.5

 

Note:

The number of employees of the Honda Group and the Company refers to full-time employees. The average number of temporary employees is shown in parentheses.

 

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2. COMMON STOCK

 

(1) Total Number of Shares Issued		1,811,428,430 shares
(2) Number of Stockholders		221,028
(3) Principal Stockholders

 

Name		Number of Shares Held (thousands)		Percentage as against  Total Shares Issued (%)
Japan Trustee Services Bank, Ltd. (Trust Account)		126,568		7.0
The Master Trust Bank of Japan, Ltd. (Trust Account)		83,741		4.6
Meiji Yasuda Life Insurance Company		51,199		2.8
Moxley & Co. LLC		50,169		2.8
Tokio Marine & Nichido Fire Insurance Co., Ltd.		44,917		2.5
JPMorgan Chase Bank 380055		41,688		2.3
SSBT OD05 OMNIBUS ACCOUNT–TREATY CLIENTS		38,029		2.1
The Chase Manhattan Bank, N.A. London, S.L. Omnibus Account		36,896		2.0
The Bank of Tokyo-Mitsubishi UFJ, Ltd.		36,686		2.0
Nippon Life Insurance Company		34,700		1.9

 

Notes:		1.		The number of shares described above rounds off figures of less than 1,000 shares.
		2.		Ownership percentages are calculated using the total number of shares issued minus treasury stock (9,131 thousand shares).
		3.		Moxley & Co. LLC is an official holder of stock of JPMorgan Chase Bank, which is a depositary institution for American Depositary Receipts (ADRs).

3. STOCK WARRANTS

No relevant information

 

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4. CORPORATE OFFICERS

(1) Directors and Corporate Auditors

 

Title		Name		Area of Responsibility or Principal Occupations
President, Chief Executive Officer and Representative Director		Takanobu Ito		Chief Operating Officer for Automobile Operations
Executive Vice President, Executive Officer and Representative Director		Tetsuo Iwamura		Chief Operating Officer for Regional Operations (North America) President and Director of Honda North America, Inc. President and Director of American Honda Motor Co., Inc.
Senior Managing Officer and Director		Tatsuhiro Oyama		Chief Operating Officer for Motorcycle Operations Chief Officer of Driving Safety Promotion Center
Senior Managing Officer and Director		Fumihiko Ike		Chief Operating Officer for Business Management Operations Chief Operating Officer for IT Operations
				Risk Management Officer
				Responsible for Government & Industrial Affairs
Senior Managing Officer and Director		Tomohiko Kawanabe		Responsible for Quality, Certification and Regulation Compliance
Senior Managing Officer and Director		Takashi Yamamoto		Chief Operating Officer for Production Operations
Senior Managing Officer and Director		Yoshiharu Yamamoto		President, Chief Executive Officer and Director of Honda R&D Co., Ltd.
Director		Kensaku Hogen
Director		Nobuo Kuroyanagi		Advisor of The Bank of Tokyo-Mitsubishi UFJ, Ltd.
				Outside Director of Isetan Mitsukoshi Holdings Ltd.
				Outside Director of Mitsubishi Research Institute, Inc.
				Outside Director of Tokio Marine & Nichido Fire Insurance Co., Ltd.
				Outside Corporate Auditor of Mitsubishi Heavy Industries, Ltd.
Director and Advisor		Takeo Fukui
Operating Officer and Director		Masahiro Yoshida		Chief Operating Officer for Business Support Operations
				Compliance Officer
Operating Officer and Director		Yuji Shiga		Chief Operating Officer for Power Product Operations
Corporate Auditor (Full-time)		Masaya Yamashita
Corporate Auditor (Full-time)		Hideki Okada
Corporate Auditor		Hirotake Abe		Certified Public Accountant
				Outside Corporate Auditor of ITC NETWORKS CORPORATION
				Outside Corporate Auditor of NIPPON STEEL & SUMITOMO
				METAL CORPORATION
Corporate Auditor		Tomochika Iwashita		Outside Corporate Auditor of DCM Holdings Co., Ltd.
Corporate Auditor		Toshiaki Hiwatari		Lawyer
				Outside Director of Nomura Securities Co., Ltd.
				Outside Corporate Auditor of TOYO KANETSU K.K.
				Advisor of TMI Associates

 

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Notes:		1.		Directors Kensaku Hogen and Nobuo Kuroyanagi are Outside Directors in accordance with Article 2-15 of the Company Law.
		2.		Corporate Auditors Hirotake Abe, Tomochika Iwashita and Toshiaki Hiwatari are Outside Corporate Auditors in accordance with Article 2-16 of the Company Law.
		3.		Corporate Auditor Hideki Okada has considerable operating experience regarding financial and accounting departments in the Company and its subsidiaries. In addition, Corporate Auditor Hirotake Abe has extensive knowledge and experience as a certified public accountant. Together, Mr. Okada and Mr. Abe have abundant knowledge related to finance and accounting.
		4.		The Company has appointed Kensaku Hogen as an independent (outside) director and Hirotaka Abe and Toshiaki Hiwatari as independent (outside) corporate auditors as provided for by each of the rules of the Tokyo Stock Exchange and the Osaka Securities Exchange and reported their appointment to each of these stock exchanges.
		5.		The Bank of Tokyo-Mitsubishi UFJ, Ltd., is one of the Company’s principal shareholders, and the Company has transactions relationships with the Bank of Tokyo-Mitsubishi UFJ, including deposits and foreign exchange. In addition, the Tokio Marine & Nichido Fire Insurance Co., Ltd., is one of the Company’s principal shareholders, and the Company has transactions relationships with Tokio Marine & Nichido Fire Insurance, including insurance contracts. The Company has transaction relationships with NIPPON STEEL & SUMITOMO METAL CORPORATION and purchases steel and related products from that company. The Company also has transaction relationships with Mitsubishi Heavy Industries, Ltd., and purchases automobile parts from the company. The Company has no other special capital or transactions relationships with other companies.
		6.		The Company has introduced the Operating Officer System to strengthen operations in regions and local workplaces and implement quick and appropriate decisions. The Operating Officers of the Company (excluding Operating Officers who also hold the position of Director) are as follows: (As of March 31, 2013)

 

 

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		7.		As of April 1, 2013, the following changes in Representative Director and Operating Officers were announced by the Company.

 

 

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(2) Remuneration of Directors and Corporate Auditors, Etc.

 

		Yen (millions)
Item		Directors (Outside Directors)								Corporate Auditors (Outside Corporate Auditors)								Total (Outside Directors  and Corporate Auditors)
		Number of persons				Value of payments				Number of persons				Value of payments				Number of persons				Value of payments
Remuneration			13 (2	)			543 (23	)			7 (4	)			181 (47	)			20 (6	)			724 (71	)
Bonuses			12 (2	)			248 (7	)			—   (—	)			—   (—	)			12 (2	)			248 (7	)
Total							792 (30	)							181 (47	)							973 (78	)

 

Notes:		1.		Remuneration is limited to ¥1,300 million per month for Directors and ¥270 million per month for Corporate Auditors.
		2.		“Remuneration” shown in the table above is the amount of remuneration that the Company paid to its Directors, Corporate Auditors as well as its Outside Directors and Corporate Auditors during the fiscal year under review. This amount includes remuneration paid to two Directors and two Corporate Auditors who resigned as of the closing of the 88th Ordinary General Meeting of Shareholders that was held on June 21, 2012.
		3.		Bonuses to directors are included in the previously mentioned maximum amount for compensation to Directors, and the amount shown was decided by the meeting of the Board of Directors held on April 26, 2013.

(3) Principal Activities of Outside Corporate Officers during the Fiscal Year under Review

(a) Principal Activities during the Fiscal Year under Review

 

Post		Name		Attendance Record		Principal Activities during the Fiscal Year under Review
Director		Kensaku Hogen		Attended all 10 meetings of the Board of Directors		Based on abundant experience and considerable knowledge regarding international diplomacy, he provides advice regarding the Company’s operations from an objective and highly sophisticated perspective.
Director		Nobuo Kuroyanagi		Attended 9 of 10 meetings of the Board of Directors		Based on abundant experience and considerable knowledge regarding corporate management, he provides advice regarding the Company’s operations from an objective and highly sophisticated perspective.
Corporate Auditor		Hirotake Abe		Attended 9 of 10 meetings of the Board of Directors Attended all 10 meetings of the Board of Auditors		Based on abundant experience and considerable knowledge as a certified public accountant, he conducts auditing activities from a broad and sophisticated perspective.
Corporate Auditor		Tomochika Iwashita		Attended all 10 meetings of the Board of Directors Attended all 10 meetings of the Board of Auditors		Based on abundant experience and considerable knowledge regarding corporate management, he conducts auditing activities from a broad and sophisticated perspective.
Corporate Auditor		Toshiaki Hiwatari		Attended all 8 meetings of the Board of Directors Attended all 7 meetings of the Board of Auditors		Based on abundant experience and considerable knowledge as a legal affairs specialist, he conducts auditing activities from a broad and sophisticated perspective.

All Outside Directors have been selected based on their abundant experience and considerable knowledge, and they provide necessary comments during the deliberation of proposals.

 

Note:

The record of meetings attended by auditor Toshiaki Hiwatari is based on attendance at the meetings of the Board of Directors and the Board of Auditors following their election on June 21, 2012.

 

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(b) Summary of Content of Liability Limitation Contracts

The Company has entered into liability limitation contracts with all Outside Directors and Outside Corporate Auditors based on the provisions of Article 427, Paragraph 1 of the Company Law and of the Company’s Articles of Incorporation, to the effect of limiting the liability for damages provided for in Article 423, Paragraph 1 of the Company Law to the minimum liability amount provided for in Article 425, Paragraph 1 of the Company Law.

5. FINANCIAL AUDIT COMPANY

(1) Name of Financial Audit Company

KPMG AZSA LLC

(2) Financial Audit Company Remuneration, Etc., for the Fiscal Year under Review

 

(a)		Remuneration, etc.		¥	422 million
(b)		Total profit on monetary and other assets to be paid by the Company and its subsidiaries		¥	536 million

 

Notes:		1.		The audit contract between the Company and its financial audit company does not itemize remuneration for auditing work based on the Company Law of Japan, auditing work based on the Financial Instruments and Exchange Law of Japan and auditing work based on the Securities Exchange Law of the United States. Because of this and because it is impractical to itemize these categories of remuneration, the figure shown in line item (a) above is a total figure.
		2.		In addition to the services specified in Article 2, Paragraph 1 of the Japanese Certified Public Accountants Law, the Company paid the independent accounting firm for advisory and other services related to the application of the International Financial Reporting Standards.
		3.		Of the Company’s principal subsidiaries, Yachiyo Industry Co., Ltd., as well as overseas subsidiaries are audited by financial audit companies other than the financial audit company employed by the Company.

(3) Policy Regarding Dismissal or Non-Re-Employment of Financial Audit Company

In the case that the Company’s financial audit company was recognized to have committed a serious legal infraction, sharply lowered the quality of its audit services or otherwise shown grounds for determining it was inappropriate for employment as a financial audit company, the Company has the policy of, in accordance with procedures stipulated in the Company Law, dismissing its financial audit company or submitting resolutions proposing the financial audit company’s dismissal or non-re-employment to the general meeting of shareholders.

 

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6. THE COMPANY’S SYSTEMS AND POLICIES

Systems to Ensure Directors’ Execution of Duties Complies with Laws and Regulations and the Articles of Incorporation and Other Systems to Ensure the Appropriateness of the Company’s Operations

The Company’s Board of Directors made the following decisions regarding enhancements in the Company’s Internal Control Systems.

 

1.	Systems for ensuring that the execution of duties by directors and employees complies with the law and the Company’s Articles of Incorporation

The Company has prepared the Honda Conduct Guidelines which provide for conformity with applicable laws and internal rules and regulations as guidelines for conduct which should be shared by the Company’s management and employees and implements measures to ensure that all management personnel and employees are made aware of and follow these guidelines. The Company establishes its compliance system such as by appointing a Compliance Officer, who is a director in charge of compliance-related initiatives and by establishing the Business Ethics Committee and the Business Ethics Improvement Proposal Line.

 

2.	Systems related to retention and management of information on execution of duties by directors

Information related to the execution of duties by directors, including minutes of Board of Directors meetings and other important meetings, is retained and stored appropriately in accordance with the Company’s document management policy.

 

3.	Regulations and other systems related to risk management

Important management issues are taken up by the Board of Directors, Executive Council and/or Regional Operating Boards, which discuss them in accordance with established rules of procedure, assess associated risks and make decisions after due consideration.

A Risk Management Officer is appointed as a director in charge of promoting risk management initiatives. The Risk Management Officer playing the main role, risk information is collected and evaluated (of these risks, significant risk is promptly reported to the division in charge along with instructions on the countermeasures, and its progress is then monitored). For large-scale disasters requiring Company-level crisis management, the Company organizes the system, such as by establishing the Corporate Crisis Management Policy and Honda Crisis Response Rules.

 

4.	Systems for ensuring that the execution of duties by directors is being conducted efficiently

The Company has established a system for operating its organizational units that reflects its fundamental corporate philosophy. For example, separate headquarters have been set up for each region, business and function, and an operating officer has been assigned to each headquarters and main division. In addition, we have implemented a system that enables prompt and appropriate decision making by having the Executive Council and Regional Operating Boards deliberate on important management issues.

To conduct management efficiently and effectively, business plans are prepared on an annual basis and for the medium term, and measures are taken to share these plans.

 

5.	Systems for ensuring that the corporate group, comprised of the Company and its subsidiaries, conducts business activities appropriately

The Company and its subsidiaries share the Honda Conduct Guidelines and basic policies regarding corporate governance. In addition, each subsidiary works to promote activities that are in compliance with the laws of countries in which they operate and practices observed in their respective industries as they endeavor to enhance corporate governance. The Company examines the state of internal control in each subsidiary, and confirms how the Internal Control Systems are established and operated, through enlightenment efforts with subsidiary directors and liaising with the compliance officer of each subsidiary. As for the business execution of the subsidiary, the Company helps with the establishment of account settlement rules. When it comes to important management issues, the Company requests the subsidiary to obtain prior approval from the Company or to report to the Company according to its internal rules. The business control division of the Company regularly receives reports on the subsidiary’s business plans to confirm the appropriateness of the operation. The Business Ethics Office of the Company works with the proposal line of the subsidiary in an effort to support an appropriate and swift response to a risk or problem. The Audit Office, an independent unit supervising operations and directly reporting to the president and CEO, effectively supervises the state of work in progress at each division and subsidiary and works with the internal supervision division of subsidiaries, aiming at the completion of the internal supervision system in the Honda Group.

In the case of a company accounted for by the equity method, the Company works to improve corporate governance throughout the Group by seeking the understanding and cooperation of such companies with Honda’s basic corporate governance policies.

 

6.	Provision of employees when assistance is requested by corporate auditors and independence of such employees from directors The Corporate Auditors’ Office has been established as a supportive staff organization directly under the Board of Corporate Auditors to provide support to corporate auditors.

 

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7.	Systems for ensuring directors and employees report to corporate auditors and other systems related to the reporting to corporate auditors

In addition to regularly reporting the state of operations at the Company and its subsidiaries and the state of implementation and operation of internal control systems, including those related to compliance and risk management, any information that may have a significant impact on the Company’s operations is also reported to the corporate auditors.

 

8.	Other systems for ensuring the effectiveness of audits by corporate auditors

Corporate auditors work closely with the Audit Office, which serves as the Company’s internal audit department, to conduct business audits of the Company and its subsidiaries. Additionally, corporate auditors attend the Executive Council and other important meetings.

7. POLICY REGARDING DECISIONS FOR DISTRIBUTION OF DIVIDENDS, ETC.

The Company strives to carry out its operations worldwide from a global perspective and to increase its corporate value. With respect to the redistribution of profits to our shareholders, which we consider to be one of the most important management issues, the Company’s basic policy for dividends is to make distributions after taking into account its long-term consolidated earnings performance.

The Company will also acquire its own shares at the optimal timing with the goal of improving efficiency of the Company’s capital structure and implementing a flexible capital policy. The present goal is to maintain a shareholders’ return ratio (i.e., the ratio of the total of the dividend payment and the repurchase of the Company’s own shares to consolidated net income attributable to Honda Motor Co., Ltd.) of approximately 30%. Retained earnings will be allocated toward financing R&D activities that are essential for the future growth of the Company and capital expenditures and investment programs that will expand its operations for the purpose of improving business results and strengthening the Company’s financial condition.

The Company plans to distribute year-end cash dividends of ¥19 per share for the year ended March 31, 2013. As a result, total cash dividends for the year ended March 31, 2013, together with the first quarter cash dividends of ¥19, the second quarter cash dividends of ¥19 and the third quarter cash dividends of ¥19, are planned to be ¥76 per share, an increase of ¥16 per share from the annual dividends paid for the year ended March 31, 2012.

Also, please note that the year-end cash dividends for the year ended March 31, 2013 is a matter to be resolved at the general meeting of shareholders.

• Trends in Dividends (reference)

 

 

Yen

FY2010

FY2011

FY2012

FY2013

Classification

First quarter

Second quarter

Third quarter

Year- end

Total

First quarter

Second quarter

Third quarter

Year- end

Total

First quarter

Second quarter

Third quarter

Year- end

Total

First quarter

Second quarter

Third quarter

Year- end

Total

Dividends

8

8

10

12

38

12

12

15

15

54

15

15

15

15

60

19

19

19

19 (planned)

76 (planned)

 

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Consolidated Balance Sheets

 

		Yen (millions)
As of March 31, 2012 and 2013		2012				2013
ASSETS
Current assets:
Cash and cash equivalents		¥	1,247,113			¥	1,206,128
Trade accounts and notes receivable			812,155				1,005,981
Finance subsidiaries–receivables, net			1,081,721				1,243,002
Inventories			1,035,779				1,215,421
Deferred income taxes			188,755				234,075
Other current assets			373,563				418,446
Total current assets			4,739,086				5,323,053
Finance subsidiaries–receivables, net			2,364,393				2,788,135
Investments and advances:
Investments in and advances to affiliates			434,744				459,110
Other, including marketable equity securities			188,863				209,680
Total investments and advances			623,607				668,790
Property on operating leases:
Vehicles			1,773,375				2,243,424
Less accumulated depreciation			300,618				400,292
Net property on operating leases			1,472,757				1,843,132
Property, plant and equipment, at cost:
Land			488,265				515,661
Buildings			1,492,823				1,686,638
Machinery and equipment			3,300,727				3,832,090
Construction in progress			191,107				288,073
			5,472,922				6,322,462
Less accumulated depreciation and amortization			3,499,464				3,922,932
Net property, plant and equipment			1,973,458				2,399,530
Other assets			614,298				612,717
Total assets		¥	11,787,599			¥	13,635,357

 

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		Yen (millions)
		2012				2013
LIABILITIES AND EQUITY
Current liabilities:
Short-term debt		¥	964,848			¥	1,238,297
Current portion of long-term debt			911,395				945,046
Trade payables:
Notes			26,499				31,354
Accounts			942,444				956,660
Accrued expenses			489,110				593,570
Income taxes payable			24,099				48,454
Other current liabilities			221,364				283,304
Total current liabilities			3,579,759				4,096,685
Long-term debt, excluding current portion			2,235,001				2,710,845
Other liabilities			1,454,937				1,630,085
Total liabilities			7,269,697				8,437,615
Equity:
Honda Motor Co., Ltd. stockholders’ equity:
Common stock			86,067				86,067
Capital surplus			172,529				171,117
Legal reserves			47,184				47,583
Retained earnings			5,758,641				5,995,626
Accumulated other comprehensive income (loss), net			(1,646,078	)			(1,236,792	)
Treasury stock			(26,117	)			(26,124	)
Total Honda Motor Co., Ltd. stockholders’ equity			4,392,226				5,037,477
Noncontrolling interests			125,676				160,265
Total equity			4,517,902				5,197,742
Commitments and contingent liabilities
Total liabilities and equity		¥	11,787,599			¥	13,635,357

 

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Consolidated Statements of Income

 

		Yen (millions)
Years ended March 31, 2012 and 2013		2012				2013
Net sales and other operating revenue		¥	7,948,095			¥	9,877,947
Operating costs and expenses:
Cost of sales			5,919,633				7,345,162
Selling, general and administrative			1,277,280				1,427,705
Research and development			519,818				560,270
Total operating costs and expenses			7,716,731				9,333,137
Operating income			231,364				544,810
Other income (expenses):
Interest income			33,461				25,742
Interest expense			(10,378	)			(12,157	)
Other, net			2,956				(69,504	)
Total other income (expenses)			26,039				(55,919	)
Income before income taxes and equity in income of affiliates			257,403				488,891
Income tax expense:
Current			86,074				125,724
Deferred			49,661				53,252
Total income tax expense			135,735				178,976
Income before equity in income of affiliates			121,668				309,915
Equity in income of affiliates			100,406				82,723
Net income			222,074				392,638
Less: Net income attributable to noncontrolling interests			(10,592	)			25,489
Net income attributable to Honda Motor Co., Ltd.		¥	211,482			¥	367,149
		Yen
Basic net income attributable to Honda Motor Co., Ltd. per common share		¥	117.34			¥	203.71

 

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Consolidated Statements of Changes in Equity

 

		Yen (millions)
		Common stock				Capital surplus				Legal reserves				Retained earnings				Accumulated other comprehensive income (loss), net				Treasury stock				Total Honda Motor Co., Ltd. stockholders’ equity				Non- controlling interests				Total equity
Balance at March 31, 2011		¥	86,067			¥	172,529			¥	46,330			¥	5,656,151			¥	(1,495,380	)		¥	(26,110	)		¥	4,439,587			¥	132,937			¥	4,572,524
Transfer to legal reserves											854				(854	)											—								—
Dividends paid to Honda Motor Co., Ltd. shareholders															(108,138	)											(108,138	)							(108,138	)
Dividends paid to noncontrolling interests																															(15,763	)			(15,763	)
Capital transactions and others																															(783	)			(783	)
Comprehensive income (loss):
Net income															211,482												211,482				10,592				222,074
Other comprehensive income (loss), net of tax
Adjustments from foreign currency translation																			(116,812	)							(116,812	)			(1,323	)			(118,135	)
Unrealized gains (losses) on marketable securities, net																			5,899								5,899				(87	)			5,812
Unrealized gains (losses) on derivative instruments, net																			(29	)							(29	)							(29	)
Pension and other postretirement benefits adjustments																			(39,756	)							(39,756	)			103				(39,653	)
Total comprehensive income																											60,784				9,285				70,069
Purchase of treasury stock																							(8	)			(8	)							(8	)
Reissuance of treasury stock																							1				1								1
Balance at March 31, 2012			86,067				172,529				47,184				5,758,641				(1,646,078	)			(26,117	)			4,392,226				125,676				4,517,902
Transfer to legal reserves											399				(399	)											—								—
Dividends paid to Honda Motor Co., Ltd. shareholders															(129,765	)											(129,765	)							(129,765	)
Dividends paid to noncontrolling interests																															(6,250	)			(6,250	)
Capital transactions and others							(1,412	)																			(1,412	)			1,189				(223	)
Comprehensive income (loss):
Net income															367,149												367,149				25,489				392,638
Other comprehensive income (loss), net of tax
Adjustments from foreign currency translation																			415,462								415,462				15,350				430,812
Unrealized gains (losses) on marketable securities, net																			7,933								7,933				51				7,984
Unrealized gains (losses) on derivative instruments, net																			(52	)							(52	)							(52	)
Pension and other postretirement benefits adjustments																			(14,057	)							(14,057	)			(1,240	)			(15,297	)
Total comprehensive income																											776,435				39,650				816,085
Purchase of treasury stock																							(8	)			(8	)							(8	)
Reissuance of treasury stock																							1				1								1
Balance at March 31, 2013		¥	86,067			¥	171,117			¥	47,583			¥	5,995,626			¥	(1,236,792	)		¥	(26,124	)		¥	5,037,477			¥	160,265			¥	5,197,742

 

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Consolidated Statements of Cash Flows

 

		Yen (millions)
Years ended March 31, 2012 and 2013		2012				2013
Cash flows from operating activities:
Net income		¥	222,074			¥	392,638
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation excluding property on operating leases			345,105				335,536
Depreciation of property on operating leases			209,762				254,933
Deferred income taxes			49,661				53,252
Equity in income of affiliates			(100,406	)			(82,723	)
Dividends from affiliates			95,106				84,705
Provision for credit and lease residual losses on finance subsidiaries–receivables			13,032				10,059
Impairment loss on investments in securities			1,062				—
Damaged and impairment loss on long-lived assets and goodwill excluding property on operating leases			10,590				—
Impairment loss on property on operating leases			1,514				4,773
Loss (gain) on derivative instruments, net			(1,847	)			35,027
Decrease (increase) in assets:
Trade accounts and notes receivable			(35,475	)			(90,495	)
Inventories			(154,222	)			(74,662	)
Other current assets			2,883				2,019
Other assets			(24,000	)			(27,243	)
Increase (decrease) in liabilities:
Trade accounts and notes payable			242,814				(95,192	)
Accrued expenses			(25,718	)			52,021
Income taxes payable			(7,568	)			21,764
Other current liabilities			(12,395	)			(4,489	)
Other liabilities			(14,744	)			(4,384	)
Other, net			(55,690	)			(66,795	)
Net cash provided by operating activities			761,583				800,744
Cash flows from investing activities:
Increase in investments and advances			(23,129	)			(34,426	)
Decrease in investments and advances			14,647				19,850
Payment for purchase of available-for-sale securities			(1,784	)			(5,642	)
Proceeds from sales of available-for-sale securities			1,879				1,347
Payment for purchase of held-to-maturity securities			(26,078	)			(5,186	)
Proceeds from redemption of held-to-maturity securities			47,193				17,005
Proceeds from sales of investments in affiliates			9,957				—
Capital expenditures			(397,218	)			(626,879	)
Proceeds from sales of property, plant and equipment			23,260				44,182
Proceeds from insurance recoveries for damaged property, plant and equipment			16,217				9,600
Acquisitions of finance subsidiaries–receivables			(1,784,720	)			(1,951,802	)
Collections of finance subsidiaries–receivables			1,765,204				1,833,669
Purchase of operating lease assets			(683,767	)			(793,118	)
Proceeds from sales of operating lease assets			365,270				418,086
Other, net			—				3,558
Net cash used in investing activities			(673,069	)			(1,069,756	)
Cash flows from financing activities:
Proceeds from short-term debt			6,778,336				6,775,636
Repayment of short-term debt			(6,882,932	)			(6,621,897	)
Proceeds from long-term debt			1,151,971				1,101,469
Repayment of long-term debt			(967,588	)			(970,702	)
Dividends paid			(108,138	)			(129,765	)
Dividends paid to noncontrolling interests			(15,763	)			(6,250	)
Sales (purchases) of treasury stock, net			(7	)			(7	)
Other, net			(24,109	)			(28,917	)
Net cash provided by (used in) financing activities			(68,230	)			119,567
Effect of exchange rate changes on cash and cash equivalents			(52,150	)			108,460
Net change in cash and cash equivalents			(31,911	)			(40,985	)
Cash and cash equivalents at beginning of the year			1,279,024				1,247,113
Cash and cash equivalents at end of the period		¥	1,247,113			¥	1,206,128

 

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The Notes to the Consolidated Statutory Report

Significant Accounting Policies:

 

1.	Consolidated subsidiaries

Number of consolidated subsidiaries: 369

Corporate names of principal consolidated subsidiaries:

American Honda Motor Co., Inc., Honda of America Mfg., Inc., Honda Canada Inc., Honda R&D Co., Ltd., American Honda

Finance Corporation

 

2.	Affiliated companies

Number of affiliated companies: 86

Corporate names of major affiliated companies accounted for under the equity method:

Dongfeng Honda Automobile Co., Ltd., Guangqi Honda Automobile Co., Ltd., P.T. Astra Honda Motor

 

3.	Changes of consolidated subsidiaries and affiliated companies

Consolidated subsidiaries:

Newly formed consolidated subsidiaries: 16

Reduced through reorganization: 25

Affiliated companies:

Newly formed affiliated companies: 0

Reduced through reorganization: 2

 

4.

The Company prepares its consolidated financial statements in conformity with accounting principles generally accepted in the United States of America in accordance with Article 120-2 (1) of the Companies Act. The Company omits some disclosure items and notes in accordance with the second sentence of Article 120-2 (1) of the Companies Act.

 

5.	Inventories are stated at the lower of cost, determined principally by the first-in, first-out method, or market.

 

6.

Honda classifies its debt and equity securities in the following categories: available-for-sale, trading or held-to-maturity. Debt securities that are classified as “held-to-maturity” securities are reported at amortized cost. Debt and equity securities classified as “trading” securities are reported at fair value, with unrealized gains and losses included in earnings. Other marketable debt and equity securities are classified as “available-for-sale” securities and are reported at fair value, with unrealized gains or losses, net of deferred taxes, included in accumulated other comprehensive income (loss) in the stockholders’ equity section of the consolidated balance sheets.

 

7.	Goodwill, all of which is allocated to Honda’s reporting units, is not amortized but instead is tested for impairment at least annually.

 

8.	Depreciation of property, plant and equipment is calculated principally by the straight-line method based on estimated useful lives and salvage values of the respective assets.

Previously, Honda used principally the declining-balance method for calculating the depreciation of property, plant and equipment, excluding property on operating leases. In recent years, because sales of global strategic product models are increasing, Honda has been enhancing its production systems and the versatility of production equipment to have better flexibility to meet changes in global customer demand. Further, Honda has resumed more normalized capital expenditures which Honda had previously held down due to financial crisis beginning in the fiscal year ended March 31, 2009. Effective April 1, 2012, Honda changed to the straight-line method of depreciation because management believes it better reflects the future economic benefit from the usage of property, plant and equipment under this more flexible and versatile production arrangement. The effect of the change in depreciation method is recognized prospectively as a change in accounting estimate in accordance with the FASB Accounting Standards Codification (ASC) 250 “Accounting Changes and Error Corrections”.

As a result of the change in depreciation method, depreciation expense for the year ended March 31, 2013 decreased by approximately ¥56,300 million. Net income attributable to Honda Motor Co., Ltd. and Basic net income attributable to Honda Motor Co., Ltd. per common share for the year ended March 31, 2013 increased by approximately ¥35,746 million and ¥19.83.

 

9.	Honda applies hedge accounting for certain foreign currency forward contracts related to forecasted foreign currency transactions between the Company and its subsidiaries.

 

10.

The allowance for credit losses on finance subsidiaries–receivables is maintained at an amount management deems adequate to cover estimated losses on finance receivables. The allowance is based on management’s evaluation of many factors, including current economic trends, industry experience, inherent risks in the portfolio and the borrower’s ability to pay.

 

11.

The allowance for losses on lease residual values is maintained at an amount management deems adequate to cover estimated losses on the uninsured portion of the vehicles’ lease residual values. The allowance is also based on management’s evaluation of many factors, including current economic conditions, industry experience and the finance subsidiaries’ historical experience with residual value losses.

 

12.

Provisions for retirement benefits are provided based on the fair value of both projected benefit obligations and plan assets at the end of the fiscal year to cover for employees’ retirement benefits. The Company recognizes its overfunded or underfunded status for the defined benefit postretirement plan as an asset or liability in its consolidated balance sheets and recognizes changes in the funded status in accumulated comprehensive income (loss), net of taxes. Prior service cost (benefit) is amortized by using the straight-line method and the estimated average remaining service years of employees. Actuarial loss is amortized if unrecognized net gain or loss exceeds ten percent of the greater of the projected benefit obligation or the market-related value of plan assets by using the straight-line method and the estimated average remaining service years of employees.

 

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13.

Estimated warranty expenses are provided based on historical warranty claim experience with consideration given to the expected level of future warranty costs as well as current information on repair costs. Included in warranty expense accruals are costs for general warranties on vehicles Honda sells and product recalls.

 

14.	Honda’s common stock-to-ADS exchange ratio is one share of common stock to one ADS.

Changes in Accounting Policy

Adoption of New Accounting Pronouncements

In June 2011, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2011-05 “Presentation of Comprehensive Income”, which amends the FASB Accounting Standards Codification (ASC) 220 “Comprehensive Income”. This amendment requires reporting entities to report other comprehensive income as components of comprehensive income either in a single continuous statement of comprehensive income or in two separate but consecutive statements and is effective retrospectively.

In December 2011, the FASB issued ASU 2011-12 “Deferral of the Effective Date for Amendments to the Presentation of Reclassifications of Items Out of Accumulated Other Comprehensive Income in Accounting Standards Update No. 2011-05”, which defers the effective date of pending amendments to current accounting guidance prescribed in ASU 2011-05.

Honda adopted ASU 2011-05 as amended by ASU 2011-12, effective April 1, 2012, and discloses consolidated statements of comprehensive income as two separate but consecutive statements.

Notes to Consolidated Balance Sheets:

 

1.	The allowance for assets are as follows: Yen (millions)

 

		Mar. 31, 2012				Mar. 31, 2013
The allowance for doubtful trade accounts and notes receivables			7,293				7,885
The allowance for credit losses for finance subsidiaries–receivables			20,616				17,828
The allowance for losses on lease residual values for finance subsidiaries–receivables			5,366				3,354
The allowance for doubtful accounts for other assets			23,036				22,754

 

2.	Net book value of property, plant and equipment that were subject to specific collateral securing indebtedness and debt-related mortgages are as follows: Yen (millions)

 

		Mar. 31, 2012				Mar. 31, 2013
Mortgaged assets:
Trade accounts and notes receivables			10,119				12,422
Inventories			3,289				11,154
Property, plant and equipment			22,102				26,169
Finance subsidiaries–receivables			570,655				724,399
Mortgage-related debts:
Short-term debt			305,069				397,297
Long-term debt			280,747				351,591

 

3.	Honda has entered into various guarantee and indemnification agreements which are primarily for employee bank loans to cover their housing costs as follows: Yen (millions)

 

		Mar. 31, 2012				Mar. 31, 2013
Bank loans of employees for their housing costs			28,165				26,475

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 shown above. As of March 31, 2013, no amount has been accrued for any estimated losses under these obligations, as it is probable that the employees will be able to make all scheduled payments.

 

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Notes to Consolidated Statements of Stockholders’ Equity:

 

		Mar. 31, 2012				Mar. 31, 2013
1. The number of shares outstanding			1,811,428,430				1,811,428,430
		Mar. 31, 2012				Mar. 31, 2013
2. The number of treasury shares			9,128,871				9,131,140

3. The total amount of dividends for the fiscal year ended March 31, 2013, was ¥129,765 million. The Company intends to distribute year-end cash dividends of ¥136,974 million to the stockholders of record on March 31, 2013.

Note on Financial Instruments:

Current Status of Financial Instruments

 

1.	Policy Regarding Financial Instruments

The policy of Honda is to support its business activities by maintaining sufficient capital resources, a sufficient level of liquidity and a sound balance sheet. In its cash management activities, the Company invests principally in highly safe, short-term financial instruments. Honda meets its operating capital requirements primarily through cash generated by operations, bank loans and the issuance of commercial paper. In addition, the Company’s finance subsidiaries fund those financial programs for customers and dealers primarily from medium-term notes, bank loans, securitization of finance receivables, commercial paper, corporate bonds and intercompany loans.

 

2.	Risk Associated with Financial Instruments and Related Risk Management System

The Company reduces the credit risk arising from trade accounts and notes receivables and finance subsidiaries–receivables by requiring compliance with its internal credit management regulations. To minimize the foreign currency fluctuation risk of the foreign currency denominated receivables, the Company enters into foreign currency forward exchange contracts and foreign currency purchased option contracts. Regarding the lease receivables held by the Company’s finance subsidiaries, losses may be incurred when proceeds from the sale of the returned vehicles are less than the contractual residual value. The Company’s finance subsidiaries periodically review the estimated residual value of the leased vehicles to monitor the residual value risk.

Available-for-sale securities mainly consist of equity securities. Held-to-maturity securities mainly consist of government and agency debt securities. In order to manage the price fluctuation risk, the Company periodically estimates the fair value of these securities.

To manage the liquidity risk associated with short-term and long-term debt, the Company diversifies its sources of funds. To reduce the interest rate fluctuation risk, the Company enters into interest rate swap contracts. To minimize the foreign currency fluctuation risk of the foreign currency denominated payables, the Company enters into currency swap contracts.

The Company enters into derivative contracts within the actual demand of its business activities in accordance with the risk management policy. The derivative instruments contain an element of risk in the event the counterparties are unable to meet the terms of the agreement. However, Honda minimizes the risk exposure by limiting the counterparties to major international banks and financial institutions meeting established credit guidelines.

The Company applies hedge accounting for certain foreign currency forward exchange contracts related to forecasted foreign currency transactions between the Company and its subsidiaries.

 

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Fair Value of Financial Instruments

The carrying amount, estimated fair value and difference of financial instruments at March 31, 2013 are as follows: Yen (millions)

 

		Carrying Amount				Estimate Fair Value				Difference
Finance subsidiaries–receivables			4,278,460				4,326,333				47,873
Available-for-sale securities			128,848				128,848				—
Held-to-maturity securities			16,511				16,556				45
Short-term and long-term debt			(4,894,188	)			(4,966,318	)			(72,130	)
Derivative instruments			54,883				54,883				—

 

Note:

The book value of the previously mentioned finance subsidiaries–receivables excludes direct finance leases (net) from the amount of finance subsidiaries–receivables appearing on the balance sheets. The amount of direct finance leases (net) at the end of the fiscal year under review was ¥425,870 million. Also, the previously mentioned finance subsidiaries–receivables include the amount of finance subsidiaries–receivables, which is presented in the balance sheet items trade accounts and notes receivable and other assets. The amount of such finance subsidiaries–receivables at the end of the fiscal year under review was ¥673,193 million.

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

 

1.	Cash and cash equivalents, trade receivables and trade payables

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

 

2.	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.

 

3.	Available-for-sale securities

The fair value of marketable equity securities is estimated by using quoted market prices. To estimate fair value of auction rate securities, Honda uses 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.

 

4.	Held-to-maturity securities

The fair value of Government bonds is estimated by using quoted market prices. The fair value of U.S. government agency debt securities is 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.

 

5.

Debt

The fair values of bonds are estimated by using quoted market prices. 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.

 

6.	Derivative instruments

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

Non-marketable securities are excluded from the above table as it is not possible to estimate the future cash flow and it is deemed to be extremely difficult to measure the fair value. The carrying amount of non-marketable securities is ¥11,749 million at March 31, 2013.

Notes to Information about Per Common Share:

Honda Motor Co., Ltd. shareholders’ equity per common share and basic net income attributable to Honda Motor Co., Ltd. per common share are as follows: Yen

 

		Mar. 31, 2012				Mar. 31, 2013
Honda Motor Co., Ltd. shareholders’ equity per common share			2,437.01				2,795.03
Basic net income attributable to Honda Motor Co., Ltd. per common share			117.34				203.71

 

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Honda Motor Co., Ltd. shareholders’ equity per common share has been computed by dividing Honda Motor Co., Ltd. shareholders’ equity by the number of shares outstanding at the end of each period. The numbers of common shares, at the end of the years ended March 31, 2012 and 2013 were 1,802,299,559 and 1,802,297,290, respectively. Basic net income attributable to Honda Motor Co., Ltd. per common share has been computed by dividing net income attributable to Honda Motor Co., Ltd. by the weighted average number of shares outstanding during each period. The weighted average numbers of shares outstanding for the years ended March 31, 2012 and 2013 were 1,802,300,720 and 1,802,298,819, respectively. There were no potentially dilutive shares issued during the years ended March 31, 2012 or 2013.

 

Note:

Honda corrects Honda Motor Co., Ltd. shareholders’ equity for the year ended March 31, 2012. Honda Motor Co., Ltd. shareholders’ equity per common share is also adjusted. For detailed information, please refer to Consolidated Financial Summary “[10] Other. 3. Immaterial corrections of the prior year’s Consolidated Balance Sheets and Consolidated Statements of Changes in Equity.”

Other

 

1.	Impairment loss on investments in affiliates

For the fiscal year ended March 31, 2013, Honda recognized an impairment loss of ¥12,757 million, net of tax, on certain investments in affiliates which have quoted market values because of an other-than-temporary decline in fair value below their carrying values. The fair values of the investments were based on quoted market price. The impairment loss is included in equity in income of affiliates in the accompanying consolidated statement of income.

 

2.	Impact on the Company’s consolidated financial position or results of operations of the floods in Thailand

In October 2011, Thailand suffered from severe floods that caused damage to inventories and machinery and equipment of certain consolidated subsidiaries and affiliates of the Company. Accordingly, production activities in plant facilities at Honda and its affiliates had been temporarily affected by the floods for the year ended March 31, 2012.

Honda recognized ¥23,420 million in costs and expenses, of which ¥10,680 million is included in cost of sales and ¥12,740 million is included in selling, general and administrative expenses in the accompanying consolidated statement of income for the year ended March 31, 2012. These costs and expenses mainly consist of losses on damaged inventories of ¥7,330 million, which is included in cost of sales, and losses on damaged property, plant and equipment of ¥7,654 million, which is included in selling, general and administrative expenses.

In addition, Honda recognized insurance recoveries of ¥21,725 million and ¥16,278 million for the years ended March 31, 2012 and 2013, respectively, which are included in selling, general and administrative expenses in the accompanying consolidated statement of income. Honda recognizes insurance recoveries in excess of the incurred losses when settlements with insurance companies are reached.

 

3.

Immaterial corrections of the prior year’s Consolidated Balance Sheets and Consolidated Statements of Changes in Equity Honda corrected its attribution method used to calculate the projected benefit obligation for certain pension plans, which resulted in an increase in other liabilities for prior fiscal years. Cumulative effect adjustments have been made as of April 1, 2011, the earliest period presented, to increase other liabilities by ¥17,228 million and to decrease retained earnings by ¥10,388 million, net of tax. Honda believes that the effects of this correction were inconsequential to the Company’s consolidated financial statements for the fiscal year ended March 31, 2012; therefore, no other adjustments were made to those consolidated financial statements.

 

4.	Immaterial corrections of the prior years’ Consolidated Statements of Cash Flows

Adjustments have been made to correct previous understatements in both depreciation excluding property on operating leases, which is included in cash flows from operating activities, and payments of other debt, which is included in Other, net in cash flows from financing activities, in the consolidated statements of cash flows for the year ended March 31, 2012. These adjustments increased previously reported net cash provided by operating activities and increased previously reported net cash used in financing activities by ¥24,109 million for the year ended March 31, 2012.

Regarding the Notes for the Previous Fiscal Year

The notes for the previous fiscal year contain additional information for reference.

 

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¡ Segment Information (reference)

(a) Business Segment Information

For the year ended March 31, 2012

 

		Yen (millions)
		Motorcycle Business				Automobile Business				Financial Services Business				Power Product & Other Businesses				Segment Total				Reconciling Items				Consolidated
Net sales and other operating revenue:
External customers			1,348,828				5,805,975				516,148				277,144				7,948,095				—				7,948,095
Intersegment			—				16,767				10,428				12,590				39,785				(39,785	)			—
Total			1,348,828				5,822,742				526,576				289,734				7,987,880				(39,785	)			7,948,095
Cost of sales, SG&A and R&D expenses			1,206,226				5,899,948				356,570				293,772				7,756,516				(39,785	)			7,716,731
Segment income (loss)			142,602				(77,206	)			170,006				(4,038	)			231,364				—				231,364
Assets			1,006,684				4,955,791				5,644,380				305,235				11,912,090				(124,491	)			11,787,599
Depreciation and amortization			43,564				289,845				211,325				10,133				554,867				—				554,867
Capital expenditures			62,075				349,605				686,495				10,005				1,108,180				—				1,108,180
For the year ended March 31, 2013
		Yen (millions)
		Motorcycle Business				Automobile Business				Financial Services Business				Power Product & Other Businesses				Segment Total				Reconciling Items				Consolidated
Net sales and other operating revenue:
External customers			1,339,549				7,709,216				548,506				280,676				9,877,947				—				9,877,947
Intersegment			—				14,374				11,750				10,994				37,118				(37,118	)			—
Total			1,339,549				7,723,590				560,256				291,670				9,915,065				(37,118	)			9,877,947
Cost of sales, SG&A and R&D expenses			1,229,316				7,437,599				402,098				301,242				9,370,255				(37,118	)			9,333,137
Segment income (loss)			110,233				285,991				158,158				(9,572	)			544,810				—				544,810
Assets			1,095,357				5,759,126				6,765,322				309,149				13,928,954				(293,597	)			13,635,357
Depreciation and amortization			34,665				290,522				256,166				9,116				590,469				—				590,469
Capital expenditures			73,513				540,625				794,869				14,519				1,423,526				—				1,423,526

Notes:

 

1.	Intersegment sales and revenues are generally made at values that approximate arm’s-length prices.

 

2.

Unallocated corporate assets, included in reconciling items, amounted to ¥399,732 million as of March 31, 2012 and ¥293,583 million as of March 31, 2013, 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.

 

3.	Depreciation and amortization of Financial Services Business include ¥209,762 million for the year ended March 31, 2012 and ¥254,933 million for the year ended March 31, 2013, respectively, of depreciation of property on operating leases.

 

4.	Capital expenditures of Financial Services Business include ¥683,767 million for the year ended March 31, 2012 and ¥793,118 million for the year ended March 31, 2013, respectively, of purchase of operating lease assets.

 

5.

Previously, Honda used principally the declining-balance method for calculating the depreciation of property, plant and equipment, excluding property on operating leases. Effective April 1, 2012, Honda changed to the straight-line method of depreciation. As a result of the change in depreciation method, depreciation expense for the year ended March 31, 2013 decreased by approximately ¥6,358 million in Motorcycle Business, ¥48,568 million in Automobile Business, ¥77 million in Financial Services Business and ¥1,297 million in Power Product & Other Businesses, respectively. It resulted in an increase of segment income. For further information, refer to “Changes in accounting policy, (b) Change in depreciation method”.

 

6.

For the years ended March 31, 2012 and 2013, impacts of the floods in Thailand are mainly included in Cost of sales, SG&A and R&D expenses of Automobile business. For further information, refer to “Other, 2. Impact on the Company’s consolidated financial position or results of operations of the floods in Thailand”.

 

7.	Honda corrected the amounts of Assets for the year ended March 31, 2012. For detailed information, refer to “Other, 3. Immaterial corrections of the prior year’s Consolidated Balance Sheets and Consolidated Statements of Changes in Equity”.

 

8.	The amounts of Depreciation and amortization for the year ended March 31, 2012 have been corrected from the amounts previously disclosed.

 

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(b) Geographic Segment Information

For the year ended March 31, 2012

 

		Yen (millions)
		Japan				North America				Europe				Asia				Other Regions				Total				Reconciling Items				Consolidated
Net sales and other operating revenue:
External customers			1,774,573				3,500,245				519,329				1,276,621				877,327				7,948,095				—				7,948,095
Transfers between geographic areas			1,588,379				214,511				61,463				213,857				15,805				2,094,015				(2,094,015	)			—
Total			3,362,952				3,714,756				580,792				1,490,478				893,132				10,042,110				(2,094,015	)			7,948,095
Cost of sales, SG&A and R&D expenses			3,472,786				3,491,463				592,901				1,413,608				836,176				9,806,934				(2,090,203	)			7,716,731
Operating income (loss)			(109,834	)			223,293				(12,109	)			76,870				56,956				235,176				(3,812	)			231,364
Assets			3,112,901				6,333,851				568,790				1,070,331				611,818				11,697,691				89,908				11,787,599
Long-lived assets			1,048,402				1,970,631				111,354				274,182				130,339				3,534,908				—				3,534,908
For the year ended March 31, 2013
		Yen (millions)
		Japan				North America				Europe				Asia				Other Regions				Total				Reconciling Items				Consolidated
Net sales and other operating revenue:
External customers			1,925,333				4,612,361				536,856				1,926,434				876,963				9,877,947				—				9,877,947
Transfers between geographic areas			1,968,179				244,741				105,254				379,213				19,504				2,716,891				(2,716,891	)			—
Total			3,893,512				4,857,102				642,110				2,305,647				896,467				12,594,838				(2,716,891	)			9,877,947
Cost of sales, SG&A and R&D expenses			3,715,084				4,648,184				641,650				2,158,889				860,773				12,024,580				(2,691,443	)			9,333,137
Operating income			178,428				208,918				460				146,758				35,694				570,258				(25,448	)			544,810
Assets			3,264,383				7,645,540				673,667				1,523,192				660,856				13,767,638				(132,281	)			13,635,357
Long-lived assets			1,167,236				2,481,097				124,088				434,827				143,570				4,350,818				—				4,350,818

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, Vietnam
Other Regions		Brazil, Australia

 

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

 

3.

Unallocated corporate assets, included in reconciling items, amounted to ¥399,732 million as of March 31, 2012 and ¥293,583 million as of March 31, 2013, 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.

 

4.

Previously, Honda used principally the declining-balance method for calculating the depreciation of property, plant and equipment, excluding property on operating leases. Effective April 1, 2012, Honda changed to the straight-line method of depreciation. As a result of the change in depreciation method, depreciation expense for the year ended March 31, 2013 decreased by approximately ¥42,486 million in Japan, ¥9,602 million in North America, ¥1,068 million in Europe and ¥3,144 million in Asia, respectively. It resulted in an increase in operating income. For further information, refer to “Changes in accounting policy, (b) Change in depreciation method”.

 

5.	For the years ended March 31, 2012 and 2013, impacts of the floods in Thailand are included in Cost of sales, SG&A and R&D expenses of Asia. For further information, refer to “Other, 2. Impact on the Company’s consolidated financial position or results of operations of the floods in Thailand”.

 

6.	Honda corrected the amounts of Assets for the year ended March 31, 2012. For detailed information, refer to “Other, 3. Immaterial corrections of the prior year’s Consolidated Balance Sheets and Consolidated Statements of Changes in Equity”.

 

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Independent Auditors’ Report

Independent Auditors’ Report

 

The Board of Directors		May 9, 2013
Honda Motor Co., Ltd.

 

		KPMG AZSA LLC
		Takuji Kanai (Seal)		Designated Limited Liability Partner, Engagement Partner and Certified Public Accountant
		Kenji Tanaka (Seal)		Designated Limited Liability Partner, Engagement Partner and Certified Public Accountant
		Hideaki Koyama (Seal)		Designated Limited Liability Partner, Engagement Partner and Certified Public Accountant

We have audited the consolidated financial statements, comprising the consolidated balance sheet, the consolidated statements of income, the consolidated statements of changes in equity and the related notes of Honda Motor Co., Ltd. as at March 31, 2013 and for the year from April 1, 2012 to March 31, 2013 in accordance with Article 444-(4) of the Companies Act.

Management’s Responsibility for the Consolidated Financial Statements

Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with the second sentence of Article 120-2 (1) of the Ordinance of Companies Accounting that prescribes some omissions of disclosure items required under accounting principles generally accepted in the United States of America, and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatements, whether due to fraud or error.

Auditor’s Responsibility

Our responsibility is to express an opinion on the consolidated financial statements based on our audit as independent auditor. We conducted our audit in accordance with auditing standards generally accepted in Japan. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on our judgement, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, we consider internal control relevant to the entity’s preparation and fair presentation of the consolidated financial statements in order to design audit procedures that are appropriate in the circumstances, while the objective of the financial statement audit is not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion, the consolidated financial statements referred to above, which were prepared in accordance with the second sentence of Article 120-2 (1) of the Ordinance of Companies Accounting that prescribes some omissions of disclosure items required under accounting principles generally accepted in the United States of America, present fairly, in all material respects, the financial position and the results of operations of Honda Motor Co., Ltd. and its consolidated subsidiaries for the period, for which the consolidated financial statements were prepared.

Emphasis of Matter

As described in Note 8 of Significant Accounting Policies in The Notes to the Consolidated Statutory Report, the Company changed the depreciation method of property, plant and equipment, excluding property on operating leases, effective April 1, 2012. Our opinion is not qualified in respect of this matter.

Other Matter

Our firm and engagement partners have no interest in the Company which should be disclosed pursuant to the provisions of the Certified Public Accountants Law of Japan.

Notes to the Reader of Independent Auditor’s Report:

The Independent Auditor’s Report herein is the English translation of the Independent Auditor’s Reports as required by the Companies Act.

 

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Audit Report of the Board of Corporate Auditors

Audit Report

Mr. Takanobu Ito

President and Representative Director of

Honda Motor Co., Ltd.

The Board of Corporate Auditors has prepared this Audit Report regarding the performance of duties by the Directors for the 89th fiscal year from April 1, 2012 to March 31, 2013, upon deliberation based on the audit reports prepared by each Corporate Auditor, and hereby reports as follows:

1. Auditing Methods Employed by the Corporate Auditors and the Board of Corporate Auditors and Details of Such Methods

The Board of Corporate Auditors established auditing policies, assignment of duties, etc., and received reports from each Corporate Auditor regarding their execution of audits and results thereof, and received reports from the Directors, etc. and the Accounting Auditor regarding performance of their duties, and sought explanations as necessary.

Each Corporate Auditor, in accordance with the auditing standards of Corporate Auditors established by the Board of Corporate Auditors, following the auditing policies, assignment of duties and other relevant matters, communicated with the Directors, the Audit Office and other employees, etc., made efforts to collect information and establish the environment for auditing, and participated in the meetings of the Board of Directors and other important meetings, received reports from the Directors and employees regarding performance of their duties, sought explanations as necessary, examined important documents on business decisions, etc., and surveyed the status of operations and assets at the head office and principal business offices. In addition, each Corporate Auditor monitored and verified the content of the resolution of the Board of Directors regarding the establishment of the system for ensuring that the performance of duties by the Directors as recorded in the Business Report conforms to the laws and regulations and Articles of Incorporation and other systems stipulated in Paragraphs 1 and 3 of Article 100 of the Enforcement Regulations of the Corporation Law as being necessary for ensuring appropriateness of the Company’s operations, and the status of the systems established based on such resolution (Internal Control Systems) by receiving periodic reports from the Directors and employees on the structuring and operation of these systems, and, as necessary, requesting explanations and asking for expression of opinions. With respect to subsidiaries, Corporate Auditors communicated and exchanged information with Directors and Corporate Auditors of subsidiaries, and received business reports from subsidiaries as necessary. Based on the above methods, Corporate Auditors examined the business report and the accompanying detailed statements for this fiscal year.

Furthermore, Corporate Auditors monitored and verified whether the Accounting Auditor maintained its independence and implemented appropriate audits, and received reports from the Accounting Auditor regarding the performance of its duties and sought explanations as necessary. In addition, Corporate Auditors received notice from the Accounting Auditor that “System for ensuring that duties are performed properly” (matters set forth in each item of Article 131 of the Company Accounting Regulations) is established in accordance with the “Quality Control Standards Regarding Audits” (Business Accounting Council, October 28, 2005), etc., and sought explanations as necessary. Based on the above methods, Corporate Auditors examined the unconsolidated financial statements (unconsolidated balance sheets, unconsolidated statements of operations, unconsolidated statements of stockholders’ equity and notes to the unconsolidated financial statements) and the supplementary schedules thereto, and the consolidated financial statements (the consolidated balance sheet, the consolidated statement of income, the consolidated statements of change in equity and notes to consolidated financial statements) for this fiscal year.

2. Results of Audit

 

(1)	Results of Audit of Business Report, etc.

 

1.

The business report and the supplementary schedules thereto fairly represent the status of the Company in accordance with the applicable laws and regulations and Articles of Incorporation.

 

2.

No misconduct or material violation of laws, regulations or the Articles of Incorporation was found with regard to the performance of duties by the Directors.

 

3.

The content of the resolution of the Board of Directors regarding the Internal Control Systems is appropriate. In addition, no matters were found for comment with regard to the content of the business report as it is related to Internal Control Systems or with regard to the performance of duties by the Directors.

 

(2)	Results of Audit of unconsolidated financial statements and the supplementary schedules thereto.

The methods and results of the audit performed by the Accounting Auditor, KPMG AZSA LLC, are appropriate.

 

(3)	Results of Audit of consolidated financial statements.

The methods and results of the audit performed by the Accounting Auditor, KPMG AZSA LLC, are appropriate.

May 14, 2013

Board of Corporate Auditors

Honda Motor Co., Ltd.

 

				Corporate Auditor (Full-time)		Masaya Yamashita (Seal)
				Corporate Auditor (Full-time)		Hideki Okada (Seal)
				Corporate Auditor (Outside)		Hirotake Abe (Seal)
				Corporate Auditor (Outside)		Tomochika Iwashita (Seal)
				Corporate Auditor (Outside)		Toshiaki Hiwatari (Seal)

 

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REFERENCE

• Forecasts for the Fiscal Year Ending March 31, 2014

In regard to the forecasts of the financial results for the fiscal year ending March 31, 2014, Honda projects consolidated and unconsolidated results to be as shown below:

These forecasts are based on the assumption that the average exchange rates for the Japanese yen to the U.S. dollar and the euro will

be ¥95 and ¥120, respectively, for the full year ending March 31, 2014.

• Consolidated

 

		Yen (billions)/Changes from the previous fiscal period
		Fiscal year ending March 31, 2014
Net sales and other operating revenue			12,100				(+22.5	%)
Operating income			780				(+43.2	%)
Income before income taxes and equity in income of affiliates			780				(+59.5	%)
Net income attributable to Honda Motor Co., Ltd.			580				(+58.0	%)

This announcement contains “forward-looking statements” as defined in Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Such statements are based on management’s assumptions and beliefs taking into account information currently available to it. Therefore, please be advised that Honda’s actual results could differ materially from those described in these forward-looking statements as a result of numerous factors, including general economic conditions in Honda’s principal markets and foreign exchange rates between the Japanese yen and the U.S. dollar, the euro and other major currencies, as well as other factors detailed from time to time.

• Shareholders

 

Categories		FY2010 Year-End (As of March 31, 2011)								FY2011 Year-End (As of March 31, 2012)								FY2012 Year-End (As of March 31, 2013)
		Thousand shares				Number of shareholders				Thousand shares				Number of shareholders				Thousand shares				Number of shareholders
Individuals			176,239				210,526				180,246				215,138				181,719				218,121
National and Local Public Entities			—				—				3				1				—				—
Financial Institutions			784,292				270				769,527				260				736,115				260
Securities Companies			29,106				72				30,558				65				22,254				76
Other Domestic Corporations			179,845				1,573				176,507				1,538				158,924				1,562
Foreigners			632,818				1,034				645,456				964				703,282				1,008
Treasury Stock			9,126				1				9,128				1				9,131				1
Total			1,811,428				213,476				1,811,428				217,967				1,811,428				221,028

Note:   The numbers of shares above disregard and round off amounts of less than one thousand.

 

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Honda Motor Co., Ltd.

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Unconsolidated Balance Sheets

 

		Yen (million)
As of March 31, 2012 and 2013		2012				2013
Assets
Current assets
Cash and bank deposits			136,648				51,242
Notes receivable			4				—
Accounts receivable			366,508				417,528
Securities			176,509				149,550
Finished goods			100,718				70,107
Work in process			26,278				29,620
Raw materials and supplies			25,571				27,320
Advance payments			25,430				13,974
Prepaid expenses			4,307				6,799
Deferred income taxes			67,949				108,832
Short-term loans receivable–subsidiaries and affiliates			22,280				29,869
Other receivables			99,438				88,368
Others			21,199				13,961
Allowance for doubtful accounts			(2,810	)			(2,875	)
Total current assets			1,070,034				1,004,300
Fixed assets
Tangible fixed assets
Buildings			611,995				669,584
Accumulated depreciation			(402,283	)			(408,953	)
Buildings, net			209,712				260,631
Structures			127,699				130,512
Accumulated depreciation			(94,257	)			(95,388	)
Structures, net			33,442				35,123
Machinery and equipment			594,245				601,639
Accumulated depreciation			(533,001	)			(525,372	)
Machinery and equipment, net			61,244				76,267
Vehicles			15,738				15,921
Accumulated depreciation			(13,103	)			(12,523	)
Vehicles, net			2,635				3,397
Tools, furniture and fixtures			223,122				212,038
Accumulated depreciation			(205,685	)			(191,319	)
Tools, furniture and fixtures, net			17,437				20,719
Land			336,378				335,703
Lease assets			2,656				3,671
Accumulated depreciation			(1,428	)			(1,250	)
Lease assets, net			1,227				2,421
Construction in progress			65,333				55,047
Total tangible fixed assets			727,410				789,312
Intangible assets
Patents			38				26
Leaseholds			2,094				2,101
Trademarks			13				17
Software			10,003				32,131
Lease assets			52				8
Others			286				543
Total intangible assets			12,489				34,829
Investments and other assets
Investment securities			86,538				92,752
Investment securities–subsidiaries and affiliates			429,109				432,242
Investments and other assets			24				24
Investments–subsidiaries and affiliates			93,065				93,065
Long-term loans receivable–employees			177				139
Long-term loans receivable–subsidiaries and affiliates			4,714				3,928
Receivables in bankruptcy			6,711				6,462
Long-term prepaid expenses			517				551
Deferred income taxes			151,589				89,570
Others			35,123				23,587
Allowance for doubtful accounts			(7,670	)			(7,442	)
Total investments and other assets			799,901				734,882
Total fixed assets			1,539,801				1,559,023
Total assets			2,609,835				2,563,324

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		Yen (million)
		2012				2013
Liabilities
Current liabilities
Notes payable–trade			639				1,854
Accounts payable			357,527				237,888
Short-term bonds payable			—				39,998
Short-term loans payable			17,905				24,033
Current portion of long-term loans payable			31				28
Current portion of bonds			70,000				—
Lease debt			527				733
Other payables			39,783				98,530
Accrued expenses			122,633				99,669
Income taxes payable			—				936
Advances received			2,889				4,413
Deposits received			2,693				3,850
Deferred revenue			126				142
Current portion of accrued product warranty			29,991				30,011
Accrued employees’ bonuses			27,068				29,651
Accrued directors’ bonuses			274				272
Accrued operating officers’ bonuses			467				449
Provision for loss on disaster			17,294				1,145
Derivatives liabilities			19,038				49,423
Others			1,855				3,395
Total current liabilities			710,748				626,429
Non-current liabilities
Long-term loans payable			165				131
Lease debt			845				1,853
Accrued product warranty			33,392				36,141
Accrued employees’ retirement benefits			122,922				124,048
Asset retirement obligation			596				662
Others			6,618				10,575
Total non-current liabilities			164,540				173,413
Total liabilities			875,288				799,843
Total net assets
Stockholders’ equity
Common stock			86,067				86,067
Capital surplus
Capital reserve			170,313				170,313
Total capital surplus			170,313				170,313
Retained earnings
Legal reserves			21,516				21,516
Other retained earnings
Reserve for dividends			—				—
General reserve			1,333,300				1,243,300
Reserve for special depreciation			1,551				1,199
Reserve for reduction of acquisition cost of fixed assets			14,235				16,276
Earnings to be carried forward			104,029				217,288
Total retained earnings			1,474,633				1,499,582
Treasury stock			(26,215	)			(26,222	)
Total stockholders’ equity			1,704,799				1,729,740
Difference of appreciation and conversion
Net unrealized gains on securities			29,932				33,977
Deferred loss (gain) on hedges			(184	)			(237	)
Total difference of appreciation and conversion			29,747				33,740
Total net assets			1,734,546				1,763,480
Total liabilities and net assets			2,609,835				2,563,324

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Unconsolidated Statements of Income

 

		Yen (million)
Year ended March 31, 2012 and 2013		2012				2013
Net sales			2,740,052				3,244,070
Cost of sales
Finished goods and parts for sale at beginning of year			81,540				100,718
Production cost			1,756,702				1,697,268
Others			326,053				520,331
Total			2,164,296				2,318,318
Transfer to other accounts			1,571				2,566
Finished goods and parts for sale at end of year			100,718				70,107
Cost of finished goods sold			2,062,006				2,245,643
Gross profit			678,045				998,426
Selling, general and administrative expenses			814,803				894,494
Operating income (loss)			(136,757	)			103,932
Non-operating income
Interest income			1,656				1,181
Dividend income			182,182				156,492
Rental income			22,829				23,585
Others			6,389				6,186
Total non-operating income			213,057				187,446
Non-operating expenses
Interest expenses			97				99
Contributions			558				570
Foreign exchange loss			9,969				78,884
Others			25,285				17,999
Total non-operating expenses			35,911				97,553
Ordinary income			40,388				193,825
Extraordinary income
Gain on sale of fixed assets			632				2,549
Subsidy income			457				1,337
Gain on transfer of intellectual property rights			23,977				—
Gain of reversal of provision for loss on disaster			3,511				—
Others			2,803				677
Total extraordinary income			31,383				4,564
Extraordinary losses
Loss on disposal of fixed assets			1,844				3,354
Loss on devaluation of investment securities–subsidiaries and affiliates			8,328				—
Compensation expenses to affiliated company			13,564				—
Others			5,612				285
Total extraordinary losses			29,348				3,640
Income before income taxes			42,422				194,750
Income taxes - current			18,620				21,055
Income taxes - deferred			(22,478	)			18,980
Total income tax			(3,857	)			40,036
Net income			46,280				154,714

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Unconsolidated Statement of Changes in Net Assets

 

		Yen (million)
		2012				2013
Stockholders’ equity
Common stock
Balance at March 31, 2012			86,067				86,067
Balance at March 31, 2013			86,067				86,067
Capital surplus
Legal capital surplus
Balance at March 31, 2012			170,313				170,313
Balance at March 31, 2013			170,313				170,313
Total capital surplus
Balance at March 31, 2012			170,313				170,313
Balance at March 31, 2013			170,313				170,313
Retained earnings
Legal reserves
Balance at March 31, 2012			21,516				21,516
Balance at March 31, 2013			21,516				21,516
Other retained earnings
Reserve for dividends
Balance at March 31, 2012			113,300				—
Changes of items during the period
Reversal of reserve for dividends			(113,300	)			—
Total changes of items during the period			(113,300	)			—
Balance at March 31, 2013			—				—
General reserve
Balance at March 31, 2012			1,273,300				1,333,300
Changes of items during the period
Provision of general reserve			60,000				—
Reversal of general reserve			—				(90,000	)
Total changes of items during the period			60,000				(90,000	)
Balance at March 31, 2013			1,333,300				1,243,300
Reserve for special depreciation
Balance at March 31, 2012			2,145				1,551
Changes of items during the period
Provision of reserve for special depreciation			93				271
Reversal of reserve for special depreciation			(687	)			(623	)
Total changes of items during the period			(593	)			(351	)
Balance at March 31, 2013			1,551				1,199
Reserve for reduction entry
Balance at March 31, 2012			12,979				14,235
Changes of items during the period
Provision of reserve for reduction entry			1,345				2,316
Reversal of reserve for reduction entry			(89	)			(275	)
Total changes of items during the period			1,256				2,041
Balance at March 31, 2013			14,235				16,276
Retained earnings brought forward
Balance at March 31, 2012			113,249				104,029
Changes of items during the period
Reversal of reserve for dividends			113,300				—
Provision of general reserve			(60,000	)			—
Reversal of general reserve			—				90,000
Provision of reserve for special depreciation			(93	)			(271	)
Reversal of reserve for special depreciation			687				623
Provision of reserve for reduction entry			(1,345	)			(2,316	)
Reversal of reserve for reduction entry			89				275
Dividends from surplus			(108,138	)			(129,765	)
Net income			46,280				154,714
Disposal of treasury stock			(0	)			(0	)
Total changes of items during the period			(9,219	)			113,259
Balance at March 31, 2013			104,029				217,288
Total retained earnings

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		Yen (million)
		2012				2013
Balance at March 31, 2012			1,536,491				1,474,633
Changes of items during the period
Reversal of reserve for dividends			—				—
Provision of general reserve			—				—
Reversal of general reserve			—				—
Provision of reserve for special depreciation			—				—
Reversal of reserve for special depreciation			—				—
Provision of reserve for reduction entry			—				—
Reversal of reserve for reduction entry			—				—
Dividends from surplus			(108,138	)			(129,765	)
Net income			46,280				154,714
Disposal of treasury stock			(0	)			(0	)
Total changes of items during the period			(61,857	)			24,948
Balance at March 31, 2013			1,474,633				1,499,582
Treasury stock
Balance at March 31, 2012			(26,209	)			(26,215	)
Changes of items during the period
Purchase of treasury stock			(7	)			(8	)
Disposal of treasury stock			1				1
Total changes of items during the period			(6	)			(6	)
Balance at March 31, 2013			(26,215	)			(26,222	)
Total stockholders’ equity
Balance at March 31, 2012			1,766,662				1,704,799
Changes of items during the period
Dividends from surplus			(108,138	)			(129,765	)
Net income			46,280				154,714
Purchase of treasury stock			(7	)			(8	)
Disposal of treasury stock			1				1
Total changes of items during the period			(61,863	)			24,941
Balance at March 31, 2013			1,704,799				1,729,740
Valuation and translation adjustments
Valuation difference on available-for-sale security
Balance at March 31, 2012			25,348				29,932
Changes of items during the period
Net changes of items other than shareholder’s equity			4,583				4,045
Total changes of items during the period			4,583				4,045
Balance at March 31, 2013			29,932				33,977
Deferred gains or losses on hedges
Balance at March 31, 2012			(156	)			(184	)
Changes of items during the period
Net changes of items other than shareholder’s equity			(28	)			(52	)
Total changes of items during the period			(28	)			(52	)
Balance at March 31, 2013			(184	)			(237	)
Total valuation and translation adjustments
Balance at March 31, 2012			25,192				29,747
Changes of items during the period
Net changes of items other than shareholder’s equity			4,555				3,992
Total changes of items during the period			4,555				3,992
Balance at March 31, 2013			29,747				33,740
Total net assets
Balance at March 31, 2012			1,791,854				1,734,546
Changes of items during the period
Dividends from surplus			(108,138	)			(129,765	)
Net income			46,280				154,714
Purchase of treasury stock			(7	)			(8	)
Disposal of treasury stock			1				1
Net changes of items other than shareholder’s equity			4,555				3,992
Total changes of items during the period			(57,308	)			28,934
Balance at March 31, 2013			1,734,546				1,763,480

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Guangqi Honda Begins Construction of Third Automobile Production Line and a New Engine Plant

BEIJING, China, May 28, 2013—Guangqi Honda Automobile Co., Ltd., an automobile production and sales joint venture of Honda in China, held a ceremony to commemorate the start of construction of a third production line and an engine plant within the property of the existing ZengCheng Plant.

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

http://world.honda.com/news/2013/c130528Guangqi-Honda-New-Engine-Plant/index.html

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Honda Inaugurates New Motorcycle Plant in Karnataka

Bengaluru, India, May 28, 2013—Honda Motorcycle & Scooter India Pvt. Ltd., the second largest motorcycle company in India inaugurated its most advanced and latest third motorcycle production plant at Narsapura Area, District Kolar (Karnataka) today.

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

http://world.honda.com/news/2013/c130528Motorcycle-Plant-Karnataka/index.html