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 FEBRUARY 2016

COMMISSION FILE NUMBER: 1-07628

HONDA GIKEN KOGYO KABUSHIKI KAISHA

(Name of registrant)

HONDA MOTOR CO., LTD.

(Translation of registrant’s name into English)

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

(Address of principal executive offices)

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

Form 20-F  x    Form 40-F  ¨

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

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

 

 

 

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Contents

Exhibit 1:

On February 5, 2016, Honda Motor Co., Ltd. filed its consolidated financial statements for the fiscal third quarter ended December 31, 2015 with Financial Services Agency in Japan.

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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: February 29, 2016

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HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Condensed Consolidated Interim Financial Statements

December 31, 2015

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HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Condensed Consolidated Statements of Financial Position

March 31, 2015 and December 31, 2015

 

				Yen (millions)
Assets		Note		March 31, 2015				December 31, 2015
				unaudited				unaudited
Current assets:
Cash and cash equivalents				¥	1,471,730			¥	1,633,453
Trade receivables					820,681				699,727
Receivables from financial services					2,098,951				1,978,602
Other financial assets					92,708				149,298
Inventories					1,498,312				1,396,478
Other current assets					313,758				391,771
Total current assets					6,296,140				6,249,329
Non-current assets:
Investments accounted for using the equity method					614,975				621,277
Receivables from financial services					3,584,654				3,327,095
Other financial assets					350,579				361,223
Equipment on operating leases		6			3,335,367				3,741,841
Property, plant and equipment		7			3,189,511				3,185,734
Intangible assets					759,535				814,997
Deferred tax assets					138,069				125,009
Other non-current assets					157,007				161,740
Total non-current assets					12,129,697				12,338,916
Total assets				¥	18,425,837			¥	18,588,245
				Yen (millions)
Liabilities and Equity		Note		March 31, 2015				December 31, 2015
				unaudited				unaudited
Current liabilities:
Trade payables				¥	1,157,738			¥	987,905
Financing liabilities					2,833,563				2,938,445
Accrued expenses					377,372				338,058
Other financial liabilities					109,715				83,387
Income taxes payable					53,654				44,042
Provisions		8			294,281				404,734
Other current liabilities					474,731				447,978
Total current liabilities					5,301,054				5,244,549
Non-current liabilities:
Financing liabilities					3,926,276				3,909,390
Other financial liabilities					61,147				55,069
Retirement benefit liabilities					592,724				591,381
Provisions		8			182,661				169,029
Deferred tax liabilities					744,410				879,589
Other non-current liabilities					234,744				234,714
Total non-current liabilities					5,741,962				5,839,172
Total liabilities					11,043,016				11,083,721
Equity:
Common stock					86,067				86,067
Capital surplus					171,118				171,118
Treasury stock					(26,165	)			(26,176	)
Retained earnings					6,083,573				6,402,345
Other components of equity					794,034				603,944
Equity attributable to owners of the parent					7,108,627				7,237,298
Non-controlling interests					274,194				267,226
Total equity					7,382,821				7,504,524
Total liabilities and equity				¥	18,425,837			¥	18,588,245

See accompanying notes to condensed consolidated interim financial statements.

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HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Condensed Consolidated Statements of Income

For the nine months ended December 31, 2014 and 2015

 

				Yen (millions)
		Note		December 31, 2014				December 31, 2015
				unaudited				unaudited
Sales revenue				¥	9,836,584			¥	10,943,262
Operating costs and expenses:
Cost of sales					(7,626,209	)			(8,503,957	)
Selling, general and administrative					(1,185,041	)			(1,410,722	)
Research and development					(440,829	)			(461,376	)
Total operating costs and expenses					(9,252,079	)			(10,376,055	)
Operating profit					584,505				567,207
Share of profit of investments accounted for using the equity method		5			78,143				117,611
Finance income and finance costs:
Interest income					19,629				21,312
Interest expense					(14,664	)			(13,538	)
Other, net					30,965				1,564
Total finance income and finance costs					35,930				9,338
Profit before income taxes					698,578				694,156
Income tax expense		9			(230,815	)			(208,818	)
Profit for the period				¥	467,763			¥	485,338
Profit for the period attributable to:
Owners of the parent					427,530				437,975
Non-controlling interests					40,233				47,363
				Yen
				December 31, 2014				December 31, 2015
Earnings per share attributable to owners of the parent
Basic and diluted		12		¥	237.21			¥	243.01

See accompanying notes to condensed consolidated interim financial statements.

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HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Condensed Consolidated Statements of Comprehensive Income

For the nine months ended December 31, 2014 and 2015

 

				Yen (millions)
		Note		December 31, 2014				December 31, 2015
				unaudited				unaudited
Profit for the period				¥	467,763			¥	485,338
Other comprehensive income, net of tax:
Items that will not be reclassified to profit or loss
Remeasurements of defined benefit plans					(6,162	)			—
Net changes in revaluation of financial assets measured at fair value through other comprehensive income					17,211				(2,303	)
Share of other comprehensive income of investments accounted for using the equity method					(146	)			(319	)
Items that may be reclassified subsequently to profit or loss
Exchange differences on translating foreign operations					590,258				(185,534	)
Share of other comprehensive income of investments accounted for using the equity method					48,598				(18,452	)
Total other comprehensive income, net of tax					649,759				(206,608	)
Comprehensive income for the period				¥	1,117,522			¥	278,730
Comprehensive income for the period attributable to:
Owners of the parent					1,049,833				247,632
Non-controlling interests					67,689				31,098

See accompanying notes to condensed consolidated interim financial statements.

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HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Condensed Consolidated Statements of Income

For the three months ended December 31, 2014 and 2015

 

						Yen (millions)
		Note				December 31, 2014				December 31, 2015
						unaudited				unaudited
Sales revenue						¥	3,497,906			¥	3,617,223
Operating costs and expenses:
Cost of sales							(2,684,121	)			(2,789,606	)
Selling, general and administrative							(454,464	)			(497,167	)
Research and development							(149,320	)			(167,371	)
Total operating costs and expenses							(3,287,905	)			(3,454,144	)
Operating profit							210,001				163,079
Share of profit of investments accounted for using the equity method							36,781				45,097
Finance income and finance costs:
Interest income							7,252				7,218
Interest expense							(5,106	)			(4,406	)
Other, net							15,491				(10,098	)
Total finance income and finance costs							17,637				(7,286	)
Profit before income taxes							264,419				200,890
Income tax expense							(95,869	)			(61,769	)
Profit for the period						¥	168,550			¥	139,121
Profit for the period attributable to:
Owners of the parent							152,396				124,187
Non-controlling interests							16,154				14,934
						Yen
						December 31, 2014				December 31, 2015
Earnings per share attributable to owners of the parent
Basic and diluted			12			¥	84.56			¥	68.91

See accompanying notes to condensed consolidated interim financial statements.

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HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Condensed Consolidated Statements of Comprehensive Income

For the three months ended December 31, 2014 and 2015

 

				Yen (millions)
		Note		December 31, 2014				December 31, 2015
				unaudited				unaudited
Profit for the period				¥	168,550			¥	139,121
Other comprehensive income, net of tax:
Items that will not be reclassified to profit or loss
Remeasurements of defined benefit plans					429				—
Net changes in revaluation of financial assets measured at fair value through other comprehensive income					6,258				10,325
Share of other comprehensive income of investments accounted for using the equity method					(1,201	)			1,874
Items that may be reclassified subsequently to profit or loss
Exchange differences on translating foreign operations					369,181				13,508
Share of other comprehensive income of investments accounted for using the equity method					30,099				(10,048	)
Total other comprehensive income, net of tax					404,766				15,659
Comprehensive income for the period				¥	573,316			¥	154,780
Comprehensive income for the period attributable to:
Owners of the parent					539,949				137,541
Non-controlling interests					33,367				17,239

See accompanying notes to condensed consolidated interim financial statements.

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HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Condensed Consolidated Statements of Changes in Equity

For the nine months ended December 31, 2014 and 2015

 

						Yen (millions)
						Equity attributable to owners of the parent
		Note				Common stock				Capital surplus				Treasury stock				Retained earnings				Other components of equity				Total				Non-controlling interests				Total equity
Balance as of April 1, 2014 (unaudited)						¥	86,067			¥	171,117			¥	(26,149	)		¥	5,831,140			¥	273,359			¥	6,335,534			¥	223,394			¥	6,558,928
Comprehensive income for the period
Profit for the period																			427,530								427,530				40,233				467,763
Other comprehensive income, net of tax																							622,303				622,303				27,456				649,759
Total comprehensive income for the period																			427,530				622,303				1,049,833				67,689				1,117,522
Reclassification to retained earnings																			(4,094	)			4,094				—								—
Transactions with owners and other
Dividends paid			13																(118,951	)							(118,951	)			(21,323	)			(140,274	)
Purchases of treasury stock															(11	)											(11	)							(11	)
Disposal of treasury stock															1												1								1
Equity transactions and others																															(2,924	)			(2,924	)
Total transactions with owners and other															(10	)			(118,951	)							(118,961	)			(24,247	)			(143,208	)
Balance as of December 31, 2014 (unaudited)						¥	86,067			¥	171,117			¥	(26,159	)		¥	6,135,625			¥	899,756			¥	7,266,406			¥	266,836			¥	7,533,242
						Yen (millions)
						Equity attributable to owners of the parent
		Note				Common stock				Capital surplus				Treasury stock				Retained earnings				Other components of equity				Total				Non-controlling interests				Total equity
Balance as of April 1, 2015 (unaudited)						¥	86,067			¥	171,118			¥	(26,165	)		¥	6,083,573			¥	794,034			¥	7,108,627			¥	274,194			¥	7,382,821
Comprehensive income for the period
Profit for the period																			437,975								437,975				47,363				485,338
Other comprehensive income, net of tax																							(190,343	)			(190,343	)			(16,265	)			(206,608	)
Total comprehensive income for the period																			437,975				(190,343	)			247,632				31,098				278,730
Reclassification to retained earnings																			(253	)			253				—								—
Transactions with owners and other
Dividends paid			13																(118,950	)							(118,950	)			(35,251	)			(154,201	)
Purchases of treasury stock															(11	)											(11	)							(11	)
Disposal of treasury stock
Equity transactions and others																															(2,815	)			(2,815	)
Total transactions with owners and other															(11	)			(118,950	)							(118,961	)			(38,066	)			(157,027	)
Balance as of December 31, 2015 (unaudited)						¥	86,067			¥	171,118			¥	(26,176	)		¥	6,402,345			¥	603,944			¥	7,237,298			¥	267,226			¥	7,504,524

See accompanying notes to condensed consolidated interim financial statements.

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HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows

For the nine months ended December 31, 2014 and 2015

 

				Yen (millions)
		Note		December 31, 2014				December 31, 2015
				unaudited				unaudited
Cash flows from operating activities:
Profit before income taxes				¥	698,578			¥	694,156
Depreciation, amortization and impairment losses excluding equipment on operating leases					455,635				493,836
Share of profit of investments accounted for using the equity method					(78,143	)			(117,611	)
Finance income and finance costs, net					(28,145	)			(10,947	)
Interest income and interest costs from financial services, net					(131,071	)			(120,419	)
Changes in assets and liabilities
Trade receivables					59,925				60,095
Inventories					(23,943	)			51,020
Trade payables					(103,373	)			(51,047	)
Accrued expenses					(40,384	)			(34,993	)
Provisions and retirement benefit liabilities					21,807				105,749
Receivables from financial services					160,921				328,043
Equipment on operating leases					(401,199	)			(424,387	)
Other assets and liabilities					(32,045	)			(61,480	)
Other, net					(10,405	)			1,368
Dividends received					76,889				61,433
Interest received					176,507				178,208
Interest paid					(65,488	)			(71,223	)
Income taxes paid, net of refunds					(174,707	)			(123,146	)
Net cash provided by operating activities					561,359				958,655
Cash flows from investing activities:
Payments for additions to property, plant and equipment					(455,970	)			(485,311	)
Payments for additions to and internally developed intangible assets					(160,779	)			(177,354	)
Proceeds from sales of property, plant and equipment and intangible assets					27,222				19,984
Payments for acquisitions of investments accounted for using the equity method					(1,561	)			—
Payments for acquisitions of other financial assets					(73,104	)			(129,871	)
Proceeds from sales and redemptions of other financial assets					77,352				91,664
Other, net					328				(1,977	)
Net cash used in investing activities					(586,512	)			(682,865	)
Cash flows from financing activities:
Proceeds from short-term financing liabilities					6,437,390				6,180,654
Repayments of short-term financing liabilities					(6,243,085	)			(6,454,410	)
Proceeds from long-term financing liabilities					1,072,964				1,413,771
Repayments of long-term financing liabilities					(990,799	)			(1,001,637	)
Dividends paid to owners of the parent					(118,951	)			(118,950	)
Dividends paid to non-controlling interests					(20,593	)			(33,044	)
Purchases and sales of treasury stock, net					(10	)			(11	)
Other, net					(35,807	)			(35,168	)
Net cash provided by (used in) financing activities					101,109				(48,795	)
Effect of exchange rate changes on cash and cash equivalents					114,617				(65,272	)
Net change in cash and cash equivalents					190,573				161,723
Cash and cash equivalents at beginning of year					1,193,584				1,471,730
Cash and cash equivalents at end of period				¥	1,384,157			¥	1,633,453

See accompanying notes to condensed consolidated interim financial statements.

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1

 

HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Notes to Condensed Consolidated Interim Financial Statements

 

(1) Reporting Entity

Honda Motor Co., Ltd. (the “Company”) is a public company domiciled in Japan. The Company and its subsidiaries (collectively “Honda”) develop, manufacture and distribute motorcycles, automobiles, power products and others throughout the world, and also provide financial services to customers and dealers for the sale of those products. Principal manufacturing facilities are located in Japan, the United States of America, Canada, Mexico, the United Kingdom, Turkey, Italy, France, China, India, Indonesia, Malaysia, Thailand, Vietnam, Argentina and Brazil.

(2) Basis of Preparation

 (a) Compliance with Interim Financial Reporting Standards

The condensed consolidated interim financial statements of the Company have been prepared in accordance with IAS 34 “Interim Financial Reporting”. The condensed consolidated interim financial statements should be read in conjunction with the Company’s consolidated financial statements for the fiscal year ended March 31, 2015, which have been prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board.

 (b) Functional Currency and Presentation Currency

The condensed consolidated interim financial statements are presented in Japanese yen, which is the functional currency of the Company. All financial information presented in Japanese yen has been rounded to the nearest million Japanese yen, except when otherwise indicated.

 (c) Use of Estimates and Judgments

The preparation of condensed consolidated interim financial statements requires management to make judgments, estimates and assumptions that affect the application of accounting policies, the reported amount of assets, liabilities, revenues and expenses, and the disclosure of contingent assets and liabilities. Actual results could differ from these estimates. These estimates and underlying assumptions are reviewed on a continuous basis. Changes in these accounting estimates are recognized in the period in which the estimates are revised and in any future periods affected.

The condensed consolidated interim financial statements are prepared based on the same judgments and estimations as those applied and described in the Company’s consolidated financial statements for the fiscal year ended March 31, 2015.

(3) Summary of Significant Accounting Policies

The condensed consolidated interim financial statements are prepared based on the same accounting policies as those applied and described in the Company’s consolidated financial statements for the fiscal year ended March 31, 2015.

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2

 

HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Notes to Condensed Consolidated Interim Financial Statements

 

(4) Segment Information

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

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

 

Segment		Principal products and services		Functions
Motorcycle Business		Motorcycles, all-terrain vehicles (ATVs) and relevant parts		Research and development Manufacturing Sales and related services
Automobile Business		Automobiles and relevant parts		Research and development Manufacturing Sales and related services
Financial Services Business		Financial services		Retail loan and lease related to Honda products Others
Power Product and Other Businesses		Power products and relevant parts, and others		Research and development Manufacturing Sales and related services Others

 (a) Segment Information

Segment information as of and for the nine months ended December 31, 2014 and 2015 is as follows:

As of and for the nine months ended December 31, 2014

 

		Yen (millions)
		Motorcycle Business				Automobile Business				Financial Services Business				Power Product and Other Businesses				Segment Total				Reconciling Items				Consolidated
Sales revenue:
External customers		¥	1,332,035			¥	7,171,380			¥	1,104,558			¥	228,611			¥	9,836,584			¥	—			¥	9,836,584
Intersegment			—				101,557				9,872				19,127				130,556				(130,556	)			—
Total			1,332,035				7,272,937				1,114,430				247,738				9,967,140				(130,556	)			9,836,584
Segment profit (loss)		¥	138,781			¥	297,822			¥	148,395			¥	(493	)		¥	584,505			¥	—			¥	584,505
Segment assets		¥	1,510,495			¥	7,451,797			¥	9,464,294			¥	361,133			¥	18,787,719			¥	(426,148	)		¥	18,361,571
Depreciation and amortization			52,203				389,664				345,888				8,925				796,680				—				796,680
Capital expenditures			52,467				543,981				1,213,624				9,140				1,819,212				—				1,819,212

As of and for the nine months ended December 31, 2015

 

		Yen (millions)
		Motorcycle Business				Automobile Business				Financial Services Business				Power Product and Other Businesses				Segment Total				Reconciling Items				Consolidated
Sales revenue:
External customers		¥	1,368,176			¥	7,950,031			¥	1,380,268			¥	244,787			¥	10,943,262			¥	—			¥	10,943,262
Intersegment			—				96,151				9,600				13,766				119,517				(119,517	)			—
Total			1,368,176				8,046,182				1,389,868				258,553				11,062,779				(119,517	)			10,943,262
Segment profit (loss)		¥	154,145			¥	268,104			¥	155,803			¥	(10,845	)		¥	567,207			¥	—			¥	567,207
Segment assets		¥	1,387,628			¥	7,520,141			¥	9,431,907			¥	356,017			¥	18,695,693			¥	(107,448	)		¥	18,588,245
Depreciation and amortization			55,122				421,891				460,640				10,157				947,810				—				947,810
Capital expenditures			49,681				581,905				1,474,286				12,284				2,118,156				—				2,118,156

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HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Notes to Condensed Consolidated Interim Financial Statements

 

Segment information for the three months ended December 31, 2014 and 2015 is as follows:

For the three months ended December 31, 2014

 

		Yen (millions)
		Motorcycle Business				Automobile Business				Financial Services Business				Power Product and Other Businesses				Segment Total				Reconciling Items				Consolidated
Sales revenue:
External customers		¥	472,783			¥	2,566,652			¥	381,096			¥	77,375			¥	3,497,906			¥	—			¥	3,497,906
Intersegment			—				43,090				4,370				8,205				55,665				(55,665	)			—
Total			472,783				2,609,742				385,466				85,580				3,553,571				(55,665	)			3,497,906
Segment profit (loss)		¥	53,024			¥	109,588			¥	50,170			¥	(2,781	)		¥	210,001			¥	—			¥	210,001

For the three months ended December 31, 2015

 

		Yen (millions)
		Motorcycle Business				Automobile Business				Financial Services Business				Power Product and Other Businesses				Segment Total				Reconciling Items				Consolidated
Sales revenue:
External customers		¥	442,182			¥	2,652,491			¥	444,590			¥	77,960			¥	3,617,223			¥	—			¥	3,617,223
Intersegment			—				32,065				3,232				4,097				39,394				(39,394	)			—
Total			442,182				2,684,556				447,822				82,057				3,656,617				(39,394	)			3,617,223
Segment profit (loss)		¥	49,507			¥	69,577			¥	51,494			¥	(7,499	)		¥	163,079			¥	—			¥	163,079

 

Explanatory notes:

 

1.

Segment profit (loss) of each segment is measured in a consistent manner with consolidated operating profit, which is profit before income taxes before share of profit of investments accounted for using the equity method and finance income and finance costs. Expenses not directly associated with specific segments are allocated based on the most reasonable measures applicable.

 

2.

Segment assets of each segment are defined as total assets including investments accounted for using the equity method, derivatives, and deferred tax assets. Segment assets are based on those directly associated with each segment and those not directly associated with specific segments are allocated based on the most reasonable measures applicable except for the corporate assets described below.

 

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

 

4.

Reconciling items include elimination of intersegment transactions and balances as well as unallocated corporate assets. Unallocated corporate assets, included in reconciling items as of December 31, 2014 and 2015 amounted to ¥298,348 million and ¥402,463 million, respectively, which consist primarily of the Company’s cash and cash equivalents and financial assets measured at fair value through other comprehensive income.

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4

 

HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Notes to Condensed Consolidated Interim Financial Statements

 

 (b) Supplemental Geographical Information

In addition to the disclosure required by IFRS, Honda provides the following supplemental information in order to provide financial statements users with useful information:

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

 

As of and for the nine months ended December 31, 2014
		Yen (millions)
		Japan				North America				Europe				Asia				Other Regions				Total				Reconciling Items				Consolidated
Sales revenue:
External customers		¥	1,557,230			¥	5,101,235			¥	488,551			¥	1,971,780			¥	717,788			¥	9,836,584			¥	—			¥	9,836,584
Inter-geographic areas			1,358,957				255,397				54,713				440,295				2,729				2,112,091				(2,112,091	)			—
Total			2,916,187				5,356,632				543,264				2,412,075				720,517				11,948,675				(2,112,091	)			9,836,584
Operating profit (loss)		¥	201,586			¥	189,174			¥	(6,478	)		¥	207,181			¥	32,377			¥	623,840			¥	(39,335	)		¥	584,505
Assets		¥	4,080,580			¥	10,547,552			¥	654,797			¥	2,496,126			¥	770,164			¥	18,549,219			¥	(187,648	)		¥	18,361,571
Non-current assets other than financial instruments and deferred tax assets		¥	2,178,112			¥	4,012,316			¥	136,770			¥	727,961			¥	219,536			¥	7,274,695			¥	—			¥	7,274,695
As of and for the nine months ended December 31, 2015
		Yen (millions)
		Japan				North America				Europe				Asia				Other Regions				Total				Reconciling Items				Consolidated
Sales revenue:
External customers		¥	1,463,373			¥	6,133,622			¥	479,375			¥	2,224,302			¥	642,590			¥	10,943,262			¥	—			¥	10,943,262
Inter-geographic areas			1,467,982				300,851				66,868				469,948				2,582				2,308,231				(2,308,231	)			—
Total			2,931,355				6,434,473				546,243				2,694,250				645,172				13,251,493				(2,308,231	)			10,943,262
Operating profit (loss)		¥	81,766			¥	184,394			¥	(3,127	)		¥	269,807			¥	11,414			¥	544,254			¥	22,953			¥	567,207
Assets		¥	4,259,603			¥	10,690,637			¥	642,390			¥	2,505,803			¥	596,279			¥	18,694,712			¥	(106,467	)		¥	18,588,245
Non-current assets other than financial instruments and deferred tax assets		¥	2,353,689			¥	4,522,481			¥	111,624			¥	741,779			¥	174,739			¥	7,904,312			¥	—			¥	7,904,312

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HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Notes to Condensed Consolidated Interim Financial Statements

 

For the three months ended December 31, 2014
		Yen (millions)
		Japan				North America				Europe				Asia				Other Regions				Total				Reconciling Items				Consolidated
Sales revenue:
External customers		¥	507,713			¥	1,887,050			¥	151,309			¥	709,919			¥	241,915			¥	3,497,906			¥	—			¥	3,497,906
Inter-geographic areas			456,393				80,724				19,025				163,493				906				720,541				(720,541	)			—
Total			964,106				1,967,774				170,334				873,412				242,821				4,218,447				(720,541	)			3,497,906
Operating profit (loss)		¥	75,724			¥	79,919			¥	(2,533	)		¥	77,088			¥	10,168			¥	240,366			¥	(30,365	)		¥	210,001
For the three months ended December 31, 2015
		Yen (millions)
		Japan				North America				Europe				Asia				Other Regions				Total				Reconciling Items				Consolidated
Sales revenue:
External customers		¥	474,543			¥	2,028,572			¥	161,236			¥	759,658			¥	193,214			¥	3,617,223			¥	—			¥	3,617,223
Inter-geographic areas			558,258				118,133				25,257				154,205				772				856,625				(856,625	)			—
Total			1,032,801				2,146,705				186,493				913,863				193,986				4,473,848				(856,625	)			3,617,223
Operating profit (loss)		¥	27,795			¥	37,905			¥	(5,306	)		¥	88,234			¥	(303	)		¥	148,325			¥	14,754			¥	163,079

 

Explanatory notes:

 

1.	Major countries or regions in each geographic area:

 

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

 

2.	Operating profit (loss) of each geographical region is measured in a consistent manner with consolidated operating profit, which is profit before income taxes before share of profit of investments accounted for using the equity method and finance income and finance costs.

 

3.	Assets of each geographical region are defined as total assets including investments accounted for using the equity method, derivatives, and deferred tax assets.

 

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

 

5.

Reconciling items include elimination of inter-geographic transactions and balances as well as unallocated corporate assets. Unallocated corporate assets, included in reconciling items as of December 31, 2014 and 2015 amounted to ¥298,348 million and ¥402,463 million, respectively, which consist primarily of the Company’s cash and cash equivalents and financial assets measured at fair value through other comprehensive income.

(5) Impairment loss on investments accounted for using the equity method

For the nine months ended December 31, 2014, the Company recognized impairment losses of ¥18,979 million on certain investments accounted for using the equity method because there is objective evidence of impairment from declines in quoted market values. The impairment losses are included in share of profit of investments accounted for using the equity method in the condensed consolidated statement of income. For the nine months ended December 31, 2015, the Company did not recognize any significant impairment losses.

(6) Equipment on Operating Leases

The additions to equipment on operating leases for the nine months ended December 31, 2014 and 2015 are ¥1,210,961 million and ¥1,470,583 million, respectively.

The sales or disposals of equipment on operating leases for the nine months ended December 31, 2014 and 2015 are ¥462,913 million and ¥584,009 million, respectively.

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HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Notes to Condensed Consolidated Interim Financial Statements

 

(7) Property, Plant and Equipment

The additions to property, plant and equipment for the nine months ended December 31, 2014 and 2015 are ¥480,360 million and ¥488,079 million, respectively.

The sales or disposals of property, plant and equipment for the nine months ended December 31, 2014 and 2015 are ¥34,285 million and ¥38,401 million, respectively.

(8) Provisions

The components of and changes in provisions for the nine months ended December 31, 2015 are as follows:

 

		Yen (millions)
		Product warranties*				Other				Total
Balance as of March 31, 2015		¥	421,523			¥	55,419			¥	476,942
Provision		¥	302,435			¥	11,144			¥	313,579
Charge-offs			(183,727	)			(8,442	)			(192,169	)
Reversal			(6,780	)			(4,354	)			(11,134	)
Exchange differences on translating foreign operations			(10,173	)			(3,282	)			(13,455	)
Balance as of December 31, 2015		¥	523,278			¥	50,485			¥	573,763

Current liabilities and non-current liabilities of provisions as of March 31, 2015 and December 31, 2015 are as follows:

 

		Yen (millions)
		As of March 31, 2015				As of December 31, 2015
Current liabilities		¥	294,281			¥	404,734
Non-current liabilities			182,661				169,029
Total		¥	476,942			¥	573,763

 

Explanatory notes:

 

*

Honda recognizes provisions for product warranties to cover future product warranty expenses. Honda recognizes costs for general warranties on products Honda sells and for specific warranty programs, including product recalls. Honda provides for general estimated warranty costs at the time products are sold to customers. Honda also provides for specific estimated warranty program costs when it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation. These provisions are estimated 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. Provision for product warranties are used for expenditures based on the demand from customers and dealers.

(9) Income Taxes

In May 2015, the lawsuit related to transfer pricing involving the Company’s foreign transactions with certain consolidated subsidiaries in Brazil was concluded, and it was ruled that the Company shall receive a tax refund plus interest in Japan. As a result, income tax expense decreased by ¥19,145 million for the nine months ended December 31, 2015.

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HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Notes to Condensed Consolidated Interim Financial Statements

 

(10) Fair Value

 (a) Definition of Fair Value Hierarchy

Honda uses a three-level hierarchy when measuring fair value. The following is a description of the three hierarchy levels:

 

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

The level in the fair value hierarchy within which a fair value measurement in its entirety falls is based on the lowest input that is significant to the fair value measurement in its entirety. Honda recognizes the transfers between the levels of the fair value hierarchy at the end of the reporting period during which the change has occurred.

 (b) Method of Fair Value Measurement

The fair values of assets and liabilities are determined based on relevant market information and through the use of an appropriate valuation method.

The measurement methods and assumptions used in the measurement of assets and liabilities are as follows:

 (Cash and cash equivalents, trade receivables and trade payables)

The fair values approximate their carrying amounts due to their short-term maturities.

 (Receivables from financial services)

The fair value of receivables from financial services is measured primarily by discounting future cash flows using the current interest rates applicable for these receivables of similar remaining maturities. Fair value measurement for receivables from financial services is classified as Level 3.

 (Debt securities)

Debt securities consist mainly of mutual funds, corporate bonds, local bonds and auction rate securities.

The fair value of mutual funds with an active market is measured by using quoted market prices. Fair value measurement for mutual funds with an active market is classified as Level 1.

The fair values of corporate bonds and local bonds are measured based on proprietary pricing models provided by specialists and/or market makers and the models obtain a wide array of market observable inputs such as credit ratings and discount rates. Fair value measurements for corporate bonds and local bonds are classified as Level 2.

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

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HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Notes to Condensed Consolidated Interim Financial Statements

 

 (Equity securities)

The fair value of equity securities with an active market is measured by using quoted market prices. Fair value measurement for equity securities with an active market is classified as Level 1.

The fair value of equity securities with no active market is measured mainly by using the comparable company valuation method and other appropriate valuation methods. Fair value measurement for equity securities with no active market is classified as Level 3.

Price book-value ratio (PBR) of a comparable company are used as a significant unobservable input in the fair value measurement of equity securities classified as Level 3. The fair value increases (decreases) as PBR of a comparable company rise (decline). Such fair value measurements are conducted in accordance with the group accounting policy approved by the appropriate person of authority and based upon valuation methods determined by a valuator.

 (Derivatives)

Derivatives consist mainly of foreign currency forward exchange contracts, foreign currency option contracts, currency swap agreements and interest rate swap agreements.

The fair values of foreign currency forward exchange contracts and foreign currency option contracts are measured by 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 measured by discounting future cash flows using market observable inputs such as LIBOR rates, swap rates, and foreign exchange rates. Fair value measurements for these derivatives are classified as Level 2.

The credit risk of the counterparties is considered in the valuation of derivatives.

 (Financing liabilities)

The fair value of financing liabilities is measured by discounting future cash flows using interest rates currently available for liabilities of similar terms and remaining maturities. Fair value measurement of financing liabilities is mainly classified as Level 2.

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HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Notes to Condensed Consolidated Interim Financial Statements

 

 (c) Assets and Liabilities Measured at Fair Value on a recurring basis

Assets and liabilities measured at fair value on a recurring basis as of March 31, 2015 and December 31, 2015 consist of the following:

 

		Yen (millions)
As of March 31, 2015		Level 1				Level 2				Level 3				Total
Other financial assets:
Financial assets measured at fair value through profit or loss:
Derivatives
Foreign exchange instruments		¥	—			¥	6,199			¥	—			¥	6,199
Interest rate instruments			—				28,399				—				28,399
Total			—				34,598				—				34,598
Debt securities			17,665				33,481				8,172				59,318
Financial assets measured at fair value through other comprehensive income:
Equity securities			170,641				—				14,242				184,883
Total		¥	188,306			¥	68,079			¥	22,414			¥	278,799
Other financial liabilities:
Financial liabilities measured at fair value through profit or loss:
Derivatives
Foreign exchange instruments		¥	—			¥	33,429			¥	—			¥	33,429
Interest rate instruments			—				14,099				—				14,099
Total			—				47,528				—				47,528
Total		¥	—			¥	47,528			¥	—			¥	47,528

There were no transfers between Level 1 and Level 2 for the year ended March 31, 2015.

 

		Yen (millions)
As of December 31, 2015		Level 1				Level 2				Level 3				Total
Other financial assets:
Financial assets measured at fair value through profit or loss:
Derivatives
Foreign exchange instruments		¥	—			¥	19,067			¥	—			¥	19,067
Interest rate instruments			—				25,284				—				25,284
Total			—				44,351				—				44,351
Debt securities			17,850				36,841				6,031				60,722
Financial assets measured at fair value through other comprehensive income:
Equity securities			166,010				—				11,876				177,886
Total		¥	183,860			¥	81,192			¥	17,907			¥	282,959
Other financial liabilities:
Financial liabilities measured at fair value through profit or loss:
Derivatives
Foreign exchange instruments		¥	—			¥	24,275			¥	—			¥	24,275
Interest rate instruments			—				6,707				—				6,707
Total			—				30,982				—				30,982
Total		¥	—			¥	30,982			¥	—			¥	30,982

There were no transfers between Level 1 and Level 2 for the nine months ended December 31, 2015.

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HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Notes to Condensed Consolidated Interim Financial Statements

 

 (d) Financial Assets and Financial Liabilities measured at amortized cost

The carrying amounts and fair values of financial assets and financial liabilities measured at amortized cost as of March 31, 2015 and December 31, 2015 are as follows:

 

		Yen (millions)
		As of March 31, 2015								As of December 31, 2015
		Carrying amount				Fair value				Carrying amount				Fair value
Receivables from financial services		¥	5,683,605			¥	5,714,504			¥	5,305,697			¥	5,285,764
Debt securities			18,231				18,235				46,930				46,929
Financing liabilities			6,759,839				6,825,427				6,847,835				6,881,960

The table does not include financial assets and financial liabilities measured at amortized cost whose fair values approximate their carrying amounts.

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HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Notes to Condensed Consolidated Interim Financial Statements

 

(11) Contingent Liabilities

 Claims and Lawsuits

Honda is subject to potential liability under other various lawsuits and claims. Honda recognizes a provision for loss contingencies when it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation. Honda reviews these pending lawsuits and claims periodically and adjusts the amounts recognized for these contingent liabilities, if necessary, by considering the nature of lawsuits and claims, the progress of the case and the opinions of legal counsel.

With respect to product liability, personal injury claims or lawsuits, Honda believes that any judgment that may be recovered by any plaintiff for general and special damages and court costs will be adequately covered by Honda’s insurance and provision. Punitive damages are claimed in certain of these lawsuits.

After consultation with legal counsel, and taking into account all known factors pertaining to existing lawsuits and claims, Honda believes that the ultimate outcome of such lawsuits and pending claims should not result in liability to Honda that would be likely to have an adverse material effect on its consolidated financial position or results of operations.

 Loss related to airbag inflators

Honda provides warranty programs with regard to the product recalls and SIC (Safety Improvement Campaign) related to airbag inflators. Honda recognizes a provision for specific warranty costs when it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation. There is a possibility that Honda will need to recognize additional provisions when new evidence related to product recalls arise, however, it is not possible for Honda to reasonably estimate the amount and timing of potential future losses as of the date of this report.

In North America, various class actions related to the above mentioned product recalls and SIC have been filed against Honda since October 2014. The plaintiffs have claimed for properly functioning airbag inflators, compensation of economic losses including for incurred costs and the decline in the value of vehicles, as well as punitive damages. Most of the cases in the United States were transferred to the United States District Court for the Southern District of Florida and consolidated into a multidistrict litigation.

Regarding the above matter, Honda did not recognize a provision for loss contingencies because the conditions for a provision have not been met as of the date of this report. Also, it is not possible for Honda to reasonably estimate the amount and timing of potential future losses as of the date of this report because there is uncertainty regarding the period when these lawsuits will be concluded.

(12) Earnings Per Share

Earnings per share attributable to owners of the parent for the nine months ended December 31, 2014 and 2015 are calculated based on the following information. There were no potentially dilutive common shares outstanding for the nine months ended December 31, 2014 and 2015.

 

		2014				2015
Profit for the period attributable to owners of the parent (millions of yen)		¥	427,530			¥	437,975
Weighted average number of common shares outstanding, basic (shares)			1,802,289,849				1,802,285,552
Basic earnings per share attributable to owners of the parent (yen)		¥	237.21			¥	243.01

Earnings per share attributable to owners of the parent for the three months ended December 31, 2014 and 2015 are calculated based on the following information. There were no potentially dilutive common shares outstanding for the three months ended December 31, 2014 and 2015.

 

		2014				2015
Profit for the period attributable to owners of the parent (millions of yen)		¥	152,396			¥	124,187
Weighted average number of common shares outstanding, basic (shares)			1,802,288,789				1,802,284,798
Basic earnings per share attributable to owners of the parent (yen)		¥	84.56			¥	68.91

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HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Notes to Condensed Consolidated Interim Financial Statements

 

(13) Dividend

 (a) Dividend payout

For the nine months ended December 31, 2014

 

Resolution		The Ordinary General Meeting of Shareholders on June 13, 2014
Type of shares		Common shares
Total amount of dividends (millions of yen)		39,650
Dividend per share (yen)		22.00
Record date		March 31, 2014
Effective date		June 16, 2014
Resolution		The Board of Directors Meeting on July 29, 2014
Type of shares		Common shares
Total amount of dividends (million yen)		39,650
Dividend per share (yen)		22.00
Record date		June 30, 2014
Effective date		August 25, 2014
Resolution		The Board of Directors Meeting on October 28, 2014
Type of shares		Common shares
Total amount of dividends (million yen)		39,650
Dividend per share (yen)		22.00
Record date		September 30, 2014
Effective date		November 28, 2014

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HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Notes to Condensed Consolidated Interim Financial Statements

 

For the nine months ended December 31, 2015

 

Resolution		The Ordinary General Meeting of Shareholders on June 17, 2015
Type of shares		Common shares
Total amount of dividends (millions of yen)		39,650
Dividend per share (yen)		22.00
Record date		March 31, 2015
Effective date		June 18, 2015
Resolution		The Board of Directors Meeting on July 31, 2015
Type of shares		Common shares
Total amount of dividends (million yen)		39,650
Dividend per share (yen)		22.00
Record date		June 30, 2015
Effective date		August 25, 2015
Resolution		The Board of Directors Meeting on November 4, 2015
Type of shares		Common shares
Total amount of dividends (million yen)		39,650
Dividend per share (yen)		22.00
Record date		September 30, 2015
Effective date		November 30, 2015

 (b) Dividends payable of which record date was in the nine months ended December 31, 2015, effective after the period

 

Resolution		The Board of Directors Meeting on January 29, 2016
Type of shares		Common shares
Resource for dividend		Retained earnings
Total amount of dividends (millions of yen)		39,650
Dividend per share (yen)		22.00
Record date		December 31, 2015
Effective date		February 26, 2016

(14) Approval of Release of Condensed Consolidated Interim Financial Statements

The release of the condensed consolidated interim financial statements was approved by Takahiro Hachigo, President, Chief Executive Officer and Representative Director and Kohei Takeuchi, Director and Chief Operating Officer for Business Management Operations on February 5, 2016.