April 25, 2003
HONDA MOTOR CO., LTD. REPORTS
CONSOLIDATED FINANCIAL RESULTS
FOR THE FISCAL FOURTH QUARTER AND
THE FISCAL YEAR ENDED MARCH 31, 2003
Tokyo, April 25, 2003 --- Honda Motor Co., Ltd. today announced its consolidated financial results
for the fiscal fourth quarter and the fiscal year ended March 31, 2003.
Fourth Quarter Results
Honda's consolidated net income for the fiscal fourth quarter ended March 31, 2003 totaled a record
high, JPY 116.7 billion (USD 971 million), an increase of 9.4% from the same period in 2002. Basic
net income per Common Share for the quarter amounted to JPY 120.86 (USD 1.01), compared to JPY
109.51 for the same period in 2002. Two of Honda's American Depositary Shares represent one Common
Share.
Unit sales in all Honda's business categories, namely motorcycles, automobiles and power products,
increased for the fiscal fourth quarter and consolidated net sales and other operating revenue
(herein referred to as "revenue") amounted to JPY 2,128.6 billion (USD 17,709 million), an increase
of 1.3% over the corresponding period in 2002.
Revenue included currency translation effects, which had a negative impact on foreign currency
denominated revenue from Honda's overseas subsidiaries translated into yen.
Honda estimates that had the exchange rate of the yen remained unchanged from the same period in
2002, revenue for the quarter would have increased by approximately 7.2%.
Consolidated operating income for the fiscal fourth quarter totaled JPY 206.6 billion (USD 1,719
million), an increase of 22.0% compared to the same period in 2002.
This increase in operating income was due mainly to higher revenue from strong automobile sales in
North America. In addition, Honda's ongoing cost cutting strategies also contributed to this
increase. These positive impacts offset negative impacts, such as appreciation of the yen, increases
in selling, general and administrative (SG&A) expenses as well as research and development (R&D)
expenses.
Consolidated income before income taxes for the quarter totaled JPY 177.3 billion (USD 1,475
million), an increase of 10.2% from the same period in 2002.
With respect to Honda's sales in the fiscal fourth quarter by business category, motorcycle unit
sales increased 18.0% to 2,068,000 units and revenue decreased 12.7%, to JPY 263.0 billion (USD
2,188 million).
Honda's unit sales of automobiles increased by 7.4% to 780,000 units, due primarily to strong sales
in North America. As a result, revenue increased 3.0%, to JPY 1,711.1 billion (USD 14,236 million)
during the quarter.
Unit sales of power products totaled 1,716,000 units, an increase of 20.1% compared to the
corresponding period in 2002. Favorable sales of Honda's general-purpose engines in Europe and North
America contributed to this increase. Revenue from other businesses, including the power product
business and financial services, increased by 12.0% to JPY 154.4 billion (USD 1,285 million) due
mainly to higher revenue from financial services led by favorable automobile sales in North America.
Fiscal Year Results
Honda's consolidated net income for the year ended March 31, 2003 set a record high totaling JPY
426.6 billion (USD 3,550 million), an increase of 17.6% from the corresponding period of last year.
Basic net income per Common Share for the year amounted to JPY 439.43 (USD 3.66), compared to JPY
372.23 for the corresponding period a year ago.
Unit sales of Honda's motorcycles, automobiles and power products increased and revenue for the year
amounted to JPY 7,971.4 billion (USD 66,319 million), an increase of 8.3% from last year.
Revenue included negative effect of currency translation, and Honda estimates that had the exchange
rate of the yen remained unchanged from the previous year, revenue for the year would have increased
by approximately 9.1%.
Consolidated operating income for the year totaled JPY 689.4 billion (USD 5,736 million), an
increase of 7.8% compared to the corresponding period last year. Higher revenue from the automobile
business, Honda's continuing cost cutting strategies and weaker yen were the major contributing
factors in this increase in operating income.
Consolidated income before income taxes for the year totaled JPY 609.7 billion (USD 5,073 million),
an increase of 10.6% compared to the previous year.
With respect to Honda's sales for the fiscal year by business category, motorcycle unit sales
increased by 32.6% to 8,080,000 units, and revenue increased 3.2% to JPY 978.0 billion (USD 8,137
million). Higher sales in Asia outside Japan mainly contributed to this increase.
Honda's unit sales of automobiles increased by 8.3% to 2,888,000 units, and revenue increased 8.6%
to JPY 6,440.0 billion (USD 53,578 million) from the previous fiscal year. Strong sales in North
America and Asia outside Japan contributed to this increase in unit sales.
Unit sales of power products totaled 4,584,000 units, an increase of 16.8% compared to the
corresponding period of the previous year. This is due mainly to increased unit sales of general-
purpose engines in Europe and North America. Revenue from other businesses, including power products
and financial services, showed a 14.1% increase, amounting to JPY 553.3 billion (USD 4,603 million).
Forecasts for the fiscal year ending March 31, 2004
Fears of a progressing slowdown in the U.S. economies, and its impact on the global business
environment are anticipated to increase, and competition in the Japanese market is expected to
intensify amid continuing weak consumer spending. Other global concerns, including Iraqi issues, are
also expected to affect the overall global economies. In these circumstances, Honda expects
competition in each of its markets to remain challenging. In regard to the forecasts of the
financial results for the fiscal year ending March 31, 2004, Honda projects consolidated results as
to be below:
First half ending September 30, 2003
In billions of yen Changes from FY 2003
Net sales and other operating revenue 4,050 +5.1%
Income before income taxes 270 -1.4%
Net income 195 +0.1%
Fiscal year ending March 31, 2004
In billions of Yen Changes from FY2003
Net sales 8,300 +4.1%
Income before income taxes 620 +1.7%
Net income 440 +3.1%
These forecasts are based on the assumption that the exchange rates for the yen to the U.S. dollar
and the euro for the current fiscal year will average JPY 116 and JPY 125, respectively.
This announcement contains forward-looking statements within the meaning of Section 21E of the U.S.
Securities Exchange Act of 1934. Honda's actual results could materially differ from those contained
in these forward-looking statements as a result of numerous factors outside of Honda's control. Such
factors include general economic conditions in Honda's principal markets, and foreign exchange rates
between the Japanese yen and other major currencies, as well as other factors detailed from time to
time in Honda's reports filed with the U.S. Securities and Exchange Commission.
[1] Unit Sales Breakdown
(In thousands of units)
-----------------------------------------------------------------------------------
Three months Three months Year Year
ended ended ended ended
Mar. 31, 2003 Mar. 31, 2002 Mar. 31, 2003 Mar. 31, 2002
------------------------------------------------------------------------------------
MOTORCYCLE BUSINESS
Japan 123 101 432 404
(motorcycles included above) ( 123) ( 101) ( 432) ( 404)
North America 170 190 610 590
(motorcycles included above) ( 101) ( 101) ( 324) ( 307)
Europe 92 96 305 315
(motorcycles included above) ( 89) ( 94) ( 296) ( 308)
Others 1,683 1,365 6,733 4,786
(motorcycles included above) ( 1,681) ( 1,361) ( 6,722) ( 4,775)
------------------------------ -------------------------------------------------------------------------------
Total 2,068 1,752 8,080 6,095
(motorcycles included above) ( 1,994) ( 1,657) ( 7,774) ( 5,794)
AUTOMOBILE BUSINESS
Japan 221 247 849 878
North America 402 364 1,522 1,368
Europe 64 54 207 176
Others 93 61 310 244
------------------------------------------------------------------------------------------------------------------
Total 780 726 2,888 2,666
POWER PRODUCT BUSINESS
Japan 119 137 472 409
North America 712 622 1,872 1,601
Europe 592 405 1,290 1,012
Others 293 265 950 904
------------------------------------------------------------------------------------------------------------------
Total 1,716 1,429 4,584 3,926
[2] Net Sales Breakdown
(A) For the three months ended March 31, 2003 and 2002
(In millions of Yen)
-----------------------------------------------------------------------------------
Three months Three months
ended ended
Mar. 31, 2003 Mar. 31, 2002
------------------------------------------------------------------------------------
MOTORCYCLE BUSINESS
Japan 24,277 ( 9.2% ) 24,624 ( 8.2% )
North America 89,130 ( 33.9% ) 126,241 ( 41.9% )
Europe 57,758 ( 22.0% ) 60,453 ( 20.1% )
Others 91,862 ( 34.9% ) 89,912 ( 29.8% )
------------------------ -----------------------------------------------------------------------------------
Total 263,027 ( 100.0% ) 301,230 ( 100.0% )
AUTOMOBILE BUSINESS
Japan 377,804 ( 22.1% ) 447,843 ( 26.9% )
North America 1,038,509 ( 60.7% ) 999,596 ( 60.2% )
Europe 133,009 ( 7.8% ) 106,228 ( 6.4% )
Others 161,820 ( 9.4% ) 108,152 ( 6.5% )
------------------------ -----------------------------------------------------------------------------------
Total 1,711,142 ( 100.0% ) 1,661,819 ( 100.0% )
OTHERS
Japan 30,873 ( 20.0% ) 28,938 ( 21.0% )
North America 86,247 ( 55.8% ) 75,673 ( 54.8% )
Europe 25,790 ( 16.7% ) 22,042 ( 16.0% )
Others 11,570 ( 7.5% ) 11,328 ( 8.2% )
------------------------ -----------------------------------------------------------------------------------
Total 154,480 ( 100.0% ) 137,981 ( 100.0% )
TOTAL
Japan 432,954 ( 20.3% ) 501,405 ( 23.9% )
North America 1,213,886 ( 57.0% ) 1,201,510 ( 57.2% )
Europe 216,557 ( 10.2% ) 188,723 ( 9.0% )
Others 265,252 ( 12.5% ) 209,392 ( 9.9% )
------------------------ -----------------------------------------------------------------------------------
Total 2,128,649 ( 100.0% ) 2,101,030 ( 100.0% )
Explanatory Note:
1. The geographical breakdown of net sales is based on the location of affiliated and unaffiliated
customers.
2. Net sales of others including revenue from sales of power products and related parts,
leisure businesses, trading and financial services.
[2] Net Sales Breakdown - continued
(B) For the years ended March 31, 2003 and 2002
(In millions of Yen)
-----------------------------------------------------------------------------------
Year Year
ended ended
Mar. 31, 2003 Mar. 31, 2002
------------------------------------------------------------------------------------
MOTORCYCLE BUSINESS
Japan 98,391 ( 10.1% ) 101,587 ( 10.7% )
North America 329,073 ( 33.6% ) 348,832 ( 36.8% )
Europe 175,736 ( 18.0% ) 172,378 ( 18.2% )
Others 374,895 ( 38.3% ) 325,103 ( 34.3% )
------------------------ -----------------------------------------------------------------------------------
Total 978,095 ( 100.0% ) 947,900 ( 100.0% )
AUTOMOBILE BUSINESS
Japan 1,513,596 ( 23.5% ) 1,654,238 ( 27.9% )
North America 3,926,848 ( 61.0% ) 3,529,560 ( 59.5% )
Europe 420,292 ( 6.5% ) 336,844 ( 5.7% )
Others 579,358 ( 9.0% ) 409,100 ( 6.9% )
------------------------ -----------------------------------------------------------------------------------
Total 6,440,094 ( 100.0% ) 5,929,742 ( 100.0% )
OTHERS
Japan 136,719 ( 24.7% ) 112,921 ( 23.3% )
North America 312,005 ( 56.4% ) 269,535 ( 55.6% )
Europe 65,933 ( 11.9% ) 54,330 ( 11.2% )
Others 38,653 ( 7.0% ) 48,010 ( 9.9% )
------------------------ -----------------------------------------------------------------------------------
Total 553,310 ( 100.0% ) 484,796 ( 100.0% )
TOTAL
Japan 1,748,706 ( 21.9% ) 1,868,746 ( 25.4% )
North America 4,567,926 ( 57.3% ) 4,147,927 ( 56.3% )
Europe 661,961 ( 8.3% ) 563,552 ( 7.7% )
Others 992,906 ( 12.5% ) 782,213 ( 10.6% )
------------------------ -----------------------------------------------------------------------------------
Total 7,971,499 ( 100.0% ) 7,362,438 ( 100.0% )
Explanatory Note:
1. The geographical breakdown of net sales is based on the location of affiliated and unaffiliated customers.
2. Net sales of others including revenue from sales of power products and related parts,
leisure businesses, trading and financial services.
[3] Consolidated Financial Summary
For the three months and years ended March 31, 2003 and 2002
Financial Highlights
(In millions of Yen)
------------------------------------------------------------------------------------------------
Three months Three months Year Year
ended % ended ended % ended
Mar. 31, 2003 Change Mar. 31, 2002 Mar. 31, 2003 Change Mar. 31, 2002
------------------------------------------------------------------------------------------------
Net sales and other
operating revenue 2,128,649 1.3% 2,101,030 7,971,499 0 7,362,438
Operating income 206,602 22.0% 169,277 689,449 7.8% 639,296
Income before
income taxes 177,345 10.2% 160,882 609,755 10.6% 551,342
Net income 116,716 9.4% 106,709 426,662 17.6% 362,707
(In Yen)
------------------------------------------------------------------------------------------------
Basic net income per
Common Share 121 109.51 439 372.23
American Share 60.43 54.75 219.71 186.11
(In millions of U.S. Dollars)
----------------------------------------
Three months Year
ended ended
Mar. 31, 2003 Mar. 31, 2003
----------------------------------------
Net sales and other
operating revenue 17,709 66,319
Operating income 1,719 5,736
Income before income taxes 1,475 5,073
Net income 971 3,550
(In U.S. Dollars)
----------------------------------------
Net income per
Common Share 1.01 3.66
American Share 0.50 1.83
Explanatory Note:
The number of treasury stock has been excluded from the calculation for basic net income per common share.
[4] Consolidated Statements of Income and Retained Earnings
(A) For the three months ended March 31, 2003 and 2002
(In millions of Yen)
--------------------------------------------------------------------------
Three months Three months
ended ended
Mar. 31, 2003 Mar. 31, 2002
--------------------------------------------------------------------------
Net sales and other
operating revenue 2,128,649 2,101,030
Cost of sales 1,420,375 1,451,738
Selling, general and
administrative 384,290 372,263
Research and development 117,382 107,752
-------------------------------------------------------------------------
Operating income 206,602 169,277
Other income:
Interest 1,721 1,851
Other 5,086 16,009
Other expenses:
Interest 2,559 3,853
Other 33,505 22,402
-------------------------------------------------------------------------
Interest before income taxes 177,345 160,882
Income taxes 78,953 68,009
Income before equity in
income of affiliates 98,392 92,873
Equity in income of affiliates 18,324 13,836
-------------------------------------------------------------------------
Net income 116,716 106,709
Retained earnings:
Balance at beginning of period 3,044,948 2,658,891
Cash dividends paid - -
Transfer to legal reserves - -
-------------------------------------------------------------------------
Balance at end of period 3,161,664 2,765,600
-------------------------------------------------------------------------
(In Yen)
-------------------------------------------------------------------------
Basic net income per
Common Share 120.86 109.51
American Share 60.43 54.75
Explanatory Note:
The number of treasury stock has been excluded from the calculation for basic net income per common share.
[5] Consolidated Balance Sheets
(In millions of Yen)
------------------------------------------------------------
Assets
-------------------------------------------------------------------------------------------------
Mar. 31, 2003 Mar. 31, 2002
------------------------------------------------------------
Current assets:
Cash and cash equivalents 547,404 609,441
Trade accounts and notes receivable 444,498 452,208
Finance subsidiaries-
receivables, net 1,097,541 995,087
Inventories 751,980 644,282
Deferred income taxes 202,376 182,788
Other current assets 248,561 204,538
------------------------------------------------------------
Total current assets 3,292,360 3,088,344
Finance subsidiaries-
receivables, net 2,230,020 1,808,861
Investments and advances 412,971 395,495
Property, plant
and equipment, at cost:
Land 342,991 318,208
Buildings 942,747 920,106
Machinery and equipment 2,023,724 2,048,244
Construction in progress 72,112 82,610
------------------------------------------------------------
3,381,574 3,369,168
Less accumulated depreciation 1,987,231 1,979,455
------------------------------------------------------------
Net property,
plant and equipment 1,394,343 1,389,713
Other assets 351,597 258,382
-----------------------------------------------------------------------------------------
Total assets 7,681,291 6,940,795
=========================================================================================
[5] Consolidated Balance Sheets - continued
(In millions of Yen)
------------------------------------------------------------
Liabilities and Stockholders'
Equity
-------------------------------------------------------------------------------------------------
Mar. 31, 2003 Mar. 31, 2002
------------------------------------------------------------
Current liabilities:
Short-term debt 877,954 1,035,069
Current portion of long-term debt 304,342 308,014
Trade payables 830,671 840,957
Accrued expenses 777,492 678,118
Income taxes payables 64,179 61,244
Other current liabilities 267,752 186,657
------------------------------------------------------------
Total current liabilities 3,122,390 3,110,059
------------------------------------------------------------
Long-term debt 1,140,182 716,614
Other liabilities 788,999 540,181
-------------------------------------------------------------------------------------------------
Total liabilities 5,051,571 4,366,854
-------------------------------------------------------------------------------------------------
Stockholders' equity:
Common stock 86,067 86,067
Capital surplus 172,529 172,529
Legal reserves 29,391 28,969
Retained earnings 3,161,664 2,765,600
Adjustments from foreign
currency translation ( 469,472 ) ( 300,081 )
Net unrealised gains on
marketable equity securities 14,820 8,730
Minimum pension
liabilities adjustment ( 308,513 ) ( 187,824 )
------------------------------------------------------------
Accumulated other comprehensive
income (loss) ( 763,165 ) ( 479,175 )
Treasury stock ( 56,766 ) ( 49 )
-------------------------------------------------------------------------------------------------
Total stockholders' equity 2,629,720 2,573,941
Total liabilities and
stockholders' equity 7,681,291 6,940,795
[6] Consolidated Statements of Cash Flows
(In millions of Yen)
------------------------------------------------------------
Year Year
ended ended
Mar. 31, 2003 Mar. 31, 2002
------------------------------------------------------------
Cash flows from operating activities:
Net income 426,662 362,707
Adjustments to reconcile net income
to net cash provided by operating activities:
Depreciation 220,874 194,944
Deffered income taxes 68,433 8,086
Equity in income of affiliates ( 61,972 ) ( 42,515 )
Loss on fair value adjustment of derivative
instrument 36,983 21,740
Decrease (increase) in:
Trade accounts and notes receivable ( 16,842 ) 5,539
Inventories ( 146,574 ) 10,191
Increase (decrease) in trade payables 28,675 ( 14,101 )
Other, net 131,888 203,359
------------------------------------------------------------
Net cash provided by operating activities 688,127 749,950
------------------------------------------------------------
Cash flows from investing activities:
Decrease (increase) in investments and advances 20,737 476
Capital Expenditures ( 316,991 ) ( 303,424 )
Proceeds from sales of property,
plant and equipment 16,438 7,416
Decrease (increase) in finance
subsidiaries-receivables ( 793,743 ) ( 591,039 )
------------------------------------------------------------
Net cash used in investing activities ( 1,073,559 ) ( 886,571 )
------------------------------------------------------------
Cash flows from financing activities:
Increase (decrease) in short-term debt ( 47,959 ) 5,997
Proceeds from long-term debt 775,987 624,070
Repayment of long-term debt ( 292,063 ) ( 298,718 )
Acquisiotion of common share ( 56,717 ) -
Cash dividends paid ( 30,176 ) ( 24,360 )
Increase (decrease) in commercial paper
classified as long-term debt ( 2,131 ) 649
Net cash provided by (used in)
------------------------------------------------------------
financing activities 346,941 307,638
------------------------------------------------------------
Effect of exchange rate changes on cash and
cash equivalents ( 23,546 ) 20,905
------------------------------------------------------------
Net change in cash and cash equivalents ( 62,037 ) 191,922
Cash and cash equivalents at beginning of year 609,441 417,519
------------------------------------------------------------
Cash and cash equivalents at end of year 547,404 609,441
============================================================
Explanatory Notes:
1. The Company prepares its consolidated financial statements in conformity with accounting principles generally
accepted in the United States since the Company has issued American Depositary Receipts listed on the New York
Stock Exchange and files reports with the U.S. Securities and Exchange Commission, except all segment
information which is prepared in accordance with a Ministerial Ordinance under the Securities and Exchange Law
of Japan.
2. The average exchange rates for the fiscal forth quarter ended March 31, 2003 were JPY 118.94=U.S.$1 and
JPY 127.74=euro1. The average exchange rates for the corresponding period last year were JPY 132.52=U.S.$1 and
JPY 116.11=euro1. The average exchange rates for the fiscal year ended March 31, 2003 were JPY 121.95=U.S.$1 and
JPY 121.04=euro1, as compared with JPY 125.14=U.S.$1 and JPY 110.58=euro1 for the corresponding period last year.
3. United States dollar amounts have been translated from yen solely for the convenience of the reader at the rate
of JPY 120.20=U.S.$1, the mean of the telegraphic transfer selling exchange rate and the telegraphic transfer
buying exchange rate prevailing on the Tokyo foreign exchange market on March 31, 2003.
4. The Company's Common Stock-to-ADR exchange rate has been changed from two shares of Common Stock to one ADR to
one share of Common Stock to two ADRs, effective January 10, 2002.
5. The Company has adopted the provisions of Statement of Financial Accounting Standards (SFAS) No.130, "Reporting
Comprehensive Income". The following table represents components of the Company's comprehensive income. Other
comprehensive income (loss) consists of changes in adjustments from foreign currency translation, net
unrealized gains on marketable equity securities and minimum pension liabilities adjustment.
Three months ended Three months ended
March 31, 2003 March 31, 2002
(In millions of Yen)
Net income 116,716 106,709
Other comprehensive (82,529) (49,847)
income (loss)
-------------------------------------------------------------------------------
Comprehensive income 34,187 56,862
Fiscal year ended Fiscal year ended
March 31, 2003 March 31, 2002
(In millions of Yen)
Net income 426,662 362,707
Other comprehensive (283,990) 5,352
income (loss)
--------------------------------------------------------------------------------
Comprehensive income 142,672 368,059
6. Certain reclassifications have been made to the prior year's consolidated financial statements to confirm to
the presentation used for the year ended March 31, 2003.
7. The number of treasury stock has been excluded from the calculation for basic net income per common share.
[7] Segment Information
(A) Business Segment Information
For the year ended March 31, 2003
(In millions of Yen)
---------------------------------------------------------------------------------------------
Motor- Auto- Corporate assets
cycle mobile Financial Other and
Business Business Services Businesses Total Eliminations Consolidated
---------------------------------------------------------------------------------------------
Net sales and other
operating revenue:
Sales to unaffiliated
unaffiliated customers 978,095 6,440,094 237,958 315,352 7,971,499 - 7,971,499
Intersegment-sales 0 0 3,037 10,971 14,008 (14,008) -
---------------------------------------------------------------------------------------------
Total 978,095 6,440,094 240,995 326,323 7,985,507 (14,008) 7,971,499
Cost of sales,
S.G.A. and R&D expenses 919,329 5,879,991 179,006 317,732 7,296,058 (14,008) 7,282,050
---------------------------------------------------------------------------------------------
Operating income 58,766 560,103 61,989 8,591 689,449 0 689,449
=============================================================================================
Assets 798,530 3,624,639 3,505,017 241,085 8,169,271 (487,980) 7,681,291
Depreciation and 25,311 187,839 804 6,920 220,874 - 220,874
amortization
Capital expenditures 37,496 270,263 646 8,586 316,991 - 316,991
For the year ended March 31, 2002
(In millions of Yen)
---------------------------------------------------------------------------------------------
Motor- Auto- Corporate assets
cycle mobile Financial Other and
Business Business Services Businesses Total Eliminations Consolidated
---------------------------------------------------------------------------------------------
Net sales and other
operating revenue:
Sales to
unaffiliated customers 947,900 5,929,742 201,906 282,890 7,362,438 - 7,362,438
Intersegment-sales 0 0 7,409 10,968 18,377 ( 18,377) -
---------------------------------------------------------------------------------------------
Total 947,900 5,929,742 209,315 293,858 7,380,815 ( 18,377) 7,362,438
Cost of sales,
S.G.A. and R&D expenses 878,244 5,409,232 164,231 289,812 6,741,519 ( 18,377) 6,723,142
---------------------------------------------------------------------------------------------
Operating income (Losses) 69,656 520,510 45,084 4,046 639,296 0 639,296
=============================================================================================
Assets 754,512 3,377,470 2,917,170 240,735 7,289,887 349,092 6,940,795
Depreciation and 22,129 165,508 786 6,521 194,944 - 194,944
amortization
Capital expenditure 29,929 264,657 676 8,162 303,424 - 303,424
Explanatory Note:
1. Segmentation of Business
Business segment is based on Honda's business organization and the similarity of the principal products
included within each segment as well as the relevant markets for such products.
2. Principal products of each segment
Business Sales Principal Products
-------------------------------------------------------------------------------------------------------------
Motorcycle Motorcycles, all-terrain vehicles (ATV), Large-size motorcycles, mid-size motorcycles,
personal water craft and relevant parts motorized bicycles, all-terrain vehicles (ATV),
personal water craft
Automobile Automobiles and relevant parts Compact cars, sub-compact cars, mini-vehicles
Financial Services Financial and insurance services
Other Power products and relevant parts, and Power tillers, generators,
others general purpose engines, lawn mowers
(B) Geographical Segment Information
The geographical segmentation is based on the location where sales originated.
For the year ended March 31, 2003
(In millions of Yen)
------------------------------------------------------------------------------------------
Corporate assets
and
Japan North America Europe Others Total Eliminations Consolidated
------------------------------------------------------------------------------------------
Net sales and other
operating revenue:
Sales to
unaffiliated customers 1,975,518 4,580,004 663,032 752,945 7,971,499 - 7,971,499
Transfers between
geographical segments 1,943,465 131,906 161,551 35,515 2,272,437 -2,272,437 -
------------------------------------------------------------------------------------------
Total 3,918,983 4,711,910 824,583 788,460 10,243,936 -2,272,437 7,971,499
Cost of sales,
S.G.A. and R&D expenses 3,716,654 4,313,202 810,398 727,440 9,567,694 -2,285,644 7,282,050
------------------------------------------------------------------------------------------
Operating income (losses) 202,329 398,708 14,185 61,020 676,242 13,207 689,449
==========================================================================================
Assets 2,392,252 4,182,861 535,507 472,259 7,582,879 98,412 7,681,291
For the year ended March 31, 2002 (In millions of Yen)
------------------------------------------------------------------------------------------
Corporate assets
and
Japan North America Europe Others Total Eliminations Consolidated
------------------------------------------------------------------------------------------
Net sales and other
operating revenue:
Sales to
unaffiliated customers 2,087,765 4,163,951 570,170 540,552 7,362,438 - 7,362,438
Transfers between
geographical segments 1,723,269 143,987 33,335 14,259 1,914,850 -1,914,850 -
------------------------------------------------------------------------------------------
Total 3,811,034 4,307,938 603,505 554,811 9,277,288 -1,914,850 7,362,438
Cost of sales,
S.G.A. and R&D expenses 3,557,603 3,905,543 638,843 514,100 8,616,089 -1,892,947 6,723,142
------------------------------------------------------------------------------------------
Operating income (losses) 253,431 402,395 -35,338 40,711 661,199 -21,903 639,296
==========================================================================================
Assets 2,177,095 3,679,762 514,535 374,801 6,746,193 194,602 6,940,795
Explanatory Note:
Corporate assets included in Corporate assets and Eliminations amounted to 323,005 million yen for the year ended
March 31, 2002 and 348,625 million yen for the year ended March 31, 2001, which consist primarily of cash
and cash equivalents and marketable equity securities at the Parent company.
(C) Overseas Sales
For the year ended March 31, 2003 (In Millions of Yen)
North America Europe Others Total
----------------------------------------------------------
Overseas Sales 4,567,926 661,961 992,906 6,222,793
Consolidated Sales 7,971,499
Overseas Sales Ratio to Consolidated Sales 57.3% 8.3% 12.5% 78.1%
For the year ended March 31, 2002 (In Millions of Yen)
North America Europe Others Total
----------------------------------------------------------
Overseas Sales 4,147,927 563,552 782,213 5,493,692
Consolidated Sales 7,362,438
Overseas Sales Ratio to Consolidated Sales 56.3% 7.7% 10.6% 74.6%
[8] Consolidated Financial Statements divided into non-financial services and finance subsidiaries
(1) Consolidated Balance Sheets divided into non-financial services businesses and finance subsidiaries
(In millions of Yen)
-----------------------------------------------------------------------------------------------------------------
The fiscal year ended March 31, 2003
--------------------------------------------------------------------
Yen % of total
-----------------------------------------------------------------------------------------------------------------
Assets
-----------------------------------------------------------------------------------------------------------------
< Non-financial services businesses >
Current Assets: 2,987,609 38.9
Cash and cash equivalents 530,343
Trade accounts and notes receivable 450,241
Inventories 751,980
Other current assets 1,255,045
Investments and advances 557,971 7.3
Property, plant and equipment, at cost 1,376,137 17.9
Other assets 325,398 4.2
--------------------------------------------------------------------
Total assets 5,247,115 68.3
< Finance subsidiaries >
Cash and cash equivalents 17,061 0.2
Finance subsidiaries-short-term 1,106,917 14.4
receivables, net
Finance subsidiaries-long-term 2,231,804 29.1
receivables, net
Other assets 149,235 1.9
--------------------------------------------------------------------
Total assets 3,505,017 45.6
Eliminations among subsidiaries ( 1,070,841 ) ( 13.9 )
----------------------------------------------------------------------------------------------------------------
Total assets 7,681,291 100.0
----------------------------------------------------------------------------------------------------------------
Liabilities and Stockholders' Equity
-----------------------------------------------------------------------------------------------------------------
< Non-financial services businesses >
Current liabilities: 1,950,980 25.4
Short-term debt 241,039
Current portion of long-term debt 9,753
Trade payables 835,302
Accrued expenses 653,570
Other current liabilities 211,316
Long-term debt 32,805 0.4
Other liabilities 789,031 10.3
--------------------------------------------------------------------
Total liabilities 2,772,816 36.1
|< Finance subsidiaries >
Short-term debt 1,400,962 18.2
Current portion of long-term debt 294,596 3.8
Accrued expenses 128,870 1.7
Long-term debt 1,111,069 14.5
Other liabilities 269,252 3.5
-----------------------------------------------------------------------------------------------------------------
Total liabilities 3,204,749 41.7
Eliminations among subsidiaries ( 925,994 ) ( 12.0 )
-----------------------------------------------------------------------------------------------------------------
Total liabilities 5,051,571 65.8
-----------------------------------------------------------------------------------------------------------------
Common stock 86,067 1.1
Capital surplus 172,529 2.2
Legal reserves 29,391 0.4
Retained earnings 3,161,664 41.1
Accumulated other comprehensive income ( 763,165 ) ( 9.9 )
(loss)
Treasury stock ( 56,766 ) ( 0.7 )
-----------------------------------------------------------------------------------------------------------------
Total stockholders' equity 2,629,720 34.2
-----------------------------------------------------------------------------------------------------------------
Total liabilities and stockholders' 7,681,291 100.0
equity
(2) Consolidated Statements of Cash Flows divided into non-financial services businesses and finance subsidiaries
(In millions of Yen)
The fiscal year ended March 31, 2003
-------------------------------------------------------------------------------------------------------------------
Items Non-financial services Finance
businesses subsidiaries
------------------------------------------------
Cash flows from operating activities:
Net Income 412,636 14,265
Adjustments to reconcile net income to net cash provided by operating
activities:
Depreciation 220,070 804
Deferred income taxes ( 18,139 ) 86,572
Equity in income of affiliates ( 62,638 )
Loss on fair value adjustment of derivative instrument ( 1,956 ) 38,939
Decrease in trade accounts and notes receivable ( 19,774 )
Decrease in inventories ( 146,574 )
Decrease in trade payables 28,273
Other, net 131,705 163
------------------------------------------------
Net cash provided by operating activities 543,603 140,743
-------------------------------------------------------------------------------------------------------------------
Cash flows from investing activities:
*Decrease (increase) in investments and advances ( 122,255 ) ( 551 )
Capital expenditures ( 316,345 ) ( 646 )
Proceeds from sales of property, plant and equipment 16,273 165
Decrease (increase) in finance subsidiaries-receivables ( 796,314 )
Net cash used in investing activities ( 422,327 ) ( 797,346 )
-------------------------------------------------------------------------------------------------------------------
Free cash flow (cash flows from operating and investing activities) 121,276 ( 656,603 )
-------------------------------------------------------------------------------------------------------------------
Free cash flow of non-financial services businesses excluding the increase
in loans (amounting to 70,471 million yen) to finance subsidiaries (Note) 246,184
-------------------------------------------------------------------------------------------------------------------
Cash flows from financing activities:
* Increase (decrease) in short-term debt ( 70,207 ) 156,825
* Proceeds from long-term debt 8,240 767,749
* Repayment of long-term debt ( 9,886 ) ( 283,589 )
Proceeds from issuance of common stock 16,967
Cash dividends paid ( 56,717 )
Increase (decrease) in commercial paper classified as long-term debt ( 30,221 ) ( 194 )
( 2,131 )
----------------------------------------
( 158,791 ) 655,627
-------------------------------------------------------------------------------------------------------------------
Effect of exchange rate changes on cash and cash equivalents ( 22,940 ) ( 606 )
-------------------------------------------------------------------------------------------------------------------
Net change in cash and cash equivalents ( 60,455 ) ( 1,582 )
-------------------------------------------------------------------------------------------------------------------
Cash and cash equivalents at beginning of year 590,798 18,643
-------------------------------------------------------------------------------------------------------------------
Cash and cash equivalents at end of year 530,343 17,061
-------------------------------------------------------------------------------------------------------------------
Note: Non-financial services businesses loans to finance subsidiaries. These cash flows were included in the items of
"Decrease(increase) in investments and advances" of non-financial services businesses, and some items of
finance subsidiaries (marked by *). Free cash flow of non-financial services businesses excluding the increase
in lending to finance subsidiaries are stated for the readers' information.
Unconsolidated Financial Summary
(Parent company only)
For the years ended March 31, 2003 and 2002
1. Financial Highlights
(Parent company only)
(In millions of Yen)
------------------------------------------------------
Year Year
ended % ended
Mar. 31, 2003 Change Mar. 31, 2002
------------------------------------------------------
Net sales 3,322,719 3.5% 3,211,186
Operating profit 144,838 -22.1% 185,829
Ordinary profit 242,680 10.8% 218,987
Net income 170,035 26.0% 134,925
(In Yen )
------------------------------------------------------
Net income per share 174.63 138.47
Dividend per share 32 28
for the term
Year-end dividend 16 15
per share
Interim dividend 16 13
per share
(As a percentage)
------------------------------------------------------
Payout ratio 18.3% 20.2%
2. Estimated Financial Figures for the Fiscal Year Ending March 31, 2004
(Parent company only)
(In millions of Yen)
------------------------------------------------------
First half Year
ending ending
Sep.30, 2003 Mar.31, 2004
------------------------------------------------------
Net sales 1,640,000 3,390,000
Ordinary profit 125,000 260,000
Net income 90,000 190,000
(In Yen)
------------------------------------------------------
Dividend per share
for the term 19 19
3. Unit Sales Breakdown
(Parent company only)
(In thousands of units)
--------------------------------------------------------
Year Year
ended ended
Mar. 31, 2003 Mar. 31, 2002
--------------------------------------------------------
MOTORCYCLE BUSINESS
Japan 429 396
Export 776 808
(Motorcycles included in export) (446) (505)
-----------------------------------------------------------------------------------------------
Total 1,205 1,204
AUTOMOBILES BUSINESS
Japan 871 902
(Mini-vehicles included above) (265) (295)
Export 485 428
-----------------------------------------------------------------------------------------------
Total 1,357 1,330
POWER PRODUCT BUSINESS
Japan 473 412
Export 4,075 3,450
-----------------------------------------------------------------------------------------------
Total 4,548 3,862
3. Net Sales Breakdown - continued
(Parent company only)
(In millions of Yen)
--------------------------------------------------------------
Year Year
ended ended
Mar. 31, 2003 Mar. 31, 2002
--------------------------------------------------------------
MOTORCYCLE BUSINESS
Japan 79,696 81,583
Export 369,998 392,785
--------------------------------------------------------------------------------------------------------------
Total 449,695 474,369
AUTOMOBILES BUSINESS
Japan 1,173,907 1,285,340
Export 1,581,244 1,344,981
--------------------------------------------------------------------------------------------------------------
Total 2,755,152 2,630,321
POWER PRODUCT BUSINESS
Japan 23,028 21,678
Export 94,842 84,817
--------------------------------------------------------------------------------------------------------------
Total 117,871 106,495
TOTAL
Japan 1,276,633 1,388,602
Export 2,046,086 1,822,583
--------------------------------------------------------------------------------------------------------------
Total 3,322,719 3,211,186
Explanatory Notes:
1. The summary of unconsolidated financial information set forth above is derived from the complete
unconsolidated financial information of the Company to be filed with the Securities and Exchange
Commission on the Company's Form 6-K for the month of May 2003.
2. Unconsolidated financial statements have been prepared on the basis of accounting principles
generally accepted in Japan in accordance with the Japanese Commercial Code.
3. The unit sales and yen amounts described above are rounded down to the nearest one thousand
units and one million yen, respectively.
4. Unconsolidated Statements of Income
(Parent company only)
(In millions of Yen)
------------------------------------------------------
Year Year
ended ended
Mar.31, 2003 Mar.31, 2002
------------------------------------------------------
Net sales 3,322,719 3,211,186
Cost of sales 2,247,487 2,184,432
Selling, general and administrative
expenses 930,398 840,924
------------------------------------------------------
Operating profit 144,838 185,829
Non-operating profit 117,732 92,388
Non-operating expenses 19,891 59,231
Ordinary Profit 242,680 218,987
Extraordinary profit 4,197 1,646
Extraordinary loss 14,859 45,362
------------------------------------------------------
Income before income taxes 232,018 175,270
Income taxes
Current 92,888 73,589
Deferred (30,905) (33,245)
------------------------------------------------------
Net income 170,035 134,925
======================================================
Notes
1. Research and development expenses for the fiscal year amounted 414,634 million of yen.
5. Unconsolidated Balance Sheets
(Parent company only)
(In millions of Yen)
------------------------------------------------------
Mar. 31, 2003 Mar. 31, 2002
------------------------------------------------------
Current assets 829,444 766,973
Fixed assets 1,231,887 1,170,832
------------------------------------------------------
Total assets 2,061,331 1,937,805
======================================================
Current liabilities 525,315 523,785
Fixed liabilities 114,761 71,372
------------------------------------------------------
Total liabilities 640,077 595,157
Common stock 86,067 86,067
Capital surplus 168,912 168,912
Legal reserve 21,516 21,516
Earned surplus 1,179,817 1,040,337
Unrealized gains on securities available
for sale 21,707 25,864
Treasury stock (56,766) (49)
------------------------------------------------------
Stockholders' equity 1,421,254 1,342,648
Total liabilities and ------------------------------------------------------
stockholders' equity 2,061,331 1,937,805
======================================================
Management Policy
Honda's business activities are based on fundamental corporate philosophies known as "Respect for
the Individual" and "The Three Joys."
"Respect for the Individual" defines Honda's relationship with its associates, business partners and
society. It is based on sharing a commitment to initiative, equality and mutual trust among people.
It is Honda's belief that everyone who comes into contact with Honda's activities will gain a sense
of satisfaction through the experience of buying, selling or creating our Honda's products and
services. This philosophy is expressed as "The Three Joys."
With these corporate philosophies as the foundation, Honda's business is guided by the following
Company Principle:
"Maintaining a global viewpoint,
we are dedicated to supplying products of the highest quality
at a reasonable price for worldwide customer satisfaction"
Honda actively works to share a sense of satisfaction with all of its customers as well as its
shareholders, and to continue improving its corporate value.
Profit Redistribution Policy
The Company considers redistribution of profits to our shareholders as one of the most important
management issues. Accordingly, the Company attempts to increase its corporate value while carrying
out its operations from a global standpoint.
The Company intends to redistribute profits to our shareholders, with regard to its projected
comprehensive cash needs/requirements, and to make distribution payments, taking into consideration
the Company's long-term consolidated earnings performance.
In consideration of shareholder expectations, retained earnings will be applied toward financing the
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 its business
results and strengthening its financial condition.
Acquisition of the Company's common stock will also be implemented at the optimal timing with the
aim of improving efficiency in its capital structure.
Preparing for the Future
Fears of a progressing slowdown in the U.S. economies, and its impact on the global business
environment are anticipated to increase, and competition in the Japanese market is expected to
intensify amid continuing weak consumer spending. Other global concerns, including Iraqi issues, are
also expected to affect the overall global economies.
In these circumstances, as part of its objective of strengthening the corporate structure and
improving product competitiveness to increase speed and flexibility in response to changing customer
and social needs, Honda recognizes that further enhancing each of the following specific areas is
essential to its success:
* R&D
* Production Efficiency
* Sales Efficiency
* Product Quality
* The Environment
* Safety Technologies
* European Business Strategy
R&D
Along with efforts to develop more effective safety and environmental technologies, Honda will
create and swiftly introduce new value-added products that meet specific needs in various regional
markets.
Honda will also continue efforts in the research of future technologies, which include the
advancement of a bi-pedal humanoid robot.
Production Efficiency
Honda will establish efficient and flexible production systems and expand production capacity with
aims to increase the capability of supplying high quality products that meet market needs. In
addition to the ongoing expansion of these systems, the Company also intends to expand on a global
scale the supply network of its competitive products and component parts.
Sales Efficiency
Honda will expand its product lines and upgrade its sales structure. Through the innovative use of
IT, Honda will also promote its efforts in customer communication.
Product Quality
Responding to increasing consumer demand, Honda will upgrade its quality control through enhanced
coordination among the development purchasing, production, sales and service departments.
The Environment
Honda will step up the introduction of clean, fuel-efficient engine technologies and recyclability
throughout its product lines. Honda will also advance alternative fuel technologies, including fuel
cells. In addition, Honda will continue its efforts to minimize the environmental impact, as
measured by the *Life Cycle Assessment, in all of its business fields including logistics and sales.
In its production activities, Honda promotes environmental preservation issues under its Green
Factory concept.
*Life Cycle Assessment
A comprehensive system for quantifying the environmental impacts of Honda's products throughout
their life cycles, from the material procurement and energy consumption to waste disposal.
Safety Technologies
Honda R&D will develop technologies for the prediction and the prevention of accidents as well as
those for passenger and pedestrian injury reduction. Honda intends to enhance its contribution to
traffic safety in motorized societies, including Asian countries. Honda also intends to remain
active in a variety of traffic safety programs, including advanced driving and motorcycling training
schemes provided by its local dealerships.
European Business Strategy
Honda will continue efforts to reinforce its sales structure by strengthening product lineup and
restructuring its sales and distribution organization. On the manufacturing side, Honda will improve
its cost competitiveness by enhancing parts procurement through Honda's global supply network,
including the network in Asian countries, and improving production efficiency at each of Honda's
production facilities in Europe.
Honda will continue to evolve in each of these areas, focusing on activities aligned with the three
directions - "Value Creation," "Globalization," and "Commitment for the future" - to reach its goal
of becoming a company that society wants to exist.
