Honda 2007 Annual Report Download - page 64

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human brain activity as a result of joint research with Advanced
Telecommunications Research Institute International. Honda
has also developed a biofabric with excellent levels of durability,
aesthetics and smoothness for use as an automobile interior
finish. As this fabric is derived from plant materials, the material
manufacturing process results in an energy savings of 10% to
15%, compared with such conventional oil-based fabrics as
polyester. Further, through joint research with the Research
Institute of Innovative Technology for the Earth we have estab-
lished a technological base for ethanol production from soft-
biomass, cellulose from plant stalk and leaf matter, such as
cultivated rice byproducts, that are not suitable for human con-
sumption. This step from cellulose to bioethanol production
surmounts a problem that had been thwarting progress in
this field.
Expenses incurred in fundamental research are distributed
among Honda’s business segments.
improvement, streamlining and modernization of production
facilities, and improvement of Sales and R&D facilities.
In the financial services segment, capital expenditures
excluding property on operating leases amounted to ¥0.9 bil-
lion in the fiscal year ended March 31, 2007, while capital
expenditures for property on operating leases were ¥366.7 bil-
lion. Capital expenditures in power product and other busi-
nesses in the fiscal year ended March 31, 2007, totaling ¥16.3
billion, were deployed to upgrade, streamline, and modernize
manufacturing facilities for power products, and to improve
R&D facilities for power products.
The Company did not sell or dispose of any major facilities
in the fiscal year ended March 31, 2007.
Spending by business segment is shown below.
Yen (millions)
Years ended March 31 2006 2007
Motorcycle Business ¥052,246 ¥068,880
Automobile Business 392,934 540,859
Financial Services 1,316 933
Power Product and
Other Businesses 011,345 016,394
Total ¥457,841 ¥627,066
Purchase of operating
lease assets ¥ 0 0 0—00 ¥366,795
Capital Expenditures
Capital expenditures in fiscal 2007 were applied to the expan-
sion of manufacturing facilities, streamlining efforts, and the
replacement of older equipment. Other expenditures included
funds used to augment sales and R&D facilities.
Total capital expenditures for the year amounted to ¥993.8
billion, up ¥536.0 billion from the previous year. Also, total capi-
tal expenditures excluding property on operating leases for the
year amounted to ¥627.0 billion, up ¥169.2 billion from the
previous year.
In the motorcycle business, we made capital expenditures
of ¥68.8 billion in the fiscal year ended March 31, 2007. Funds
were allocated to the introduction of new models, as well as
the improvement, streamlining and modernization of produc-
tion facilities, and improvement of Sales and R&D facilities.
In the automobile business, we made capital expenditures of
¥540.8 billion in the fiscal year ended March 31, 2007. Funds
were allocated to the introduction of new models, as well as the
03 04 05 06 07
0
200
400
600
0
2.0
4.0
6.0
R&D Expenses and R&D Expenses
as a Percentage of Net Sales
Years ended March 31
Yen (billions) (%)
R&D Expenses (left)
R&D Expenses as a Percentage
of Net Sales (right)
Plans after Fiscal 2007
Honda plans to build a new engine plant in Ogawa-machi Hiki-
gun, Saitama with an investment of approximately ¥25,000
million. The annual production capacity of this new plant will be
approximately 200,000 units. This new plant should begin
operation in 2009. The amount of this capital expenditure is
included in the plan of new auto plant in Yorii-machi Oosato-
gun, Saitama with an investment of approximately ¥70,000
million, which was announced last fiscal year.
03 04 05 06 07
0
200
400
600
Capital Expenditures
Depreciation
Capital Expenditures and
Depreciation
Years ended March 31
Yen (billions)