Honda 2011 Annual Report Download - page 51

Standards Update (ASU) 2009-16 “Accounting for Transfers of
Financial Assets”, and ASU 2009-17 “Improvements to Financial
Reporting by Enterprises Involved with Variable Interest Entities”,
effective April 1, 2010. Upon the adoption of these standards, we
consolidated all trusts as of April 1, 2010. As a result, we have no
off-balance sheet arrangements in the fiscal year ended March 31,
2011. Information about ASU 2009-16 and 2009-17 is described in
note (1)(c) and information about variable interest entities and
securitizations is described in note (4) to the accompanying
consolidated financial statements.
Guarantee
At March 31, 2011, we guaranteed ¥30.3 billion of employee bank
loans for their housing costs. If an employee defaults on his/her loan
payments, we are required to perform under the guarantee. The
undiscounted maximum amount of our obligation to make future
payments in the event of defaults is ¥30.3 billion. As of March 31,
2011, no amount was accrued for any estimated losses under the
obligations, as it was probable that the employees would be able to
make all scheduled payments.
a special-purpose entity, which is established for the limited purpose
of buying and re-transfer finance receivables. Our finance subsidiaries
remain as a servicer of the finance receivables and are paid a
servicing fee for our services. The special-purpose entity transfers
the receivables to a trust which is newly structured for each
securitization or bank conduit, which issues asset-backed securities
or commercial paper, respectively, to investors. Our finance
subsidiaries retain certain subordinated interests in the transferred
receivables in the form of subordinated certificates, servicing assets
and residual interests in certain cash reserves provided as credit
enhancements for investors. Our finance subsidiaries apply
significant assumptions regarding prepayments, credit losses and
average interest rates in estimating expected cash flows from the
trust or bank conduit, which affect the recoverability of our retained
interests in the transferred finance receivables. We periodically
evaluate these assumptions and adjust them, if appropriate, to
reflect the performance of the finance receivables.
We have not consolidated certain trusts since these trusts meet
the definitions of a former qualifying special-purpose entity before
the fiscal year ended March 31, 2011. We adopted Accounting
Tabular Disclosure of Contractual Obligations
The following table shows our contractual obligations at March 31, 2011:
Yen (millions)
Payments due by period
Total Less than 1 year 1-3 years 3-5 years After 5 years
Long-term debt ¥3,005,695 ¥ 962,455 ¥1,369,943 ¥555,551 ¥117,746
Operating leases 102,783 19,100 24,370 15,115 44,198
Purchase commitments*1 28,466 28,466 — — —
Interest payments*2 218,226 92,907 97,696 25,112 2,511
Contributions to defined benefit pension plans*3 92,815 92,815 — — —
Total ¥3,447,985 ¥1,195,743 ¥1,492,009 ¥595,778 ¥164,445
*1 Honda had commitments for purchases of property, plant and equipment at March 31, 2011.
*2 To estimate the schedule of interest payments, the Company utilized the balances and average interest rates of borrowings and debts and derivative instruments as of March 31, 2011.
*3 Since contributions beyond the next fiscal year are not currently determinable, contributions to defined benefit pension plans reflect only contributions expected for the next fiscal year.
If our estimates of unrecognized tax benefits and potential tax
benefits are not representative of actual outcomes, our consolidated
financial statements could be materially affected in the period of
settlement or when the statutes of limitations expire, as we treat
these events as discrete items in the period of resolution. Since it is
difficult to estimate actual payment in the future related to our
uncertain tax positions, unrecognized tax benefits totaled ¥46,265
million are not represented in the table above.
At March 31, 2011, we had no material capital lease obligations
or long-term liabilities reflected on our balance sheet under U.S.
GAAP other than those set forth in the table above.
Trend Information
The Great East Japan Earthquake
The Great East Japan Earthquake occurred on March 11, 2011 and
the nuclear power plant disaster has caused and will continue to
cause significant damage to the Japanese economy. Honda’s
business sites, such as Honda’s R&D subsidiaries located in Tochigi
Prefecture, were heavily damaged. As a result, certain property,
plant and equipment and inventories were damaged. On March 11,
2011, Honda temporarily suspended production and R&D activities
at its sites located in Japan due to the effects of this disaster, which
includes a shortage of parts supplies and damage on property, plant
and equipment.
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