Honda 2012 Annual Report Download - page 41

Net cash used in financing activities amounted to ¥44.1
billion of cash outflows. Cash outflows from financing activi-
ties decreased by ¥56.2 billion, compared with the previous
fiscal year, due mainly to an increase in proceeds from debt
and a decrease in purchases of treasury stock, which was
partially offset by an increase in dividends paid.
Liquidity
The ¥1,247.1 billion in cash and cash equivalents at the end
of the fiscal year 2012 corresponds to approximately 1.9
months of net sales, and Honda believes it has sufficient
liquidity for its business operations.
At the same time, Honda is aware of the possibility that
various factors, such as recession-induced market contrac-
tion and financial and foreign exchange market volatility, may
adversely affect liquidity. For this reason, finance subsidiaries
that carry total short-term borrowings of ¥1,177.8 billion have
committed lines of credit equivalent to ¥777.3 billion that
serve as alternative liquidity for the commercial paper issued
regularly to replace debt. Honda believes it currently has
sufficient credit limits, extended by prominent international
banks, as of the date of the filing of Honda’s Form 20-F.
Honda’s short- and long-term debt securities are rated by
credit rating agencies, such as Moody’s Investors Service,
Inc., Standard & Poor’s Rating Services, and Rating and
Investment Information, Inc. The following table shows the
ratings of Honda’s unsecured debt securities by Moody’s,
Standard & Poor’s and Rating and Investment Information as
of March 31, 2012.
Credit ratings for
Short-term
unsecured
debt securities
Long-term
unsecured
debt securities
Moody’s Investors Service P-1 A1
Standard & Poor’s Rating
Services A-1 A+
Rating and Investment
Information a-1+ AA
The above ratings are based on information provided by
Honda and other information deemed credible by the rating
agencies. They are also based on the agencies’ assessment
of credit risk associated with designated securities issued by
Honda. Each rating agency may use different standards for
calculating Honda’s credit rating, and also makes its own
assessment. Ratings can be revised or nullified by agencies
at any time. These ratings are not meant to serve as a rec-
ommendation for trading in or holding Honda’s unsecured
debt securities.
Off-Balance Sheet Arrangements
Guarantee
At March 31, 2012, we guaranteed ¥28.1 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
¥28.1 billion. As of March 31, 2012, 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.
Tabular Disclosure of Contractual Obligations
The following table shows our contractual obligations at March 31, 2012:
Yen (millions)
Payments due by period
At March 31, 2012 Total Less than 1 year 1–3 years 3–5 years After 5 years
Long-term debt ¥3,146,396 ¥ 911,395 ¥1,286,621 ¥792,501 ¥155,879
Operating leases 101,732 18,733 24,443 17,487 41,069
Purchase commitments*188,136 88,136 — — —
Interest payments*2203,160 79,056 87,640 33,788 2,676
Contributions to defined benefit pension plans*393,555 93,555 — — —
Total ¥3,632,979 ¥1,190,875 ¥1,398,704 ¥843,776 ¥199,624
*1 Honda had commitments for purchases of property, plant and equipment at March 31, 2012.
*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, 2012.
*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.
Honda Motor Co., Ltd. 39