Honda 2014 Annual Report Download - page 38

Liquidity
The ¥1,168.9 billion in cash and cash equivalents at the end of the fiscal year
2014 corresponds to approximately 1.2 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 contraction and financial and foreign exchange
market volatility, may adversely affect liquidity. For this reason, finance subsidiaries
that carry total short-term borrowings of ¥1,566.8 billion have committed lines of
credit equivalent to ¥965.0 billion that serve as alternative liquidity for the com-
mercial 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 agen-
cies, 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, 2014.
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 nulli-
fied by agencies at any time. These ratings are not meant to serve as a recom-
mendation for trading in or holding Honda’s unsecured debt securities.
Off-Balance Sheet Arrangements
Guarantee
As of March 31, 2014, we guaranteed ¥25.3 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 ¥25.3 billion. As
of March 31, 2014, no amount has been 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 as of March 31, 2014:
Yen (millions)
Payments due by period
As of March 31, 2014 Total Within 1 year 1–3 years 3–5 years Thereafter
Long-term debt ¥4,537,530 ¥1,303,464 ¥2,088,658 ¥851,734 ¥293,674
Operating leases 102,180 18,862 27,567 16,027 39,724
Purchase and other commitments*1131,238 93,448 16,452 16,452 4,886
Interest payments*2181,449 79,061 73,865 25,802 2,721
Contributions to defined benefit pension plans*379,240 79,240 ———
Total ¥5,031,637 ¥1,574,075 ¥2,206,542 ¥910,015 ¥341,005
*1 Honda had commitments for purchases of property, plant and equipment as of March 31, 2014.
*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, 2014.
*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. Annual Report 2014 37
6 Financial Section
1 The Power of Dreams
2 Financial Highlights
3 To Our Shareholders
4 Review of Operations
5 Corporate Governance
7
Investor Relations
Information
Return to last
page opened
Go to
contents page