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57
MITSUBISHI MOTORS CORPORATION ANNUAL REPORT 2006
Notes to Consolidated Financial Statements
Mitsubishi Motors Corporation and Consolidated Subsidiaries
1. Going Concern
In fiscal years (FY) 2003 and 2004, the Mitsubishi Motors Corporation (MMC) group recorded net losses of
¥215,424 million and ¥474,785 million respectively. In FY2005, the MMC group also recorded a net loss of
¥92,166 million ($784,596 thousand).
As a result of these recurring losses, significant doubt arises as to the Company’s ability to continue as a
going concern.
To address this situation as well as strengthen its operating base, the MMC group formulated the “Business
Revitalization Plan” (from FY2004 to FY2006) in May 2004.
In June 2004, the MMC group outlined additional measures to its “Business Revitalization Plan” announced in
May 2004 that focus on three areas: all out cost cutting; restoring customer trust; and across the board compliance.
The new measures were in response to a marked slump in domestic sales that surfaced following the recall prob-
lems at MMC and Mitsubishi Fuso Truck and Bus Corporation.
After announcing its “Business Revitalization Plan” in May 2004, the MMC group devoted itself to implement-
ing the measures set out in the plan, designed to regain customer and public trust and improve profitability. Despite
these measures, MMC’s inability to respond adequately to past recall problems delayed the hoped for restoration of
consumer and public trust and seriously impacted sales. This, in turn, highlighted the problem of over capacity that
lurked beneath the surface over recent years. In addition, concerns deepened about delays in the recovery of opera-
tions and about the financial health of the MMC group. As a result, the MMC group was forced to use funds allo-
cated for the revitalization program in the repayment of interest bearing debt.
To break out of this situation and successfully revitalize itself, the MMC group, while continuing its efforts to
regain customer and public trust, found itself in a situation that required additional measures to improve profitability.
Given these circumstances, the MMC group put together the new “Mitsubishi Motors Revitalization Plan” in January
2005. Highlights of the plan as well as the progress in FY2005 are summarized as follows.
(1) Corporate culture reform initiatives
Recovering customer and public trust and reforming corporate culture are absolute priorities in the MMC group’s bid
to revitalize itself. The Corporate Social Responsibility (CSR) Promotion Office has played a lead role in the imple-
mentation of a wide range of measures designed to enhance compliance. The Business Ethics Committee, made up
of specialists and leaders in their fields from outside the MMC group, has also given valuable advice and guidance
from an external perspective in this regard. An internal seminar program has enabled each employee to acquire a
deeper understanding of business ethics principles. Employees have now submitted written pledges to fully observe
and practice compliance.
An investigation by a panel of external lawyers into past recall problems was completed in March 2005. The
MMC group submitted to the Ministry of Land Infrastructure & Transport (MLIT) its final report, which summarizes
disciplinary action and measures to prevent any recurrence. In FY2005, these measures continued to be carried out
by the MMC group and the latest status of the implementation has been reported to MLIT every three months.
Notes to Consolidated Financial Statements