Mitsubishi 2014 Annual Report Download - page 52

The net amount of cash and cash equivalents received on the
share transfer less the cash and cash equivalents included in the
above current assets, which were deconsolidated on the sale of
the subsidiary, amounting to ¥21,587 million is presented as “Net
decrease in cash on the sale of subsidiaries resulting in change in
scope of consolidation” in the consolidated statement of cash flow
for the year ended March 31, 2013.
For the year ended March 31, 2014, treasury stock of
¥181,709 million ($1,765,544 thousand) was retired as a non-cash
transaction.
14. Leases
As lessee
(a) Finance lease transactions that do not involve transfer of
ownership to the lessee
(1) Description of the leased assets:
Property, plant and equipment
Leased assets principally include, but are not limited to,
production facilities for the automobile business (“Machinery
and equipment (net)” and “Tool, furniture and fixtures
(net)”).
(2) Depreciation method of leased assets
Leased assets under finance leases that do not involve trans-
fer of ownership to the lessee, are depreciated using the
straight line method based on the contract term of the lease
agreement. If the guaranteed residual value is determined
in the lease agreement, the said guaranteed residual value
is deemed as the residual value of such leased assets. If the
residual value is not determined, it is deemed to be zero.
(b) Operating lease transactions
Future minimum lease payments required under non-cancellable
operating lease transactions entered into by MMC and its
consolidated subsidiaries at March 31, 2014 and 2013 were
as follows:
(In millions of yen)
(In thousands
of U.S. dollars)
March 31,
2014 2013 2014
Due within 1 year ¥ 1,709 ¥1,357 $ 16,612
Due after 1 year 9,911 8,201 96,299
Total ¥11,620 ¥9,559 $112,911
As lessor
Future minimum lease revenues from non-cancellable operating
lease transactions entered into by MMC and its consolidated sub-
sidiaries as lessor at March 31, 2014 and 2013 were as follows:
(In millions of yen)
(In thousands
of U.S. dollars)
March 31,
2014 2013 2014
Due within 1 year ¥ 7,130 ¥ 5,429 $ 69,281
Due after 1 year 9,528 8,845 92,586
Total ¥16,659 ¥14,274 $161,868
15. Financial Instruments
For the years ended March 31, 2014 and 2013
Overview of financial instruments
(a) Our policy to manage financial instruments
Capital management policy of MMC group (the “Group”) is to
limit its investments to low-risk financial products and to obtain its
required funds mainly through bank borrowings. We use derivative
instruments to hedge interest rate, foreign currency and similar
risks, and we do not enter into any speculative transactions.
(b) Nature and risks of financial instruments and our risk
management structure
Trade receivables, which include notes receivable and accounts
receivable, are exposed to the credit risk of our customers. To man-
age this risk, in accordance with the Group’s credit control rules,
each group company monitors the financial condition of its major
customers, as well as managing the maturity profiles and outstand-
ing balances of the receivables on a customer by customer basis.
Trade receivables denominated in foreign currency are exposed
to foreign currency risk. In principle, forward foreign exchange
contracts are used to hedge the net position after offsetting foreign
currency denominated payables.
Some investment securities are exposed to the risk of market price
fluctuation. However, such securities are composed of mainly the
stocks of companies with which the Group has business relationships.
Trade payables, which include notes payable and accounts pay-
able, are mostly expected to be settled within one year. While trade
payables include certain payables denominated in foreign curren-
cies, in principle these are managed by netting against foreign
currency denominated receivables.
Floating rate bank borrowings are exposed to interest rate risk.
For some of our long-term bank borrowings, derivative transactions
MITSUBISHI MOTORS CORPORATION
Annual Report 2014
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