Mitsubishi 1999 Annual Report Download

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Annual
1999
Report

Table of contents

  • Page 1
    Annual 1999 Report

  • Page 2
    ... sustainable profitability. The company is focused on this At March 31 mission Total so that it may earn maximum customer satisfaction,¥ assets create value and reward its stockholders Property, plant and equipment and employees. Stockholders' equity ¥120.55=U.S.$1, the exchange rate prevailing...

  • Page 3
    ... not available due to the loss for the period. Non-consolidated summary Mitsubishi Motors Corporation 1999 Years ended March 31 Net sales Operating income (loss) Ordinary income (loss) Net income (loss) Per share of common stock Net income (loss): Basic Fully diluted Cash dividends ¥ 2,333,971 21...

  • Page 4
    ... service. RM2001 gives us the blueprint for realizing that ideal, so I would like to take you on a brief tour of the 3-year management plan, our guiding star to the land of higher efficiencies, profitability and increased value for our shareholders. In a nutshell, RM2001's major thrust is directed...

  • Page 5
    ... Mitsubishi Heavy Industries and other Mitsubishi group companies in the development of fuel cell EVs, and expects to complete a road-test model by 2001. Profitability is also the name of the game overseas. Improved profits and record sales are the story in the United States, Europe and Australia...

  • Page 6
    ... in Italy and based on the fast-selling Pajero iO, hits the European market this autumn. Mitsubishi truck sales in Europe grew 10% on 1997, benefiting from our marketing alliance with Volvo. In Australia, Mitsubishi brand vehicles sold in record numbers for the second consecutive year, and MMC is...

  • Page 7
    .... Born 1936. During career with company, has served in Accounting, Personnel Planning & Labor Relations, and Labor Union departments. More recently, has held posts of vice-president of Mitsubishi Motor Manufacturing of America, Inc., Works General Manager and Corporate General Manager of Office of...

  • Page 8
    ... core model that matches North American market requirements and needs. In Europe, MMC is aiming at a sales volume of 330,000 units in 2000, to put the Mitsubishi Motors Europe B.V. group onto a firmer base. It will continue to introduce models powered by the GDI eco-engine. In Asia, MMC is aiming...

  • Page 9
    ... GDI engine generator, with automatic idling stop-go system, compact motor and high-power batteries and with a kinetic energy regeneration capability. The company is working with Mitsubishi Heavy Industries, Ltd., and other Mitsubishi group companies on the development of fuel-cell electric vehicles...

  • Page 10
    ... (Renewal Mitsubishi 2001) mid-term management plan, which calls for major changes in policy to restore corporate health and vigor by March 2001. That was six months ago; how would you rate the progress RM2001 has made so far? A: I would say that we are right on track. I would give our workforce...

  • Page 11
    ... you have made in the GDI engine is proving a burden to MMC? A: The playing field will level out once other manufacturers start using GDI engines. Fuel-cell EV technology is going to take take several years before it becomes available on the market at a reasonable price and until that day, our best...

  • Page 12
    ... and marketing aspects. Q: Turning to Europe. Mitsubishi Motors has recently increased its holding in NedCar and currently shares management with Volvo on a 50-50 basis. Now that Volvo has been acquired by Ford, what form will the management of NedCar take? A: With the change of control that...

  • Page 13
    and financial base so that we can make a profit on sales of 80,000 in Japan and 70,000 overseas. Q: Tie-ups in the motor industry, until recentry, have usually been limited in scope, but all of a sudden, in the space of six months, we have seen a major change in this. A: From a business angle, the ...

  • Page 14
    ... in, and rationalization of, the total development and manufacturing process are vital to staying competitive. This is a part of life at MMC. We are currently reducing the number of platforms used in our passenger model lineup. This will produce significant saving in development, ride and handling...

  • Page 15
    ... provide generous interior space and comfort with excellent maneuverability, and gives full expression to MMC's trademark fun-to-drive and easy-to-use philosophy. GDI engines keep carbon dioxide, NOx and HC emissions low, return great mileage and deliver peppy performance. The Mirage Dingo launched...

  • Page 16
    ...in this field will be a major key to survival in the industry, and to creating value for the shareholder. Already, the company has forged its place as an industry leader in the field of fuel-efficiency and engine emissions and has focused its development resources on consolidating and extending that...

  • Page 17
    ... to cut fuel consumption and carbon dioxide emissions by 30%, while in- creasing power 10%. And a brand new MVV leanburn engine now powers the fast-selling Mitsubishi minicars. The company already uses direct injection diesel engines to power its trucks, and the new Pajero (Montero) series to...

  • Page 18
    ... or diesel engines MMC has market-ready technology that has been part of the California Air Resource Board testing program since 1995. The company has developed advanced high-power lithiumion batteries that are lighter and have a longer useful life, and high-efficiency energy management systems for...

  • Page 19
    ... and recycling efforts translate into higher manufacturing efficiency, lower costs and improved profits. Mitsubishi models will be 90% recyclable by weight by 2000. Under its Voluntary End-of-Life Vehicle Recycling Action Program, the company is: promoting the use of more easily recyclable parts-one...

  • Page 20
    ...to being a major revenue engine in the early 21st century. With growing environmental awareness and changes in energy supplies, the development and application of leading-edge technology in this field is a pre-requisite in order to stay competitive and is the key to survival and profits. MMC has the...

  • Page 21
    ...Japan in 2000. In Europe, Carisma, Galant, Space Wagon and Space Star models meet Germany's D3 levels that correspond closely to the Step III regulations to be introduced in the EU in 2000. This ultra-clean performance has been achieved through the addition of advanced catalytic converter technology...

  • Page 22
    ...GDI eco-engine, Dingo returns outs tanding mileage and is eas y on the environment. likes , iO offers s pacious comfort ins ide the RIS E s afety body, and i s powered by Mi ts ubi s hi GDI eco-engine. T he European-market Pajero Pinin due to go into production at Pininfarina in Italy this s ummer...

  • Page 23
    ... has captured leading s hare in the s mall s pecialty clas s . T he new 2 0 0 0 Eclips e model has been des igned for the American market by Mits ubis hi Motors R&D of America, Inc., and recei ved rave revi ews at the New York Internati onal Autos how in April this year. Powered by a new 3 -liter V6...

  • Page 24
    ... for Mitsubishi Motors after 1997 saw the worst set of results in the history of the company. Total commitment to the corporate ideals has seen a dramatic improvement in the financial and business health of the company over the last year, as reflected in the sharp increase in the value of its shares...

  • Page 25
    ... Passenger car (1,000 units) Minicar Truck & Bus 1999. The revolutionary GDI engine family continues to give the company a competitive edge that will play an increasingly important role in years to come. Total industry vehicle sales in Japan in fiscal 1998 were 5,874,172 units, 6.5% down over 1997...

  • Page 26
    ... regulations. This technology will also enable Mitsubishi cars to meet the European Step III levels and the ULEV levels in California slated for market in Japan at the end of the year. The company has installed CVT production facilities at the Yagi Plant in Kyoto. The HEV system employs compact...

  • Page 27
    ... power. Total bus sales in Japan were 12,102 units, a 12% decline over 1997. Mitsubishi brand bus sales were 4,589 units. This marked a 7% decrease, but the company retained leading share of 37.9%. All large-size bus production was transferred to Mitsubishi Automotive Bus Manufacturing Co., Ltd...

  • Page 28
    ...truck production hub in Thailand. The GDI eco-engine helped increase sales in environmentally-aware Europe. The company's units in North America, Europe and Thailand all returned to profitability in fiscal 1998. Total industry exports from Japan in fiscal 1998 were 4,519,289 units, 3.3% down on 1997...

  • Page 29
    ... the fourth model to the current Mitsubishi lineup of the locally-produced Galant and Eclipse and the imported Montero Sport. This is likely to be from the company's new core SUW series recently introduced in Japan, and will be tailored to match American SUV tastes. Truck sales in North America were...

  • Page 30
    ... three new models in 1998: the Space Wagon, Pajero Sport and the made-in-Europe Space Star. The enthusiastic acceptance in environmentally-aware Europe of Mitsubishi's GDI eco-engine, which cuts fuel consumption and carbon dioxide emissions by an average 30%, gives the company a telling competitive...

  • Page 31
    ... car and truck sales by 35%, but the company Space Star brand recaptured leading share for the first time in nine years, helped by strong sales of the Adventure MPV model launched at the beginning of 1998. Mitsubishi's MPV series is a strategic model for the Asian market that is assembled in Taiwan...

  • Page 32
    ... region. Total car sales declined by just 0.4% on fiscal 1997, helped by strong sales in the first half of the year. Sales slowed in the second half with concern about financial markets, and a deterioration in the balance of payments and in exchange rates. MMC's affiliate China Motor Corp., posted...

  • Page 33
    ... Plant Office of Domestic Car Operations Office of International Car Operations Office of North America Car Operations Headquarters of Truck & Bus Operations Truck & Bus Research & Development Center Tokyo Plant Office of Truck & Bus Sales Truck & Bus International Sales Operational review 31

  • Page 34
    ... 1999, a significant reduction of ¥241.3 billion. major decline in total vehicle demand, and in truck sales in particular. Sales outside Japan totaled ¥2,030.1 billion, a decrease of 3.6% on the previous year. Increased sales volume and a weaker Yen saw sales income in North America and Europe...

  • Page 35
    ... a major deterioration in truck and bus income resulting from the sharp drop in total demand. In North America, operating profit was ¥39.4 billion, a ¥26.4 billion improvement on the year before. This was the result of reduced production costs for the new Galant model and of reductions in selling...

  • Page 36
    ...) of ¥156.7 billion, a 13.5% decrease over the previous year. Expenditure decreased in Japan, but installation of new plant for production of the new Eclipse model in North America and the 0 '94 Total 106.6 Excluding Leased vehicles '95 152.2 '96 109.9 '97 129.0 '98 127.7 Financial review 34

  • Page 37
    ..., selling off fixed assets, and liquidating trade receivables. 56 subsidiaries and 16 affiliates. The company's 45 truck and bus dealerships in Japan include 35 subsidiaries and 3 affiliates. Leased vehicles Mitsubishi Motor Sales of America Inc., the company's sales unit in North America...

  • Page 38
    ... and accounts receivable (Note 4 and 6) Marketable securities (Note 6) Inventories (Note 5) Short-term loans (Note 4) Deferred taxes Prepaid expenses and other current assets Allowance for doubtful receivables Total current assets Property, plant and equipment (Note 6): Land Buildings and structures...

  • Page 39
    ...) Liabilities and stockholders' equity Current liabilities: Trade notes and accounts payable Short-term borrowings (Note 6) Current portion of long-term debt (Note 6) Employees' savings deposits Accrued expenses Accrued income taxes Other current liabilities Total current liabilities Long-term debt...

  • Page 40
    Mitsubishi Motors Corporation and Consolidated Subsidiaries Consolidated Statements of Operations Year ended March 31, 1999 1998 1999 (In thousands of U.S. dollars) (Note 3) (In millions of yen) Net sales Cost of sales Reversal of deferred profit on installment sales Gross profit Selling, general ...

  • Page 41
    Mitsubishi Motors Corporation and Consolidated Subsidiaries Consolidated Statements of Stockholders' Equity Common stock Balance at April 1, 1997 Net loss Adjustment to retained earnings at beginning of year for inclusion or exclusion of subsidiaries and affiliates in or from consolidation or equity...

  • Page 42
    ... and equipment, net Gain on sales of marketable securities Devaluation loss on marketable securities Gain on sales of stocks of a subsidiary Foreign exchange loss on loans Accrued severance indemnities, net Change in operating assets and liabilities: Trade notes and accounts receivable Inventories...

  • Page 43
    ... by financing activities Effect of exchange rate changes on cash and cash equivalents Net change in cash and cash equivalents Cash and cash equivalents at beginning of year Cash and cash equivalents at end of year See accompanying notes to consolidated financial statements. (127,501) 190,773...

  • Page 44
    ... Notes to Consolidated Financial Statements March 31, 1999 1. Significant Accounting Policies (a) Basis of presentation Mitsubishi Motors Corporation ("MMC") and its domestic subsidiaries maintain their books of account in conformity with the financial accounting standards of Japan, and its foreign...

  • Page 45
    .... Pension cost is funded as accrued. Past service cost was amortized over a period of 26 and 25 years for the years ended March 31, 1999 and 1998, respectively. (h) Installment sales Certain domestic consolidated subsidiaries recognize revenues by the installment sales method whereby gross profit on...

  • Page 46
    ... was reclassified to selling, general and administrative expenses. e. For the year ended March 31, 1998, equity in losses of unconsolidated subsidiaries and affiliates of ¥254 million was reclassified to other non-operating expenses. 2. Changes in Accounting Policies a. Effective April 1, 1998...

  • Page 47
    ....55 = U.S.$1.00, the exchange rate prevailing on March 31, 1999. The translation should not be construed as a representation that the yen amounts represent or have been, or could be, converted into U.S. dollars at that or any other rate. 4. Liquidation of Accounts and Loans Receivable At March 31...

  • Page 48
    ...) (In millions of yen) Loans, principally from banks and insurance companies due through 2022 at rates ranging from 0.39% to 11.75 %: Secured Unsecured 6.0% bonds due 1998 6.2% bonds due 1999 2.15% bonds due 2001 1.9% bonds due 2001 4.4% bonds due 2001 2.25% bonds due 2002 2.4% bonds due 2003...

  • Page 49
    ...been converted at the current conversion price, 101,195 thousand new shares would have been issuable. The exercise price was, and the conversion prices is, subject to adjustments in certain cases including stock splits. 7. Gain (Loss) on Sales or Disposal of Property, Plant and Equipment, Net Gain...

  • Page 50
    ... trucks as well as the related components. The geographical segment information for MMC and its consolidated subsidiaries for the year ended March 31, 1999 and 1998 is summarized as follows: Year ended March 31, 1999 Japan Sales to third parties Interarea sales and transfers Total sales Operating...

  • Page 51
    ...,179 330,670 317,626 ¥ 13,044 ¥ 157,022 Total (In millions of yen) Consolidated ¥ 3,735,228 - 3,735,228 3,736,530 ¥ (1,301) ¥ 3,370,526 ¥ 3,735,228 640,046 4,375,275 4,371,622 ¥ 3,652 ¥ 3,617,801 Year ended March 31, 1999 Corporate and Eliminations - $ (6,618,515) (6,618,515) (6,656,284...

  • Page 52
    ...¥ 747,706 20.0% ¥ 471,924 12.6% Year ended March 31, 1999 North America Europe (In thousands of U.S. dollars) Overseas sales Consolidated net sales $ 6,609,357 $ 4,284,728 11. Pension Assets The aggregate assets of the pension funds of MMC and its domestic consolidated subsidiaries as of the...

  • Page 53
    ... ended March 31, 1998 Others (In millions of yen) Total ¥ 2,105,418 ¥ 3,735,228 56.4% 396,020 10.6% ¥ 489,765 13.1% Asia Year ended March 31, 1999 Others (In thousands of U.S. dollars) Total $16,840,091 $29,138,167 $ 1,910,369 $ 4,035,620 Notes to consolidated financial statements 51

  • Page 54
    ... acquisition cost of finance lease transactions, except for agreements which stipulate transfer of the title of the assets to the lessee, amounted to ¥108,303 million ($898,407 thousand) for tools and equipment and ¥19,848 million ($164,645 thousand) for others. The total equivalent of the related...

  • Page 55
    Report of the independent public accountants Report of the independent public accountants 53

  • Page 56
    ... Transfer agent and register The Mitsubishi Trust & Banking Corporation 4-5, Marunouchi 1-chome, Chiyoda-ku, Tokyo 100-0005, Japan Common stock Issued and outstanding: 921,791,624 shares Number of shareholders 38,490 Accounting auditor Showa Ota & Co. Number of employees 26,749 ; (MMC) Major...

  • Page 57
    ... Hisashi Watanabe Truck & Bus Research & Development Yasuo Fujisawa Domestic Car Sales Yoshinobu Tadai Car Production Statutory auditors Kenzo Inoue Soichi Uemura Tsuneo Wakai Senior Advisor, The Bank of Tokyo Mitsubishi Yoshihisa Tsuda Executive Vice President, Mitsubishi Heavy Industries Board of...

  • Page 58
    ... Truck & Bus Research & Development Center 10, Okura-cho, Nakahara-ku, Kawasaki, Kanagawa 211-8522, Japan Telephone: +81-44-587-2000 Kitsuregawa Proving Ground 4300, Washijuku, Kitsuregawa-cho, Shioya-gun, Tochigi 329-1411, Japan Telephone: +81-286-86-4711 Engineering centers Works (Passenger cars...

  • Page 59
    ... B.V. Netherlands Car B.V. •Portugal Mitsubishi Trucks Europe, S.A. •The Philippines Mitsubishi Motors Philippines Corp. •Indonesia P.T. Mitsubishi Krama Yudha Motors and Manufacturing PHP 1,464 IDR 11,451 AUD 74 •Australia Mitsubishi Motors Australia, Ltd. The MMC group of companies 57

  • Page 60
    ... Mitsubishi Motors Corporation 1990 Years ended March 31 Net Sales Operating income (loss) Ordinary income (loss) Net income (loss) Per share of common stock (in yen): Net income (loss): Basic Fully diluted Cash dividends At March 31 Total assets Property, plant and equipment Stockholders' equity...

  • Page 61
    ...(in millions of yen) ¥ 2,522,559 62,359 55,393 20,468 (in yen) 22.24 22.04 7.00 ¥ 1997 1998 1999 ¥ 2,455,928 40,085 35,354 15,952 ¥ 2,652,517 67,745 48,046 18,826 2,585,940 57,148... thousands of U.S. dollars) 1,637,233 $ 13,581,360 534,592 4,434,608 467,171 3,875,330 Financial summary 59

  • Page 62
    http://www.mitsubishi-motors.co.jp 5-33-8, Shiba, Minato-ku, Tokyo 108-8410 Japan Corporate Public Relations Department Tel: +81-3-5232-7176 (Investor Relations) +81-3-5232-7165 (Media Relations) fax: +81-3-5232-7747