Mitsubishi 1999 Annual Report Download - page 37

Financial review
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Interest-bearing liabilities
At the end of March 1999, interest-bearing liabilities (short- and
long-term loans payable, commercial paper and bonds), including
those at the company's financing subsidiaries in North America,
stood at ¥1,772.0 billion, a 12.0% reduction over the previous
year. This reduction was realized by trimming inventories, selling
off fixed assets, and liquidating trade receivables.
Cash flows
Net cash provided by operating activities was ¥232.6 billion, a
major increase on the ¥67.4 billion of the previous year. This fig-
ure includes the ¥5.7 billion net income for the year, depreciation
expenses of ¥159.0 billion, the ¥45.7 billion reduction in trade
notes and accounts receivable, and the ¥141.2 billion reduction in
inventory assets. Net cash used in investing activities was ¥36.9
billion, a major decrease of ¥218.3 billion on the year before. This
was the result of the 22.1% decrease in acquisition of property,
plant and equipment at ¥256.8 billion stemming from the compa-
ny's cut back on investment, and from the collection of loans re-
ceivable and the sales of property, plant and equipment. As a re-
sult, the company produced an inflow of ¥159.6 billion in financ-
ing activities.
Consolidated companies
The number of consolidated subsidiaries included in the consoli-
dated statements at the end of March 1999 was 165, an increase of
two over the previous year. The total decreased by two and in-
creased by four. There was no change in the total number of com-
panies accounted for by the equity method at 54, with four addi-
tions and four deletions. Noteworthy among companies newly in-
cluded in the consolidated statements was the addition of NedCar
as an affiliate accounted for by the equity method as a result of
additional investment in NedCar stock by the company in
February 1999. Because NedCar became an affiliate near the end
of the fiscal year, its net profit for the 1998 fiscal year is not in-
cluded in the consolidated net income.
MMC has included all material subsidiaries and affiliates in
its consolidated results. The company considers that the 1999
change in criteria relating to subsidiaries and affiliates will have
no impact on the scope of consolidation or on the financial state-
ments.
The company's 249 passenger car dealerships in Japan include
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, conducts lease financing through its wholly-
owned subsidiary Mitsubishi Motors Credit of America, Inc. New
lease contracts in fiscal 1998 numbered 44,771 vehicles, while
35,654 vehicles were returned. Current leases at the end of
December 1998 numbered 126,072, a reduction of 4,198 over the
previous year.
Exchange rates
The foreign currency exchange rates applied in calculating the
revenues, expenses, assets and liabilities of the company's princi-
pal foreign subsidiaries in fiscal 1998 are as follows:
• Revenues and expenses: USD 1 = ¥131.17 (¥121.33 in fiscal 1997)
• Assets and liabilities: USD 1 = ¥115.70 (¥130.10 in fiscal 1997)
Dividend payment policy
The Company makes the maintenance of a stable dividend its first
principle, giving due consideration to achieving a balance be-
tween returning profits to shareholders and to securing sufficient
funds for future development of its business. To this end, the
Company considers efforts both to improve business results and to
meet the expectations of its shareholders to be of the utmost im-
portance.
The company reported a net income in fiscal 1998, this pri-
marily resulting from determined cost reductions and from profits
on the sale of property. At the annual general meeting, however,
the stockholders decided to retain all net income and not to make
payment of end-of-term dividend.
For fiscal 1999, the company expects it will be unable to
avoid canceling payment of the interim dividend. However, to en-
sure payment of an end-of-term dividend, the company will make
further efforts to reduce costs and strengthen the corporate finan-
cial base. In addition, the company is exerting every effort to at-
tain the targets set out in the RM2001 mid-term management plan
in order to return dividends to a level that is satisfactory to its
shareholders as soon as possible.