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Turning a New Corner
Annual Report 2009
Year ended March 31, 2009

Table of contents

  • Page 1
    Annual Report 2009 Year ended March 31, 2009 Turning a New Corner

  • Page 2
    ... Management Responsibility to Society "Mitsubishi Motors Group Environmental Vision 2020" Financial Section Consolidated Subsidiaries and Affiliates Principal Plants Investor Information A clear direction for the development and manufacturing of Mitsubishi Motors vehicles The cars that Mitsubishi...

  • Page 3
    ...6.8 -128.5 Net Income (Loss) -600 08 07 06 05 04 (FY) Total Assets -400 -300 -200 -100 -54.9 34.7 8.7 -92.2 0 100 (Â¥ billion) -500 0 08 07 06 05 04 (FY) 500 1,000 1,138.0 1,500 2,000 (Â¥ billion) 1,609.4 1,778.7 1,557.6 1,589.3 -474.8 Annual Report 2009 MITSUBISHI MOTORS CORPORATION 01

  • Page 4
    ...'s next 100 years. In this sense, we look forward to "Driving into the Next 100 Years" with customers and stakeholders, as we work to rapidly create a low-carbon society. August 2009 Takashi Nishioka Chairman of the Board Osamu Masuko President 02 MITSUBISHI MOTORS CORPORATION Annual Report 2009

  • Page 5
    ... between dynamic and environmental performance, and will continue to develop technologies that show as much care for the environment outside as for the occupants within its vehicles. Takashi Nishioka Chairman of the Board Osamu Masuko President Annual Report 2009 MITSUBISHI MOTORS CORPORATION 03

  • Page 6
    ... credit crunch. For many customers who use auto loans, purchasing an automobile became difficult. The third issue was the yen's appreciation against foreign currencies. Because the yen strengthened not only against the U.S. dollar but also against other major currencies, export industries in Japan...

  • Page 7
    ... Individual Countries' Needs in the Midst of Increasing Concern about the Environment and Fuel Economy In Japan, MMC expects retail sales volume to increase as a result of policies aimed at stimulating automobile demand, such as the Japanese government's subsidies for purchasing certain new vehicles...

  • Page 8
    ... into the Next 100 Years" With Customers and Stakeholders 10 New-Generation Electric Vehicle i-MiEV 1 Events Leading to the Conception of the i-MiEV Features of the i-MiEV Paving the Way for the Popularization of Electric Vehicles 2 3 06 MITSUBISHI MOTORS CORPORATION Annual Report 2009

  • Page 9
    The i-MiEV being "quick charged" at a shopping center in Japan. Annual Report 2009 MITSUBISHI MOTORS CORPORATION 07

  • Page 10
    Interview With the President "Driving into the Next 100 Years" With Customers and Stakeholders The June 2009 i-MiEV launch in Tokyo From left: GS Yuasa Corporation President Makoto Yoda, Mitsubishi Motors Corporation President Osamu Masuko, Mitsubishi Corporation Senior Executive Vice President ...

  • Page 11
    ... production by 20% over the same time frame. The slogan of the Mitsubishi Motors Group Environmental Vision 2020 is "Leading the EV era, towards a sustainable future." We view EVs-the ultimate eco-cars-as central to our business activities over the medium and long terms, and as the driving force...

  • Page 12
    ... for everyday use without sacrificing the generous seating and luggage space of the "i" minicar. Gasoline-powered i i-MiEV Inverter On-board charger & DC/DC converter Engine & transmission Fuel tank Motor & transmission Drive battery pack 10 MITSUBISHI MOTORS CORPORATION Annual Report 2009

  • Page 13
    ... braking control •Power save control A/C & heater Lithium-ion battery (Drive battery) Energy saving Occupant comfort Inputs from the following ECUs: •Air bags •ABS •ETACS Driver inputs: •Shift selector •Accelerator •Brakes Annual Report 2009 MITSUBISHI MOTORS CORPORATION...

  • Page 14
    ...-board charger Power supply Drive battery Inverter Motor Transmission Driving Quick charging Charging Electricity generation Regenerative brakes Driven 100% by electrical power The only cost the i-MiEV incurs to run it is electricity expense. Also, depending on electric power company rate...

  • Page 15
    ... takeoffs, climate control system usage). *2: A nationwide survey in Japan indicates that on average 90% of car drivers cover less than 40 km/day on weekdays and that 80% cover less than 60 km/day at weekends and holidays (in-house research). Annual Report 2009 MITSUBISHI MOTORS CORPORATION 13

  • Page 16
    ...company, will play a part in popularizing electric vehicles. This will be done by working to broaden the understanding of electric vehicles and to promote technological advances and infrastructure development. i-MiEV Global Evaluation Iceland From Fall 2009 Canada Europe (15 countries) From Fall...

  • Page 17
    ...Fiscal year 2011 Japan July 2009 Retail sales Fleet sales Approx. 250 vehicles Right-hand drive vehicles (Hong Kong, U.K. and others) Overseas Fall 2009 Europe (including left-hand-drive markets) For PSA Peugeot Citroën Successively expand Annual Report 2009 MITSUBISHI MOTORS CORPORATION 15

  • Page 18
    ... the form of reduced taxes on eco-friendly cars. • New Products Market Launch of the i-MiEV MMC launched the new-generation electric vehicle i-MiEV in Japan in July 2009. In fiscal year 2009, MMC expects to sell approximately 1,400 units, mainly to corporate users and local governments. Operating...

  • Page 19
    ... sales volume and the appreciation of the yen. 172 164 * Puerto Rico's results have been classified under "Asia and Other Regions" from 2008. The Lancer Sportback (Japanese name: Galant Fortis Sportback) was rolled out in the U.S. in summer 2009. Annual Report 2009 MITSUBISHI MOTORS CORPORATION...

  • Page 20
    ... and countries, including Western Europe, Russia, and the Ukraine. European governments such as Germany have put in place programs to support purchases of small, fuel-efficient models. The Colt series is at the heart of MMC's efforts to boost sales in response to these programs. Net Sales 0 09...

  • Page 21
    ... established Mitsubishi Motors Middle East & Africa FZE. This new company is centrally overseeing sales, marketing, parts, R&D, and service/training functions in the Middle Eastern and African markets and is providing comprehensive support to local distributors. • Deploying New Technologies Tuned...

  • Page 22
    ... for complaint data by model, part, production date and other parameters. This information can be effectively utilized by the design, manufacturing, service, and other related departments to quickly respond to complaints. WAS entered service at plants around the world in 2009. • Timely and...

  • Page 23
    ... and advice President Managing Directors' Meetings (21 members) Executive Vice President (Step up 2010 Office) Quality Affairs Office Quality Audit CSR Promotion Office Internal Audit Departments Internal Audit Subsidiaries and affiliates Annual Report 2009 MITSUBISHI MOTORS CORPORATION 21

  • Page 24
    ... Affiliated Departments companies Response to the Financial Instruments and Exchange Act (Development and evaluation of internal controls over financial reporting) Response to Company Law (Development of systems in line with basic policies) 22 MITSUBISHI MOTORS CORPORATION Annual Report 2009

  • Page 25
    ... Manager=Code Leader Help Line Employee Counseling Office Consult on Ethical Issues Thorough Compliance with Business Ethics Consult on Ethical Issues Various Consultations Employees of Affiliates and Distributors, Temporary Employees, Former Employees Employees Annual Report 2009 MITSUBISHI...

  • Page 26
    ... Furthermore, MMC continues to regularly conduct training on resolving corporate ethics problems, developing precedents and related topics. Overseas affiliates are also working to develop compliance promotion frameworks linked with internal controls. "Safety Pledge Days" To prevent past errors such...

  • Page 27
    ... is not limited to business ethics; but also includes matters broadly related to quality problems and corporate culture. Review of the Committee's Activities Since its Establishment Since the committee convened its first meeting in July 2004 through to July 2009, it has held a total of 60 meetings...

  • Page 28
    ... Corporate General Manager of North Asia Office Akinori Nakanishi Executive Officer Corporate General Manager of Asia & ASEAN Office Keizo Fuchita Executive Officer Vice President, Mitsubishi Motors North America, Inc. *Representative Director 26 MITSUBISHI MOTORS CORPORATION Annual Report 2009

  • Page 29
    ..., learn and enjoy driving together with instructors in the course of studying driving techniques, automobiles, safety and other topics. MMC has been running the Car School program since 1995 as part of its safe driving educational activities. Annual Report 2009 MITSUBISHI MOTORS CORPORATION 27

  • Page 30
    ... and introduce renewable energy, etc. 20% Reduction Corporate image Auto industry Government MMC Group Media Products & Technology Operations Customers Towards a sustainable future Other sectors Trading partners Cooperation with society 28 MITSUBISHI MOTORS CORPORATION Annual Report 2009

  • Page 31
    ... and Discussion Consolidated Balance Sheets Consolidated Statements of Operations Consolidated Statements of Changes in Net Assets Consolidated Statements of Cash Flows Notes to Consolidated Financial Statements Report of Independent Auditors Annual Report 2009 MITSUBISHI MOTORS CORPORATION 29

  • Page 32
    ... Margin 0 08 0.2 500 1,000 1,500 2,000 1,973.6 1.8 0.3 2,500 4.0 2,682.1 2,202.9 2,120.1 2,122.6 0 n (Â¥ billion) 500 1,000 1,066 1,500 3,000 1,360 1,230 1,344 1,312 07 06 05 04 (FY) 1 2 3 4 5 (%) n Net Sales Operating Margin (%) 30 MITSUBISHI MOTORS CORPORATION Annual Report 2009

  • Page 33
    ...10.6 billion). Total Assets 0 08 07 06 05 04 (FY) (Â¥ billion) Interest-bearing Debt 0 08 100 200 300 400 353.4 353.9 503.8 447.8 476.0 500 600 (Â¥ billion) 500 1,000 1,138.0 1,500 2,000 1,609.4 1,778.7 1,557.6 1,589.3 07 06 05 04 (FY) Annual Report 2009 MITSUBISHI MOTORS CORPORATION 31

  • Page 34
    ...of the MMC Group as of the end of the fiscal year 2008. Leasing, financial services and sales incentives Overcapacity in the auto industry, and fierce competition, especially price competition in the North American market, has led to the necessity of sales incentives in sales promotion efforts. The...

  • Page 35
    ...and finished parts and components from many partners. Increased demand and other changes in market conditions may cause materials and components prices to increase, thus raising MMC's manufacturing costs and resulting in an impact on MMC results. Annual Report 2009 MITSUBISHI MOTORS CORPORATION 33

  • Page 36
    ... investments and other assets, net Total assets 68,443 24,001 9,146 8,206 43,218 (12,322) 140,693 ¥1,138,009 93,021 5,580 11,195 9,842 54,907 (14,551) 159,996 ¥1,609,408 696,765 244,337 93,115 83,544 439,967 (125,443) 1,432,286 $11,585,153 34 MITSUBISHI MOTORS CORPORATION Annual Report 2009

  • Page 37
    ... (Note 17) Total current liabilities Long-term debt (Note 8) Lease obligations (Note 8) Deferred tax liabilities (Note 17) Provision for retirement benefits (Note 16) Other Total liabilities Net assets: Shareholders' equity (Notes 9 and 20): Preferred stock: Authorized: 3,312,000 shares Issued or...

  • Page 38
    ... Statements of Operations Mitsubishi Motors Corporation and Consolidated Subsidiaries For the years ended March 31, 2009 and 2008 In millions of yen 2009 2008 In thousands of U.S. dollars (Note 2) 2009 Net sales Cost of sales Reversal of unrealized income on installment sales Gross profit...

  • Page 39
    ...Net Assets Mitsubishi Motors Corporation and Consolidated Subsidiaries For the years ended March 31, 2009 and 2008 In millions of yen 2009 2008 In thousands of U.S. dollars (Note 2) 2009 Shareholders' equity Preferred stock: Balance at beginning of year Preferred stock issued or converted Balance...

  • Page 40
    ... activities: Increase (decrease) in short-term loans payable Proceeds from issuance of long-term debt Repayment or redemption of long-term debt Cash dividends paid to minority shareholders Other, net Net cash provided by (used in) financing activities Effect of exchange rate changes on cash and cash...

  • Page 41
    ... to Consolidated Financial Statements Mitsubishi Motors Corporation and Consolidated Subsidiaries 1. Significant Accounting Policies (a) Basis of preparation MMC and its domestic consolidated subsidiaries maintain their books of account in conformity with the financial accounting standards of Japan...

  • Page 42
    ...product warranties The allowance for product warranty claims has been calculated based on MMC and its consolidated subsidiaries' historical experience and estimations with respect to future costs relating to claims. (i) Retirement benefits Accrued retirement benefits for employees at March 31, 2009...

  • Page 43
    ... treatment for finance lease is now included in "tools, furniture and fixtures (net)". As a result of this change, work in process decreased by ¥35,102 million ($357,348 thousand), and the tools, furniture and fixtures (net) by the same amount. Annual Report 2009 MITSUBISHI MOTORS CORPORATION 41

  • Page 44
    ..., Australia (2 sites) Assets used in sales operations Land, buildings and others ¥ 4,345 Idle assets Land, buildings and others 802 Production facilities Machinery and equipment, furniture and fixtures and others 16,170 ¥21,318 42 MITSUBISHI MOTORS CORPORATION Annual Report 2009

  • Page 45
    ... consolidated statements of operations for the years ended March 31, 2009 and 2008 were as follows: In thousands of U.S. dollars 2009 In millions of yen 2009 2008 Proceeds Gross gains Gross losses ¥446 77 (16) ¥482 183 (0) $4,545 784 (167) Annual Report 2009 MITSUBISHI MOTORS CORPORATION...

  • Page 46
    ... interest rates on short-term loans payable at March 31, 2009 and 2008 were 3.9% and 4.8%, respectively. Long-term debt at March 31, 2009 and 2008 consisted of the following: In thousands of U.S. dollars 2009 In millions of yen 2009 2008 Loans, principally from banks and insurance companies, due...

  • Page 47
    ... a building with Murata Medical Services, Ltd. at March 31, 2009 and 2008, respectively. ¥46 million ($468 thousand) and ¥46 million of investments were pledged as collateral for debt of Mizushima Eco-Works Co., Ltd at 2009 and 2008, respectively. Annual Report 2009 MITSUBISHI MOTORS CORPORATION...

  • Page 48
    ...$242,807 The following groups of assets of MMC, the Mizushima factory, were pledged as collateral at March 31, 2009 and 2008, respectively. The amounts guaranteed for the loan from The Japan Bank for International Cooperation to a consolidated subsidiary EQUUS Leasing B.V. were ¥8,869 million ($90...

  • Page 49
    ...voting rights, but the holders of Series A and G (except for Series B) are entitled to preferred stock dividends of ¥50,000 per share each year after April 2009. MMC also would be required to distribute residual claims to the holders of each series of convertible preferred stock by a single payment...

  • Page 50
    ...2009 In millions of yen 2009 2008 Advertising and promotion expenses Freightage expense Directors' compensations, salaries and allowances Pension expenses Depreciation Research and development expenses Other Total...,307 5,714 (51,329) $(224,867) 48 MITSUBISHI MOTORS CORPORATION Annual Report 2009

  • Page 51
    ... from sale of lease vehicles of ¥8,587 million ($87,423 thousand) and ¥17,435 million, respectively. Changes in finance receivables within operating activities in the consolidated statements of cash flows for the years ended March 31, 2009 and 2008 are primarily the net of payments amounting...

  • Page 52
    ... approves derivative transactions of consolidated subsidiaries as appropriate, and in accordance with policies established for each subsidiary, which require the appropriate approval of managing directors in charge of finance group head quarters. 50 MITSUBISHI MOTORS CORPORATION Annual Report 2009

  • Page 53
    ... exchange contracts: Sell: US $ Euro £ stg Australian $ Japanese ¥ Others Buy: Thai B | Japanese ¥ Total $ 49,288 96,195 - - 566,609 - 11,789 8,597 $ 50,227 88,831 - - 600,895 - 12,462 8,622 $ (938) 7,364 - - (34,285) - 673 25 $(27,161) Annual Report 2009 MITSUBISHI MOTORS CORPORATION...

  • Page 54
    ... one year. Interest rate options In millions of yen 2009 Notional amount Fair value Unrealized gain (loss) Notional amount Fair value 2008 Unrealized gain (loss) Interest rate options: Buy: Total ¥- ¥- ¥- - ¥17,119 ¥18 ¥18 ¥18 52 MITSUBISHI MOTORS CORPORATION Annual Report 2009

  • Page 55
    ... financial instruments, principally forward exchange contracts and interest swaps, which qualify as hedges and are accounted for using the deferred hedge accounting method, are excluded from the above table according to the disclosure requirements. Annual Report 2009 MITSUBISHI MOTORS CORPORATION...

  • Page 56
    ... 3,304 (96,428) 6,866 ¥(103,295) $(1,813,431) 484,235 (1,329,196) 275,452 32,478 (1,021,264) 61,011 $(1,082,275) Some of the consolidated subsidiaries adopt the simplified method for the calculation of retirement benefits obligation. 54 MITSUBISHI MOTORS CORPORATION Annual Report 2009

  • Page 57
    ...the foreign consolidated subsidiaries are generally calculated based on the tax rates applicable in their countries of incorporation. The consolidated tax payment system is applied at March 31, 2009 and 2008. The effective tax rates reflected in the accompanying consolidated statements of operations...

  • Page 58
    ...of yen 2009 2008 Current assets Non-current assets Current liabilities Non-current liabilities Net deferred tax liabilities ¥ 1,398 8,206 - (18,549) ¥ (8,944) ¥ 1,040 9,842 (3,219) (27,967) ¥(20,303) $ 14,234 83,544 - (188,833) $ (91,054) 56 MITSUBISHI MOTORS CORPORATION Annual Report 2009

  • Page 59
    ... dollars 2009 In millions of yen 2009 2008 Net sales: Automobiles Financial services Total Corporate and eliminations Consolidated Operating income (loss): Automobiles Financial services Total Corporate and eliminations Consolidated Total assets: Automobiles Financial services Total Corporate and...

  • Page 60
    ... business activities. 2. Main countries and regions outside Japan are grouped as follows; (1) North America ...The United States (2) Europe ...The Netherlands (3) Asia ...Thailand, Philippines (4) Other ...Australia, New Zealand, UAE, Puerto Rico National and regional groupings have been classified...

  • Page 61
    .... 2. Main countries and regions outside Japan are grouped as follows: (1) North America ...The United States (2) Europe ...The Netherlands, Italy, Germany, Russia, Ukraine (3) Asia ...Thailand, Malaysia, Taiwan (4) Other ...Australia, New Zealand, Puerto Rico National and regional groupings have...

  • Page 62
    ... amount: Account title: Balance at year end Major shareholder Mitsubishi Corporation Chiyoda-Ku, Tokyo, Japan ¥202,816 million Wholesale trading Direct 14.0 Indirect 0.0 Sales of passenger cars and import of materials for production/ Interlocking directorates Sales ¥251,381 million ($2,559...

  • Page 63
    ... Account title: Balance at year end March 31, 2008 Major shareholder Mitsubishi Corporation Chiyoda-Ku, Tokyo, Japan ¥201,825 million Wholesale trading Direct 14.0 1 concurrent member, 3 formally transferred to MMC Sales of passenger cars and import of materials for production Sales (see (i) below...

  • Page 64
    ... - - - ¥ ¥ 34,710 - 34,710 $ (558,728) - $ (558,728) 5,537,816 - - - 5,509,309 3,598,366 (3,598,316) (50) In numbers of stock, 966 and 975 thousand shares relating to stock options were outstanding at March 31, 2009 and 2008, respectively. 62 MITSUBISHI MOTORS CORPORATION Annual Report 2009

  • Page 65
    ...2009 Date of approval by shareholders' meeting: Grantees: Date of granted: Class and number of shares granted: Condition of settlement of rights: Required service period: Exercise period: June 25, 2002 5 directors, 25 executive officers and 80 employees June 2, 2003 Common stock 1,994,000 Limited...

  • Page 66
    ...Date of granted: Class and number of shares granted: Condition of settlement of rights: Required service period: Exercise period: June 25, 2002 5 directors, 25 executive officers and 80 employees June 2, 2003 Common stock 1,994,000 Limited to directors, executive officers, employees of the company...

  • Page 67
    Annual Report 2009 MITSUBISHI MOTORS CORPORATION 65

  • Page 68
    ... Automotive Accessories & Products Co., Ltd. Mitsubishi Automotive Logistics Technology Co., Ltd. Mitsubishi Automotive Engineering Co., Ltd. Suiryo Plastics Co., Ltd. Mitsubishi Motors North America, Inc. (MMNA) Mitsubishi Motors R&D of America, Inc. (MRDA) Mitsubishi Motor Sales of Canada, Inc...

  • Page 69
    ...Shipbuilding & ocean systems development, power systems, machinery & steel structures, aerospace, mass and medium-lot manufactured machinery and others Share of Voting Rights in MMC (%) 15.7 (0.5) Relationship Supplier of parts for MMC products Annual Report 2009 MITSUBISHI MOTORS CORPORATION 67

  • Page 70
    ... Co., Ltd. (SEM) e Shenyang Aerospace Mitsubishi Motors Engine Manufacturing, Co., Ltd. (SAME) r Harbin Dongan Automotive Engine Manufacturing, Co., Ltd. (HDMC) Taiwan Vietnam t China Motor Corporation (CMC) y Vina Star Motors Corporation (VSM) 68 MITSUBISHI MOTORS CORPORATION Annual Report 2009

  • Page 71
    Investor Information As of March 31, 2009 Company Name Head Office MITSUBISHI MOTORS CORPORATION 5-33-8, Shiba, Minato-ku, Tokyo 108-8410, Japan Telephone: +81-3-3456-1111 Established Capital Number of Employees Stock Listings Securities Code Share Trading Unit April 22, 1970 ¥657,350,013,926 ...

  • Page 72
    5-33-8, Shiba, Minato-ku, Tokyo 108-8410, Japan Public Relations Department Tel : +81-3-6852-4206 (IR) +81-3-6852-4274 (Corporate PR) Fax : +81-3-6852-5405 http://www.mitsubishi-motors.com Printed in Japan