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Annual Report 2010
Year ended March 31, 2010
Driving into the next century
with the world

Table of contents

  • Page 1
    Annual Report 2010 Year ended March 31, 2010 Driving into the next century with the world

  • Page 2
    ...and Affiliates Principal Production Facilities Investor Information 16 20 21 22 Forward-looking Statements This annual report contains forward-looking statements about Mitsubishi Motors Corporation's plans, strategies, beliefs and performance. These forward-looking statements are based on current...

  • Page 3
    ... MITSUBISHI MOTORS CORPORATION Annual Report 2010 Per share data: Net income per share-basic Net income per share-diluted Cash dividends ¥(19.75) - - ¥1.59 0.96 - ¥6.30 3.81 - ¥(9.91) - - ¥0.86 $0.01 0.01 0.51 - - In thousands of In millions of yen U.S. dollars At year-end: Total assets...

  • Page 4
    ... and secure steady profits, as well as continue to build the foundations for growth ahead of the next mid-term business plan. We look forward to your continued support and understanding. August 2010 02 MITSUBISHI MOTORS CORPORATION Annual Report 2010 Takashi Nishioka Chairman of the Board Osamu...

  • Page 5
    03 Takashi Nishioka Chairman of the Board Osamu Masuko President MITSUBISHI MOTORS CORPORATION Annual Report 2010

  • Page 6
    ...Fiscal 2010 will be a year to finish building the foundations for growth. Important themes include addressing environmental issues; developing compact, affordable, and fuel-efficient vehicles; emerging countries; and business tie-ups. 04 MITSUBISHI MOTORS CORPORATION Annual Report 2010 President...

  • Page 7
    ... Results 2 Change 2-1 Net Sales Operating Income Ordinary Income (Loss) Net Income (Loss) Sales Volume (Retail) 1,973.6 3.9 -14.9 -54.9 106.6 1,445.6 13.9 13.0 4.8 96.0 -528.0 10.0 27.9 59.7 -10.6 Note: Sales volume figures exclude OEM supplies. MITSUBISHI MOTORS CORPORATION Annual Report 2010

  • Page 8
    Fiscal 2010 MITSUBISHI MOTORS CORPORATION Annual Report 2010 A Year to Finish Building the Foundations for Growth -Key themes include addressing the environment; developing compact, affordable and fuel-efficient vehicles; emerging countries; and business tie-ups There have been dramatic changes in ...

  • Page 9
    ... the i-MiEV in North America. In fiscal year 2012 we will add i-MiEV variations and plan to sell over 40,000 units. Currently, MMC has an EV Business Office which reports directly to the president, and is working quickly on a variety of issues, including domestic and overseas marketing strategies as...

  • Page 10
    Performance Outlook Aiming for Increases in Revenue and Profit with Increase in Sales Volume and Further Cost Reductions -Increase in sales volume will be driven by the new compact SUV 08 MITSUBISHI MOTORS CORPORATION Annual Report 2010 The Step Up 2010 mid-term business plan which we announced ...

  • Page 11
    ... the midst of rising expectations that electric vehicles world in the near future, Mitsubishi Motors launched the i-MiEV new-generation electric vehicle in Japan in July 2009 and began offering it overseas in 2010. MITSUBISHI MOTORS CORPORATION Annual Report 2010 will help make a low-carbon society...

  • Page 12
    ...individuals in Japan, MMC plans for sales of the i-MiEV to reach 9,000 units in fiscal 2010, more than five-fold higher than fiscal 2009. 10 More than 50 Domestic and Overseas Partnerships 8 in North America United States Electric power companies (PG&E Corporation, Southern California Edison, and...

  • Page 13
    ... basis. This approach is easier for customers, as Mitsubishi Motors sales outlets provide peace of mind through precise inspection and maintenance while the leasing company takes care of all government subsidy paperwork. 11 MITSUBISHI MOTORS CORPORATION Annual Report 2010 For PSA Peugeot Citroën

  • Page 14
    ...abreast of this development. MITSUBISHI MOTORS CORPORATION Annual Report 2010 MiEV House MMC showcased the MiEV House at the Tokyo Motor Show 2009 to highlight its vision for how electric vehicles could transform the social structure. SHARP CORPORATION was one of 12 partners that contributed to the...

  • Page 15
    ... the shared target has been a powerful driving force for action inside MMC. MITSUBISHI MOTORS CORPORATION Annual Report 2010 Yoshikazu Nakamura is corporate general manager of the EV Business Office. His responsibilities include overseeing business strategies and feasibility for MMC's electric...

  • Page 16
    ... electric vehicle business can grow. 14 MITSUBISHI MOTORS CORPORATION Annual Report 2010 Mitsubishi Motors' Competitive Advantages I have been told when explaining that we buy the all-important batteries from outside sources that any company could make an electric vehicle by externally procuring...

  • Page 17
    .... Encourage People to Ride in Our Electric Vehicles MITSUBISHI MOTORS CORPORATION Annual Report 2010 Many people who ride in the i-MiEV find to their surprise that, among other things, it accelerates extremely well and is very quiet. First-hand experience is the first step in understanding the...

  • Page 18
    ... lowered the price of the i-MiEV and commenced sales to individuals. Tetsuro Aikawa Managing Director, Head Officer of the Headquarters, Domestic Sales Group Headquarters 16 MITSUBISHI MOTORS CORPORATION Annual Report 2010 Fiscal Year 2009 Performance Retail Sales Retail sales in Japan increased...

  • Page 19
    ... increased selling expenses and development expenses. Retail Sales 0 50 100 150 200 (Thousand units) 10 09 08 07 (FY) 109 (Forecast) 88 119 172 * Puerto Rico's results have been classified under "Asia and Other Regions" from 2008. MITSUBISHI MOTORS CORPORATION Annual Report 2010 North America

  • Page 20
    ... of those incentives, thus retail sales declined year on year. In Central Europe retail sales declined year on year as demand in general continued to be sluggish even though markets were strong in Poland and elsewhere. MITSUBISHI MOTORS CORPORATION Annual Report 2010 Net Sales 0 200 400 600 800...

  • Page 21
    ... intensifying competition in the major markets of the Gulf nations, despite some increased retail sales mainly due to large-scale business negotiations in the second half of the fiscal year. Net Sales 0 200 400 600 800 1,000 (Â¥ billion) MITSUBISHI MOTORS CORPORATION Annual Report 2010 10 09 08 07...

  • Page 22
    ... this decision-making system. MITSUBISHI MOTORS CORPORATION Annual Report 2010 Rapid Feedback of Customer Information • New Quality Information Management System (SQM-BC)*2 MMC introduced the SQM-BC in 2006 to allow MMC to swiftly respond to quality-related information from customers. The SQM-BC...

  • Page 23
    ... Advice President Managing Directors' Meetings Executive Vice Presidents Quality Affairs Office Quality Audit CSR Promotion Office Internal Audit Departments Internal Audit Subsidiaries and Affiliates MITSUBISHI MOTORS CORPORATION Annual Report 2010 Status of Internal Audits and Statutory...

  • Page 24
    ... of the Internal Control Promotion Committee. MITSUBISHI MOTORS CORPORATION Annual Report 2010 continuously conducts educational and training programs. These BCP initiatives also spread to influential supply chains. MMC, striving to ensure its corporate social responsibility, has set as its...

  • Page 25
    ...direction of compliance officers. In these and other ways, MMC worked to put business ethics into practice. MITSUBISHI MOTORS CORPORATION Annual Report 2010 In addition to these types of discussions at each workplace, compli- Operating the Help Line MMC is giving priority to its internal reporting...

  • Page 26
    ..., 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. 24 MITSUBISHI MOTORS CORPORATION Annual Report 2010

  • Page 27
    ... the company faces." MITSUBISHI MOTORS CORPORATION Annual Report 2010 In the report, the committee made 13 policy recommendations. Overview of Activities in Fiscal Year 2009 The committee convened 12 times during fiscal year 2009, and received briefings on 25 issues, including the business ethics...

  • Page 28
    ... Group Headquarters A Corporate General Manager of Overseas Business Management Office In Charge of Overseas Operations Group Headquarters B 26 MITSUBISHI MOTORS CORPORATION Annual Report 2010 Tetsuro Aikawa Managing Director Head Officer of the Headquarters Domestic Sales Group Headquarters...

  • Page 29
    ... environment centered on test rides in the i-MiEV electric vehicle, and car design, with guidance from designers and modelers. MMC has been running the Car School program since 1995 as part of its safe driving educational activities. 27 3. Environmental Preservation • The Pajero Forest MMC has...

  • Page 30
    ...28 MITSUBISHI MOTORS CORPORATION Annual Report 2010 1. Products & Technology: As well as pushing ahead with the development of EV technologies and products, MMC will seek to reduce environmental loads throughout the entire lifecycle of its products, mainly by improving the fuel economy of internal...

  • 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 29 MITSUBISHI MOTORS CORPORATION Annual Report 2010

  • Page 32
    ... 2010 mid-term business plan, MMC worked to bolster its strengths and secure steady profits by making earnest efforts to return domestic operations to profitability, stabilizing North American businesses, building a more marketresponsive production structure, and enhancing environmental technologies...

  • Page 33
    ... improvement from the previous year, reflecting lower advertising and other costs (Lower net sales; smaller operating loss). MITSUBISHI MOTORS CORPORATION Annual Report 2010 Segment Analysis Business Segment Information 1. Automobiles Net sales in the automotive business sector came to ¥1,434...

  • Page 34
    ... the strength of an upturn in exchange rates and reductions in selling costs (Lower net sales; higher earnings). MITSUBISHI MOTORS CORPORATION Annual Report 2010 of ¥22.3 billion, compared with a net outflow of ¥94.8 billion in the previous year, due mainly to capital expenditures. Finally, cash...

  • Page 35
    ... rates on borrowings resulting from a change in financial market conditions in the future will impact MMC results. MITSUBISHI MOTORS CORPORATION Annual Report 2010 Effect of fluctuations in materials prices The MMC Group purchases materials and finished parts and components from many partners...

  • Page 36
    ... Mitsubishi Motors Corporation and Consolidated Subsidiaries As of March 31, 2010 and 2009 In millions of yen In thousands of U.S. dollars (Note 3) 2010 Assets Current assets: Cash and cash equivalents (Notes 13 and 15) Notes and accounts receivable-trade (Notes 4, 8 and 15) Finance receivables...

  • Page 37
    ... 15) Lease obligations (Note 8) Deferred tax liabilities (Note 18) Provision for retirement benefits (Note 17) Other Total liabilities Net assets: Shareholders' equity (Notes 9 and 22): Preferred stock: Authorized: 3,312,000 shares Issued or converted: 437,593 shares in 2009 437,593 shares in 2010...

  • Page 38
    Consolidated Statements of Operations Mitsubishi Motors Corporation and Consolidated Subsidiaries For the years ended March 31, 2010 and 2009 In millions of yen 2010 2009 In thousands of U.S. dollars (Note 3) 2010 Net sales Cost of sales Gross profit Selling, general and administrative expenses (...

  • Page 39
    ... Statements of Changes in Net Assets Mitsubishi Motors Corporation and Consolidated Subsidiaries For the years ended March 31, 2010 and 2009 In millions of yen 2010 2009 In thousands of U.S. dollars (Note 3) 2010 Shareholders' equity Preferred stock: Balance at beginning of year Preferred stock...

  • Page 40
    ... (increase) in time deposits Purchase of property, plant and equipment (Note 13) Proceeds from sales of property, plant and equipment (Note 13) Net decrease (increase) in investments in securities Decrease (increase) in short-term loans receivable Payments of long-term loans receivable Collection of...

  • Page 41
    ... primarily over the period for which each asset is available for use for its overseas subsidiaries. Software intended for use by MMC and its domestic consolidated subsidiaries is amortized using the straight line method over a period of 5 years. MITSUBISHI MOTORS CORPORATION Annual Report 2010

  • Page 42
    ...claims. MITSUBISHI MOTORS CORPORATION Annual Report 2010 (i) Retirement benefits Accrued retirement benefits for employees at March 31, 2010 and 2009 are calculated based on the retirement benefits obligation and the fair value of the pension plan assets estimated at year end. Prior service cost is...

  • Page 43
    ... authorization levels and transaction volumes. Based on this policy, within certain limits, MMC and its consolidated subsidiaries hedge the risks arising from the changes in foreign currency exchange rates and interest rates. Forward foreign exchange contracts are designated to hedge the exposure...

  • Page 44
    ... and others (16 sites) sales operations Nayoro, Hokkaido and others (2 sites) Idle assets Land, buildings and others ¥208 $2,238 Land 6 ¥214 In millions of yen 2009 65 $2,303 42 MITSUBISHI MOTORS CORPORATION Annual Report 2010 Location Application Assets Impairment loss amount Tsukuba...

  • Page 45
    ... the following: In thousands of U.S. dollars 2010 In millions of yen 2010 2009 Loans, principally from banks ¥125,851 ¥179,635 $1,352,659 MITSUBISHI MOTORS CORPORATION Annual Report 2010 Significant declines in the value of securities with market value are recognized as impairment losses if...

  • Page 46
    ... banks and insurance companies, due through 2023 at interest rates averaging 3.5% in 2010 and 4.0% in 2009: Secured Unsecured 3.3% bonds due May 28, 2009 (issued May 28, 1997) 1.1% bonds due September 24, 2010 (issued September 26, 2005) MITSUBISHI MOTORS CORPORATION Annual Report 2010 Less current...

  • Page 47
    ... $1,513,189 MITSUBISHI MOTORS CORPORATION Annual Report 2010 (i) ¥1,025 million ($11,025 thousand) and ¥949 million of other current assets were pledged based on a liability in a term lease contract relating to a building with Murata Medical Services, Ltd. at March 31, 2010 and 2009, respectively...

  • Page 48
    ... following groups of assets of a consolidated subsidiary, Pajero Manufacturing Corporation, were pledged as collateral at March 31, 2010 and 2009, respectively. MITSUBISHI MOTORS CORPORATION Annual Report 2010 In millions of yen 2010 2009 In thousands of U.S. dollars 2010 Buildings and structures...

  • Page 49
    ...917 million, respectively. Income taxes paid for the years ended March 31, 2010 and 2009 amounted to ¥5,006 million ($53,807 thousand) and ¥6,727 million, respectively. MITSUBISHI MOTORS CORPORATION Annual Report 2010 Advertising and promotion expenses Freightage expense Provision for allowance...

  • Page 50
    ... value of such leased assets. If the residual value is not determined, it is deemed to be zero. 48 MITSUBISHI MOTORS CORPORATION Annual Report 2010 (2) Operating lease transactions Future minimum lease payments required under non-cancellable operating lease transactions entered into by MMC...

  • Page 51
    ... risk management structure Trade receivables, which include notes receivable and accounts receivable, are exposed to the credit risk of our customers. To manage this risk, in accordance with the Group's credit control rules, each group company monitors the financial condition of its major customers...

  • Page 52
    ... dollars Fair value Difference Cash and bank deposits Notes and accounts receivable-trade Finance receivables Allowance for doubtful accounts (*1) MITSUBISHI MOTORS CORPORATION Annual Report 2010 Investment securities (*2) Total assets Notes and accounts payable-trade Short-term loans payable Long...

  • Page 53
    ...$723,731 MITSUBISHI MOTORS CORPORATION Annual Report 2010 4. Maturity profile of the long-term loans payable subsequent to March 31, 2010 Refer to Note 8 "Short-term Loans payable, Long-term Debt and Lease Obligations." (Additional information) Effective from the year ended March 31, 2010, MMC has...

  • Page 54
    ...010 (20) 52 March 31, 2010 Notional amount Due more than 1 year MITSUBISHI MOTORS CORPORATION Annual Report 2010 18,626 - 2,059 ¥8,933 2,059 ¥8,933 306,132 - 200,196 - 22,139 $96,020 22,139 $96,020 Interest rate options In millions of yen Fair value Unrealized gain (loss) Notional amount...

  • 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. MITSUBISHI MOTORS CORPORATION Annual Report 2010

  • Page 56
    ... was as follows: In millions of yen Pension Plan assets Benefit obligations under pension plan rules Difference ¥21,251 26,275 (5,024) 54 MITSUBISHI MOTORS CORPORATION Annual Report 2010 The ratio of MMC and its consolidated subsidiaries' payments to total contributions of the multi-employer...

  • Page 57
    ... (48,492) (140,631) (172,714) (404,683) $ (136,317) MITSUBISHI MOTORS CORPORATION Annual Report 2010 Service cost Interest cost Expected return on plan assets Amortization of actuarial losses Amortization of prior service costs Others Pension expenses ¥ 7,804 4,372 (2,841) 4,840 (595) - ¥13,580...

  • Page 58
    ... and Rental Property MITSUBISHI MOTORS CORPORATION Annual Report 2010 For the fiscal year ended March 31, 2010, no note is provided as the amount of the investment and rental property is considered immaterial. (Additional information) Effective for the year ended March 31, 2010, the "Accounting...

  • Page 59
    ... relevance of 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 areas ...Australia, New Zealand, UAE, Puerto Rico 3. Changes in accounting treatment...

  • Page 60
    ...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) Oceania ...Australia, New Zealand (5) Other areas ...UAE, Puerto Rico 3. Overseas sales...

  • Page 61
    ...estimated cost, current component price, and market prices of each component. MITSUBISHI MOTORS CORPORATION Annual Report 2010 Major shareholder Mitsubishi Corporation Chiyoda-Ku, Tokyo, Japan ¥203,228 million Wholesale trading Direct 13.99 Indirect 0.00 Sales of products; import of materials for...

  • Page 62
    ... stock held: Relationship with the Related Party: Detail of transaction: Transaction 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 products; import of materials...

  • Page 63
    ...816 - - - $51,139 - $51,139 61 In numbers of stock, 966 thousand shares relating to stock options were outstanding at March 31, 2009. MITSUBISHI MOTORS CORPORATION Annual Report 2010 Diluted amounts per share of common stock are not included for the year ended March 31, 2009 due to the net loss...

  • Page 64
    ... to June 30, 2009 62 MITSUBISHI MOTORS CORPORATION Annual Report 2010 (b) Size and fluctuation of stock options Outstanding stock options during the year ended March 31, 2010 converted to numbers of shares are as follows: March 31, 2010 Non-vested (number of shares): Outstanding at the beginning...

  • Page 65
    ... end of the year: Exercise price: Weighted average market price at exercise date: Fair evaluation price on grant date: - - - - - 975,000 - 1,000 8,000 966,000 ¥173 ¥183 - 63 MITSUBISHI MOTORS CORPORATION Annual Report 2010 June 25, 2002 5 directors, 25 executive officers and 80 employees June...

  • Page 66
    24. Business Combinations N/A 25. Subsequent Event N/A 64 MITSUBISHI MOTORS CORPORATION Annual Report 2010

  • Page 67
    65 MITSUBISHI MOTORS CORPORATION Annual Report 2010

  • Page 68
    ... Sales Co., Ltd. Shikoku MMC Parts Sales Co., Ltd.*2 Pajero Manufacturing Co., Ltd. Mitsubishi Automotive Accessories & Products Co., Ltd. Mitsubishi Automotive Logistics Technology Co., Ltd. MITSUBISHI MOTORS CORPORATION Annual Report 2010 Mitsubishi Automotive Engineering Co., Ltd. Suiryo Plastics...

  • Page 69
    ... Automobile financing, leasing Automobile importing, sales Importing, sales of automobiles and parts Product development, design, testing, certification Automobile importing, sales Automobile importing, sales Automobile importing, sales Automobile importing, sales Procurement of funds, group company...

  • Page 70
    ... Facilities 8 7 r e 123 456 q wt 68 MITSUBISHI MOTORS CORPORATION Annual Report 2010 Country/Region Name Major Products 90 y -= Japan 1 Nagoya Plant-Okazaki 2 Mizushima Plant 3 Pajero Manufacturing Co., Ltd. 4 Powertrain Plant-Kyoto 5 Powertrain Plant-Shiga 6 Powertrain Plant-Mizushima...

  • Page 71
    Investor Information As of March 31, 2010 Company Name Head Office Established Capital Number of Employees Stock Listings Securities Code Share Trading Unit Number of Shares Outstanding Number of Shareholders MITSUBISHI MOTORS CORPORATION 5-33-8, Shiba, Minato-ku, Tokyo 108-8410, Japan Telephone: ...

  • 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