Edgar Filing: HONDA MOTOR CO LTD

Form 6-K

No.1-7628

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 6-K

REPORT OF FOREIGN PRIVATE ISSUER

PURSUANT TO RULE 13a-16 OR 15d-16

UNDER THE SECURITIES EXCHANGE ACT OF 1934

FOR THE MONTH OF AUGUST 2017

COMMISSION FILE NUMBER: 1-07628

HONDA GIKEN KOGYO KABUSHIKI KAISHA

(Name of registrant)

HONDA MOTOR CO., LTD.

(Translation of registrant’s name into English)

1-1, Minami-Aoyama 2-chome, Minato-ku, Tokyo 107-8556, Japan

(Address of principal executive offices)

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F:

Form 20-F ☒ Form 40-F ☐

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): ☐

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): ☐

Contents

Exhibit 1:

On August 7, 2017, Honda Motor Co., Ltd. filed its consolidated financial statements for the fiscal first quarter ended June 30, 2017 with Financial Services Agency in Japan.

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

HONDA GIKEN KOGYO KABUSHIKI KAISHA (HONDA MOTOR CO., LTD.)

/s/ Eiji Fujimura

Eiji Fujimura

General Manager

Finance Division

Honda Motor Co., Ltd.

Date: August 29, 2017

HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Condensed Consolidated Interim Financial Statements

June 30, 2017

HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Consolidated Financial Results

Overview of Operating Performance

Honda’s consolidated sales revenue for the three months ended June 30, 2017 increased by 7.0% to ¥3,713.0 billion from the same period last year, due mainly to an increase in sales revenue in the Financial services business and Motorcycle business as well as positive foreign currency translation effects. Operating profit increased by 0.9% to ¥269.2 billion from the same period last year, due mainly to an increase in profit attributable to increased sales revenue and model mix as well as continuing cost reduction, which was partially offset by increased selling, general and administrative expenses. Profit before income taxes increased by 16.1%, to ¥335.0 billion. Profit for the period attributable to owners of the parent increased by 18.7%, to ¥207.3 billion.

Business Segments

Motorcycle Business

For the three months ended June 30, 2016 and 2017


	Units (thousands)
	Honda Group Unit Sales*										Consolidated Unit Sales*
	Three months ended Jun. 30, 2016		Three months ended Jun. 30, 2017								Three months ended Jun. 30, 2016		Three months ended Jun. 30, 2017
	Three months ended Jun. 30, 2016		Three months ended Jun. 30, 2017		Change			%			Three months ended Jun. 30, 2016		Three months ended Jun. 30, 2017		Change			%
Motorcycle Business		4,352		4,699		347			8.0			2,831		3,245		414			14.6
Japan		29		42		13			44.8			29		42		13			44.8
North America		78		80		2			2.6			78		80		2			2.6
Europe		72		81		9			12.5			72		81		9			12.5
Asia		3,885		4,219		334			8.6			2,364		2,765		401			17.0
Other Regions		288		277		(11	)		(3.8	)		288		277		(11	)		(3.8	)

Honda Group Unit Sales is the total unit sales of completed motorcycle, ATV and side-by-side products of Honda, its consolidated subsidiaries and its affiliates and joint ventures accounted for using the equity method. Consolidated Unit Sales is the total unit sales of completed products corresponding to consolidated sales revenue to external customers, which consists of unit sales of completed products of Honda and its consolidated subsidiaries.

Sales revenue from external customers increased by 17.6%, to ¥508.5 billion from the same period last year, due mainly to increased consolidated unit sales. Operating profit increased by 152.7% to ¥78.8 billion from the same period last year, due mainly to an increase in profit attributable to increased sales volume and model mix.

Automobile Business

For the three months ended June 30, 2016 and 2017


	Units (thousands)
	Honda Group Unit Sales*										Consolidated Unit Sales*
	Three months ended Jun. 30, 2016		Three months ended Jun. 30, 2017								Three months ended Jun. 30, 2016		Three months ended Jun. 30, 2017
	Three months ended Jun. 30, 2016		Three months ended Jun. 30, 2017		Change			%			Three months ended Jun. 30, 2016		Three months ended Jun. 30, 2017		Change			%
Automobile Business		1,213		1,267		54			4.5			908		900		(8	)		(0.9	)
Japan		146		157		11			7.5			132		144		12			9.1
North America		510		481		(29	)		(5.7	)		510		481		(29	)		(5.7	)
Europe		45		42		(3	)		(6.7	)		45		42		(3	)		(6.7	)
Asia		453		523		70			15.5			162		169		7			4.3
Other Regions		59		64		5			8.5			59		64		5			8.5

Honda Group Unit Sales is the total unit sales of completed products of Honda, its consolidated subsidiaries and its affiliates and joint ventures accounted for using the equity method. Consolidated Unit Sales is the total unit sales of completed products corresponding to consolidated sales revenue to external customers, which consists of unit sales of completed products of Honda and its consolidated subsidiaries. Certain sales of automobiles that are financed with residual value type auto loans by our Japanese finance subsidiaries and sold through our consolidated subsidiaries are accounted for as operating leases in conformity with IFRS and are not included in consolidated sales revenue to the external customers in our Automobile business. Accordingly, they are not included in Consolidated Unit Sales, but are included in Honda Group Unit Sales of our Automobile business.

Sales revenue from external customers increased by 3.6%, to ¥2,589.9 billion from the same period last year, due mainly to positive foreign currency translation effects, which was partially offset by decreased consolidated unit sales. Operating profit decreased by 23.9% to ¥140.3 billion from the same period last year, due mainly to increased selling, general and administrative expenses as well as a decrease in profit attributable to decreased sales volume and model mix, which was partially offset by continuing cost reduction.

Financial Services Business

Sales revenue from external customers increased by 15.6%, to ¥536.9 billion from the same period last year, due mainly to an increase in revenues on disposition of lease vehicles and operating lease revenues. Operating profit decreased by 1.4% to ¥49.8 billion from the same period last year, due mainly to increased selling, general and administrative expenses.

Power Product and Other Businesses

For the three months ended June 30, 2016 and 2017


	Units (thousands)
	Honda Group Unit Sales/ Consolidated Unit Sales*
	Three months ended Jun. 30, 2016		Three months ended Jun. 30, 2017
	Three months ended Jun. 30, 2016		Three months ended Jun. 30, 2017		Change			%
Power Product Business		1,488		1,331		(157	)		(10.6	)
Japan		59		59		0			0.0
North America		769		596		(173	)		(22.5	)
Europe		225		240		15			6.7
Asia		360		362		2			0.6
Other Regions		75		74		(1	)		(1.3	)

Honda Group Unit Sales is the total unit sales of completed power products of Honda, its consolidated subsidiaries and its affiliates and joint ventures accounted for using the equity method. Consolidated Unit Sales is the total unit sales of completed power products corresponding to consolidated sales revenue to external customers, which consists of unit sales of completed power products of Honda and its consolidated subsidiaries. In Power product business, there is no discrepancy between Honda Group Unit Sales and Consolidated Unit Sales since no affiliate and joint venture accounted for using the equity method were involved in the sale of Honda power products.

Sales revenue from external customers increased by 2.6%, to ¥77.6 billion from the same period last year, due mainly to increased sales revenue in other businesses. Operating profit decreased by 69.9% to ¥0.1 billion from the same period last year, due mainly to increased selling, general and administrative expenses, which was partially offset by decreased operating costs in other businesses. In addition, operating loss of aircraft and aircraft engines included in the Power product and other businesses was ¥8.5 billion, an improvement of ¥0.2 billion from the same period last year.

Cash Flows

Consolidated cash and cash equivalents on June 30, 2017 decreased by ¥86.5 billion from March 31, 2017, to ¥2,019.4 billion. The reasons for the increases or decreases for each cash flow activity, when compared with the same period last year, are as follows:

Net cash provided by operating activities amounted to ¥176.6 billion of cash inflows. Cash inflows from operating activities increased by ¥5.2 billion from the same period last year, due mainly to an increase in cash received from customers.

Net cash used in investing activities amounted to ¥178.7 billion of cash outflows. Cash outflows from investing activities decreased by ¥3.2 billion from the same period last year, due mainly to a decrease in payments for additions to property, plant and equipment.

Net cash used in financing activities amounted to ¥88.5 billion of cash outflows. Cash outflows from financing activities increased by ¥141.2 billion from the same period last year, due mainly to a decrease in proceeds from financing liabilities.

HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Condensed Consolidated Statements of Financial Position

March 31, 2017 and June 30, 2017


		Yen (millions)
Assets	Note	March 31, 2017			June 30, 2017
		unaudited			unaudited
Current assets:
Cash and cash equivalents		¥	2,105,976		¥	2,019,418
Trade receivables			764,026			725,451
Receivables from financial services			1,878,938			1,861,152
Other financial assets			149,427			148,498
Inventories			1,364,130			1,444,970
Other current assets			292,970			318,024

Total current assets			6,555,467			6,517,513

Non-current assets:
Investments accounted for using the equity method			597,262			645,890
Receivables from financial services			3,070,615			3,116,256
Other financial assets			364,612			393,238
Equipment on operating leases	6		4,104,663			4,164,365
Property, plant and equipment	7		3,200,378			3,158,791
Intangible assets			778,192			765,212
Deferred tax assets			121,509			112,176
Other non-current assets			165,425			170,870

Total non-current assets			12,402,656			12,526,798

Total assets		¥	18,958,123		¥	19,044,311


		Yen (millions)
Liabilities and Equity	Note	March 31, 2017			June 30, 2017
		unaudited			unaudited
Current liabilities:
Trade payables		¥	1,183,344		¥	1,089,446
Financing liabilities			2,786,928			2,830,318
Accrued expenses			417,736			373,089
Other financial liabilities			119,784			121,841
Income taxes payable			45,507			69,381
Provisions	8		348,095			315,470
Other current liabilities			527,448			537,054

Total current liabilities			5,428,842			5,336,599

Non-current liabilities:
Financing liabilities			4,022,190			4,019,344
Other financial liabilities			47,241			50,078
Retirement benefit liabilities			494,131			444,677
Provisions	8		248,935			241,106
Deferred tax liabilities			900,450			944,202
Other non-current liabilities			246,708			277,871

Total non-current liabilities			5,959,655			5,977,278

Total liabilities			11,388,497			11,313,877

Equity:
Common stock			86,067			86,067
Capital surplus			171,118			171,118
Treasury stock			(26,189	)		(26,192	)
Retained earnings			6,712,894			6,877,387
Other components of equity			351,406			363,514

Equity attributable to owners of the parent			7,295,296			7,471,894
Non-controlling interests			274,330			258,540

Total equity			7,569,626			7,730,434

Total liabilities and equity		¥	18,958,123		¥	19,044,311

See accompanying notes to condensed consolidated interim financial statements.

HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Condensed Consolidated Statements of Income

For the three months ended June 30, 2016 and 2017


		Yen (millions)
	Note	June 30, 2016			June 30, 2017
		unaudited			unaudited
Sales revenue		¥	3,471,730		¥	3,713,096

Operating costs and expenses:
Cost of sales			(2,677,660	)		(2,874,789	)
Selling, general and administrative			(361,663	)		(394,823	)
Research and development			(165,564	)		(174,273	)

Total operating costs and expenses			(3,204,887	)		(3,443,885	)

Operating profit			266,843			269,211

Share of profit of investments accounted for using the equity method	5		27,222			52,948

Finance income and finance costs:
Interest income			7,440			8,997
Interest expense			(3,092	)		(2,854	)
Other, net			(9,921	)		6,723

Total finance income and finance costs			(5,573	)		12,866

Profit before income taxes			288,492			335,025

Income tax expense			(98,626	)		(109,517	)

Profit for the period		¥	189,866		¥	225,508

Profit for the period attributable to:
Owners of the parent			174,699			207,335
Non-controlling interests			15,167			18,173

		Yen
		June 30, 2016			June 30, 2017
Earnings per share attributable to owners of the parent
Basic and diluted	11	¥	96.93		¥	115.04

See accompanying notes to condensed consolidated interim financial statements.

HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Condensed Consolidated Statements of Comprehensive Income

For the three months ended June 30, 2016 and 2017


		Yen (millions)
	Note	June 30, 2016			June 30, 2017
		unaudited			unaudited
Profit for the period		¥	189,866		¥	225,508

Other comprehensive income, net of tax:
Items that will not be reclassified to profit or loss
Remeasurements of defined benefit plans			—			—
Net changes in revaluation of financial assets measured at fair value through other comprehensive income			(10,921	)		5,817
Share of other comprehensive income of investments accounted for using the equity method			(2,084	)		(1,182	)
Items that may be reclassified subsequently to profit or loss
Exchange differences on translating foreign operations			(376,380	)		6,492
Share of other comprehensive income of investments accounted for using the equity method			(36,264	)		3,349

Total other comprehensive income, net of tax			(425,649	)		14,476

Comprehensive income for the period		¥	(235,783	)	¥	239,984

Comprehensive income for the period attributable to:
Owners of the parent			(224,797	)		219,855
Non-controlling interests			(10,986	)		20,129

See accompanying notes to condensed consolidated interim financial statements.

HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Condensed Consolidated Statements of Changes in Equity

For the three months ended June 30, 2016 and 2017


			Yen (millions)
			Equity attributable to owners of the parent
	Note		Common stock		Capital surplus		Treasury stock			Retained earnings			Other components of equity			Total			Non-controlling interests			Total equity
Balance as of April 1, 2016 (unaudited)			¥	86,067	¥	171,118	¥	(26,178	)	¥	6,194,311		¥	336,115		¥	6,761,433		¥	270,355		¥	7,031,788

Comprehensive income for the period
Profit for the period											174,699						174,699			15,167			189,866
Other comprehensive income, net of tax														(399,496	)		(399,496	)		(26,153	)		(425,649	)

Total comprehensive income for the period											174,699			(399,496	)		(224,797	)		(10,986	)		(235,783	)
Reclassification to retained earnings											5,307			(5,307	)		—						—
Transactions with owners and other
Dividends paid		12									(39,650	)					(39,650	)		(29,421	)		(69,071	)
Purchases of treasury stock								(3	)								(3	)					(3	)

Total transactions with owners and other								(3	)		(39,650	)					(39,653	)		(29,421	)		(69,074	)

Balance as of June 30, 2016 (unaudited)			¥	86,067	¥	171,118	¥	(26,181	)	¥	6,334,667		¥	(68,688	)	¥	6,496,983		¥	229,948		¥	6,726,931


			Yen (millions)
			Equity attributable to owners of the parent
	Note		Common stock		Capital surplus		Treasury stock			Retained earnings			Other components of equity			Total			Non-controlling interests			Total equity
Balance as of April 1, 2017 (unaudited)			¥	86,067	¥	171,118	¥	(26,189	)	¥	6,712,894		¥	351,406		¥	7,295,296		¥	274,330		¥	7,569,626

Comprehensive income for the period
Profit for the period											207,335						207,335			18,173			225,508
Other comprehensive income, net of tax														12,520			12,520			1,956			14,476

Total comprehensive income for the period											207,335			12,520			219,855			20,129			239,984
Reclassification to retained earnings											412			(412	)		—						—
Transactions with owners and other
Dividends paid		12									(43,254	)					(43,254	)		(35,919	)		(79,173	)
Purchases of treasury stock								(3	)								(3	)					(3	)

Total transactions with owners and other								(3	)		(43,254	)					(43,257	)		(35,919	)		(79,176	)

Balance as of June 30, 2017 (unaudited)			¥	86,067	¥	171,118	¥	(26,192	)	¥	6,877,387		¥	363,514		¥	7,471,894		¥	258,540		¥	7,730,434

See accompanying notes to condensed consolidated interim financial statements.

HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows

For the three months ended June 30, 2016 and 2017


		Yen (millions)
	Note	June 30, 2016			June 30, 2017
		unaudited			unaudited
Cash flows from operating activities:
Profit before income taxes		¥	288,492		¥	335,025
Depreciation, amortization and impairment losses excluding equipment on operating leases			167,075			177,979
Share of profit of investments accounted for using the equity method			(27,222	)		(52,948	)
Finance income and finance costs, net			(10,901	)		14,519
Interest income and interest costs from financial services, net			(30,522	)		(30,983	)
Changes in assets and liabilities
Trade receivables			93,656			43,116
Inventories			(19,740	)		(75,532	)
Trade payables			(90,990	)		(48,379	)
Accrued expenses			(21,539	)		(55,386	)
Provisions and retirement benefit liabilities			(40,175	)		(26,299	)
Receivables from financial services			27,098			(5,461	)
Equipment on operating leases			(158,531	)		(51,744	)
Other assets and liabilities			(17,245	)		(71,802	)
Other, net			(3,198	)		4,225
Dividends received			20,362			20,726
Interest received			53,294			57,816
Interest paid			(20,206	)		(22,018	)
Income taxes paid, net of refunds			(38,322	)		(36,217	)

Net cash provided by operating activities			171,386			176,637

Cash flows from investing activities:
Payments for additions to property, plant and equipment			(132,375	)		(124,693	)
Payments for additions to and internally developed intangible assets			(38,460	)		(35,828	)
Proceeds from sales of property, plant and equipment and intangible assets			5,169			4,529
Payments for acquisitions of subsidiaries, net of cash and cash equivalents acquired			(2,835	)		—
Payments for acquisitions of investments accounted for using the equity method			—			(2,450	)
Payments for acquisitions of other financial assets			(45,572	)		(52,603	)
Proceeds from sales and redemptions of other financial assets			32,253			31,536
Other, net			(200	)		719

Net cash used in investing activities			(182,020	)		(178,790	)

Cash flows from financing activities:
Proceeds from short-term financing liabilities			2,411,374			1,878,152
Repayments of short-term financing liabilities			(2,158,928	)		(1,766,270	)
Proceeds from long-term financing liabilities			226,200			212,833
Repayments of long-term financing liabilities			(364,795	)		(335,354	)
Dividends paid to owners of the parent			(39,650	)		(43,254	)
Dividends paid to non-controlling interests			(9,114	)		(23,748	)
Purchases and sales of treasury stock, net			(3	)		(3	)
Other, net			(12,367	)		(10,904	)

Net cash provided by (used in) financing activities			52,717			(88,548	)

Effect of exchange rate changes on cash and cash equivalents			(126,732	)		4,143

Net change in cash and cash equivalents			(84,649	)		(86,558	)

Cash and cash equivalents at beginning of year			1,757,456			2,105,976

Cash and cash equivalents at end of period		¥	1,672,807		¥	2,019,418

See accompanying notes to condensed consolidated interim financial statements.

HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Notes to Condensed Consolidated Interim Financial Statements

(1) Reporting Entity

Honda Motor Co., Ltd. (the “Company”) is a public company domiciled in Japan. The Company and its subsidiaries (collectively “Honda”) develop, manufacture and distribute motorcycles, automobiles, power products and others throughout the world, and also provide financial services to customers and dealers for the sale of those products. Principal manufacturing facilities are located in Japan, the United States of America, Canada, Mexico, the United Kingdom, Turkey, Italy, France, China, India, Indonesia, Malaysia, Thailand, Vietnam, Argentina and Brazil.

(2) Basis of Preparation

(a) Compliance with Interim Financial Reporting Standards

The condensed consolidated interim financial statements of the Company have been prepared in accordance with IAS 34 “Interim Financial Reporting”. The condensed consolidated interim financial statements should be read in conjunction with the Company’s consolidated financial statements for the fiscal year ended March 31, 2017, which have been prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board.

(b) Functional Currency and Presentation Currency

The condensed consolidated interim financial statements are presented in Japanese yen, which is the functional currency of the Company. All financial information presented in Japanese yen has been rounded to the nearest million Japanese yen, except when otherwise indicated.

(c) Use of Estimates and Judgments

The preparation of condensed consolidated interim financial statements requires management to make judgments, estimates and assumptions that affect the application of accounting policies, the reported amount of assets, liabilities, revenues and expenses, and the disclosure of contingent assets and liabilities. Actual results could differ from these estimates. These estimates and underlying assumptions are reviewed on a continuous basis. Changes in these accounting estimates are recognized in the period in which the estimates are revised and in any future periods affected.

The condensed consolidated interim financial statements are prepared based on the same judgments and estimations as those applied and described in the Company’s consolidated financial statements for the fiscal year ended March 31, 2017.

(3) Summary of Significant Accounting Policies

The condensed consolidated interim financial statements are prepared based on the same accounting policies as those applied and described in the Company’s consolidated financial statements for the fiscal year ended March 31, 2017.

HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Notes to Condensed Consolidated Interim Financial Statements

(4) Segment Information

Honda has four reportable segments: Motorcycle business, Automobile business, Financial services business and Power product and other businesses, which are based on Honda’s organizational structure and characteristics of products and services. Operating segments are defined as the components of Honda for which separate financial information is available that is evaluated regularly by the chief operating decision maker in deciding how to allocate resources and in assessing performance. The accounting policies used for these reportable segments are consistent with the accounting policies used in the Company’s condensed consolidated interim financial statements.

Principal products and services, and functions of each segment are as follows:


Segment	Principal products and services	Functions
Motorcycle Business	Motorcycles, all-terrain vehicles (ATVs), side-by-sides (SxS) and relevant parts	Research and development Manufacturing Sales and related services

Automobile Business	Automobiles and relevant parts	Research and development Manufacturing Sales and related services

Financial Services Business	Financial services	Retail loan and lease related to Honda products Others

Power Product and Other Businesses	Power products and relevant parts, and others	Research and development Manufacturing Sales and related services Others

(a) Segment Information

Segment information as of and for the three months ended June 30, 2016 and 2017 is as follows:

As of and for the three months ended June 30, 2016


	Yen (millions)
	Motorcycle Business		Automobile Business		Financial Services Business		Power Product and Other Businesses		Segment Total		Reconciling Items			Consolidated
Sales revenue:
External customers	¥	432,404	¥	2,498,985	¥	464,674	¥	75,667	¥	3,471,730	¥	—		¥	3,471,730
Intersegment		—		37,126		3,296		5,245		45,667		(45,667	)		—

Total		432,404		2,536,111		467,970		80,912		3,517,397		(45,667	)		3,471,730

Segment profit (loss)	¥	31,198	¥	184,533	¥	50,577	¥	535	¥	266,843	¥	—		¥	266,843

Segment assets	¥	1,302,343	¥	7,155,959	¥	8,538,313	¥	319,772	¥	17,316,387	¥	(213,726	)	¥	17,102,661
Depreciation and amortization		19,691		142,959		154,900		3,682		321,232		—			321,232
Capital expenditures		7,838		130,493		524,795		2,163		665,289		—			665,289

HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Notes to Condensed Consolidated Interim Financial Statements

As of and for the three months ended June 30, 2017


	Yen (millions)
	Motorcycle Business		Automobile Business		Financial Services Business		Power Product and Other Businesses		Segment Total		Reconciling Items			Consolidated
Sales revenue:
External customers	¥	508,540	¥	2,589,935	¥	536,957	¥	77,664	¥	3,713,096	¥	—		¥	3,713,096
Intersegment		—		34,635		2,732		5,449		42,816		(42,816	)		—

Total		508,540		2,624,570		539,689		83,113		3,755,912		(42,816	)		3,713,096

Segment profit (loss)	¥	78,842	¥	140,344	¥	49,864	¥	161	¥	269,211	¥	—		¥	269,211

Segment assets	¥	1,440,194	¥	7,781,275	¥	9,494,404	¥	318,045	¥	19,033,918	¥	10,393		¥	19,044,311
Depreciation and amortization		18,210		155,103		182,232		3,733		359,278		—			359,278
Capital expenditures		9,914		102,638		465,785		1,688		580,025		—			580,025

Explanatory notes:

Segment profit (loss) of each segment is measured in a consistent manner with consolidated operating profit, which is profit before income taxes before share of profit of investments accounted for using the equity method and finance income and finance costs. Expenses not directly associated with specific segments are allocated based on the most reasonable measures applicable.

Segment assets of each segment are defined as total assets including investments accounted for using the equity method, derivatives, and deferred tax assets. Segment assets are based on those directly associated with each segment and those not directly associated with specific segments are allocated based on the most reasonable measures applicable except for the corporate assets described below.

3.	Intersegment sales revenues are generally made at values that approximate arm’s-length prices.

Reconciling items include elimination of intersegment transactions and balances as well as unallocated corporate assets. Unallocated corporate assets, included in reconciling items as of June 30, 2016 and 2017 amounted to ¥261,040 million and ¥394,601 million, respectively, which consist primarily of the Company’s cash and cash equivalents and financial assets measured at fair value through other comprehensive income.

(b) Supplemental Geographical Information

In addition to the disclosure required by IFRS, Honda provides the following supplemental information for the financial statements users:

Supplemental geographical information based on the location of the Company and its subsidiaries

As of and for the three months ended June 30, 2016


	Yen (millions)
	Japan			North America		Europe		Asia		Other Regions		Total		Reconciling Items			Consolidated
Sales revenue:
External customers	¥	464,178		¥	1,970,643	¥	172,895	¥	691,777	¥	172,237	¥	3,471,730	¥	—		¥	3,471,730
Inter-geographic areas		441,509			98,160		10,100		139,521		614		689,904		(689,904	)		—

Total		905,687			2,068,803		182,995		831,298		172,851		4,161,634		(689,904	)		3,471,730

Operating profit (loss)	¥	(19,777	)	¥	171,271	¥	1,246	¥	90,321	¥	14,326	¥	257,387	¥	9,456		¥	266,843

Assets	¥	4,198,043		¥	9,579,288	¥	578,115	¥	2,324,820	¥	593,279	¥	17,273,545	¥	(170,884	)	¥	17,102,661
Non-current assets other than financial instruments and deferred tax assets	¥	2,432,536		¥	4,119,488	¥	104,429	¥	633,799	¥	173,399	¥	7,463,651	¥	—		¥	7,463,651

HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Notes to Condensed Consolidated Interim Financial Statements

As of and for the three months ended June 30, 2017


	Yen (millions)
	Japan		North America		Europe		Asia		Other Regions		Total		Reconciling Items			Consolidated
Sales revenue:
External customers	¥	507,944	¥	2,008,877	¥	166,748	¥	827,096	¥	202,431	¥	3,713,096	¥	—		¥	3,713,096
Inter-geographic areas		517,080		121,248		46,519		154,606		1,431		840,884		(840,884	)		—

Total		1,025,024		2,130,125		213,267		981,702		203,862		4,553,980		(840,884	)		3,713,096

Operating profit (loss)	¥	21,536	¥	101,589	¥	6,653	¥	97,833	¥	14,730	¥	242,341	¥	26,870		¥	269,211

Assets	¥	4,202,768	¥	10,838,441	¥	663,091	¥	2,794,158	¥	643,550	¥	19,142,008	¥	(97,697	)	¥	19,044,311
Non-current assets other than financial instruments and deferred tax assets	¥	2,475,066	¥	4,797,297	¥	109,051	¥	703,479	¥	174,345	¥	8,259,238	¥	—		¥	8,259,238

Explanatory notes:

1.	Major countries or regions in each geographic area:


North America		United States, Canada, Mexico
Europe		United Kingdom, Germany, Belgium, Turkey, Italy
Asia		Thailand, Indonesia, China, India, Vietnam
Other Regions		Brazil, Australia

2.	Operating profit (loss) of each geographical region is measured in a consistent manner with consolidated operating profit, which is profit before income taxes before share of profit of investments accounted for using the equity method and finance income and finance costs.

3.	Assets of each geographical region are defined as total assets including investments accounted for using the equity method, derivatives, and deferred tax assets.

4.	Sales revenues between geographic areas are generally made at values that approximate arm’s-length prices.

Reconciling items include elimination of inter-geographic transactions and balances as well as unallocated corporate assets. Unallocated corporate assets, included in reconciling items as of June 30, 2016 and 2017 amounted to ¥261,040 million and ¥394,601 million, respectively, which consist primarily of the Company’s cash and cash equivalents and financial assets measured at fair value through other comprehensive income.

(5) Impairment loss on investments accounted for using the equity method

For the three months ended June 30, 2016, the Company recognized impairment losses of ¥12,871 million on certain investments accounted for using the equity method because there is objective evidence of impairment from declines in quoted market values. The impairment losses are included in share of profit of investments accounted for using the equity method in the condensed consolidated statement of income. For the three months ended June 30, 2017, the Company did not recognize any significant impairment losses.

(6) Equipment on Operating Leases

The additions to equipment on operating leases for the three months ended June 30, 2016 and 2017 are ¥523,930 million and ¥465,141 million, respectively.

The sales or disposals of equipment on operating leases for the three months ended June 30, 2016 and 2017 are ¥209,565 million and ¥230,001 million, respectively.

(7) Property, Plant and Equipment

The additions to property, plant and equipment for the three months ended June 30, 2016 and 2017 are ¥114,945 million and ¥87,469 million, respectively.

The sales or disposals of property, plant and equipment for the three months ended June 30, 2016 and 2017 are ¥8,917 million and ¥10,140 million, respectively.

HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Notes to Condensed Consolidated Interim Financial Statements

(8) Provisions

The components of and changes in provisions for the three months ended June 30, 2017 are as follows:


	Yen (millions)
	Product warranties*			Other			Total
Balance as of March 31, 2017	¥	520,130		¥	76,900		¥	597,030

Provision	¥	51,751		¥	5,278		¥	57,029
Charge-offs		(74,139	)		(10,309	)		(84,448	)
Reversal		(11,149	)		(1,279	)		(12,428	)
Exchange differences on translating foreign operations		209			(816	)		(607	)

Balance as of June 30, 2017	¥	486,802		¥	69,774		¥	556,576

Current liabilities and non-current liabilities of provisions as of March 31, 2017 and June 30, 2017 are as follows:


	Yen (millions)
	As of March 31, 2017		As of June 30, 2017
Current liabilities	¥	348,095	¥	315,470
Non-current liabilities		248,935		241,106

Total	¥	597,030	¥	556,576

Explanatory notes:

Honda recognizes provisions for product warranties to cover future product warranty expenses. Honda recognizes costs for general warranties on products Honda sells and for specific warranty programs, including product recalls. Honda recognizes general estimated warranty costs at the time products are sold to customers. Honda also recognizes specific estimated warranty program costs when it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation. These provisions are estimated based on historical warranty claim experience with consideration given to the expected level of future warranty costs as well as current information on repair costs. Provision for product warranties are utilized for expenditures based on the demand from customers and dealers.

HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Notes to Condensed Consolidated Interim Financial Statements

(9) Fair Value

(a) Definition of Fair Value Hierarchy

Honda uses a three-level hierarchy when measuring fair value. The following is a description of the three hierarchy levels:


Level 1		Quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to access as of the measurement date

Level 2		Inputs other than quoted prices included within Level 1 that are observable for the assets or liabilities, either directly or indirectly

Level 3		Unobservable inputs for the assets or liabilities

The level in the fair value hierarchy within which a fair value measurement in its entirety falls is based on the lowest input that is significant to the fair value measurement in its entirety. Honda recognizes the transfers between the levels of the fair value hierarchy at the end of the reporting period during which the change has occurred.

(b) Method of Fair Value Measurement

The fair values of assets and liabilities are determined based on relevant market information and through the use of an appropriate valuation method.

The measurement methods and assumptions used in the measurement of assets and liabilities are as follows:

(Cash and cash equivalents, trade receivables and trade payables)

The fair values approximate their carrying amounts due to their short-term maturities.

(Receivables from financial services)

The fair value of receivables from financial services is measured primarily by discounting future cash flows using the current interest rates applicable for these receivables of similar remaining maturities. Fair value measurement for receivables from financial services is classified as Level 3.

(Debt securities)

Debt securities consist mainly of mutual funds, corporate bonds, local bonds and auction rate securities.

The fair value of mutual funds with an active market is measured by using quoted market prices. Fair value measurement for mutual funds with an active market is classified as Level 1.

The fair values of corporate bonds and local bonds are measured based on proprietary pricing models provided by specialists and/or market makers and the models obtain a wide array of market observable inputs such as credit ratings and discount rates. Fair value measurements for corporate bonds and local bonds are classified as Level 2.

HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Notes to Condensed Consolidated Interim Financial Statements

The subsidiary’s auction rate securities are A to AAA rated and are insured by qualified guarantee agencies, and reinsured by the Secretary of Education and United States government, and guaranteed at approximately 95% by the United States government. To measure fair value of auction rate securities, Honda uses a third-party-developed valuation model which obtains a wide array of market observable inputs, as well as unobservable inputs including probability of passing or failing auction at each auction. Fair value measurement for auction rate securities is classified as Level 3.

(Equity securities)

The fair value of equity securities with an active market is measured by using quoted market prices. Fair value measurement for equity securities with an active market is classified as Level 1.

The fair value of equity securities with no active market is measured mainly by using the comparable company valuation method and other appropriate valuation methods. Fair value measurement for equity securities with no active market is classified as Level 3.

Price book-value ratio (PBR) of a comparable company are used as a significant unobservable input in the fair value measurement of equity securities classified as Level 3. The fair value increases (decreases) as PBR of a comparable company rise (decline). Such fair value measurements are conducted in accordance with the group accounting policy approved by the appropriate person of authority and based upon valuation methods determined by a valuator such as personnel in accounting divisions of Honda.

(Derivatives)

Derivatives consist mainly of foreign currency forward exchange contracts, foreign currency option contracts, currency swap agreements and interest rate swap agreements.

The fair values of foreign currency forward exchange contracts and foreign currency option contracts are measured by using market observable inputs such as spot exchange rates, discount rates and implied volatility. The fair values of currency swap agreements and interest rate swap agreements are measured by discounting future cash flows using market observable inputs such as LIBOR rates, swap rates, and foreign exchange rates. Fair value measurements for these derivatives are classified as Level 2.

The credit risk of the counterparties is considered in the valuation of derivatives.

(Financing liabilities)

The fair value of financing liabilities is measured by discounting future cash flows using interest rates currently available for liabilities of similar terms and remaining maturities. Fair value measurement of financing liabilities is mainly classified as Level 2.

HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Notes to Condensed Consolidated Interim Financial Statements

(c) Assets and Liabilities Measured at Fair Value on a recurring basis

Assets and liabilities measured at fair value on a recurring basis as of March 31, 2017 and June 30, 2017 consist of the following:


	Yen (millions)
As of March 31, 2017	Level 1		Level 2		Level 3		Total
Other financial assets:
Financial assets measured at fair value through profit or loss:
Derivatives
Foreign exchange instruments	¥	—	¥	8,850	¥	—	¥	8,850
Interest rate instruments		—		26,663		—		26,663

Total		—		35,513		—		35,513

Debt securities		24,096		38,988		5,610		68,694
Financial assets measured at fair value through other comprehensive income:
Equity securities		177,339		—		11,318		188,657

Total	¥	201,435	¥	74,501	¥	16,928	¥	292,864

Other financial liabilities:
Financial liabilities measured at fair value through profit or loss:
Derivatives
Foreign exchange instruments	¥	—	¥	33,483	¥	—	¥	33,483
Interest rate instruments		—		21,593		—		21,593

Total		—		55,076		—		55,076

Total	¥	—	¥	55,076	¥	—	¥	55,076

There were no transfers between Level 1 and Level 2 for the year ended March 31, 2017.


	Yen (millions)
As of June 30, 2017	Level 1		Level 2		Level 3		Total
Other financial assets:
Financial assets measured at fair value through profit or loss:
Derivatives
Foreign exchange instruments	¥	—	¥	19,275	¥	—	¥	19,275
Interest rate instruments		—		27,097		—		27,097

Total		—		46,372		—		46,372

Debt securities		26,005		41,042		5,600		72,647
Financial assets measured at fair value through other comprehensive income:
Equity securities		186,304		—		11,832		198,136

Total	¥	212,309	¥	87,414	¥	17,432	¥	317,155

Other financial liabilities:
Financial liabilities measured at fair value through profit or loss:
Derivatives
Foreign exchange instruments	¥	—	¥	24,973	¥	—	¥	24,973
Interest rate instruments		—		15,691		—		15,691

Total		—		40,664		—		40,664

Total	¥	—	¥	40,664	¥	—	¥	40,664

There were no transfers between Level 1 and Level 2 for the three months ended June 30, 2017.

HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Notes to Condensed Consolidated Interim Financial Statements

(d) Financial Assets and Financial Liabilities measured at amortized cost

The carrying amounts and fair values of financial assets and financial liabilities measured at amortized cost as of March 31, 2017 and June 30, 2017 are as follows:


	Yen (millions)
	As of March 31, 2017				As of June 30, 2017
	Carrying amount		Fair value		Carrying amount		Fair value
Receivables from financial services	¥	4,949,553	¥	4,952,670	¥	4,977,408	¥	4,976,613
Debt securities		68,263		68,264		80,758		80,749
Financing liabilities		6,809,118		6,841,558		6,849,662		6,879,306

The table does not include financial assets and financial liabilities measured at amortized cost whose fair values approximate their carrying amounts.

HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Notes to Condensed Consolidated Interim Financial Statements

(10) Contingent Liabilities

Claims and Lawsuits

Honda is subject to potential liability under various lawsuits and claims. Honda recognizes a provision for loss contingencies when it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation. Honda reviews these pending lawsuits and claims periodically and adjusts the amounts recognized for these contingent liabilities, if necessary, by considering the nature of lawsuits and claims, the progress of the case and the opinions of legal counsel.

With respect to product liability, personal injury claims or lawsuits, Honda believes that any judgment that may be recovered by any plaintiff for general and special damages and court costs will be adequately covered by Honda’s insurance and provision. Punitive damages are claimed in certain of these lawsuits.

After consultation with legal counsel, and taking into account all known factors pertaining to existing lawsuits and claims, Honda believes that the ultimate outcome of such lawsuits and pending claims should not result in liability to Honda that would be likely to have an adverse material effect on its consolidated financial position or results of operations.

Loss related to airbag inflators

Honda has been conducting market-based measures in relation to airbag inflators. Honda recognizes a provision for specific warranty costs when it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation. There is a possibility that Honda will need to recognize additional provisions when new evidence related to the product recalls arise, however, it is not possible for Honda to reasonably estimate the amount and timing of potential future losses as of the date of this report.

In the United States and Canada, various class action lawsuits and civil lawsuits related to the above mentioned market-based measures have been filed against Honda. The plaintiffs have claimed for properly functioning airbag inflators, compensation of economic losses including incurred costs and the decline in the value of vehicles, as well as punitive damages. Most of the class action lawsuits in the United States were transferred to the United States District Court for the Southern District of Florida and consolidated into a multidistrict litigation.

Honda did not recognize a provision for loss contingencies because the conditions for a provision have not been met as of the date of this report. Therefore, it is not possible for Honda to reasonably estimate the amount and timing of potential future losses as of the date of this report because there are some uncertainty, such as the period when these lawsuits will be concluded.

HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Notes to Condensed Consolidated Interim Financial Statements

(11) Earnings Per Share

Earnings per share attributable to owners of the parent for the three months ended June 30, 2016 and 2017 are calculated based on the following information. There were no dilutive potential common shares outstanding for the three months ended June 30, 2016 and 2017.


	2016		2017
Profit for the period attributable to owners of the parent (millions of yen)	¥	174,699	¥	207,335
Weighted average number of common shares outstanding, basic (shares)		1,802,283,096		1,802,279,930
Basic earnings per share attributable to owners of the parent (yen)	¥	96.93	¥	115.04

(12) Dividend

(a) Dividend payout

For the three months ended June 30, 2016


Resolution		The Ordinary General Meeting of Shareholders on June 16, 2016
Type of shares		Common shares
Total amount of dividends (millions of yen)		39,650
Dividend per share (yen)		22.00
Record date		March 31, 2016
Effective date		June 17, 2016

For the three months ended June 30, 2017


Resolution		The Ordinary General Meeting of Shareholders on June 15, 2017
Type of shares		Common shares
Total amount of dividends (millions of yen)		43,254
Dividend per share (yen)		24.00
Record date		March 31, 2017
Effective date		June 16, 2017

(b) Dividends payable of which record date was in the three months ended June 30, 2017, effective after the period


Resolution		The Board of Directors Meeting on August 1, 2017
Type of shares		Common shares
Resource for dividend		Retained earnings
Total amount of dividends (millions of yen)		43,254
Dividend per share (yen)		24.00
Record date		June 30, 2017
Effective date		August 25, 2017

(13) Approval of Release of Condensed Consolidated Interim Financial Statements

The release of the condensed consolidated interim financial statements was approved by Takahiro Hachigo, President and Representative Director, Chief Executive Officer and Kohei Takeuchi, Senior Managing Director and Chief Financial Officer on August 7, 2017.

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents