Note: All graphs below are based on figures calculated using the temporal adjustment method for FY 1992-1995 and the current exchange rate method for FY 1996.
In fiscal 1996, Nissan's consolidated unit sales of vehicles decreased by 29 thousand units, or 1.1 percent, to 2,671 thousand units. Supported by new model introductions, including luxury models such as the Cedric/Gloria and RV models, domestic unit sales increased by 83 thousand units, or 7.8 percent, to 1,146 thousand vehicles. Overseas unit sales decreased by 111 thousand units, or 6.8 percent, to 1,525 thousand units, mainly because of lower sales in Mexico and Latin America. U.S. unit sales decreased by 15 thousand units, or 1.9 percent, as overall market demand decreased 0.2 percent to 14,902 thousand vehicles. In Europe, unit sales rose by 4 thousand units in spite of severe competition. Consolidated net sales increased 3.5 percent to 6,039.1 billion yen (US$57.0 billion), due mainly to the increase in domestic sales. Total consolidated sales from automotive operations increased 3.4 percent to 5,913.1 billion yen (US$55.8 billion). Non-automotive sales increased 9.2 percent to 126.0 billion yen (US$1.2 billion), supported by higher sales of industrial machinery and marine equipment.
Foreign Currency Translation
Beginning with the fiscal year ended March 31, 1996, Nissan stopped using the temporal adjustment method in favor of the current exchange rate method for foreign currency translations of the financial statements of overseas subsidiaries. This change was made in accordance with changes in the sections of the Japanese Accounting Standards related to foreign currency translation.
Under this new method, income statement items must be translated using average exchange rates and balance sheet items must be translated using the rates at the balance sheet date. Shareholders' equity must be translated using historical rates. Discrepancies resulting from the difference in the exchange rates used for translations are shown in the assets section of the balance sheets as Translation Adjustments. The following table summarizes figures for the fiscal year ended March 1996, stated using the current exchange rate method, and figures for the fiscal year ended March 1995, restated using the current exchange rate method and compared to the figures stated using the temporal adjustment method.
| Billion Yen | ||||
| FY1996 Current Exchange Rate Method |
FY1995 Current Exchange Rate Method |
FY1995 Temporal Adjustment Method |
FY1995 Difference |
|
| Operating income (loss) | ¥43.2 | ¥(55.0) | ¥(102.7) | ¥47.7 |
| Income (loss) before income taxes | (81.5) | (178.3) | (226.0) | 47.7 |
| Net income (loss) | (88.4) | (164.3) | (166.1) | 1.8 |
| Total assets | 7,091.6 | 6,888.3 | 7,192.9 | (304.6) |
| 5,580.1 | 5,707.3 | 5,830.6 | (123.3) | |
| 1,511.5 | 1,181.0 | 1,362.3 | (181.3) | |
| Total debt | 3,728.5 | 3,639.4 | 3,931.5 | (292.1) |
| 2,503.3 | 2,674.1 | 2,837.3 | (163.2) | |
| 1,225.2 | 965.3 | 1,094.2 | (128.9) | |
| Shareholders' equity | 1,356.7 | 1,465.7 | 1,429.1 | 36.6 |
Net Income
Nissan recorded consolidated operating income of 43.2 billion yen (US$407.9 million) in fiscal 1996, the first time in three years that Nissan has recorded operating income on a current rate basis. Higher sales in Japan and over 100 billion yen in savings that have resulted from the Company's restructuring program drove the earnings increase, offsetting the negative impact on earnings from the strong yen. Other expenses totaled 124.7 billion yen (US$1,176.3 million), nearly equivalent to the other expenses of fiscal 1995 as appraisal gains resulting from inflation in Mexico were offset by special early retirement payments and lower net realized gain on sales of securities. As a result, Nissan recorded a net loss of 88.4 billion yen (US$834.1 million), an improvement of 75.9 billion yen from the prior fiscal year.
1) Total Assets
Total assets increased 3.0 percent to 7,091.6 billion yen (US$66.9 billion). Total assets consist of manufacturing assets and financial services assets that include retail and wholesale financing and leased vehicles. Manufacturing operations assets decreased 127.2 billion yen to 5,580.1 billion yen, while financial services assets increased 330.5 billion yen to 1,511.5 billion yen, primarily because of stronger demand for retail financing services, particularly in the United States, and the increase in overseas assets due to the weaker yen at the balance sheet date.
Net property, plant and equipment decreased 0.2 percent to 3,129.8 billion yen (US$29.5 billion), as capital expenditures for manufacturing operations continued to decrease. Capital expenditures associated with manufacturing operations, excluding leased vehicles, were 173.1 billion yen in fiscal 1996 in fiscal 1995. Depreciation expenses associated with manufacturing operations, excluding leased vehicles, were 222.6 billion yen in fiscal 1996.
2) Debt
Interest-bearing debt, the sum of short-term borrowings, the current portion of long-term debt, and long-term debt, increased 89.1 billion yen to 3,728.5 billion yen (US$35.2 billion). Manufacturing operations debt decreased 170.8 billion yen to 2,503.3 billion yen, reflecting decreased funding requirements for capital expenditures, while financial services debt increased 259.9 billion yen to 1,225.2 billion yen in reflection of asset growth at NMAC and other consolidated financing companies.
Nissan replaced long-term debt with short-term debt, taking advantage of the historically low level of interest rates in Japan. While deploying cash and cash equivalents to reduce debt, Nissan flexibly met its funding and working capital needs by maintaining excellent access to bank credit facilities, capital and money markets.
3) Shareholders' equity
Shareholders' equity decreased 109.0 billion yen to 1,356.7 billion yen (US$12.8 billion), mainly because Nissan's net loss in fiscal 1996 reduced retained earnings. Shareholders' equity per share was 539.90 yen. The shareholders' equity ratio, which is the ratio of shareholders' equity to total assets, dropped to 19.1 percent from 21.3 percent in fiscal 1995. Excluding financial services, this ratio was 24.3 percent in fiscal 1996 and 25.7 percent in fiscal 1995.
Investing activities used net cash of 232.3 billion yen. Nissan generated less cash flow from liquidation of short-term investments and sales of investment securities than in the prior fiscal year. Purchases of property plant and equipment totaled 173.1 billion yen, and were within the scope of operating cash flow. Investment in leased assets represents vehicle leases made by financial services subsidiaries.
Financing activities used net cash of 86.1 billion yen in fiscal 1996. Taking advantage of the historical low level of interest rates, Nissan replaced higher-cost debt with lower-cost debt and strengthened its financial position. Year-end cash dividends totaled 17.6 billion yen, or 7.0 yen per share, unchanged from the prior fiscal year. Cash at the end of the year totaled 110.2 billion yen.
Financial Strategy
Nissan has been streamlining its balance sheet by reducing debt while ensuring sufficient liquidity. Nissan's credit ratings by various credit rating agencies were unchanged during fiscal 1996. Management believes the Company will have no difficulty in funding working capital needs and long-term growth because of its extensive bank credit facilities and global access to capital and money markets. Funding sources include the issue of bonds, bank credit, commercial paper programs, medium-term note programs and asset-backed securities.
Manufacturing operations will require less capital because major global capacity expansion programs have been completed. Capital expenditures have been below depreciation for the past three fiscal years, and the Company will continue this pattern of investment in manufacturing assets in fiscal 1997.
Nissan meets group financing needs through such means as procuring funds in the world's three largest financial markets through Nissan Motor Co., Ltd. in Tokyo, Nissan Capital of America, Inc. (NCA) in New York, and Nissan International Finance (Netherlands) B.V. (NIF) in Europe. Nissan Leasing Co. in Japan also supports the funding needs of domestic dealers by helping them ensure stable cash flow and reducing their need for more costly external financing.
The credit ratings for Nissan Motor Co., Ltd. are listed in the table below. NCA and NIF have entered into Keep Well Agreements with Nissan Motor Co., Ltd., and therefore have the same ratings as the Company.
| Short Term | Long Term | |
| Nippon Investors Service Inc. | ||
| Japan Bond Research Institute | ||
| Moody's Investors Service | ||
| Standard & Poor's Corporation | ||
| Fitch Investors Service, Inc. | Not rated |
As of July 1996, Nissan had not been contacted by any of the above rating agencies regarding any proposed changes in these ratings.
|
|
|