MITSY » Topics » Net Debt-to-Equity Ratio

This excerpt taken from the MITSY 20-F filed Jul 17, 2009.

Net Debt-to-Equity Ratio

We refer to “Net Debt-to-Equity Ratio” (“Net DER”) in this Liquidity and Capital Resources and elsewhere in this annual report. Net DER is comprised of “net interest bearing debt” divided by shareholders’ equity.

“Net interest bearing debt” is defined as interest bearing debt, consisting of short-term debt and long-term debt, less cash and cash equivalents and time deposits. Management believes that Net DER is a useful internal measure to review the balance between interest bearing debt and shareholders’ equity for the purpose of improving our capacity to meet debt repayments and/or return on equity. This calculation does not recognize the fact that cash and cash equivalents and time deposits may not be completely available for debt repayments because some amount of cash and cash equivalents and time deposits may be required for operational needs including contractual obligations or capital expenditures.

“Net interest bearing debt” and “Net DER” are presented in the table below.

 

     Billions of Yen  
     As of March 31,  
     2009     2008  

Short-term debt

   ¥ 454.1      ¥ 464.6   

Long-term debt

     3,214.5        3,221.0   
                

Interest bearing debt

     3,668.6        3,685.6   

Less cash and cash equivalents and time deposits

     (1,153.5     (911.6

Net interest bearing debt

   ¥ 2,515.1      ¥ 2,774.0   
                

Shareholders’ equity

   ¥ 1,881.7      ¥ 2,183.7   
                

Net DER (times)

     1.34        1.27   
                

The most directly comparable GAAP measures for Net interest bearing debt and Net DER are considered to be “Interest bearing debt” and “Debt-to-Equity Ratio” (“DER”), respectively. However, these measures do not measure changes in cash position.

 

DER (times)

   1.95    1.69

(defined as interest bearing debt divided by shareholders’ equity)

     
This excerpt taken from the MITSY 6-K filed May 8, 2009.

(*2) Net Debt-to-Equity Ratio

We refer to Net Debt-to-Equity Ratio (“Net DER”) in this flash report. Net DER is comprised of “net interest bearing debt” divided by shareholders’ equity.

“Net interest bearing debt” is defined as interest bearing debt less cash and cash equivalents and time deposits. Our interest bearing debt primarily consists of long term debt, less current maturities, which are not readily repayable. In order to flexibly meet capital requirements and to prepare for future debt-service requirements in case of unforeseen deteriorations in financial markets, currently we hold a relatively high level of cash and cash equivalents reflecting the current financial market conditions and future capital requirements.

Under this policy, Net DER is a useful internal measure for our management to review the balance between:

 

   

our capacity to meet debt repayments; and

 

   

leverage to improve return on equity in our capital structure.

This measure does not recognize the fact that cash and cash equivalents and time deposits may not be available completely for debt repayments, but cash and cash equivalents and time deposits may be required for operational needs including certain contractual obligations or capital expenditure.

 

     Billions of Yen  
     End of Mar. 2008     End of Mar. 2009  

Short-term debt

   ¥ 464.6     ¥ 454.1  

Long-term debt

   ¥ 3,221.0     ¥ 3,214.5  

Interest bearing debt

   ¥ 3,685.6     ¥ 3,668.6  

Less cash and cash equivalents and time deposits

   ¥ (911.6 )   ¥ (1,153.5 )

Net interest bearing debt

   ¥ 2,774.0     ¥ 2,515.1  

Shareholders’ equity

   ¥ 2,183.7     ¥ 1,881.7  
                

Net DER (times)

     1.27       1.34  
This excerpt taken from the MITSY 6-K filed Feb 4, 2009.

(*) Net Debt-to-Equity Ratio

We refer to Net Debt-to-Equity Ratio (“Net DER”) in this flash report. Net DER is comprised of “net interest bearing debt” divided by shareholders’ equity.

“Net interest bearing debt” is defined as interest bearing debt less cash and cash equivalents and time deposits. Our interest bearing debt primarily consists of long term debt, less current maturities, which are not readily repayable. In order to flexibly meet capital requirements and to prepare for future debt-service requirements in case of unforeseen deteriorations in financial markets, currently we hold a relatively high level of cash and cash equivalents reflecting the current financial market conditions and future capital requirements.

Under this policy, Net DER is a useful internal measure for our management to review the balance between:

 

   

our capacity to meet debt repayments; and

 

   

leverage to improve return on equity in our capital structure.

This measure does not recognize the fact that cash and cash equivalents and time deposits may not be available completely for debt repayments, but cash and cash equivalents and time deposits may be required for operational needs including certain contractual obligations or capital expenditure.

 

     Billions of Yen  
     End of Dec. 2008     End of Mar. 2008  

Short-term debt

   ¥ 555.1     ¥ 464.6  

Long-term debt

   ¥ 3,121.7     ¥ 3,221.0  

Interest bearing debt

   ¥ 3,676.8     ¥ 3,685.6  

Less cash and cash equivalents and time deposits

   ¥ (911.2 )   ¥ (911.6 )

Net interest bearing debt

   ¥ 2,765.6     ¥ 2,774.0  

Shareholders’ equity

   ¥ 1,921.1     ¥ 2,183.7  
                

Net DER (times)

     1.44       1.27  
This excerpt taken from the MITSY 6-K filed Jan 30, 2009.

(*)Net Debt-to-Equity Ratio

We refer to Net Debt-to-Equity Ratio (“Net DER”) in this flash report. Net DER is comprised of “net interest bearing debt” divided by shareholders’ equity.

“Net interest bearing debt” is defined as interest bearing debt less cash and cash equivalents and time deposits. Our interest bearing debt primarily consists of long term debt, less current maturities, which are not readily repayable. In order to flexibly meet capital requirements and to prepare for future debt-service requirements in case of unforeseen deteriorations in financial markets, currently we hold a relatively high level of cash and cash equivalents reflecting the current financial market conditions and future capital requirements.

Under this policy, Net DER is a useful internal measure for our management to review the balance between:

 

   

our capacity to meet debt repayments; and

 

   

leverage to improve return on equity in our capital structure.

This measure does not recognize the fact that cash and cash equivalents and time deposits may not be available completely for debt repayments, but cash and cash equivalents and time deposits may be required for operational needs including certain contractual obligations or capital expenditure.

 

     Billions of Yen  
     End of Sep. 2008     End of Mar. 2008  

Short-term debt

   ¥ 555.0     ¥ 464.6  

Long-term debt

     3,196.4       3,221.0  

Interest bearing debt

     3,751.4       3,685.6  

Less cash and cash equivalents and time deposits

     (814.9 )     (911.6 )

Net interest bearing debt

   ¥ 2,936.5     ¥ 2,774.0  

Shareholders’ equity

   ¥ 2,232.2     ¥ 2,183.7  
                

Net DER (times)

     1.32       1.27  
This excerpt taken from the MITSY 6-K filed Nov 7, 2008.

(*)Net Debt-to-Equity Ratio

We refer to Net Debt-to-Equity Ratio (“Net DER”) in this flash report. Net DER is comprised of “net interest bearing debt” divided by shareholders’ equity.

“Net interest bearing debt” is defined as interest bearing debt less cash and cash equivalents and time deposits. Our interest bearing debt primarily consists of long term debt, less current maturities, which are not readily repayable. In order to flexibly meet capital requirements and to prepare for future debt-service requirements in case of unforeseen deteriorations in financial markets, currently we hold a relatively high level of cash and cash equivalents reflecting the current financial market conditions and future capital requirements.

Under this policy, Net DER is a useful internal measure for our management to review the balance between:

 

   

our capacity to meet debt repayments; and

 

   

leverage to improve return on equity in our capital structure.

This measure does not recognize the fact that cash and cash equivalents and time deposits may not be available completely for debt repayments, but cash and cash equivalents and time deposits may be required for operational needs including certain contractual obligations or capital expenditure.

 

     Billions of Yen  
     End of Sep. 2008     End of Mar. 2008  

Short-term debt

   ¥ 555.0     ¥ 464.6  

Long-term debt

     3,196.4       3,221.0  

Interest bearing debt

     3,751.4       3,685.6  

Less cash and cash equivalents and time deposits

     (814.9 )     (911.6 )

Net interest bearing debt

   ¥ 2,936.5     ¥ 2,774.0  

Shareholders’ equity

   ¥ 2,232.2     ¥ 2,183.7  
                

Net DER (times)

     1.32       1.27  
This excerpt taken from the MITSY 6-K filed Nov 4, 2008.

(*)Net Debt-to-Equity Ratio

We refer to Net Debt-to-Equity Ratio (“Net DER”) in this flash report. Net DER is comprised of “net interest bearing debt” divided by shareholders’ equity.

“Net interest bearing debt” is defined as interest bearing debt less cash and cash equivalents and time deposits. Our interest bearing debt primarily consists of long term debt, less current maturities, which are not readily repayable. In order to flexibly meet capital requirements and to prepare for future debt-service requirements in case of unforeseen deteriorations in financial markets, currently we hold a relatively high level of cash and cash equivalents reflecting the current financial market conditions and future capital requirements.

Under this policy, Net DER is a useful internal measure for our management to review the balance between:

 

   

our capacity to meet debt repayments; and

 

   

leverage to improve return on equity in our capital structure.

This measure does not recognize the fact that cash and cash equivalents and time deposits may not be available completely for debt repayments, but cash and cash equivalents and time deposits may be required for operational needs including certain contractual obligations or capital expenditure.

This excerpt taken from the MITSY 6-K filed Aug 5, 2008.

(*)Net Debt-to-Equity Ratio

We refer to Net Debt-to-Equity Ratio (“Net DER”) in this flash report. Net DER is comprised of “net interest bearing debt” divided by shareholders’ equity.

“Net interest bearing debt” is defined as interest bearing debt less cash and cash equivalents and time deposits. Our interest bearing debt primarily consists of long term debt, less current maturities, which are not readily repayable. In order to flexibly meet capital requirements and to prepare for future debt-service requirements in case of unforeseen deteriorations in financial markets, currently we hold a relatively high level of cash and cash equivalents reflecting the current financial market conditions and future capital requirements.

Under this policy, Net DER is a useful internal measure for our management to review the balance between:

 

   

our capacity to meet debt repayments; and

 

   

leverage to improve return on equity in our capital structure.

This measure does not recognize the fact that cash and cash equivalents and time deposits may not be available completely for debt repayments, but cash and cash equivalents and time deposits may be required for operational needs including certain contractual obligations or capital expenditure.

This excerpt taken from the MITSY 20-F filed Aug 4, 2008.

Net Debt-to-Equity Ratio

We refer to “Net Debt-to-Equity Ratio” (“Net DER”) in this Liquidity and Capital Resources and elsewhere in this annual report. Net DER is comprised of “net interest bearing debt” divided by shareholders’ equity.

“Net interest bearing debt” is defined as interest bearing debt, defined below, less cash and cash equivalents and time deposits. Our interest bearing debt primarily consists of long-term debt. As discussed in “Funding and Treasury Policies and Objectives,” to flexibly meet capital requirements and to prepare for future debt-service requirements in case of unforeseen deteriorations in financial markets, currently we hold a relatively high level of cash and cash equivalents reflecting the current financial market conditions and future capital requirements. Under this policy, Net DER is a useful internal measure for our management to review the balance between:

 

   

our capacity to meet debt repayments; and

 

   

leverage to improve return on equity in our capital structure.

This calculation does not recognize the fact that cash and cash equivalents and time deposits may not be completely available for debt repayments because some amount of cash and cash equivalents and time deposits may be required for operational needs including contractual obligations or capital expenditures.

“Net interest bearing debt” and “Net DER” are presented in the table below.

 

     Billions of Yen  
     As of March 31,  
     2008     2007  

Short-term debt

   ¥ 464.6     ¥ 658.7  

Long-term debt

     3,221.0       3,259.4  
                

Interest bearing debt

     3,685.6       3,918.1  

Less cash and cash equivalents and time deposits

     (911.6 )     (806.6 )

Net interest bearing debt

   ¥ 2,774.0     ¥ 3,111.5  
                

Shareholders’ equity

   ¥ 2,183.7     ¥ 2,110.3  
                

Net DER (times)

     1.27       1.47  
                

The most directly comparable GAAP measure is considered to be “Debt-to-Equity Ratio” (“DER”). However, this ratio measures gross debt relative to equity, and does not measure changes in cash position.

 

DER (times)

   1.69    1.86

(defined as interest bearing debt divided by shareholders’ equity)

     
This excerpt taken from the MITSY 6-K filed May 7, 2008.

(*)Net Debt-to-Equity Ratio

We refer to “Net Debt-to-Equity Ratio” (“Net DER”) in this flash report. Net DER is comprised of “net interest bearing debt” divided by shareholders’ equity.

“Net interest bearing debt” is defined as adjusted interest bearing debt described as below less cash and cash equivalents and time deposits. Our interest bearing debt primarily consists of long term debt, less current maturities, which are not readily repayable. In order to flexibly meet capital requirements and to prepare for future debt-service requirements in case of unforeseen deteriorations in financial markets, currently we hold a relatively high level of cash and cash equivalents reflecting the current financial market conditions and future capital requirements.

Under this policy, Net DER is a useful internal measure for our management to review the balance between:

 

   

our capacity to meet debt repayments; and

 

   

leverage to improve return on equity in our capital structure.

This measure does not recognize the fact that cash and cash equivalents and time deposits may not be available completely for debt repayments, but cash and cash equivalents and time deposits may be required for operational needs including certain contractual obligations or capital expenditure.

“Net interest bearing debt” and “Net DER” are presented in the table below.

 

     Billions of Yen  
     End of Mar. 2008     End of Mar. 2007  

Short-term debt

   ¥ 464.6     ¥ 658.7  

Long-term debt

     3,221.0       3,259.4  

Interest bearing debt

     3,685.6       3,918.1  

Less cash and cash equivalents and time deposits

     (911.6 )     (806.6 )
                

Net interest bearing debt

   ¥ 2,774.0     ¥ 3,111.5  
                

Shareholders’ equity

   ¥ 2,183.7     ¥ 2,110.3  
                

Net DER (times)

     1.27       1.47  

In the past we calculated an “adjusted interest bearing debt”, considering the eliminating factors of capital lease obligations and others: and SFAS No. 133 fair value adjustment. However, from the year ended March 31, 2008, we do not eliminate them for adjustment, and the figures for as of March 31, 2007 are presented in the same manner.

 

-23-


This excerpt taken from the MITSY 6-K filed Nov 6, 2007.

(*)Net Debt-to-Equity Ratio

The Group refers to “Net Debt-to-Equity Ratio” (“Net DER”) in this flash report. Net DER is comprised of “net interest bearing debt” divided by shareholders’ equity.

“Net interest bearing debt” is defined as adjusted interest bearing debt described as below less cash and cash equivalents and time deposits. The Group’s interest bearing debt primarily consists of long term debt, less current maturities, which are not readily repayable. In order to flexibly meet capital requirements and to prepare for future debt-service requirements in case of unforeseen deteriorations in financial markets, currently the Group holds a relatively high level of cash and cash equivalents reflecting the current financial market conditions and future capital requirements.

Under this policy, Net DER is a useful internal measure for the Group’s management to review the balance between:

 

   

the Group’s capacity to meet debt repayments; and

 

   

leverage to improve return on equity in the Group’s capital structure.

To calculate the Group’s adjusted interest bearing debt, the following are the eliminating factors:

 

   

capital lease obligations and others; and

 

   

SFAS No. 133 fair value adjustment.

The Group eliminates of SFAS No. 133 fair value adjustment because Japanese investors usually evaluate Net DER of other general trading companies in this manner.

 

-18-


This measure does not recognize the fact that cash and cash equivalents and time deposits may not be available completely for debt repayments, but cash and cash equivalents and time deposits may be required for operational needs including certain contractual obligations or capital expenditure.

“Net interest bearing debt” and “Net DER” are presented in the table below.

 

     Billions of Yen  
     End of Sep. 2007     End of Mar. 2007  

Short–term debt

   ¥ 513.7     ¥ 658.7  

Long–term debt

     3,236.3       3,259.4  

Less eliminating factors included in long–term debt:

    

Capital lease obligations and others

     (29.4 )     (24.9 )

Less SFAS No. 133 fair value adjustment

     9.6       11.8  
                

Adjusted interest bearing debt

     3,730.2       3,905.0  

Less cash and cash equivalents and time deposits

     (804.7 )     (806.6 )
                

Net interest bearing debt

   ¥ 2,925.5     ¥ 3,098.4  
                

Shareholders’ equity

   ¥ 2,382.1     ¥ 2,110.3  
                

Net DER (times)

     1.23       1.47  
This excerpt taken from the MITSY 20-F filed Sep 26, 2007.

Net Debt-to-Equity Ratio

We refer to “Net Debt-to-Equity Ratio” (“Net DER”) in this Liquidity and Capital Resources and elsewhere in this annual report. Net DER is comprised of “net interest bearing debt” divided by shareholders’ equity.

“Net interest bearing debt” is defined as adjusted interest bearing debt, defined below, less cash and cash equivalents and time deposits. Our interest bearing debt primarily consists of long-term debt. As discussed in “Funding and Treasury Policies and Objectives,” to flexibly meet capital requirements and to prepare for future debt-service requirements in case of unforeseen deteriorations in financial markets, currently we hold a relatively high level of cash and cash equivalents reflecting the current financial market conditions and future capital requirements. Under this policy, Net DER is a useful internal measure for our management to review the balance between:

 

   

our capacity to meet debt repayments; and

 

   

leverage to improve return on equity in our capital structure.

To calculate our adjusted interest bearing debt, the followings balances are excluded:

 

   

capital lease obligations; and

 

   

SFAS No. 133 fair value adjustment.

Management therefore believes that using Net DER is useful for the readers especially when comparing it with the same analysis done by other general trading companies.

Elimination of the SFAS No. 133 fair value adjustment is made because Japanese investors usually evaluate Net DER of other general trading companies in this manner.

This calculation does not recognize the fact that cash and cash equivalents and time deposits may not be completely available for debt repayments because some amount of cash and cash equivalents and time deposits may be required for operational needs including contractual obligations or capital expenditures.

 

125


Table of Contents

“Net interest bearing debt” and “Net DER” are presented in the table below.

 

     Billions of Yen  
     As of March 31,  
     2007     2006  

Short-term debt

   ¥ 658.7     ¥ 540.8  

Long-term debt

     3,259.4       3,011.9  

Less eliminating factors included in long-term debt:

    

Capital lease obligations

     (24.9 )     (25.7 )

Less SFAS No. 133 fair value adjustment

     11.8       37.7  
                

Adjusted interest bearing debt

     3,905.0       3,564.7  

Less cash and cash equivalents and time deposits

     (806.6 )     (734.1 )
                

Net interest bearing debt

   ¥ 3,098.4     ¥ 2,830.6  
                

Shareholders’ equity

   ¥ 2,110.3     ¥ 1,677.9  
                

Net DER (times)

     1.47       1.69  
                

The most directly comparable GAAP measure is considered to be “Debt-to-Equity Ratio” (“DER”). However, this ratio measures gross debt relative to equity, and does not measure changes in cash position.

 

Adjusted DER (times)

   1.85    2.13

(defined as adjusted interest bearing debt divided by shareholders’ equity)

     
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