possibility exists that the position defended by Nissan will not be accepted
and that the outcome may be significantly different from that anticipated.
As a result, any such verdict or settlement could adversely affect Nissan’s
financial position and operating results.
Government Regulations
The automobile industry worldwide is influenced by a broad spectrum of
regulations governing the emission levels of exhaust fumes, fuel economy
guidelines, noise level limitations and safety standards, and Nissan expects
these regulations to become increasingly stringent. In order to ensure
compliance, it may be necessary for Nissan to make significant ongoing
investments in these areas which would have an impact on its financial
position and results of operations.
Intellectual Property Rights
Nissan owns a wide variety of proprietary technologies and has the
expertise to differentiate Nissan’s products making them unique from
those of its competitors. These assets have proven their value in the
growth of Nissan’s business and will, no doubt, continue to be of value in
the future. Nissan strives to protect its intellectual property assets;
however, in certain markets, Nissan may encounter difficulty in fully
protecting the proprietary rights to its own technologies. Cases may arise
where Nissan finds itself unable to prohibit others from infringing on its
intellectual property rights.
The Company has established Intellectual Property Rights Management
Department for the purpose of protecting intellectual property rights in
specific areas, strengthening activities to protect Nissan’s intellectual
property rights, and abstracting new intellectual property rights. And the
department has been performing various activities to protect and create
Nissan Brand.
Natural Disasters
Nissan’s corporate headquarters and many of its manufacturing facilities
are located in Japan, where the statistically proven probability of
earthquakes is higher than in many other countries. Nissan has developed
risk management guidelines relating to earthquake damage and the CEO
has organized a global task force to direct disaster prevention and recovery
activities. In addition, the Gruop has begun to strengthen its manufacturing
facilities with anti-seismic reinforcement. However, if a severe earthquake
were to hit one of Nissan’s key facilities causing a halt in production, this
would adversely affect Nissan’s financial position and results of operations.
Sales Financing Business Risk
Sales financing is an integral part of Nissan’s core business, providing
strong support to its automotive sales, while maintaining high profitability
and a sound and stable financial condition through strict risk management
policies. However, the sales financing companies have a high exposure to
interest-rate risk, residual value risk, and credit risk, any one of which may
adversely affect Nissan’s financial position and results of operations.
Counterparty Credit Risk
Nissan does business with a variety of counterparties and manages its
counterparty credit risk by conducting a comprehensive annual assessment of
its customers’ financial condition based on their financial information.
Nonetheless, any significant default by a counterparty would adversely
affect Nissan’s financial position and results of operations.
Employee Retirement Benefit Expenses and Obligations
The amount of retirement Nissan’s benefit obligation and related expenses
are calculated using various actuarial assumptions including the discount
rate applied, the projected rate of return on plan assets, and so forth. If
Nissan’s actual results differ from those assumptions or if the assumptions
are changed, the resulting effects will be accumulated and recognized
systematically over future periods. The cumulative effect could adversely
impact the recognition of expenses and liabilities recorded in future
periods.
Purchase of raw materials and parts
Nissan purchases raw materials and parts from many suppliers. Market