Annual Report 2005
Year ended March 31, 2005

United We Grow

About the CoverAnnual Report 2005
Year ended March 31, 2005

The slogan “United We Grow” graces the cover of our Annual Report 2005. Adopted for the Toyota Industries World
Convention 2005, a gathering of key management and employees as well as distributors and dealers involved in our materials
handling equipment business held in April 2005, this motivational phrase represents our aspirations to continuously advanceand grow as the world’s leading company in materials handling equipment, backed by the solidarity of the BT Industries
Group and TOYOTA Material Handling Company. “United We Grow” exemplifies our commitment and dedication toachieving this goal by working with our stakeholders, including shareholders, employees, customers, business partners
and residents of the local communities where we do business. We also stand united in pursuing innovation and providing
customers with high-quality products and services.
Our future-concept “Suit” lift truck is also depicted on the cover. This innovative lift truck is not merely ridden upon,but instead fitted to the operator’s body to enable operation as an extension of their body. The “Suit” truly embodies the
expansibility and creativity of our “United We Grow” concept.

United We Grow

Definition of Terms“Fiscal 2005” refers to the fiscal year ended March 31, 2005, and other fiscal years are referred to in a corresponding manner. All references to the “Company” herein are to Toyota Industries Corporation, andreferences to “Toyota Industries” or “Toyota Industries Group” herein are to the Company and its 146 consolidated subsidiaries.

Cautionary Statement with Respect to Forward-Looking Statements
This annual report contains projections and other forward-looking statements that involve risks and uncertainties. The use of the words “expect,” “anticipate,” “estimate,” “forecast,” “plan” and similar expressions
is intended to identify such forward-looking statements. Projections and forward-looking statements are based on the current expectations and estimates of Toyota Industries Corporation and its Group companies
regarding their plans, outlook, strategies and results for the future. All such projections and forward-looking statements are based on management’s assumptions and beliefs derived from the information available
to it at the time of producing this report and are not guarantees of future performance. Toyota Industries and its Group companies undertake no obligation to publicly update or revise any forward-looking
statements, whether as a result of new information, future events or otherwise. Therefore, it is advised that you should not rely solely upon these projections and forward-looking statements in making yourinvestment decisions. You should also be aware that certain risks and uncertainties could cause the actual results of Toyota Industries Corporation and its Group companies to differ materially from any projections
or forward-looking statements discussed in this report. These risks and uncertainties include, but are not limited to, the following: (1) reliance on a small number of customers, (2) product development capabilities,(3) intellectual property rights, (4) product defects, (5) price competition, (6) reliance on suppliers of raw materials and components, (7) environmental regulations, (8) success or failure of strategic allianceswith other companies, (9) exchange rate fluctuations, (10) share price fluctuations, (11) effects of disasters, power blackouts and other incidents, (12) latent risks associated with international activities, and(13) retirement benefit liabilities.

Toyota Industries World Convention 2005 was held from April 11 to 15,
2005 at the Kyoto International Conference Hall and other venues. The
occasion provided a forum to share a vision for future growth with morethan 1,200 TOYOTA/BT-related people including distributors and dealers.

ProfileFounded in 1926 by Japan’s “master of invention,” Sakichi Toyoda, to manufacture automatic looms,
Toyota Industries Corporation has subsequently expanded the scope of its business domains toinclude textile machinery, automobile-related businesses, materials handling equipment and more
recently electronics and logistics solutions. In tandem with carrying out strategically positioned
global business activities encompassing production bases in Japan, Europe, North America, China
and India, Toyota Industries operates a sales network, primarily in its Materials Handling Equipment
and Textile Machinery segments, that spans the globe.

TOYOTA INDUSTRIES CORPORATION Annual Report 2005

1

Contents
3

Passing the Torch of Leadership4

Consolidated Financial Highlights

5

A Message from the President

10

A Message from the Chairman

12

At a Glance

14

Toyota Industries in Progress

16
28
32
36
40
43
44
44

45

Reflections of Toyota Industries

46
50
52
54
57
58
60
61
62
64

Review of Medium-Term Management Vision
Research and Development
Corporate Governance
Environmental and Social Contribution Efforts
Toyota Industries’ News
Toyota Industries’ History
Corporate Organization
Directors and Corporate Auditors
Corporate Data
Locations of Major Subsidiaries outside Japan

65
66
68
78
80
81
82
83
102

2

Materials Handling Equipment
Car Air-Conditioning Compressors
Vehicles/Engines
Electronics
Logistics Solutions
Textile Machinery
Automotive Stamping Dies
Manufacturing Equipment

Financial Section
Consolidated Eleven-Year Summary
Management’s Discussion and Analysis of Financial Condition and
Results of Operations
Consolidated Balance Sheets
Consolidated Statements of Income
Consolidated Statements of Shareholders’ Equity
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements
Report of Independent Accountants

103

Toyota Industries in Numbers

108

Investor Information

TOYOTA INDUSTRIES CORPORATION Annual Report 2005

Tadashi Ishikawa

Tetsuro Toyoda

ChairmanPresident

Passing the Torch of Leadership
In June 2005, Tadashi Ishikawa passed the torch of leadership of Toyota Industries
to Tetsuro Toyoda. Mr. Ishikawa’s six-year tenure was highlighted by numerous
achievements in strengthening all of our business divisions. Particularly noteworthy,
we fortified our Materials Handling Equipment Segment, commenced the Logistics
Solutions Business, expanded our automobile-related businesses and built a solid
foundation for further growth of the Electronics Business. In parallel with theseachievements, Toyota Industries’ business performance grew by leaps and bounds
during his term as president.
Under the new management team, Toyota Industries intends to bolster its
management base and attain further growth by expanding its business throughcontinued globalization and cultivation of new businesses.

TOYOTA INDUSTRIES CORPORATION Annual Report 2005

3

Consolidated Financial Highlights
Toyota Industries Corporation
Years ended March 31, 2005 and 2004

Thousands of
U.S. dollars

Millions of yen

2005

2004

% change¥1,241,538¥1,164,379

Operating income

53,12052,6310.9

494,646

Ordinary income

70,91358,971

20.3

660,332

Net income

43,35833,62329.0

403,743

Depreciation and amortization

70,21365,352

7.4

653,813

Capital expenditures

136,506

89,50952.5

1,271,124

Research and development expenses

30,051

29,5620.7

279,831

Net income — basic

135.09108.0425.0

1.26

Net income — diluted

135.03101.97

32.4

1.26

Cash dividends

32.00

24.00

33.3

0.30

Total assets¥2,326,824¥2,011,995

15.6%$21,667,045

Shareholders’ equity

1,115,747

1,016,764

9.7

10,389,673

Number of employees

30,99027,431

13.0

2005

For The YearNet sales

6.6%$11,561,021

Per share of common stock (yen, U.S. dollars):At Year-End

Note: U.S. dollar amounts have been translated from yen, for convenience only, at the rate of 107.39 yen=US$1, the approximate exchange rate on March 31, 2005.

Net Sales

Net Income

Total Assets

Shareholders’ Equity(¥ Billion)(¥ Billion)(¥ Billion)(¥ Billion)

1,400

50

2,500

1,200

40

2,000

30

1,500

1,200

1,000

1,000
800
800

600
600

20

1,000
400

400
10

500

200

200
0
FY

FY

0

0

0

01 02 03 04 05

01 02 03 04 05

FY

01 02 03 04 05

Note: Hereafter, the fiscal year ended March 31, 2005 is referred to as fiscal 2005 and other fiscal years are referred to in a corresponding manner.

4

TOYOTA INDUSTRIES CORPORATION Annual Report 2005

FY

01 02 03 04 05

A Message from the President

Dear Shareholders:
On June 22, 2005, I assumed the duties of president of Toyota Industries. Since its founding,
Toyota Industries has consistently surmounted numerous obstacles to attain steady growth inits business results. This achievement can be attributed to the strenuous efforts of a long lineof top management leaders, the dedication of employees, the patronage of customers and the
support of shareholders and members of local communities. Of particular significance, Toyota
Industries achieved remarkable advances during the six years of leadership by my predecessor,
Mr. Ishikawa.
I consider it an honor to be entrusted with the crucial task of taking over the reins ofmanagement at Toyota Industries. I will dedicate my fullest efforts to ensuring the ongoingdevelopment of Toyota Industries, work to motivate employees, contribute to local communities,
provide customers with even better products and services and, above all, uphold the crucial
responsibility of maintaining the confidence of shareholders and meeting their expectations.
Building upon our success and momentum, I am determined to continue to lead Toyota
Industries on a path to further growth.

TOYOTA INDUSTRIES CORPORATION Annual Report 2005

5

A Message from the President

Business Results for Fiscal 2005
Adverse factors affecting the business environment during fiscal 2005, ended March 2005, included
soaring prices for crude oil, steel and other raw materials, as well as a series of natural disasters such as
the Niigata-Chuetsu Earthquake in Japan. Nevertheless, the Japanese economy attained a mild recovery
underscored by increased corporate capital investment and improved employment conditions. Smooth
expansion of the U.S. and Chinese economies in turn contributed to a steady recovery of the global economy.
Under these economic conditions, Toyota Industries posted excellent business results, as reflected byrecord-high net sales and earnings. Consolidated net sales amounted to ¥1,241.5 billion, an increase of 6.6%
from the previous fiscal year. Consolidated operating income edged up 0.9% to ¥53.1 billion, as the rise in net
sales and the effects of cost reductions compensated for higher raw materials prices and increases in expenses
for depreciation and production preparations in the Automobile Segment. Consolidated ordinary income
increased 20.3% to ¥70.9 billion, due to an increase in equity in net earnings of affiliated companies and a risein dividends income. Net income amounted to ¥43.4 billion, an increase of 29.0%.

Continued Favorable Results in Each Segment
Despite some variances in the results (net sales and operating income) for each business segment, overall
results remained at a high level. A summary of business results by segment is as follows.
Note: Segment net sales figures do not include intersegment transactions. However, segment operating income figures do include operating income (loss) arising fromintersegment transactions.

Automobile Segment
The Automobile Segment, comprising vehicles (automobile assembly), engines, car air-conditioning
compressors and other businesses (including foundry parts and electronic components for automobiles), is
Toyota Industries’ largest business segment and accounts for 49.6% of consolidated net sales. In fiscal 2005,
net sales of this segment increased 2.0% from the previous fiscal year to ¥616.2 billion. The increase mainlyreflected growth in sales of CD diesel engines for Europe, favorable sales of DC-DC converters fitted in thelatest Prius and higher sales of foundry parts. On the other hand, operating income decreased 17.3% to ¥22.8
billion. The decline resulted mainly from the effects of an increase in expenses for depreciation and production
preparation accompanying a full model change of the Vitz (Yaris in Europe) in the Vehicle Business and theintroduction of new products in the Engine Business.

Materials Handling Equipment Segment
The Materials Handling Equipment Segment mainly engages in the manufacture and sales of counterbalanced
lift trucks, warehouse trucks, automated storage and retrieval systems, and automatic guided vehicle systems,
as well as special-purpose vehicles such as aerial work platforms. Net sales by the Materials Handling
Equipment Segment amounted to ¥504.0 billion, an increase of 13.7% from the previous fiscal year. This
increase was fueled by significant rises in sales by both TOYOTA Material Handling Company (TMHC) andthe BT Industries Group, which make up the core of this segment, amid an expanding global economy. Strong
performance of Aichi Corporation, which manufactures and sells aerial work platforms, also contributed tofavorable results. Operating income increased 34.8% to ¥26.1 billion.

6

TOYOTA INDUSTRIES CORPORATION Annual Report 2005

Textile Machinery Segment
The Textile Machinery Segment manufactures and sells spinning-related machinery centering on ring spinning
frames and weaving-related machinery such as air-jet looms. Toyota Industries has engaged in this businesssince its founding, and is one of the world’s leading manufacturers of air-jet looms and spinning machinery.
Net sales by the Textile Machinery Segment amounted to ¥43.9 billion during fiscal 2005, a decline of 4.5%
from the previous fiscal year. This decrease was due primarily to a lull in sales of weaving-related machinery
to China, a principal market, as well as the effects of a tighter monetary policy in the country. This segment
posted an operating loss of ¥0.8 billion, a decrease of ¥0.9 billion from the previous fiscal year.

Others Segment
This segment consists of the Electronics Business, the Logistics Solutions Business and other businesses.
TIBC Corporation (TIBC), a joint venture with Ibiden Co., Ltd. to manufacture semiconductor package
substrates, is included in the Electronics Business. Although this segment is made up mainly of businesses
that are still relatively small in scale, we regard these as strategic businesses that will serve as future pillars ofgrowth.
Net sales of the Others Segment amounted to ¥77.4 billion, an increase of 8.9% over the previous fiscal
year. This gain was due mainly to the addition of a subsidiary newly established in the logistics solutions
field as a joint venture and to solid results of TIBC and the Taikoh Transportation Group, which is involved intransportation and other logistics businesses. Operating income decreased 8.8% to ¥5.2 billion.

Business Outlook for Fiscal 2006
In fiscal 2006, ending March 2006, the Japanese economy is expected to post a mild recovery while theeconomies of such principal countries as the United States and China are forecast to record stable expansion.
Nevertheless, concerns about such risks as continued high crude oil prices and rapid adjustments in exchange
rates preclude optimism.
Amid this environment, for fiscal 2006 Toyota Industries forecasts a 16.8% rise in consolidated net sales to¥1,450.0 billion. This projection arises from an expected increase in sales in the Materials Handling Equipment
Segment. Also, the Vehicle Business is anticipated to record favorable sales of the Vitz (Yaris in Europe),
which underwent a full model change in February 2005, and the Engine Business has just started productionof new diesel engines. We expect that Group-wide cost-reduction activities, coupled with measures to enhanceearnings, will support a 5.8% rise in ordinary income to ¥75.0 billion, despite a rise in depreciation expenses
in the Automobile Segment. We forecast a 3.8% rise in net income to ¥45.0 billion.
Note: The financial projections set forth above are based upon a number of assumptions and estimates that, while presented with numerical specificity and consideredreasonable when taken as a whole, are inherently subject to significant economic, business, competitive, regulatory and operational uncertainties, contingencies
and risks, many of which are beyond our control. Financial projections are necessarily speculative in nature, and it can be expected that one or more of theassumptions underlying the projections will prove not to be valid, and unanticipated events and circumstances are likely to occur. In such a case, actual results
will vary from the financial projections and those variations may be material. Consequently, this report should not be regarded as a representation by us or any
other person that the financial projections will be achieved. Current negative market trends in the global economy make it particularly difficult at present to predictproduct demand and other related matters.

TOYOTA INDUSTRIES CORPORATION Annual Report 2005

7

A Message from the President

Aiming for Sustainable Growth
Toyota Industries aims for sustainable development of all its businesses over the medium and long term.
In line with this objective, we will expand our mainstay Materials Handling Equipment Segment and Car
Air-Conditioning Compressor Business by strengthening cost competitiveness and technologies. In particular,
the Materials Handling Equipment Segment is moving ahead with further integration of TMHC and the BT
Industries Group under the Toyota Material Handling Equipment Group to attain enhanced synergies. We
will strive to increase our presence in the Vehicle and Engine businesses as we contribute to Toyota Motor
Corporation’s (TMC) global strategy. Specifically, we will get production of diesel engines on track at Toyota
Motor Industries Poland Sp.zo.o., a joint venture with TMC that began operations in March 2005. And finally,
we will strive to undertake full-fledged initiatives to grow our Logistics Solutions and Electronics businesses
into core businesses of the future. Other measures include pursuing the further globalization of our businesses,
implementing thorough quality control, promoting cost-reduction measures and stepping up the cultivation ofhuman resources who are skilled in the Toyota Production System—the wellspring of our competitiveness.
We are currently working on a new medium-term management vision that will embody our thinking andthe directions we will pursue over the five years from fiscal 2007, ending March 2007. We will unveil the new
management vision in detail at a future date.

Looking toward the Future
In April 2005, we held the Toyota Industries World Convention 2005, which brought together numerous
TOYOTA and BT lift truck dealers and distributors from all over the world. Held in Kyoto and other locations,this marked the second such event since 2001. The slogan of the 2005 convention was “United We Grow,”which is also the theme of this year’s annual report. The slogan aptly expresses the solidarity of TMHC and

8

TOYOTA INDUSTRIES CORPORATION Annual Report 2005

the BT Industries Group, the two vital components of the Materials Handling Equipment Segment. It indicates
our intention to realize further growth supported by strengths befitting the world’s leading company in thisfield. I believe the “United We Grow” slogan also transcends the Materials Handling Equipment Segment
and symbolizes the future direction of the entire Toyota Industries Group. Moreover, the slogan embodies ourstrong intention to create new value by facilitating further collaboration within the Toyota Industries Group,
creating synergies via the organic interaction among the Group’s business divisions, and promoting stronger
relationships with shareholders, customers, members of the local community and other stakeholders.
Since its establishment, Toyota Industries has been a company with a passion for monozukuri (literallymeans “creating things,” but it implies a philosophy that recognizes the value of the innovative creation ofquality products). In time, our non-manufacturing businesses such as the provision of services and solutions are
expected to account for an increasing proportion of our total business. Even in these new business fields, I am
confident that we can skillfully and effectively apply our “spirit of monozukuri”—developing products utilizing
our ingenuity and making improvements. As we promote diversification of our businesses, this spirit handed
down by our predecessors remains a vital source of our superior competitiveness for both the current and thenext generation.
The management team of Toyota Industries—your company—regards its most vital mission as ensuring
the further growth of the Toyota Industries Group. In other words, we seek to enhance our long-term, stableearnings power and create even higher corporate value. To do so, we will carry out dynamic and strategic
business operations while establishing more efficient company management systems, attaining stable growth inbusinesses and steadily improving our business results. Toyota Industries is a conglomerate that has diversified
its businesses into a wide range of fields throughout its history. By strategically and organically combining
management resources that are the source of its competitive edge—namely the know-how, key technologies,
human resources and markets cultivated by each business—Toyota Industries can realize a “conglomeratepremium,” whereby we create value so the worth of Toyota Industries as a whole adds up to more than the sumof individual businesses.
As we work to earn the trust of society as a good corporate citizen, we will also undertake a host ofenvironmental protection and social contribution activities. Concurrently, we will earnestly promote complianceand corporate governance initiatives.
To sustain the growth of your company in the future, the new management team is committed to taking
timely and appropriate measures that will enable us to earn your trust and respond flexibly to continuallychanging markets and management environments as well as maintain our competitive edge.
I ask you for your continued understanding and support.

August 2005

Tetsuro Toyoda
President

TOYOTA INDUSTRIES CORPORATION Annual Report 2005

9

A Message from the Chairman

A Look Back at My Six Years as President
On June 22, 2005, I relinquished the duties of president and became chairman of Toyota Industries.
Unquestionably, the six years of my tenure were not always smooth. In fact, it could be said it was
rather a tumultuous period. Nevertheless, I was able to fulfill my heavy responsibilities thankslargely to the support I received from everybody.
Looking back, when I assumed the position of president six years ago, I regarded my mission as
solidifying the strengths of existing businesses while pinpointing where and how we could achieve
further growth; pursuing the potential of the new businesses handed down by my predecessors;and fortifying our foundation for monozukuri, or creating things, on which our operations arebuilt. Besides sharpening our overall strengths and competitiveness, I believed that harnessing thepassion of all employees and realizing a motivating work environment were imperative.

10

TOYOTA INDUSTRIES CORPORATION Annual Report 2005

During my term, Toyota Industries explored its potential for growth in the years ahead. This
included strengthening the Materials Handling Equipment Segment by acquiring the BT Industries
Group and taking over Toyota Motor Corporation’s (TMC) Industrial Equipment Sales Division;
establishing a global supply structure for car
air-conditioning compressors in line with expanding
the presence and contributions of the Vehicle andEngine businesses as a component of TMC’s global

Net Sales

Net Income(¥ Billion)(¥ Billion)

1,500

50
40

strategy; bolstering the Electronics Business,

1,000

30

mainly ST Liquid Crystal Display Corp. and TIBC
Corporation; and making a full-fledged entry into
the Logistics Solutions Business. During the six

20

500

10
0

0

FY

00

05

FY

00

05

years, Toyota Industries roughly doubled net sales
and operating income while net income increased threefold. We also made consistent achievements
in solidifying the foundation for monozukuri by cultivating employees well-versed in the Toyota
Production System through training activities. Reflecting on my tenure, I am satisfied that we havegenerally attained the targets I envisioned when I first took up the reins as president.
Believing that the timing was opportune, I decided to turn over the duties of this post to Tetsuro
Toyoda, as Toyota Industries gears up for further growth. I am convinced he is the best qualified
person as the new leader of Toyota Industries.
I would like to extend my sincere thanks to everyone for their support during my term aspresident. Drawing on my experience, I also pledge my full support to the new management team.
Under the leadership of the new president, Toyota Industries is preparing to set sail on a new
course of growth. Just as I benefited from your support, I ask that you give your utmost guidanceand backing to the new management team.

August 2005

Tadashi Ishikawa
Chairman

TOYOTA INDUSTRIES CORPORATION Annual Report 200511

At a Glance
Automobile Segment

Toyota Industries is actively engaged in numerous businessspheres extending from the Textile Machinery Segment, abusiness we have undertaken since our founding, to corebusinesses that encompass the Automobile Segment and theMaterials Handling Equipment Segment. Additionally, theProducts• Passenger vehicles• Diesel engines• Gasoline engines• Car air-conditioning compressors• Electronic components for automobiles

49.6%• Foundry parts for engines

Vitz (Yaris)

2AD
Diesel engine• Automotive stamping dies, etc.

7SEU17

Percentage of Net Sales

Materials Handling
Equipment Segment

DC-DC converter

Compressor

Products• Counterbalanced lift trucks• Warehouse trucks• Aerial work platforms• Automated storage and retrieval systems

40.6%• Automatic guided vehicles, etc.

Percentage of Net Sales

Textile Machinery
Segment

GENEO-B (7FB15)

Reflex

SE08B

Electric counterbalanced
lift truck

Reach truck

Truck mount aerial
work platform

Products• Ring spinning frames• Roving frames

3.5%• Drawing frames• Air-jet looms• Water-jet looms• Sizing machines, etc.
RX240NEW

JAT710Ring spinning frame

Air-jet loom

Percentage of Net Sales

Others Segment

Products• Low-temperature polysilicon TFT-LCDs• Wire bonding package substrates

6.3%• Flip chip package substrates• Flexible printed circuit (FPC) substrates• Logistics solutions• Manufacturing equipment, etc.
Low-temperaturepolysilicon
TFT-LCDs

Percentage of Net Sales

12

TOYOTA INDUSTRIES CORPORATION Annual Report 2005

Wire bonding
packagesubstrate

FPC substrate

Others Segment comprises businesses that we envision aspillars of our future growth. In essence, Toyota Industries is aconglomerate embracing diverse businesses, each with clearlydelineated core businesses. By strategically and organicallyfusing parallel technologies, production know-how and customer

bases, we aim to create new value added that allows ouroverall corporate value to exceed the simple sum of individual
businesses.
Note: Segment net sales figures do not include intersegment transactions. However, segment operating income
figures do include operating income (loss) arising from intersegment transactions.

The Automobile Segment, comprising vehicles (automobile assembly), engines, car air-conditioning
compressors, foundry parts for engines, electronic components for automobiles and automotive
stamping dies, is Toyota Industries’ largest business segment, generating 49.6% of consolidated
net sales. Within this segment, the Vehicle Business manufactures the Vitz (Yaris in Europe) andRAV4 (for Europe and North America); the Engine Business produces diesel and gasoline engines
as well as materials handling equipment engines and engines for gas heat pumps; and the Car
Air-Conditioning Compressor Business develops and produces swash-plate fixed-displacement
compressors, one-way swash-plate continuous variable-displacement compressors and scroll-type
compressors. We supply these compressors to the world’s leading automakers through DENSO
Corporation. In fiscal 2005, net sales of the Automobile Segment were ¥616.2 billion and operating
income amounted to ¥22.8 billion.

Net sales

Operating income(¥ Billion)(¥ Billion)

750

75

500

50

250

25

0
FY

The Materials Handling Equipment Segment involves lift trucks and other materials handlingequipment. Its mainstay products are the GENEO (7FG/D outside Japan) internal combustion
counterbalanced lift truck, the GENEO-B (7FB outside Japan) electric counterbalanced lift truck,warehouse trucks, automated storage and retrieval systems, and automatic guided vehicle systems.
This segment is composed mainly of TOYOTA Material Handling Company, an in-house companyof Toyota Industries, as well as the BT Industries Group and Aichi Corporation, which captures
a high share of the domestic market for aerial work platforms. In fiscal 2005, net sales of theMaterials Handling Equipment Segment totaled ¥504.0 billion. Operating income amounted to¥26.1 billion.

05

05

Operating income(¥ Billion)

600

60

400

40

200

20

04

05

0
FY

04

05

Net sales

Operating income (loss)(¥ Billion)(¥ Billion)

60

6

40

4

20

2

0

0

(20)
FY

* As STLCD is an affiliate and not a consolidated subsidiary, its sales and operating income (loss) are not included in the consolidated figures,
but are accounted for by the equity method.
** Starting in fiscal 2006 (ending March 2006), this business will be separated and function as the Logistics Segment.

04

FY(¥ Billion)FY

The Others Segment is made up primarily of our newer businesses. Although still small in size,
this segment includes strategic businesses with promising potential as pillars of future growthsuch as the Electronics Business and Logistics Solutions Business. The two entities heading up theElectronics Business are ST Liquid Crystal Display Corp. (STLCD)*, a joint venture with Sony
Corporation that produces low-temperature polysilicon TFT-LCDs, and TIBC Corporation, a joint
venture with Ibiden Co., Ltd. that produces semiconductor package substrates. This segment is also
engaged in the Logistics Solutions Business**, which handles all phases of logistics for companies
on an outsourced basis. In fiscal 2005, net sales of the Others Segment totaled ¥77.4 billion.
Operating income was ¥5.2 billion.

0

Net sales

0

The Textile Machinery Segment produces and sells spinning and weaving machinery. Spinningmachinery includes the manufacture and sales of ring spinning frames, roving frames and combing
machines, while weaving machinery entails the manufacture and sales of air-jet looms and water-jet
looms along with such preparatory machinery for weaving as sizing machines and automatic
drawing-in machines. In fiscal 2005, net sales of the Textile Machinery Segment amounted to ¥43.9
billion. Conversely, the segment posted an operating loss of ¥0.8 billion.

04

(2)

04

05

FY

04

05

Net sales

Operating income(¥ Billion)(¥ Billion)

80

8

60

6

40

4

20

2

0
FY

04

05

0
FY

04

05

TOYOTA INDUSTRIES CORPORATION Annual Report 2005

13

Toyota Industries in Progress
Progress 1

Materials Handling Equipment
Unifying Forces to Maximize Synergies

Progress 2

28

page

32

page

36

Electronics
Uniting with Key Electronics Industry Players to Drive Our Future Growth

14

page

Vehicles/Engines
Applying Our Combined Knowledge and Synergies to Produce a Global Lineup of
Automobile-Related Products

Progress 4

16

Car Air-Conditioning Compressors
Integrating Cutting-Edge Technologies to Lead the Global Market

Progress 3

page

TOYOTA INDUSTRIES CORPORATION Annual Report 2005

Progress 5

Logistics Solutions
Building a Proprietary Business Model to Provide Optimum Logistics Solutions

Progress 6

page

43

page

44

page

44

Automotive Stamping Dies
Creating Advanced Technology for Manufacturing Automotive Stamping Dies

Progress 8

40

Textile Machinery
Delivering Leading-Edge Performance Backed by Proven Expertise

Progress 7

page

Manufacturing Equipment
Independently Producing Critical Manufacturing Equipment

TOYOTA INDUSTRIES CORPORATION Annual Report 2005

15

Progress

1

Materials Handling Equipment

Toyota Industries in Progress
Toyota Industries in Progress

Unifying Forces to Maximize Synergies
Toyota Industries’ Materials Handling Equipment Segment consists mainlyof TOYOTA Material Handling Company (TMHC), the global leader incounterbalanced lift trucks, and the BT Industries Group, the world’s top name inwarehouse trucks. This segment also includes Aichi Corporation (Aichi), a Toyota
Industries subsidiary that holds a dominant share of Japan’s market for aerial
work platforms. Toyota Industries is building a solid position in the increasinglycompetitive industrial equipment industry as a leading manufacturer of lift trucks byoffering optimum solutions to meet customer needs.

16

TOYOTA INDUSTRIES CORPORATION Annual Report 2005

The establishment of the Toyota Material Handling Group was announced at the Toyota Industries World Convention 2005, which
gathered over 1,200 TOYOTA/BT-related people from more than 60 countries.

Toyota Industries in Progress Materials Handling Equipment

Pursuing Further Integration—
Establishment of the Toyota Material Handling Group

Above: President Tetsuro Toyoda(then Toyota Industries Executive Vice
President and TMHC President). Below:
Per Zaunders (BT Industries President)

President Tetsuro Toyoda (then Toyota Industries Executive Vice President and TMHC President) stated at the Toyota
Industries World Convention 2005:“I want to announce the Toyota Material Handling Group (TMHG). As our internal organization, TMHG will be more
integrated with stronger global coordination for realizing our common interest in our mutual success.”“I would like to emphasize that TMHG will be a true global integration that does not consider nationalities or company
origin.”“The purpose of the integration is not just to combine the organizations but to achieve higher targets. TMHG will be designed
to realize the original purpose of our integration: attaining our full potential.”“Of course, we will continue to capitalize on the strengths of our separate brands. We will endeavor to make our present sales
network even stronger.”President Tetsuro Toyoda (then Executive
Vice President)

Chairman Tadashi Ishikawa (then President) remarked:“In establishing TMHG, it is exactly the time to step up to a new level of integration as we have now reached the stage forcompleting the integration of TMHC and the BT Industries Group.”“With a supporting philosophy of placing utmost value on customers, TMHG offers the world’s top level of high quality toensure customer satisfaction in every region worldwide. While compiling newly developed technologies for realizing ourphilosophy, we will stress the participation of all persons and the allocation of their roles. These persons include personnel
from the Toyota and the BT Industries Group; persons at manufacturers, sales outlets and cooperating companies; and staff
involved in sales, development and manufacturing. This approach conveys the meaning embodied in ‘United We Grow,’ theslogan of the Toyota Industries World Convention 2005.”
Chairman Tadashi Ishikawa (then President)

TMHC and the BT Industries Group have made steady progressin expanding synergies by mutually supplying each other’s brandproducts, sharing sales and production know-how, exchanging
personnel and jointly procuring components. Building uponthis success, Toyota Industries’ Materials Handling Equipment
Segment has set a new ambitious target of becoming “undisputed

No. 1” in the global lift truck market. To achieve this goal, in
July 2005 we established the Toyota Material Handling Group(TMHG), a new organization that we expect will facilitate
further integration of the operations of TMHC and the BT
Industries Group and maximize synergies.

TOYOTA INDUSTRIES CORPORATION Annual Report 2005

17

Toyota Industries in Progress Materials Handling Equipment

Representatives from TOYOTA/BT distributors in various regions pledged solid
unity and their efforts to achieve higher goals.

global coordination for each of these functions, as wellas promote the sharing and exchange of information andknow-how.
To minimize any operational disruptions accompanying the
integration, TMHG’s Management Committee will consider
the ideal form in terms of integration and organization. On thisbasis, we will determine and design an optimal organizational
structure as we take our utmost efforts to achieve further
integration one step at a time. In view of the strategic importanceof this integration, Toyota Industries’ President Tetsuro Toyoda
will concurrently serve as TMHG’s president.

TMHG’s Organization
TMHG has divided its global operations into Europe, North
America and International, and a Board has been establishedas the decision-making body within each of these three
regional organizations. A Management Committee—madeup of representatives of each regional organization as well as
the head of finance and the global head of operations fromthe headquarters in Japan—manages TMHG as a whole.
Comprised of relevant sections of each regional organization,
the Sub-Committees handle such principal functions as quality,
R&D, manufacturing, production and product planning andhuman resources development as well as undertake common

Toyota Industries and BT Industries are jointly developing a new three-wheel lift
truck incorporating advanced AC technology. This product will be introduced into
the European market after being customized for respective brands.

TMHG’s Values and Principles
TMHG’s 10 Values and Principles, which represents a common ground in proceeding with further integration of TMHC
and the BT Industries Group, are as follows.
1. Be customer-focused and responsive to customers’
requirements.
2. Become undisputed No. 1 on a global basis as well as
in key regions.
3. Develop international leadership and managementby maximizing our present human resources.
4. Shoot for high financial performance.
5. Meet challenges in terms of both volume andefficiency.
6. Commit to Toyota’s high-quality standards inproducts, services and operations.

18

TOYOTA INDUSTRIES CORPORATION Annual Report 2005

7. Move to standardized processes, clarify Key
Performance Indicators and share information toincrease transparency.
8. Aim for more integrated product development
through the aggressive development and sharing of
key components.
9. The regions are the core of the new organizationand their teams must commit to achieving the above
targets and follow the principles.
10. Functional coordination, global standardization andother collective efforts will be strengthened andregional leaders are strongly expected to place highpriority on important horizontal coordination.

The Materials Handling Equipment Segment willcontinue providing products under the TOYOTA andBT brands, with TMHC and the BT Industries Group
committed to maintaining close mutual cooperation on a
global scale within the TMHG framework. In this way,

Toyota Industries intends to fully utilize the assets of BT
Industries’ BT and Raymond brands solidly positioned
in both Europe and North America. Although not apart of the TMHG organization, Aichi also expects tomaintain its own brand as a top manufacturer of aerial
work platforms in Japan.

TOYOTA Material Handling Company

BT Industries Group

Japanese market

Europe and other regions except
North America

Non-Japanese markets

North America

Materials handling equipment manufactured by
TMHC is sold in Japan under the brand name of
TOYOTA L&F (Logistics and Forklifts), which refers
to materials handling systems as well as industrial
vehicles and equipment. Outside Japan, the TOYOTAINDUSTRIAL EQUIPMENT brand/emblem is used.

BT Industries uses the brand names BT in Europe
and other regions, and Raymond in North America.
BT Industries also uses the Cesab, Prime-Mover andLift-Rite brand names in certain markets.

Toyota Industries in Progress Materials Handling Equipment

Brand Portfolio

Aichi Corporation
Aichi manufactures and sells aerial work platforms, digger derricks andother equipment. Aichi uses the AICHI brand throughout the world.
Visit www.aichi-corp.jp for further information.

TOYOTA INDUSTRIES CORPORATION Annual Report 2005

19

Toyota Industries in Progress Materials Handling Equipment

TOYOTA Material Handling Company
Globally Focused Execution of Unified
Development, Production, Sales andDecision-Making
TMHC was established as an in-house company in April 2001
after Toyota Industries took over the industrial equipment
sales and marketing operations of Toyota Motor Corporation.
This consolidation was aimed at cultivating materials handlingequipment as a core business within the Toyota Group and firmly
positioning Toyota Industries as one of the world’s foremost
comprehensive manufacturers of materials handling equipment
and systems. TMHC strives to meet customer needs throughimplementing unified development, production and sales
functions and quick decision-making via a global perspective.

TOYOTA materials(including lift trucks, shovel
handling eqiuipment sales
loaders, tow tractors and others)(Thousand units)(Target)120
amounted to a record-high 103,756
112
103.8
100
units, marking the first time that
85.7
annual sales surpassed the 100,000
80unit mark. Moreover, this was60
the first time in the industry that40
annual sales of a single brand have20
exceeded 100,000 units.
0
Operating production bases in
CY 01 02 03 04 05
Japan, the United States, France
and China, TMHC provides outstanding products and services
to customers through a global sales and service network
comprising more than 300 base stations in over 50 countries.

2004 Milestones
During calendar year 2004, Toyota Industries’ total worldwide
unit sales of TOYOTA-brand materials handling equipment

Please visit www.global-toyotalifts.com for more information on
TMHC’s global sales network and products.

Operations in Japan
Mirroring a robust recovery in the Japanese economy, total
demand in the domestic market for lift trucks in calendar year
2004 increased 10% over 2003, the first double-digit increase in
15 years. During the same period, TMHC sold 32,133 lift trucks,
an increase of 10%, virtually the same growth rate as the market.
TMHC carried out proactive sales activities by strengthening
its response to large-scale and wide-ranging customers and bypromoting proposal-based marketing. In line with strengthening
our lineup of large internal
combustion counterbalanced
lift trucks, in August 2004,
we commenced sales of 14
models of 10-ton to 24-ton
lift trucks after a full modelchange in Japan and several
countries overseas.

The series of 10- to 24-ton internal combustion
counterbalanced lift trucks are the world’s firstmodels in their class to be fitted with a diesel turbo
engine with a common rail direct injection system,
achieving the highest level of power output, excellent
fuel economy and clean exhaust emissions. They arealso equipped with a highly durable 2-stator torquecontroller and efficient wet-type disk brake offering
low maintenance and improved safety.

20

TOYOTA INDUSTRIES CORPORATION Annual Report 2005

For calendar year 2004, TMHC achieved a market share of
42.6% for sales of lift trucks in Japan, the same record-high level
as in the previous year. This marks the sixth consecutive yearthat Toyota Industries’ market share has surpassed 40% and the39th consecutive year that TMHC has maintained its top-ranked
position in the Japanese lift truck industry.

Looking Ahead
In 2005, Toyota Industries expects the domestic market for lift
trucks to continue to show solid growth. Amid this environment,
we will work to expand sales and market share by providing
products and services that we hope will deliver even greater
customer satisfaction. Efforts are to include carrying out
proposal-based marketing that offers solutions that accurately
address customer needs as well as promoting a fleet management
program to major customers.
In Japan, TMHC develops, produces and sells a wide lineup
of materials handling systems that include racks, automatic
guided vehicle systems, and automated storage and retrieval
systems.
TMHC supplies TOYOTA-brand products through a strong
and well-organized sales network of 41 dealers nationwide.

TMHC responds precisely to customer needs with anextensive product lineup—from lift trucks to automatedstorage and retrieval systems—for warehousing, storing
and low-level or high-level order picking. Very narrow
Order picking trucks

Racks

Counterbalanced lift trucks

Walkie rider trucks

aisle trucks and other warehouse trucks supplied by
BT Industries make TMHC’s product line even morecomprehensive.
Automated storage andretrieval systems

Automatic guided vehicle systems

Toyota Industries in Progress Materials Handling Equipment

TMHC’s Extensive Product Lineup in the Japanese Market

High-speed sorting equipment

Standardization of OPS System in the GENEO Series (7 Series)
The GENEO Series (7 Series overseas), Toyota
Industries’ mainstay lift trucks, will now come equippedwith the operator presence sensing (OPS) system asstandard specification to enhance operator safety. In
Japan, starting with the GENEO (7FG/D overseas)internal combustion counterbalanced lift truck produced
from August 2005, the lineup will be expanded toinclude the GENEO-B (7FB), GENEO-R (7FBR) and
GENEO-E (7FBE) electric lift trucks produced from
September 2005. For the overseas markets, we plan torelease principal products along a similar timeframe.
When the OPS system senses the operator is not ina normal operating position, it stops powered travel andpowered hydraulic functions (loading OPS system* andtraveling OPS system**) to minimize the likelihood ofaccidents due to operational errors and when the operator
is out of the operating position.
* The loading OPS system automatically stops powered loading
operations when the operator is not positioned normally. This function
minimizes the likelihood of serious accidents that may arise from theoperator inadvertently trying to work from an unsafe position.
** The traveling OPS system senses whether the operator is properly
seated via a seat switch. When the operator is not properly seated, thesystem automatically stops powered travel.

TOYOTA INDUSTRIES CORPORATION Annual Report 2005

21

Toyota Industries in Progress Materials Handling Equipment

Products for the Japanese Market — Industrial Vehicles

GENEO (7FD25)
Internal combustion
counterbalanced lift truck

GENEO-B (7FB15)
Electric counterbalanced lift
truck

GENEO-E (7FBE15)

GENEO-R (7FBR15)

2TE18

Three-wheel electriccounterbalanced lift truck

Electric reach truck

Electric tow tractor

Products for the Japanese Market — Materials Handling Systems

Partner Rack

Rack Sorter B

Rack Sorter P

Road Sorter H

2AFBR15APLB8Rail-less mobile rack

Automated storage andretrieval system(Plastic container type)

Automated storage andretrieval system(Pallet type)(ACBH10)
Automatic guided
vehicle system

Automatic guided
lift truck

Automatic guided
pallet truck

Truck Mount Aerial Work Platforms

SH15B

SE08B

TZ-10A type “RR”

Self-Propelled Aerial Work Platforms

SC40A

SR-18AJ

RX07B

Note: Although Aichi Corporation is not integrated into the Toyota Material Handling Group, it comprises an imporant part of the Materials Handling Equipment Segment.

22

TOYOTA INDUSTRIES CORPORATION Annual Report 2005

Headquartered in Irvine, California, Toyota Material Handling,
12 years at the show that
U.S.A. (TMHU) has led the industry as the top-selling lift truck
attracted 35,000 attendees.
supplier in the United States for the past three years. Of the
At the same time,
Toyota lift trucks sold in the U.S., 99% are manufactured in
TMHU expanded its
North America with the majority being built at Toyota Industrial
order picker lineup by
Equipment Manufacturing (TIEM), based in Columbus, Indiana.
launching an electric
According to Industrial Truck Association data, in 2004 thenarrow aisle order picker
A compressed natural gas option is available
for Toyota’s 4,000-6,500 lb. internalindustry as a whole enjoyed more than 20% growth over 2003.
along with six newly
combustion cushion and 3,000-6,500 lb.
Also during 2004, the 200,000th Toyota lift truck rolled off theenhanced electric pallet
pneumatic lift truck models.
line at TIEM. In addition, TMHU introduced several Toyota
truck models.
products to the United States rounding out its line to include new
TMHU also introduced a TIEM factory-installed compressed
electric reach trucks, counterbalanced electric stand-up rider
natural gas (CNG) fuel option in response to the new U.S.
trucks, an electric pallet truck and an electric stand-up tugger
Environmental Protection Agency (EPA) and California
model.
Air Resources Board (CARB)TMHU also announced theregulations. This option is available
results of its customer satisfaction
on several lift truck models, carries
survey that measures satisfaction
the Underwriters Laboratory
with dealers’ sales process, service(UL) listing and is certified toand parts support, and productmeet 2005 EPA and CARB
quality. The program, Voice ofemissions regulations in all 50
the Customer (VOC), found thatstates. Toyota reinforced its total
92% of Toyota customers would
solutions philosophy by becoming
recommend their local dealershipthe first, and currently only, lift
based on their experience with thetruck manufacturer to develop
sales and delivery process.
this factory-installed, EPA- andToyota’s new National Customer Center 360-degree showroomfeaturesacomprehensive
collectionofToyota’s
current
lift
trucksToyota closed 2004 with three
CARB-certified option for the U.S.
as well as the first Toyota lift truck sold in the U.S. in 1967 and theindustry honors, including Modern
market.
first lift truck built at TIEM in 1990.
Materials Handling magazine
Looking Ahead
naming Toyota the largest lift truck supplier in the world for the
Industry growth is forecast to continue at a slower pace infourth year in a row. In addition, Crist Information & Research
2005. Amid this environment, Toyota’s commitment to theranked Toyota as the manufacturer with the largest market share
U.S. market is reflected in its US$11 million investment in thein the United States, and a survey conducted by Reed Research
108,000-square-foot expansion of the TIEM facility that houses
Group of 600 Modern Materials Handling readers ranked
the National Customer Center. To further support its customers,
Toyota first in quality
this expansion resulted in a newly enlarged sales office and a
and value.
42,500-square-foot addition to Toyota’s distribution center. The
2004 Milestones
TIEM campus now totals 859,000 square feet of manufacturing
TMHU started the year
and support space and houses nearly 800 associates.
by exhibiting at Promat,
Toyota has 70 authorized Toyota Industrial Equipment
North America’s mostdealers with a total of 186 U.S. dealership locations nationwide
comprehensive showcase
to offer comprehensive customer service support, includingof materials handling andone-stop shopping for both new and certified used lift trucks,
logistics technologies.
parts, service and financing.
This was Toyota’s firstThousands of attendees visited the Toyota
booth at Promat, the largest materials
corporate appearance in
For more information on TMHU, visit www.toyotalift.com.
handling show in North America.

TOYOTA INDUSTRIES CORPORATION Annual Report 2005

Toyota Industries in Progress Materials Handling Equipment

Operations in the United States23

Toyota Industries in Progress Materials Handling Equipment

Operations in Europe
Based in Brussels, Belgium, Toyota Industrial Equipment Europe(TIEE) is one of the largest suppliers of materials handlingservices and products in Europe, with 20 distributors operatingin 27 countries. Toyota’s European lift truck production plant,
located in Ancenis, France, is certified with ISO 14001.
The European Parts Centre is based here, allowing Toyota’s
European distributors to source and supply more than 20,000
spare parts within 24 hours.

Market Development

In 2004, TIEE continued to enhance
its materials handling range with theintroduction of an innovative Deluxe
Cabin and a new-generation
lineup of heavy-duty
stackers (7SLL).
Available on 7ICmodels, with capacity
ranging from 2 to 3.5
tons, the Deluxe Cabin
7SLL heavy-duty powered stacker
provides complete
driver comfort in all weather and working conditions. The 7SLL
series is built around the Toyota Powerdrive system, whichsignificantly improves safety, reliability and performance, andwith lift heights of up to 5.4 meters,
ensures accurate and safe handling incongested areas.

In terms of overall performance in 2004, the European market
showed signs of recovery from a challenging 2003 and grew by
8%, reaching its highest level ever. The European market for
counterbalanced lift trucks also improved, with sales increasingby 12%. Compared to 2003, the market for warehouseequipment grew by 5%.
TIEE reported excellent results,
outperforming the European market
with an increase in sales of over 12%.
Looking Ahead
The company also continued to develop
The Central and Eastern European market
its network across Europe in 2004 andis expected to grow further in 2005
reported strong sales in the fast-growing
with investment in these countries set toCentral European region, with a record
continue.
increase of 30%.
Although the first quarter of 2005
Innovation in customer services was
TIEE’ssales&
marketing
offi
ce
in
Brussels,
Belgium
has shown the market increasing by 5%
strong in 2004, with the ASEC service
year-on-year, there are some concerns
certification program established by TIEE
about an economic slowdown in Europe in 2005.
to set industry-leading standards in customer satisfaction. ASEC
TIEE has a comprehensive plan for growth in the next year,
assesses all aspects of after sales such as how Toyota deals withincluding the development of a range of customized solutions to
its customers, procedures followed by engineers, and health,ensure customer satisfaction throughout Europe. These solutions
safety and environmental requirements. This will ensure thatwill include innovative, high-quality products supported by
Toyota’s high-quality service is consistently delivered acrossa broad array of value-added services such as driver training,
Europe.
finance, rental and fleet management.
Toyota Fleet Management will help businesses identify
the issues affecting their materials handling systems.
Through detailed and accurate analysis, TIEE will clarify thedecision-making process to help customers invest in the rightsolution.
Encompassing 350 service outlets, TIEE will continue
to strengthen its sales and service network. TIEE remains
committed to after-sales service and support, and will focus onoffering tailor-made service packages that meet each and every
customer’s needs.
Toyota Industrial Equipment, S.A., our lift truck production base in France,
manufactures approximately 14,000 lift trucks annually for the European market.

24

Product Development

TOYOTA INDUSTRIES CORPORATION Annual Report 2005

For further information please visit www.toyota-tiee.com.

7FGU70

7FGCU25

7FGCU35-BCS

Internal combustion pneumatic tire
counterbalanced lift truck

Internal combustion cushion tire
counterbalanced lift truck

Internal combustion cushion tire
counterbalanced lift truck—boxcar
special model

7FBEU15

7FBCU25

7BPUE15

Three-wheel electriccounterbalanced lift truck

Electric cushion tire
counterbalanced lift truck

Electric order picker

7FG/DF30

7FBMF25

7FBRE14

Internal combustion counterbalanced
lift truck with deluxe cabinElectric counterbalanced lift truck

Electric reach truck

7SLL

7FBEF18

LOP10CFPowered stacker

Three-wheel electric counterbalanced
lift truck

Low-level order picker with elevating cabin

Toyota Industries in Progress Materials Handling Equipment

Products for the North American Market

Products for the European Market

TOYOTA INDUSTRIES CORPORATION Annual Report 2005

25

Toyota Industries in Progress Materials Handling Equipment

BT Industries Group“Our clear customer and market focus is crucial.”
BT Industries is distinguished by its close relationships with customers. We are in themarket to meet their logistics needs. Every day we have to prove our ability to develop
together with customers as well as anticipate their needs for efficient materials handling,
and then supply solutions optimally designed for each customer’s unique situation.
We hold very strong positions in priority customer segments, where we are experts
at developing solutions for efficient materials handling. Our customer and market focus
has been crucial to establishing BT Industries as the world’s leading supplier of materials
handling solutions based on electric warehouse trucks.

Per Zaunders
President and CEO

Strong Performance in 2004

Global Player Imbued with Local Strengths

The year 2004 was a very strong year for the entire lift truck
industry, with higher volumes than ever before. All the major
markets—Europe, North America and Japan—reported growth.
We strengthened our position as the world’s leading supplierof warehouse trucks. Our increased market shares are the resultof a strong product range, a good reputation in the market and an
attention to what customers want. Success in the growing global
market has necessitated a major expansion in the BT Industries
Group’s production volumes.
Thanks to our employees’ competence, ability to design
effective solutions and focus on quality in every aspect of theirwork, we have been able to achieve improved productivity. The
emphasis on customers and quality awareness in every partof the BT Industries Group is a key factor if we are to remain
successful.

One of our strengths is that we are perhaps the only true global
company in our field. This is especially important now, when
so many large companies prefer to work with a single supplier
for all their lift truck needs wherever they operate in the world.
These corporations account for a growing share of global trade,
and it is very important to provide them with efficient materials
handling solutions whether in Europe, North America or
globally. BT Industries follows them in their development andserves as a professional partner.
It may seem contradictory, but we at BT Industries havemanaged to combine global coverage with strong, local businessacumen. Our culture stresses delegation of responsibility andauthority. By allowing decisions to be made far down in theorganization, we achieve important benefits, particularly in termsof flexibility and motivation. The local companies are the ones
that know their markets and can best manage their business.

Faster Product Development Essential
Our society is becoming increasingly dependent on transports
and is demanding an ever-faster supply chain. We have tocontinuously meet demands for efficient materials handlingsolutions that improve our customers’ productivity. To maintainand increase our competitiveness, our current products must be
constantly updated. But that is not enough. We also have to bewilling to forge ahead and develop the products of tomorrow.
Demand for fast and effective product development has
never been higher. In recent years we have invested considerable
resources in research and development, and the pace of productdevelopment has accelerated. Customers are noticing it in that
we are now launching more new products than before. We are
not going to stop there. Development certainly isn’t.

26

TOYOTA INDUSTRIES CORPORATION Annual Report 2005

Extensive Cooperation and Inspiration
Since 2000, BT Industries has been part of Toyota Industries
Corporation. BT Industries is the world leader in warehousetrucks and TOYOTA Material Handling Company (TMHC) is
the world leader in counterbalanced trucks. Together, we havea competitive advantage that takes in every continent, customer
segment and truck type.
During the year we entered a more intensive stage ofour cooperation with TMHC. We are part of the same groupand both companies manufacture lift trucks. I believe thatcooperation can and should be expanded, so that we can benefit
from each other’s strengths.
For example, quality is a primary concern for both BT

There is still some concern about raw material prices,
including for crude steel, which is our most important input
good. But because of our established position as the market
leader with a strong product range and world-class employees,
I am positive about BT Industries’ opportunities.

Continued High Demand in 2005
BT Industries is well prepared for the strong market to continue
in 2005, although we do expect the fast pace of growth in 2004
to slow. Capacity utilization in our plants is very high, and wewill bolster our efforts to raise productivity and efficiency andthereby improve our competitive strength.

Per Zaunders
President and CEO
BT Industries AB

BT Products

Pro Lifter

Pro Lifter M

Orion

Ixion

Hand pallet truck

Motorized hand pallet truck

Electric pallet truck

Stacker truck

ReflexOpus

Opal

VectorCargo

Reach truck

Low-level order picking truck

High-level order picking
truck

Very narrow aisle truck

Counterbalanced truck

Toyota Industries in Progress Materials Handling Equipment

Industries and TMHC. BT’s vision is to have the warehousetruck industry’s highest quality. In this constantly ongoing effort,
we can obtain inspiration and suggestions from TMHC, with itsvery strong quality image.

Raymond Products

Raymond Model 7400
Reach-Fork Truck

Raymond Model 112XD
Pallet Truck

Reach truck

Electric pallet truck

Raymond EASi Pacer
Stand-Up
Counterbalanced Truck

Raymond EASi
Orderpicker Truck

RaymondSwing-Reach Truck

Order picking truck

Very narrow aisle truck

Electric counterbalanced truck

TOYOTA INDUSTRIES CORPORATION Annual Report 2005

27

Progress

2

Car Air-Conditioning Compressors

Toyota Industries in Progress
Toyota Industries in Progress

Integrating Cutting-Edge Technologies
to Lead the Global Market
Besides serving as a core business of the Automobile Segment, our Car
Air-Conditioning Compressor Business also represents one of Toyota Industries’
key strategic businesses. Toyota Industries takes advantage of its outstanding
technologies to efficiently develop and manufacture top-quality products matchedto customer needs, and by doing so has spurred enhancements in comfort andtechnological advances of vehicles manufactured and sold by the world’s premierautomakers. Our excellent technologies and quality in car air-conditioning
compressors, together with unrelenting efforts to build a global production network,
exemplify the spirit of Toyota Industries’ “United We Grow” slogan.

28

TOYOTA INDUSTRIES CORPORATION Annual Report 2005

electrically driven compressor for fuel-cell hybrid vehicles thatuses CO2 as a substitute refrigerant for hydrofluorocarbons. Also
working with DENSO, in 2003 Toyota Industries developed atwo-way compressor with a built-in motor for hybrid cars. This
compressor is driven alternately by the engine during driving
and by a built-in motor during engine stop, thereby realizing
an optimal balance between fuel efficiency and comfort when
the car air-conditioner is in operation. Further underscoring
our technological and competitive superiority, all of theserevolutionary compressors were developed and commercialized
ahead of our competitors.

Toyota Industries’ car air-conditioning compressors have earned
extensive praise for unrivalled quality and reliability fromToyota Motor Corporation (TMC) and the world’s other top
automakers. Our Car Air-Conditioning Compressor Businesshas solidly established its competitive superiority, highlighting
technological capabilities that are unmatched by other makers.
Toyota Industries’ Car Air-Conditioning Compressor
Business boasts a long tradition of creating revolutionary new
products in anticipation of changing market needs, which has
been instrumental in driving the technological innovation of
automakers. Among our accomplishments, in the 1980s wedeveloped a compact, lightweight 10-cylinder swash-platefixed-displacement compressor that realizes excellent reliability
at high operating speeds. In the 1990s we demonstrated ourcommitment to environmental protection by developing a
one-way swash-plate variable-displacement compressor that
reduces the load on the engine to raise fuel efficiency. Further,in the late 1990s we introduced an externally controlled
variable-displacement clutchless compressor that improves
acceleration and saves energy consumption by sensing changes
in the external environment.
Toyota Industries’ development of car air-conditioning
compressors has also focused on addressing such urgent
environmental issues as destruction of the earth’s ozone layer
and global warming. As part of these efforts, in 2002 Toyota
Industries and DENSO Corporation (DENSO) developed an

Leading the Market with Outstanding
Technological Capabilities
Toyota Industries’ total global production and sales of car
air-conditioning compressors in fiscal 2005 totaled 18.2 million
units, representing the top share of the global market.
In the Japanese market, during fiscal 2005 we soldapproximately 5.5 million compressors to TMC and otherprincipal domestic automakers, making us the market leader.
In the United States, during fiscal 2005 Toyota Industries
sold 7.1 millions of mainly fixed-displacement compressors(including exports and local production) to U.S. automakers andJapanese auto manufacturers in North America.
Meanwhile, in Europe, we sold approximately 5.1 million
variable-displacement compressors (including exports and local
production) during fiscal 2005.

Automobile Trends and Toyota Industries’ Product Development
1980s

1990s

2000s

Provide higher engine performance and comfortable interior
Slow down global warming

Reduce ozone layer destruction

Automobile
trends

Improve gas mileage
Hybrid cars, fuel-cell hybrid vehicles
Fixeddisplacement
type

Use of HFC-134a refrigerant

1981

2003

Compact, lightweight
10-cylinder swash-plate compressor*
Variabledisplacement
type

1995

ToyotaIndustries’
product
development

Rotary valve-type compressor

Rotary valve-type variable-displacement compressor*
Externally controlled, variable displacement,
clutchless type

1997

Toyota Industries in Progress Car Air-Conditioning Compressors

Second-to-None Technology Development
Capabilities

Topic
Toyota Industries first began
producing compressors in January
1960. More than four decades
later, cumulative production of
car air-conditioning compressors
in Japan, Europe and the UnitedStates reached 200 million units at
the end of April 2004. What’s truly
remarkable is that while it tookaround 36 years for cumulative
production to reach 100 million units
as of July 1996, aggregate production
soared to 200 million units within amere span of eight years.

Power efficient,
Ultra-lightweight, ultra-power efficient, superb drivability
superb drivability
6-cylinder one-way swash-plate compressor*
7-cylinder one-way
swash-plate compressor*
CO2 compressor
2002
CFC-freeCO2 compressor for fuel-cell hybrid vehicles*

2003

Electrically driven compressor

Compact, lightweight, highly efficientElectrically driven compressor for hybrid vehicles*

2003* World’s first commercial products

Two-way compressor

Two-way compressor for hybrid vehicles*

200 millionth compressor

TOYOTA INDUSTRIES CORPORATION Annual Report 2005

29

Toyota Industries in Progress Car Air-Conditioning Compressors

Worldwide Manufacturing Bases and Local Offices

TDDK
MunichDetroit

DNTS
YSD

DWHI

Slated to start operations in
December 2005

ACTIS

TACK
Slated to start operations in April 2006

SUBROS
DNIA
Consolidated subsidiaries
Licensed manufacturers
Local offices

Building a Global Production Structure
Responding to growing demand, Toyota Industries is working tobuild an optimal production structure, with bases in Japan, North
America, Europe and Asia.
In Japan, our largest production base, we have built anefficient three-plant integrated production structure in Obu,
Higashiura and Kariya, covering all phases from production ofmaterials to processing and assembly and thereby ensuring thestable production of car air-conditioning compressors.
In the United States, Michigan Automotive Compressor,
Inc. (MACI)*, our U.S. production base, produces swash-platefixed-displacement compressors.
In July 2004, Toyota Industries and DENSO jointly
established a second North American compressor production
base, TD Automotive Compressor Georgia, LLC (TACG),
near Atlanta in the U.S. state of Georgia. TACG is slated
to commence operations in December 2005. While fixeddisplacement compressors have been the main compressor usedin North America, in view of increasing global environmental
awareness, Toyota Industries anticipates rising demand forvariable-displacement compressors, which offer excellent energy
efficiency. Determined to meet this expected higher demand,
Toyota Industries established TACG as a new plant specializing

Obu Plant produces aluminum die casts forcompressors.

30

TACG
MACI

in variable-displacement compressors in the southern UnitedStates, where automakers have been setting up operations.
TACG plans to produce 2 million compressors annually by
2010.
Our European production base, TD Deutsche
Klimakompressor GmbH (TDDK), produces swash-plate
variable-displacement compressors.
* MACI and TDDK are joint ventures with DENSO. As of March 31, 2005, Toyota
Industries held 60% and 65%, respectively, of the shares of these companies.
* TACG is capitalized at US$27 million as of March 31, 2005. Toyota Industries North
America, Inc. (a holding company controlling Toyota Industries’ North American
operations) invested 65% of this capital and DENSO International America, Inc. (acompany controlling DENSO’s North American operations) invested 35%.

In May 2005, Toyota Industries established a joint venture,
TD Automotive Compressor Kunshan Co., Ltd. (TACK)in Kunshan, as its second car air-conditioning compressor
production base in China, another vital geographic region.
TACK is scheduled to begin producing variable-displacement
compressors in April 2006. Yantai Shougang DENSO Co., Ltd.
(YSD, in which Toyota Industries holds a 15% stake), a joint
venture established in 1994 with Shougang Corporation, will
also begin producing variable-displacement compressors in
addition to its current fixed-displacement compressors. YSD will

Higashiura Plant processes compressor pistons.

TOYOTA INDUSTRIES CORPORATION Annual Report 2005

DNBR

Toyota Industries is steadily
globalizing production bases in its Car
Air-Conditioning Compressor Business.
We produce compressors through a
tripolar structure encompassing Europe,
the United States and Japan. We expectthat establishing new production bases in
the United States and China will further
strengthen this structure. Additionally,
Toyota Industries licenses productionin Asia (excluding Japan) and SouthAmerica. By carrying out production near
our markets, we are better able to supply
products precisely tailored to local needs,
as well as to reduce shipment costs andexchange rate risks.

Kariya Plant develops and assembles compressors.

TACG, Toyota Industries’ second North American
production base (Artist’s rendering)

supply compressors to users in northern China while TACK will
supply customers in the southern part of the country.

YSD

Main products:
Fixed-displacement compressors
Variable-displacement compressors(starting from April 2006)

China

Yangtze River TACK

Main products:
Variable-displacement compressors(starting from April 2006)

Production bases of automakers

Looking Ahead
To ensure future growth, our activities will focus mainly on
further penetrating overseas markets.

TDDK, Toyota Industries’ European production base

In Europe, the proportion of new cars fitted with car
air-conditioners, once relatively low, is rising and now exceeds
70%. Toyota Industries will strive to expand sales by securing
new customers and further cultivating new markets, with efforts
centered on supplying products that closely match the needs ofthe European market.
In the United States, we will redouble efforts to secure
new orders, while in China, where automobile sales continue toexpand, we will actively undertake sales promotion activities incooperation with DENSO.

Toyota Industries in Progress Car Air-Conditioning Compressors

MACI, Toyota Industries’ U.S. production base for car
air-conditioning compressors

All of Toyota Industries’ car air-conditioning compressors
are supplied to DENSO, which in turn sells these to leading
automakers worldwide. DENSO not only sells our compressors
as a single unit, but also incorporates them in DENSO’s car
air-conditioning systems.

Fixed-Displacement Type

10S17 compressor

SCS06 compressor

SV07 compressor(Swash-plate type)(Scroll type)(Vane type)Continuous Variable-Displacement TypeFor Hybrid Vehicles

7SBU16 compressor

7SEU17 compressor

ES18 electric compressor

ES27 electric compressor(Swash-plate type)(Externally controlled,
clutchless type)(Hermetic scroll type)(Hermetic scroll type)

TOYOTA INDUSTRIES CORPORATION Annual Report 2005

31

Progress

3

Vehicles/Engines

Toyota Industries in Progress
Toyota Industries in Progress

Applying Our Combined Knowledge andSynergies to Produce a Global Lineup of
Automobile-Related Products
In close cooperation with Toyota Motor Corporation (TMC), Toyota Industries’ Vehicle andEngine businesses are engaged in a wide range of automobile-related businesses, including
the manufacture of engines and the assembly of automobiles themselves. Both the Vehicle
and Engine businesses are also proactively contributing to TMC’s global expansion strategy
and working hard to be a reliable, cost-efficient and flexible supplier of engines andautomobile-related products.
Recognizing that the source of our competitiveness lies in ensuring outstanding
production capability, we will strive to constantly improve this core component ofoperations while further enhancing our products in terms of quality, cost and technology.

32

TOYOTA INDUSTRIES CORPORATION Annual Report 2005

Toyota Industries undertakes operations involved in TMC’s
car production as one of the vehicle assembly arms within the
Toyota Group. As a core business that provides stable revenues,
our Vehicle Business assembles mainly compact and midsize
automobiles under consignment from TMC. Currently, we are
manufacturing two models, the RAV4 for Europe and the UnitedStates and the Vitz (Yaris in Europe), the latter of which was
re-launched in Japan in February 2005 after a full model change.

Chairman Tadashi Ishikawa (then President) speaks at the ceremony
for the latest Vitz (Yaris) coming off the production line at TMC’s
Takaoka Plant in February 2005. In Japan, the vehicle is assembled
at the Takaoka Plant and Toyota Industries’ Nagakusa Plant.

Our Vehicle Business is renowned for its top-class quality
and quick production launch within the Toyota Group. The
Toyota Production System ensures that waste is thoroughly
removed from production operations and precious plant space isefficiently utilized.
The Vehicle Business’s automobile assembly operation
began with the Publica (van) and Corolla (van) in the late 1960s
and early 1970s. Underpinned by these successful operations,the full-fledged assembly business commenced with the Starletat the Nagakusa Plant in 1978. We have been manufacturing
the Vitz, the successor vehicle of the Starlet, since 1999. The
first-generation Vitz prompted an expansion in the compact car
market in Japan, and was later recognized as global standard
compact car. The latest Vitz packs the most advanced safety

features and environmental technologies and delivers the highest
quality bar none.
In producing the most recent Vitz model, we launched
production in an unprecedented short period of time to
reduce pre-production expenses by incorporating new process
improvement measures. We digitalized the preparation process
and re-designed its structure so that we could shorten thelead-time and get the job done faster and more efficiently.
Specific measures entailed the use of TMC’s “Compass” system
to reorganize processes and create unified standards. We alsoutilized three-dimensional data processing to improve processes
virtually, and closely reviewed the specifications of processes
and equipment. In re-designing the preparation structure, we
completely removed every conceivable barrier among relevant
manufacturing, production technology and quality control
departments involved. Subsequently, by eliminating suchfactors as communication gaps—an impediment to speed—anddelayed decision-making, we were able to implement concurrent
engineering where everyone could work in unison to handle
multiple tasks at the same time.

Unified standards created using the“Compass” system

Toyota Industries in Progress Vehicles/Engines

Vehicle Business

Reviewing processes andequipment using virtual
three-dimensional data processing

This achievement marks significant progress in realizing
greater production enhancement capability to produce
high-quality, cost-efficient vehicles, thereby contributing to
TMC’s car manufacturing operations.

Vehicles

Vitz

RAV4

(Yaris in Europe)

TOYOTA INDUSTRIES CORPORATION Annual Report 200533

Toyota Industries in Progress Vehicles/Engines

Engine BusinessToyota Industries’ Engine Business manufactures diesel andgasoline engines ranging in capacity from 1500 cc to 5200 cc.
Our automobile engines are manufactured under consignment
from TMC and installed on designated TOYOTA cars. Our diesel
engines developed in collaboration with TMC, in particular,
offer high power and lighter weight, as well as lower noise andvibration. Moreover, Toyota Industries leads the world in market
share of high-output, environmentally friendly industrial engines
for lift trucks and other materials handling equipment in addition
to engines like gas engine-driven heat pumps. The business also
handles a variety of foundry parts incorporating sophisticatedtechnologies.
Thanks to the adoption of the automatic guided vehicle
system, our Engine Business maintains a structure that’s flexible
and responsive to production fluctuations. Quick production
launch is another area in which we excel.
The Engine Business is aggressively engaged in thedevelopment of environmental technologies. In relation, theproportion of diesel engine vehicles is increasing, especiallyin Europe, based on the idea that diesel engines are moreenvironmentally friendly in terms of fuel efficiency and lower
CO2 emissions. At the same time, TMC is striving to elevate its
presence in the European market, and plans to increase sales byaugmenting the diesel vehicle lineup. Toyota Industries aims tocontribute to their European strategy through joint development
of diesel engines with TMC and production of high-quality
diesel engines.
In line with this goal, in March 2005 we started productionof 2.2-liter direct-injection AD diesel engines at the Hekinan
Plant in Japan and at Toyota Motor Industries Poland Sp.zo.o.*(TMIP), a joint venture in Europe with TMC. The engine isfitted in the Avensis that TMC produces in the United Kingdom

and is slated to equip the Corolla that TMC assembles in Europe.
Together with the Hekinan Plant, the Kyowa andHigashichita plants collectively serve as mother plants foroverseas counterparts that manufacture engines and foundryparts. In this key role, these plants spearhead the adoptionof the latest production technology developed in Japan andfacilitate the maturity of the production process and technology
before transferring the most current know-how and expertise tooverseas bases.
* Toyota Industries’ stake is 40%. Toyota Industries is chiefly responsible for
production operations at TMIP.

In June 2005, the Higashichita Plant started producing
2.5-liter and 3.0-liter direct-injection KD diesel engines for
TMC’s Innovative International Multi-Purpose Vehicle (IMV)
Project. This TMC project aims to establish a globally optimal
production and supply structure by reciprocally supplying
assembled vehicles as well as main components of pickup
trucks and multi-purpose vehicles among manufacturing basesin Asia, Argentina and South Africa. To produce the engine, welaunched the production line for manufacturing and processing ofaluminum die cast components and assembly of engines within ashort preparation period.

Toyota Industries will continuously make efforts tocontribute to the successful establishment of the IMV Project.
For example, in May 2004, Kirloskar Toyoda Textile Machinery
Private Limited (KTTM), a Toyota Industries subsidiary in India
that manufactures and sells textile machinery, started productionof components for manual transmissions. KTTM supplies
aluminum die cast components for manual transmissions andrelated components to Toyota Kirloskar Auto Parts Private Ltd.
(a joint venture in India with TMC and the Kirloskar Group,in which Toyota Industries has a 26% stake), which in turn

Assembly line at theHigashichita Plant, which
manufactures KD diesel
engines

AD diesel engine and TMIP staff

34

TOYOTA INDUSTRIES CORPORATION Annual Report 2005

Toyota Industries in Progress Vehicles/Engines

Worldwide Manufacturing Bases of Automobile-Related Businesses

Poland
India

China

Japan

TMIP
Manufacture of diesel engines for TMC’s
plants in the U.K. and Turkey

TKAP

TIK

Hekinan Plant

Kyowa Plant

Manufacture of foundry parts for Japanand manufacturing bases in Poland andIndia

Manufacture of diesel and gasoline
engines

Manufacture of engine parts

Manufacture of transmissions for the
IMV Project

TIAP

KTTM

LFTD

Manufacture of transmission parts for
TKAP

Higashichita Plant
Manufacture of foundry parts

Manufacture of foundry parts for engines

Manufacture of automotive
stamping dies (see page 44
for details)

Manufacture and supply of diesel
engines for IMV Project

Manufacture of automotive stamping diesand jigs (see page 44 for details)

supplies manual transmission systems to the IMV Project.
Toyota Industry (Kunshan) Co., Ltd., our subsidiary in
China, is manufacturing foundry parts mainly for automobile
engines. To augment production capacity spurred by anincrease in demand, in April 2004 we established our
second manufacturing base in the country, Toyota Industry
Automotive Parts (Kunshan) Co., Ltd. (TIAP), a joint venturein which Toyota Industries has a 60% stake, in cooperation with
Taiwan-based Lioho Machine Works, Ltd. and Toyota Tsusho
Corporation. TIAP commenced operation in April 2005.

Topic

Highly precise,extremely sturdy yet
lightweight, this Toyota
Industries-manufactured
engine block was installedin the Toyota Tundra,
which competed in the
NASCAR race held in the
U.S. and went on to win
the 2004 Craftsman Truck
Series title.

Engines

2AD diesel engine

2KD diesel engine

1HD-FTE diesel engine

2AZ-FE gasoline engine

1FZ-FE gasoline engine(Displacement: 2.2 liters, usedin the Avensis)(Displacement: 2.5 liters, usedin the Hilux Vigo)(Displacement: 4.2 liters, usedin the Land Cruiser)(Displacement: 2.4 liters, usedin the Estima)(Displacement: 4.5 liters, usedin the Land Cruiser)

TOYOTA INDUSTRIES CORPORATION Annual Report 2005

35

Progress

4Electronics

Toyota Industries in Progress
Toyota Industries in Progress

Uniting with Key Electronics Industry
Players to Drive Our Future Growth
Toyota Industries manufactures and sells low-temperature polysilicon TFT-LCDs andsemiconductor package substrates through joint ventures. Furthermore, Toyota Industries
not only engages in the development, manufacture and sales of power electronics
components for automobiles such as DC-DC converters but also pursues the development
and commercialization of advanced electronics technologies. Viewing electronics as
a promising field where further growth in markets is likely, we regard our Electronics
Business as an important source of future growth. Accordingly, Toyota Industries will
allocate management resources to this field as we commit our concerted energy and effort
to ensure the successful development of this business in the years ahead.

36

TOYOTA INDUSTRIES CORPORATION Annual Report 2005

ST Liquid Crystal Display Corp. (STLCD) was established
as a 50-50 joint venture with Sony Corporation. Since Toyota
Industries’ investment is not a majority stake, we account for
STLCD as an affiliate by the equity method rather than asa subsidiary. STLCD is currently securing a stable level of
earnings in spite of the adverse impact of inventory adjustmentsin the IT and digital industries, and nonetheless, represents oneof the core operations of our Electronics Business.
STLCD manufactures small and medium-sized
low-temperature polysilicon (poly-Si) TFT-LCD panels mainly
for use in digital still and video cameras and mobile phones. It
has built an optimal production system by combining Sony’s
superb LCD development capabilities with Toyota Industries’
renowned expertise in quality control and manufacturing
technology. Since commencing mass production in 1999,
STLCD has won the trust of a broad range of customers for its
product quality, cost competitiveness and reliable delivery times,
which is further attested to by its milestone achievement ofreaching 100 million panels in September 2004.
STLCD’s products excel in such basic features as highresolution and low energy consumption. A new display device
using Sony’s System-on-Glass technology is also being
developed. Incorporating the display device and its drivercircuits into a single glass substrate, this technology enables
highly reliable, lightweight and miniaturized display modules.
Responding to increases in demand, STLCD has continued
expanding production capacity. With the proliferation of digital

cameras and camera-equipped mobile phones, we expect acontinued rise in demand for its high-performance LCD panels,
whereby STLCD additionally invested approximately ¥10.0
billion in 2004 to bolster its production facilities. STLCD’s
monthly production capacity currently stands at 40,000 panels(600 x 720mm).
In a noteworthy development, Sony acquired the LCD
panel manufacturing business of International Display
Technology Co., Ltd. and subsequently established ST Mobile
Display Corporation (STMD) in March 2005 to manufacture
low-temperature poly-Si TFT-LCD panels for mobile devices.
Foreseeing sustained growth in demand for the product, Toyota
Industries made a 20% capital investment in STMD.

Toyota Industries in Progress Electronics

Low-Temperature Polysilicon TFT-LCD Panels

ST Liquid Crystal Display Corp.

Semiconductor Package Substrates
In 1998, Toyota Industries established TIBC Corporation (TIBC),a joint venture with Ibiden Co., Ltd. (Ibiden). This marked our

TIBC Corporation

entry into the business for semiconductor package substrates,
which are essential components of PCs, digital still and video
cameras, mobile phones, home video game consoles, IC cards andmemory cards. Leveraging Ibiden’s extensive technologies, TIBC
has steadily expanded its product line, manufacturing flexible
printed circuit (FPC) substrates for IC cards, wire bonding
package substrates and flip chip package substrates.
TIBC’s semiconductor package substrates are sold via
Ibiden to major integrated device manufacturers (IDMs) andsemiconductor-packaging companies in South Korea and Taiwan
for use in PCs, mobile phones and other products. TIBC’s FPC
substrates are also marketed through Ibiden to SIM-card andsmart card suppliers mainly in Europe and China for integration
into credit cards and telephone cards.

TOYOTA INDUSTRIES CORPORATION Annual Report 200537

Toyota Industries in Progress Electronics

Semiconductor Package Substrate Trend and TIBC’s Production Engineering Development
Substrate trend

FC package substrate

Flip-chipped
Super fineMulti-layered

IC signal pins

Main applications:CPU for PCs, PC graphics,
chipsets for PCs

FC substrates
Flip chipbonding

WB: Wire bonding (package)
FC: Flip chip
FPC: Flexible printed circuit

Fine
Super thin-filmed

WB package substrate
Main applications:

WB substrates

Memory for portabledevices, chipsets for PCs

LSI wirebonding

Double-sided

FPC substrates for IC cards
1980

TIBC product line

1990

2000

Sep. 1997

FPC package substrate

2010

Main applications:Contact IC cards

FPC package substrates
WB package substrates

Apr. 1999
Sep. 1998
TIBC founded

2005

Oct. 2002

FC package substrates

Car Electronics
Toyota Industries’ Electronics Division develops and manufactures
automobile-related electronics components.
Fitted in Toyota Motor Corporation’s (TMC) Prius hybridcar, our DC-DC converters were developed by utilizing ourwealth of know-how and experience in the developmentof control devices for electric counterbalanced lift trucks.
Regarded as one of the key devices in hybrid cars, the converter
down-converts the high-voltage DC current of the main battery
to a lower voltage to recharge the auxiliary battery and supply
power to lights, wipers, the horn and other in-car devices.
The division also develops and manufactures compact, low-cost
DC-DC converters for electric power steering (EPS) systems forhybrid cars, which are installed in the TMC’s Harrier Hybrid andKluger Hybrid. Other products include a broad range of DC-AC
inverters for cars with hybrid and conventional engines thatconvert currents into the same voltage as household electricity.
Looking to the future, we expect that strong worldwide

Car Electronics Products for Hybrid Cars

DC-DC converter for EPS
fitted in the Harrier Hybrid
and Kluger Hybrid

DC-DC converter

New products
DC-DC converters
for EPSfitted in the Prius
DC-DC converters

DC-AC inverter
fitted in the Estima Hybrid

DC-AC inverters
FY2002

2005

2011

demand for environment-friendly vehicles will likely be
accompanied by steady growth in demand for hybrid cars. With
this in mind, the Electronics Division will redouble its efforts tobuild a strong position as a manufacturer of power electronics
devices for hybrid cars.

New Electronics
The New Electronics Sub-Division handles the R&D andcommercialization of various electronics technologies. For
instance, the sub-division undertakes joint research on radio
tuners under a business alliance between Toyota Industries andNiigata Seimitsu Co., Ltd. Together, we have developed andcommercialized ultracompact, power-efficient FM radio tuner
utilizing “Full CMOS RF IC technology.” This device integrates
all radio tuner functions, including “radio frequency” circuits,
into a single “integrated circuit” chip using “complementary
metal-oxide semiconductor” process technology. The tuner is
optimal for use in such portable devices as mobile phones andMP3 players. The New Electronics Sub-Division also develops

38

TOYOTA INDUSTRIES CORPORATION Annual Report 2005

and manufactures small wireless LAN modules compatible
with next-generation communications platforms. Further, thesub-division developed organic light-emitting diodes (OLEDs)
that achieve an ideal balance in terms of excellent color
reproduction, brightness and life span. The commercialization ofan OLED backlight for LCDs is currently underway.
Toyota Industries built a new base in Anjo, Aichi Prefecture,for undertaking R&D and production of electronics products. We
intend to gradually consolidate our electronics-related R&D andproduction facilities into the new Anjo Plant, which is currently
working on pilot production in the run-up to commercializationof OLED backlights.

Toyota Industries in Progress Electronics

STLCD

Low-temperature polysilicon TFT-LCDs

TIBC

Wire bonding package
substrate

Flip chip package
substrate

Flexible printed circuit(FPC) package substrate

Car Electronics

DC-DC converter for the PRIUS

DC-DC converter forelectric power steering
for the Harrier Hybrid andKluger Hybrid

DC-AC inverter for theAlphard Hybrid andEstima Hybrid (1.5kW)

DC-AC inverter for
the Tacoma (400W)

New Electronics

IC chip (left) and radio
tuner module incorporating
the IC chip (right)

Wireless LAN module

Lighting for newscasters(Product developed using
white OLED technology)

White OLED lightsourceTOYOTA INDUSTRIES CORPORATION Annual Report 2005

39

Progress

5

Logistics Solutions

Toyota Industries in Progress
Toyota Industries in Progress

Building a Proprietary Business Model toProvide Optimum Logistics Solutions
Companies are increasingly striving to reduce their total logistics costs and improve overalllogistics. To address such needs, Toyota Industries is undertaking the Logistics Solutions
Business in Japan. By closely examining the flow of goods from the manufacturer to theconsumer, we seek to create a proprietary business model that optimizes the entire process.
Our track record includes a major chain retailer for whom we reformed in-store operations
from the standpoint of shoppers. Also, to offer customized logistics solutions best suited toindividual customers, we carry out logistics operations independently or via collaborative
alliances that partner us with a variety of industry players. Through continuous
improvements, reduced costs and increased efficiency, we are leading the way in ensuringsmooth logistics operations for customers.

40

TOYOTA INDUSTRIES CORPORATION Annual Report 2005

Principal Initiatives

In undertaking the Logistics Solutions Business, we offer acomprehensive solution to customers’ logistics, from planningto the operation of distribution centers to improving their entire
supply chain. This is the field of business where we can takeadvantage of our experience acquired through the production andsales of materials handling equipment as well as our production
know-how as exemplified by the Toyota Production System.
Toyota Industries regards “logistics” as an ongoing process that
continues until a product passes the checkout counter at a retailstore. By examining the optimum solution from consumers’
perspectives, we aim to build proprietary business models thatenable far-reaching improvements in the flow of goods, eventhrough reforming logistics within retail outlets.

March 2002:
Advanced Logistics Solutions Co., Ltd. (ALSO) established
as a wholly owned subsidiary to plan logistics and operate
distribution centers.
November 2002:
Commenced operation of a room-temperature distribution centerfor convenience stores commissioned by Mitsui & Co., Ltd.
November 2002:
Acquired a 5% share in Yukijirushi Access, Inc., a major dairy
foods wholesaler. (Yukijirushi Access changed its name to
Nippon Access, Inc. in April 2004.)
Invested in Teion Shokuhin Ryutsu Inc., which engages instorage and delivery of frozen and chilled foods (in which
Toyota Industries has a 60% stake via indirect investment
through ALSO).
October 2003:
KTL Co., Ltd. (KTL) established as a joint venture with Kokuyo
Logitem Co., Ltd., a logistics subsidiary of Kokuyo Co., Ltd. (inwhich Toyota Industries has a 50.5% stake).

Providing Optimum Logistics Solutions
Matched to Customer Needs

November 2003:
KTL commenced operation of the Kokuyo Tokyo Metropolitan
Area Integrated Distribution Center (IDC).

Executed under the initiative of the Advanced Logistics
Division, Toyota Industries is exploring a variety of businessformats for providing optimal solutions for individual customers.
In addition to the establishment of Advanced Logistics Solutions
Co., Ltd. (ALSO) as a wholly owned subsidiary, other avenues
include engaging in planning, total design and operation of
distribution centers through joint ventures with customers andlogistics operators, as well as acquiring equity stakes in logistics
operators.

Toyota Industries’ Expanding
Logistics Solutions BusinessPharmaceuticalproducts

Toyota Industries in Progress Logistics Solutions

Applying Proprietary Know-How in the
Logistics Solutions Business

March 2004:
Acquired a share of Fuji Logistics Co., Ltd. (Fuji Logistics, inwhich Toyota Industries has a 26% stake, with shares acquired
from Fuji Electric Holdings Co., Ltd.).
April 2004:
TF Logistics Co., Ltd. established as a joint venture with Fuji
Logistics for the transport and maintenance of information
devices (in which Toyota Industries has a 51% stake).

Frozen foods

Cosmetics anddaily use products

Chilled foods

Establishment ofjoint ventures

Electronicequipment

Teion
Direct capital Shokuhin
relationships Ryutsu Nippon
Fuji
Logistics

Building
equipment

Unrefrigerated
foods

AccessToyotaIndustries
Distribution

KokuyoLogitemTakasue

Stationery supplies

ApparelPrinted matter

Others(area platform)

Started operations by fiscal 2005
Negotiations underway

TOYOTA INDUSTRIES CORPORATION Annual Report 2005

41

Toyota Industries in Progress Logistics Solutions

Operational Scope of
the Logistics Solutions
Business

Manufacturer

Distribution center

Store improvement consulting

Financial services• Planning/design• Planning and overall design ofefficient distribution center
operations• Operation/contracted management• Cost reduction through constantimprovements• Receipt of goods/storage• Provide guidance on a simplified
goods storage method that prevents
maintaining unnecessary inventories• Goods presentation/display• Provide guidance on ways to get rid
of wasteful operations and increasetime spent with customers• Cash registers• Sales management for each cash
register and cash collection anddelivery• ATMs• Cash replenishment andmaintenanceDistribution center

Diversifying Our Business Fields throughStrategic Consolidation
On a different front, we took an important step in further
bolstering our Logistics Solutions Business in March 2005
by acquiring Asahi Security Co., Ltd. (Asahi Security) andmaking the company into a wholly owned subsidiary. Asahi
Security offers comprehensive cash management outsourcing
services, including cash collection and delivery, cash proceeds
management and equipment security, for the retail, services andtransportation sectors. The acquisition is an excellent example

Retailer

Consumerof our approach to broadening the spheres of our Logistics
Solutions Business to cover the “flow of cash” received fromconsumers in exchange for merchandise in retail stores. We
believe this move is in line with our business strategy forproviding solutions that enable customers to optimize theiroverall supply chain.
We are ambitiously allocating management resources to
our Logistics Solutions Business, applying our full efforts toaccelerate the growth of this business and make it a pillar of
Toyota Industries’ future operations.

Operational Flow of Cash Collection/Delivery Service at Asahi Security
Sales report
Delivery ofsorted change

Sorting change

Head office/headquarters ofcustomers
Supermarkets,
restaurants, etc.

Asahi VEDS Center
Sorting and checkingof sales proceeds
Deposits

Collection ofsales proceeds

Bank

Asahi Security provides comprehensive cash management service. Utilizing specially reinforced vehicles and the Asahi
VEDS Center*, Asahi Security collects sales proceeds from restaurants, supermarkets, convenience stores and otherretail outlets, sorts the sales proceeds, sends sales reports to respective head offices/headquarters, makes deposits into
respective bank accounts, and sorts and delivers change. By outsourcing cash management to Asahi Security, customers
can focus on their sales activities.
* VEDS Center: Short for Valuables Exchange & Delivery System Center. Prepares change and sorts sales proceeds.

42

TOYOTA INDUSTRIES CORPORATION Annual Report 2005

Progress

6

Textile Machinery

The history of the Toyota Group began with the inventionof an automatic loom by company founder Sakichi Toyoda.
Since then, the Textile Machinery Business, Toyota Industries’
founding business, has had a tremendous impact on thedevelopment of the global textile industry. Today, the Textile
Machinery Business develops, manufactures and sells
superior-quality products the world over. With state-of-the-art
technologies and finely tailored services, Toyota Industries
strives to meet evolving customer needs.

Our textile machinery is broadly divided into spinningmachinery, which spins bundles of fibers into yarns, andweaving machinery, which weaves yarns into fabric. To meetever more sophisticated market needs, we incorporate advanced
control, communications and mechatronics technologies into
our machinery lineup. Through such endeavor, Toyota Industries

Toyota Industries in Progress

Delivering Leading-Edge
Performance Backed by
Proven Expertisehas received global high acclaim for its mainstay air-jet looms,
which boast the top global share, as well as for its ring spinning
frames and roving frames.
Please visit www.toyota-industries.com/textile for further
information.

Weaving Machinery
Toyota Industries manufactures and sells two types of weaving machinery:
air-jet looms, which insert weft yarns using air, and water-jet looms,
which use water for the same effect. We provide customers around theworld with state-of-the-art products that we believe meet and exceed basic
performance requirements demanding high speed and reliability as well

JAT710 air-jet loom

LW600 water-jet loom

as incorporate such advanced functions as monitoring and remote settingof the machines via the Internet. Toyota Industries also produces suchpreparatory machinery for weaving as sizing machines, which enables
uniform, high-quality sizing of yarns.

MackeeSizing machine for spun yarn

Filamaster
Sizing machine for filament yarn

Spinning Machinery
Toyota Industries offers spinning machinery, including high-speed ring
spinning frames and roving frames, to meet a wide variety of customer
needs. These products excel not only in spinning high-quality yarns but
also providing superior productivity. We also produce and sell drawing

RX240NEW ring spinning frame

FL100 roving frame

frames and combers.
Toyota Kirloskar Textile Machinery Private Limited, our subsidiary inIndia, manufactures ring spinning frames for the local market.

DX8 drawing frame

VC5A comber

TOYOTA INDUSTRIES CORPORATION Annual Report 2005

43

Progress

7

Automotive Stamping Dies

Creating Advanced Technology for Manufacturing
Automotive Stamping Dies
Toyota Industries’ Machinery & Tools Sub-Division designs
and manufactures stamping dies for Toyota Motor Corporation(TMC), Toyota Industries’ Vehicle Division and TOYOTA
Material Handling Company (TMHC). Combining the skillsof its experienced engineers and advanced digital technology,
including simulation, the sub-division is receiving high acclaim
for its manufacturing and quick delivery of superior-quality
stamping dies. In recognition, the sub-division has regularly
received TMC’s “Super” Award for Quality Performance.

Setting its sights on the potential growth of the Chinese
automobile market, Toyota Industries also established Lio
Fung Tool & Die (Kunshan) Co., Ltd. (LFTD, in which Toyota
Industries has a 35% stake) as a joint venture with Taiwan-based
Lioho Machine Works, Ltd. LFTD has been in operation sinceApril 2004.
Through manufacturing stamping dies, Toyota Industries
is exploring ways to support TMC’s automobile business andcontribute to their global strategy.

Hood panel trim die

Progress

8

Rear door outer draw die

Manufacturing Equipment

Independently Producing Critical Manufacturing
Equipment
Toyota Industries produces its own essential manufacturing
equipment such as machining and assembly equipment. Our
Mechatronics Systems Department produces customized
manufacturing equipment for the Compressor Division, Engine
Division, TMHC, our affiliate ST Liquid Crystal Display
Corp. and other divisions. This practice not only protects
proprietary production know-how but also allows participationin their product development processes so that we can develop
manufacturing equipment in short order and facilitate the quick
launch of respective production lines. The department’s businessserves as a source of competitiveness for the entire Toyota
Industries Group.

44

TOYOTA INDUSTRIES CORPORATION Annual Report 2005

NC machine tool
for aluminum parts

Circuit board inspection
system with high-resolution
line scan camera

Reflections of
Toyota Industries
Toyota Industries does not solely consist of businesses
involved in textile machinery, materials handling equipment,
automobiles, electronics or logistics solutions. As a reflectionof Toyota Industries, these businesses are underpinned by aclear management policy and corporate strategies, fair andstringent corporate governance, an organization capable ofexecuting designated strategies, a long-cultivated history
and an unwavering pursuit of even higher aspirations. The
following section explains these elements, which also
embody the means to realize our slogan, “United We Grow.”

46 Review of Medium-Term Management Vision
50 Research and Development
52 Corporate Governance
54 Environmental and Social Contribution Efforts
57 Toyota Industries’ News
58 Toyota Industries’ History
60 Corporate Organization
61 Directors and Corporate Auditors
62 Corporate Data
64 Locations of Major Subsidiaries outside Japan

TOYOTA INDUSTRIES CORPORATION Annual Report 2005

45

Review of Medium-Term Management Vision (Fiscal 2002-Fiscal 2006)
Review of Medium-Term Management Vision (Fiscal 2002-Fiscal 2006)

Positioning for Future Growth
Guided by our Medium-Term Management Vision, Toyota Industries executes a host of strategic initiatives aimed at achieving
sustainable growth and enhancing corporate value. When we formulated this vision in 2001, we set the highly challenging targets forfiscal 2006, ending March 31, 2006, namely, consolidated net sales exceeding ¥1.2 trillion and consolidated ordinary income of ¥80.0
billion. As we enter the final year, we are pleased to report that the consolidated net sales target has been realized one year aheadof schedule. In terms of targeted ordinary income, however, we are uncertain if we can achieve our goal, chiefly owing to increases
in depreciation expenses and other costs accompanying aggressive, future-oriented capital investment, which exceeded our originalassumptions. Nonetheless, we are exerting our fullest efforts to achieve the ordinary income target, and at the same time, are confident
that through aggressive capital investment and other measures, our growth strategy will begin to bear fruit as we approach our extended
outlook toward 2010 and beyond.
Specific business strategies entailed in the Medium-Term Management Vision ending fiscal 2006 are as follows.

Materials Handling Equipment and Car Air-Conditioning Compressor Businesses: Bolstering
Competitive Dominance and Implementing Global Strategies
Toyota Industries will further solidify its number-one shareof the Japanese market while increasing its leading share of
the global market for materials handling equipment. As primeexamples of tangible achievements, in 2000 Toyota Industries
acquired BT Industries AB (BT Industries), a Swedish
warehouse truck manufacturer, and in 2001 integrated the sales
and marketing functions of Toyota Motor Corporation’s (TMC)
industrial equipment business into our own operations. The
acquisition of BT Industries is progressively yielding synergies,
including the mutual supply of products as well as reciprocaltransfers of production and sales know-how. We expect toreap the benefits of additional synergies following the further
integration of TOYOTA Material Handling Company and the
BT Industries Group through the establishment of the Toyota
Material Handling Group in July 2005.
We also took a major step forward in bolstering our materials
handling operations in May 2003 when Aichi Corporation(Aichi), a leading manufacturer of aerial work platforms,
became a Toyota Industries subsidiary. Since Aichi commands adominant share of the Japanese market for aerial work platforms,
this move helps the Materials Handling Equipment Segment
bolster its product line in sectors other than lift trucks.

Overview of Toyota Industries’ Medium-Term Management Vision
Ordinary
Income80.0(Mid-term target)(¥ Billion)

70.9
75.0

59.0
47.9

(Projection)

51.4
1,450.0(Projection)

1,241.5
1,164.4

Beyond1,200.0(Mid-term target)

1,069.2

Net Sales
980.2(¥ Billion)

Electronics
Logistics solutions
Materials handlimg equipment
Car air-conditioning compressors
Electronic components for hybrid cars
Vehicles/engines
Textile machinery, etc.
FY

46

02

03

TOYOTA INDUSTRIES CORPORATION Annual Report 2005

04

05

06

States and Europe (Germany). We believe the establishmentof production bases in China and North America will further
strengthen this global structure. By positioning manufacturing
operations close to our customers, we are more firmly able toproduce products that reflect market needs, while also reducing
distribution costs and minimizing exchange rate risks. Moreover,
we intend to make further inroads into the European market
and redouble efforts to expand sales in the North American
market, where we foresee stable growth over the
medium and long terms.
The Materials Handling
Equipment Segment and the Car
Air-Conditioning Compressor
Business form the nucleus of
Toyota Industries’ operations
and underpin our efforts toattain the objectives of our
Medium-Term Management
ES18 electric compressor
Vision.

Review of Medium-Term Management Vision (Fiscal 2002-Fiscal 2006)

The Materials
Handling Equipment
Segment is working
hard to maximize
business performanceand expand market
share through thedevelopment and salesof products and services
that meet customer and
GENEO-B (7FB)
market needs.
Toyota Industries is also the world’s leading manufacturerof car air-conditioning compressors. Our approach for further
solidifying this dominant position focuses on continued efforts
to develop attractive new products that meet customer needs
ahead of competitors. In making steady headway regarding
globalization of its business operations, the Car Air-Conditioning
Compressor Business has built a tripolar structure, withproduction bases in the three major markets of Japan, the United

Electronics and Logistics Solutions: Building the Pillars of Our Future Operations
Toyota Industries views its Electronics Business as having
immense potential to fuel growth in the coming years. Our
Electronics Business mainly comprises ST Liquid Crystal
Display Corp. (STLCD), TIBC Corporation (TIBC), theElectronics Division and the New Electronics Sub-Division. The
former two entities are joint ventures with Sony Corporation and
Ibiden Co., Ltd., respectively.
STLCD manufactures small and medium-sized
low-temperature polysilicon
TFT-LCDs for use mainly indigital still and video cameras
and mobile phones. TIBC
is constantly seeking
to efficiently produce
high-performancesemiconductor package
substrates tailored tocustomer needs.
STLCD’s low-temperature
The Electronics Division
polysilicon TFT-LCDsdevelops and manufactures

power electronics components for automobiles, while the New
Electronics Sub-Division is involved with the development
and commercialization of various technologies and products,
including radio tuners, wireless LAN modules and organic
light-emitting diodes.
Through a full-fledged entry into the Logistics Solutions
Business, we are building new business models in logistics
and meeting customer needs for total cost reductions andimprovements in their logistics operations. This is also a field
where we are exploiting our accumulated experience in the
production and sales of materials handling equipment as wellas our production know-how in offering integrated logistics
solutions suited to customer and market needs.
We believe the electronics and logistics solutions markets
offer tremendous medium- to long-term growth potential.
Accordingly, we expect the Electronics and Logistics Solutions
businesses to play a significant role as core operations of the
future. Concurrently, we are proactively pursuing promising
new technologies and businesses to secure stable medium- andlong-term growth.

Vehicle and Engine Businesses: Raising Our Global Presence by Contributing to the Expansion of
the Toyota GroupIn its role as one of the manufacturing bases for the Toyota
Group’s compact and midsize series of cars, Toyota Industries’
Vehicle Business is relentless in improving product quality
and cost efficiency, thereby enhancing the value of TOYOTA
cars. The Vehicle Business also contributes to car productionof the Toyota Group by continually upgrading its production
technologies.
The Engine Business is taking the same resolute approach tocontinuously supporting the enhanced functionality of TOYOTA

vehicles. This dedication is especially evident through its efforts
to develop highly functional diesel engines with outstanding
environment-friendly features in collaboration with TMC.
Meeting needs related to diesel-engine vehicles is especiallycrucial as TMC aims to increase its share in the European
market. Therefore, we established Toyota Motor Industries
Poland Sp.zo.o. jointly with TMC to supply diesel engines to
TMC. Toyota Industries is also expanding the presence of its
automobile-related business as well, for instance, supplying

TOYOTA INDUSTRIES CORPORATION Annual Report 2005

47

Review of Medium-Term Management Vision (Fiscal 2002-Fiscal 2006)

aluminum die cast components for transmissions to TMC’s
Innovative International Multi-Purpose Vehicle (IMV) Projectthrough an Indian subsidiary. We are also trying to conribute to
the development of TMC’s overseas business by strengthening
production of foundry parts andcommencing productionof stamping dies forautomobiles in China.
Toyota Industries’
Vehicle andEngine businesses
focus primarilyon commissioned
Vitz (Yaris)
production for TMC.

We are strengthening our sales link
to TMC through ongoing quality
enhancement and cost-reduction
activities so that TMC entrusts us
with the assembly of, and utilizes
our engines in, a wider range ofmodels.
Toyota Industries’ Vehicle andEngine businesses represent mainstay
2AD diesel engine
businesses that generate stable revenues.
Accordingly, we strive to further solidify
our revenue foundation by implementing strict cost and quality
control measures.

Ongoing Cost-Reduction and Quality-Improvement Measures
Amid fierce price competition amongmarket players, it is essential tointroduce appealing new products andimplement continued cost-reduction
activities to improve our revenue
structure. Accordingly, Toyota
Industries is implementing measures tocontinuously reduce costs throughout
the entire Company by carryingout systematic and well-planned
cost-reduction initiatives. While further
strengthening our continuous value
engineering (VE) and value analysis(VA) activities, our cost-reduction
efforts encompass reduction in general
expenses and activities to raise
efficiency at the Head Office.

Toyota Industries’ top management conducts a quality
inspection at a factory

As a company that engages inmanufacturing, Toyota Industries’
most important mission is providing
excellent-quality products to customers
and ensuring their satisfaction—a prerequisite to compete inglobal markets. Therefore, Toyota
Industries continually pursues
quality-improvement measures that
also include principal suppliers. As
part of these efforts, the President
and other top management regularly
conduct self-initiated on-site checksof manufacturing plants to confirm thestatus of various quality-improvement
activities.

Bolstering Initiatives in Information Technology
Toyota Industries is strategically utilizing information
technology (IT) to enhance corporate competitiveness. We haveintroduced an enterprise resource planning (ERP) program into
our corporate accounting system and three-dimensional CAD
systems in development processes. The utilization of such
IT-driven initiatives has translated into reduced development
times and improved
productivity among
non-manufacturing
departments.
In May 2002,
we opened “e-Lab,”an information
technology
research laboratory
heading up a hostof IT-related R&D
e-Lab, the Toyota Industries Group’s base foractivities. The
information technology

48

TOYOTA INDUSTRIES CORPORATION Annual Report 2005

lab is engaged ina diverse scopeof activities that
include research on
digital simulation
technologies for
shortening productdevelopment times
and shrinking
The machine room oversees the network connecting
lead-times in
Toyota Industries’ bases all over the world
all areas fromdevelopment tomanufacture and shipment. Additionally, e-Lab is working todevelop an optimal network system for joint development ofparts with suppliers, as well as for parts procurement, whilebuilding a network that encompasses the entire Toyota Industries
Group.

Toyota Industries has made steady strides in globalizing its
operations on numerous fronts. For example, we produce lift
trucks and car air-conditioning compressors in North America
and Europe, foundry parts and lift trucks in China and textile
machinery and automobile parts in India. The acquisition of
Sweden’s BT Industries also represents a stronger footing in the

global arena. Driven by our firm conviction that globalization
is essential for expanding business and raising corporate value,
Toyota Industries aims to vigorously pursue globalization by
providing customers worldwide with superior products, procuringhigh-quality, price-competitive parts from worldwide sources andmanufacturing products close to its customers around the world.

Toyota Industries’ Global Manufacturing Bases

Slated to start operations in
December 2005

Lift trucks
Car air-conditioning compressors
Engines
Foundry parts
Manual transmission parts
Automotive stamping dies
Textile machinery

Slated to start operations in
April 2006

Review of Medium-Term Management Vision (Fiscal 2002-Fiscal 2006)

Global Business Development

Nurturing the Capabilities of Employees
The Toyota Production System (TPS) is one of the foremost
sources of competitiveness as well as the most vital expertisefor efficient production. A
chief focus of our efforts
to sharpen competitivenessis to continually hone TPS
and nurture employees
who are well-versed in thesystem. In line with these
efforts, a specialist section
charged with the plannedand organized development
Employees strive to perfect their skills at theTechnical Training Centerof personnel with essential

know-how in TPS
has been established.
Based on its belief thathighly skilled workers
constitute an importantmanagement resource,
Toyota Industries has
built the TechnicalTraining Center to
The Technical Training Center is furnished with
provide various training
machines and devices for practical training
courses targeting
improved skills so that they can put their expertise to use at thefrontline of manufacturing.

Skillfully Utilizing Synergies
Toyota Industries has penetrated new markets and grown its
businesses by promoting technological development based on
the key technologies and acumen accumulated throughout its
long history. At present, Toyota Industries possesses diverse
businesses, each operating with its own core technologies
and markets. Looking ahead, we believe the creation of newtechnologies that serve as the nuclei of new business spheres
and next-generation products leads to the creation of new value
added. In that this is achievable by strategically and organicallycombining the technologies and markets of individual
businesses, Toyota Industries is laying out a structure that will
facilitate cooperation among divisions.

Note: Toyota Industries is formulating a new medium-term management plan (fiscal 2007-2011), for which the details will be finalized in 2005.

TOYOTA INDUSTRIES CORPORATION Annual Report 2005

49

Research and Development
Research and Development

Pursuing Research and Development that Raises the Bar for Excellence
Toyota Industries undertakes strategic R&D guided by its founding spirit of “Be ahead of the times through endless creativity,
inquisitiveness and pursuit of improvement.” Our R&D focuses not merely on improving short-term business results but also on
attaining sustained growth in the future. With our businesses spanning a broad spectrum, each of our business divisions has its own
distinctive competencies, core technologies and market characteristics. Innovation and technological advancement is realized throughclose collaboration and synergy among our business divisions and other R&D facilities.

Toyota Industries’ R&D Structure
R&D efforts are divided into product development andimprovements undertaken autonomously by technicaldepartments of each business division, and R&D carriedout chiefly by the New Electronics Sub-Division and the
Research & Development Department. The latter is conducted
separately from business divisions and performed as part of aCompany-wide management strategy.

Instrumental to efficiently developing new products
tailored to customer needs, the technical departments of eachdivision must lead the way in product improvement, technology
development and applied research. For this reason, each division
maintains its own staff of engineers, experiment facilities andresearch laboratories and engages in proactive technology
development efforts guided by product development plans.

New Products Developed and Sold by Toyota Industries in Fiscal 2005
Automobile Segment

50[Car Air-Conditioning Compressors][Engines][Car Electronics]

Externally Controlled
Variable-Displacement
Compressors for BusesElectrically Driven
Air-Conditioning Compressors
for Hybrid Cars

AD Diesel Engines

DC-DC Converter forElectric Power Steeringin Hybrid Cars

Buses are required to realize
lower fuel consumptionin terms of environmental
protection and costs. To
address such needs, Toyota
Industries, together with
DENSO Corporation(DENSO), developed the 7S33,
the world’s first externallycontrolled one-way swash-plate
variable-displacement
compressor for buses, andis supplying the product toleading bus manufacturers
in Japan. We also showcased
these compressors at Toyota
Industries’ booth during theTokyo Motor Show in October
2004.

In collaboration with DENSO,
Toyota Industries developed
and commenced production of
the ES27, an electrically driven
air-conditioning compressor
for the Harrier Hybrid andKluger Hybrid introduced by
Toyota Motor Corporation(TMC) in March 2005. Unlike
conventional compressors thatare belt-driven by the engine,these compressors are driven
by a built-in motor, whichenables the air conditioner
to remain on even when theengine is turned off, thereby
attaining an optimal balance ofcomfort and fuel economy.

In March 2005, productionof 2.2-liter direct-injection
AD diesel engines for
the European market
commenced at Toyota
Industries’ Hekinan Plant
in Japan and at Toyota
Motor Industries Poland
Sp.zo.o., a joint venturewith TMC. Developed
jointly by Toyota Industries
and TMC, the engine isfitted in the Avensis that
TMC produces in the U.K.

Toyota Industries hasdeveloped a compact,
low-cost DC-DC converter
for electric power steering(EPS) in hybrid cars that
down-converts the 288V
high-voltage of the mainbattery to a lower DC
current to supply power
to the 42V EPS. TMC’s
Harrier Hybrid and Kluger
Hybrid are equipped withthis converter.

TOYOTA INDUSTRIES CORPORATION Annual Report 2005

Serving as a development base of our information systems,
our “e-Lab” IT research laboratory engages in a variety of R&D
activities that include research on digital simulation technologies
for shortening product development times and shrinking
lead-times from development to production and shipping. The
lab is also involved with developing an optimal network system
for joint development of parts with suppliers as well as for partsprocurement.
In fiscal 2005, R&D expenditures amounted to ¥30.1 billion,up ¥490 million (1.7%) from the previous fiscal year. R&D
expenditures accounted for 2.4% of consolidated net sales, adecrease of 0.1 percentage point. By segment, R&D expenses
were ¥17.2 billion in the Automobile Segment, ¥11.0 billion
in the Materials Handling Equipment Segment, ¥1.0 billion in
the Textile Machinery Segment and ¥830 million in the Others
Segment.

Research and Development

The Research & Development Department is responsible
for basic R&D in materials fields while the New Electronics
Sub-Division spearheads R&D in such electronics fields asradio tuners, wireless LAN modules and organic light-emitting
diodes. We also collaborate with Toyota Central Research &Development Laboratories, Inc., an R&D facility of the Toyota
Group, and other outside R&D institutions.
The Business Planning Department within the Corporate
Center promotes new business development and handles
technology management. The department facilitates lateraltransfers of technologies among different divisions and explores
new technology development themes, thereby playing a keyrole in helping Toyota Industries establish a solid and efficient
corporate R&D structure. Systematic and constant assessmentof potential new products and services is also carried out by
tapping the technological know-how and external networks (bothhuman and information) of each business division.

Materials Handling Equipment Segment
Full Model Changes to Internal Combustion
Counterbalanced Lift Trucks

400W DC-AC Inverter

Toyota Industries added a
400W DC-AC inverter to
its lineup of car-mounted
DC-AC inverters thatconverts a direct current
into an alternate current thatis the same as household
electricity. In September
2004, we began fitting thisinverter on TMC’s Tacoma,
sold in North America. This
inverter supplies up to 400W
to operate household products
and such tools as power drills
and saws.

In August 2004, TOYOTA Material Handling Company
made a full model change on all 14 models of 10to 24-ton internal combustion counterbalanced lift
trucks and began selling these in Japan and designatedcountries* overseas. These lift trucks are fitted with ahigh-power, fuel-efficient and ecological diesel turbo
engine with a common rail direct-injection system.
They also incorporate a host of new functions forenhanced safety and easier vehicle operation, such asa full-floating, air-conditioned cabin that significantly
reduces vibration and noise.
* Available in Algeria, Australia, Indonesia, Malaysia, New Zealand,
the Philippines, Saudi Arabia, Singapore, South Africa, Taiwan,
Thailand and CIS countries. The 15- to 24-ton models areavailable overseas for the first time.

Textile Machinery Segment
RX240NEW/E-Draft Ring Spinning Frame

Production of the RX240NEW/E-draft model, thelatest addition to the lineup of highly acclaimed
RX240NEW ring spinning frames, started in
February 2005. Adopting an electronicallycontrolled draft structure eliminates the need fortroublesome gear changes when changing yarns,
while a user-friendly software program enables
special yarn spinning as a standard function.
Additionally, the strengthened networking
function allows monitoring and remote settingfrom distant locations.

TOYOTA INDUSTRIES CORPORATION Annual Report 2005

51

Corporate GovernanceCorporate GovernancePursuing Fairness, Sound Management and Transparency throughOptimal Corporate GovernanceToyota Industries is working to enhance management efficiency by building a management system that facilitates rational
decision-making and responds quickly to changes in the business environment. In parallel, we strive to create fair and soundmanagement, bolster our compliance and improve management transparency through speedy and timely disclosure of accurate
information to shareholders and other stakeholders.

Toyota Industries’ Corporate Governance System

Roles of Corporate Auditors (Board of Corporate Auditors)

Toyota Industries’ Board of Directors, Management Committee
and Business Operation Committee work to ensure prompt
decision-making on matters with a major influence onshareholders’ interests and on crucial issues affecting business
operations. The Board of Directors generally convenes once amonth to discuss and resolve crucial management matters, suchas those necessitated by law. As of June 22, 2005, the Boardof Directors consisted of 30 directors, including one external
director.
The corporate auditors are responsible for undertaking
stringent monitoring of the board members’ execution of duties
by means of attending meetings of the Board of Directors andother important meetings, and express their opinions whennecessary.

Based on Japan’s Commercial Code, Toyota Industries has chosen
to maintain the traditional “Corporate Auditor/Board of Corporate
Auditors” system. With a long history in Japan, a Board of
Corporate Auditors is a body that is completely independent fromthe management of a company and functions in parallel with
the Board of Directors. Toyota Industries believes this auditing
system adequately ensures the proper execution of duties by the
Board of Directors.
As of June 22, 2005, Toyota Industries’ Board of Corporate
Auditors consisted of five corporate auditors, with two standing
corporate auditors and three outside corporate auditors.
Appointed at the Shareholders’ Meeting, the corporate auditors’
primary duties encompass auditing of business operations andfinancial activities. An audit of business operations determines

Corporate Governance StructureWith the exception of matters resolved at the Shareholders’Meeting, the Board of Directors discusses and decides all importantmanagement matters. Toyota Industries has also independently
set up the Management Committee and Business Operation
Committee to increase efficiency and the speed of managementand decision-making as well as facilitate appropriate judgment. By

deliberating on important matters related to Company-wide management
strategies and individual businesses, these bodies facilitate top management
and the Board of Directors in appropriate decision-making. Of those issues
deliberated on by the Management Committee and Business Operation
Committee, crucial issues prescribed in Japan’s Commercial Code are put
forth for discussion by the Board of Directors.

Shareholders’ Meeting
Appointment
Corporate Auditor
ReportingBusiness Reporting

Appointment
Monitoring

President

Monitoring

The Management Committee deliberates on crucial matters related to allareas of management, including Company-wide strategy and allocationof management resources. The Committee consists of directors above the
Executive Vice President level. When the President considers it necessary,
relevant other directors and managers also attend Committee meetings.

TOYOTA INDUSTRIES CORPORATION Annual Report 2005

(Board of Corporate Auditors)

Board of Directors

Management
Committee

52

Corporate Auditors

Business Operation
Committee
The Business Operation Committee deliberates on crucial matters related
to each business segment. The President, directors in charge of corporate
planning and directors assigned to oversee divisional operations (division
managers, etc.) attend Committee meetings.

Strengthening and Improving ComplianceToyota Industries recognizes that compliance with the law is
the foundation of good corporate governance. Accordingly, we
have adopted measures designed to assure that all employees
execute their duties fairly and honestly in the light of the law andcorporate ethics.
In 1991, Toyota Industries established the Code of Conduct
Council to ensure appropriate and legal corporate activities.
In 1998, the Council took the initiative to publish a guide for
distribution to all employees. This guide contains specificguidelines on good conduct and compliance with the law.
Chaired by an Executive Vice President and attended by thoseabove the rank of Managing Director and standing corporate
auditors, the Code of Conduct Council convenes on a regularbasis and when deemed necessary. The chief responsibilities of
the Council include monitoring overall corporate activities fromthe standpoint of legal and corporate ethics, checking to ensurethat employee behavior adheres to the guidelines and promoting
educational activities on employee conduct.
In parallel, the Legal Department and Global Human
Resources Department provide employees with educational
programs, while the Audit Office regularly checks on theenforcement of such programs.
Aiming for the early detection and prompt handling of
crucial compliance-related information, in addition to otherreporting channels, Toyota Industries set up a corporate ethics
hotline staffed by outside lawyers.

Basic Philosophy
Toyota Industries bases its basic philosophy on the “Toyoda
Precepts,” which embodies the stance of the Company’s founder
Sakichi Toyoda. In addition, our Five Values clearly express
our action guidelines and ensure that Toyota Industries isoperated in accordance with shared high ethical standards fromtop management down to each and every employee. Toyota
Industries strives to carry out its management activities with akeen recognition of its social corporate responsibilities.

Information Disclosure
As one element of its basic philosophy, Toyota Industries strives
to adhere to the letter and spirit of the law in Japan and overseas,
while conducting its corporate activities in a fair and transparent
manner. In accordance with this philosophy, we disclose relevant
information to provide clear explanations to our shareholders andother investors, thereby raising management transparency. Timely
information is also disclosed to the public through the Investor
Relations section of our Web site and other media channels.

The Toyoda Precepts*
1. Be a contributor to the development and welfare of thecountry by working together, regardless of position, infaithfully fulfilling your duties.
2. Be ahead of the times through endless creativity,
inquisitiveness and pursuit of improvement.
3. Be practical and avoid frivolity.
4. Be kind and generous; strive to create a warm, homelike
atmosphere.
5. Be reverent, and show gratitude for things great and small inthought and deed.

Corporate Governancewhether directors are stringently adhering to ordinances andthe articles of incorporation in the execution of their duties. An
audit of finances involves the oversight of business results and avariety of financial-related activities. In addition, the corporate
auditors have the authority to inspect relevant documents,
make auditing visits to headquarters, business divisions andsubsidiaries, and conduct investigations first-hand. At Toyota
Industries, the Corporate Auditor’s Office with specialist staff
has been set up to facilitate the proper execution of the corporate
auditors’ duties.

* The Toyoda Precepts was assembled in 1935 to commemorate the six-year passing ofcompany founder Sakichi Toyoda. Since then, the precepts have served as the basis of
the thinking and guiding principles of the entire Toyota Group.

Basic Philosophy
The following is a statement of Toyota Industries’ basic
philosophy. This basic philosophy constitutes the expressly
stated beliefs of the management and serves as a guide forcorporate behavior.

Respect for the Law
Toyota Industries is determined to comply with the letter andspirit of the law, in Japan and overseas, and to be fair andtransparent in all its dealings.

Respect for Others
Toyota Industries is respectful of the people, culture andtraditions of each region and country in which it operates. It
also works to promote economic growth and prosperity in thoseregions and countries.

Respect for the Natural Environment
Toyota Industries believes that economic growth andconservation of the natural environment are compatible. It
strives to offer products and services that are clean, safe and ofhigh quality.

Respect for Customers
Toyota Industries conducts intensive product research andforward-looking development activities to create new value forits customers.

Respect for Employees
Toyota Industries strives to nurture the inventiveness andother abilities of its employees. It seeks to create a climateof cooperation, so that both employees and the Company canrealize their full potential.

Five Values
We also have Five Values that form an action guide for our
employees to enforce our basic philosophy.

Global Perspective
Learning from the best in the world, we aim to become the bestin the world.

Customer FirstWe forge partnerships with our customers and strive to exceed
their expectations.

Welcoming New Challenges
Unbound by convention, we embrace the challenge of creation.

Encouraging Professional Excellence
We develop our strengths, and think and act responsibly.

Encouraging Effective Teamwork
We recognize the human worth of each individual andcollaborate to achieve goals.

TOYOTA INDUSTRIES CORPORATION Annual Report 2005

53

Environmental and Social Contribution Efforts
Environmental and Social Contribution Efforts

Fulfilling Our Corporate Social Responsibilities
Toyota Industries recognizes that being a good corporate citizen entails far-reaching responsibilities to the environment as well as tothe local communities in which we operate. Accordingly, we undertake independent environmental activities that include reducing
CO2 emissions and other substances, promoting recycling and obtaining ISO 14001 certification at our facilities. At the same time,
Toyota Industries also believes in giving back to society, and as such, promotes employees’ volunteer efforts and interaction with local
communities. We remain fully committed to fulfilling our corporate social responsibilities that contribute to the betterment of society
both as the basis of our corporate activities and to enable employees to live a more rewarding life.

Environmental Protection Activities
Basic Principle

Corporate Commitment to the Environment

Our basic philosophy states: “Toyota Industries believes that
economic growth and conservation of the natural environment
are compatible. It strives to offer products and services thatare clean, safe and of high quality.” Adhering to this principle,
we recognize that environmental protection is a crucial social
responsibility of all companies and consider it as one of ourforemost management priorities in striving for sustainablegrowth. Accordingly, Toyota Industries has been determinedly
undertaking a broad scope of initiatives aimed at preserving theenvironment.

As part of efforts to address environmental issues, weformulated the Toyota Industries Group Corporate Commitment
to the Environment. Covering the Group’s entire consolidated
operations, this declaration highlights our determination to
fulfill our corporate social responsibilities while bolstering ourenvironmental protection initiatives.

Third Environmental Action Plan
As a means of systematically undertaking numerous activities,
after unveiling our First Environmental Action Plan in 1993 andToyota Industries Group Corporate Commitment to the Environment
Toyota Industries carries out its everyday businessactivities to contribute to global economic development
and enhance the quality of life through its products
and services. In our business activities, we consider
environmental issues throughout the lifecycles of our

products. In aiming for a balance between environmental
protection and economic development, we have designated“sustainable management” as an issue of the highest
priority, as all Toyota Industries employees combine theirefforts to tackle environmental issues.

Global VisionCorporate Commitment

Collaborate with local communities
and global society in addressing
environmental protection.

1. The Toyota Industries Group will strive for further reductionof environmental impact, as well as compliance withenvironmental laws and regulations.
2. The Toyota Industries Group will develop and provide products
and services with top-level environmental performance.

Harmony

3. The Toyota Industries Group will conduct production activities,
in a manner that takes into account prevention of global
warming, effective applications of energy and resources, andreduction of substances of environmental concern.

Sustainable
Management
Improvement

Improve eco-efficiency for
all our business activities,
products and services.

54

Responsibility

Fulfill our social
responsibility ofenvironmental protection.

TOYOTA INDUSTRIES CORPORATION Annual Report 2005

4. The Toyota Industries Group will communicate closely witha wide range of stakeholders, including its customers andshareholders, and continually improve its system of “sustainable
management.”
5. The Toyota Industries Group will actively address various
environmental issues in local communities and global society asa good corporate citizen.

Environmental Committee
Chaired by the President

Specialized Subcommittees
Product Technology
Subcommittee

EnergySubcommittee

Pollution Prevention
Subcommittee

Waste Minimization
Subcommittee• Development of environmentfriendly products• Facilitation of productrecycling• Promotion of lifecycle
assessment (LCA) system• Proposal of plans forincreasing energy efficiency
and related activities• Promotion of pollutionprevention activities• Management of hazardous
substances• Management and phase-out ofmaterials that impose a burden
on the environment• Planning and promotion of
reducing and recycling waste

Environmental and Social Contribution Efforts

In-House Organization for Environmental Activities

Plant Environmental Committee(at each plant)

Plant Subcommittees

virtually achieving the objectives under a second plan devisedin 1996, we re-examined the second plan in great detail andsubsequently launched the Third Five-Year Environmental
Action Plan (April 2001 - March 2006) in August 2000. Despite
uncertainties such as the effects of a rapid expansion in ourbusiness that was unforeseen at the time of the revision, Toyota
Industries is nonetheless currently making Group-wide efforts toachieve the objectives of this plan.
Looking at specific numerical targets, by the end of March
2006 we aim to lower the volume of CO2 emissions by 5%compared with fiscal 1991 levels (extending to a 10% reduction
by the end of March 2011 using the same base). By the endof March 2006, we also aim to cut total emissions of PRTR
(pollutant release and transfer register) substances as designatedby the Ministry of the Environment by 50% versus fiscal 1999
levels. With fiscal 2006 being the final year of the plan, we are
now working on a fourth plan, for which the details will beauthorized in October 2005.

Internal Organization for Environmental Activities
As part of its ongoing efforts to adopt an organized andsystematic approach to tackling environmental issues,
Toyota Industries has set up the Environmental Committee,
which is chaired by the President and comprised of four
specialized subcommittees. In accordance with policies andplans determined by the Environmental Committee, the Plant
Environmental Committee and specialized subcommittees areundertaking a host of activities to address issues unique to eachplant.
Toyota Industries considers building an organizationalframework to uniformly and efficiently manage and promote theenvironmental activities carried out by each Group company as
one of its most urgent tasks. To this end, we seek to fulfill our
responsibilities as declared under the Toyota Industries Group
Corporate Commitment to the Environment by continuously
working to find new and better ways of effectively implementing
our global environmental approach.

Complying with International Environmental
Standards
Toyota Industries believes that promoting various environmental
initiatives is contingent on building an environmental
management system based on ISO 14001, the international
standard for environment management systems. That’s why weare proactively obtaining ISO 14001 certification at production
bases in Japan and overseas.

Environmental Accounting
In line with the ever-expanding number of environmental issues,
it becomes increasingly important to make an accurate analysisof the costs and ascertain the effectiveness of environmental
investments in terms of management decision-making andinformation disclosure to investors and shareholders. Although
there are currently no uniform international standards on thescope and definition of environmental costs, the Company
has used guidelines (2002 edition) prescribed by the Japanese
Ministry of the Environment to formulate its own internal
standards for calculating the efficiency and economic
effectiveness of its environmental-protection investments andactivities.

TOYOTA INDUSTRIES CORPORATION Annual Report 2005

55

Environmental and Social Contribution Efforts

Social Contribution Activities
Basic Stance
As it works toward sustained corporate growth, Toyota Industries
is attempting to meet its obligation as a good corporate citizen
to contribute to the enrichment of local communities that are
the foundation of its corporate activities and employees’ lives.
Toyota Industries fulfills this responsibility on numerous fronts
by cooperating with local communities to undertake a diversityof social contribution activities. We also proactively support
employees’ volunteer activities.

Supporting Volunteer Activities of Employees
To encourage employees’ volunteer endeavors, the Company
set up the Heartful Club. This organization supports employees’
volunteer efforts by furnishing registered members with anabundance of useful information about volunteering, soliciting
volunteers and encouraging employee participation in suchvolunteer activities as social welfare and environmental
protection events.

Communications on Environmental Protection andSocial Contribution Activities
Toyota Industries publishes the Social & Environmental Report,
which summarizes the initiatives and achievements of ourenvironmental protection and social contribution activities. To
obtain a copy of this report, please see the contact information
listed on the last page of this annual report. The contents of theSocial & Environmental Report, along with the recent details of
our environmental protection and social contribution activities,
are also available on our Web site (www.toyota-industries.com).
Through utilizing such communication tools, Toyota Industries
will proactively continue to disclose information to stakeholders
about the ways in which we fulfill our social responsibilities.

Social & Environmental Reports

Rugby classes for children coached by Toyota Industries’
employees aim to instill young people with the importance of
teamwork and communication.

Sponsoring Social Welfare and Cultural Events
Toyota Industries also provides extensive support for social
welfare and cultural events focused chiefly on regions in
the vicinity of our headquarters and production bases. Our
activities encompass supporting various events for children withdisabilities and children orphaned by traffic accidents, as well as
sponsoring concerts.

www.toyota-industries.com

Toyota Industries holds its annual “Social Welfare
Get-Together Festival,” inviting local residents with disabilities
to its facilities for a day of fun and enjoyment.

56

TOYOTA INDUSTRIES CORPORATION Annual Report 2005

Toyota Industries’ News
Sakichi Toyoda’s Circular Loom Depicted on Postage StampOn March 23, 2005, a commemorative stamp was issued
depicting a circular loom that company founder Sakichi
Toyoda invented in 1906. This stamp was included in theseventh series of “Science and Technology & Heroes andHeroines of Animation.” In
his quest to create an ideal
loom that is more energy
efficient and quieter thanflat looms, as well as
able to weave wider cloth
without seams, Sakichi
invented an innovative
circular loom that wove
cloth in a continuous,
circular motion. He
obtained a patent for thisremarkable achievementin 19 countries around theworld, including the United
Kingdom, the United Statesand France. One of the most
revolutionary inventions in
the modernization of scienceand technology in Japan, thecircular loom was selected
as an apt motif for thetheme of the stamp series.
After almost 100 years since
the invention, we at Toyota
Industries and the Toyota
Group feel immense pridein receiving this honor.

Circular loom displayed at the Toyota
Commemorative Museum of Industry
and Technology

Toyota Industries’ Technology at the Toyota Group Pavilion
for World Expo 2005
From March 25 to September 25, 2005, the 2005 World
Exposition Aichi, Japan is being held under the themeof “Nature’s Wisdom” in Aichi Prefecture, where Toyota
Industries is based. Toyota Industries is participating in theevent through the Toyota Group Pavilion as a member of the
Toyota Group. Centered on the theme of “The Dream, Joy andInspiration of Mobility in the 21st Century,” Toyota showcases
advanced technologies of various Group companies andintroduces the direction of future society by entertaining
humanoid robots. The main “Move Live” show presents
a three-dimensional futuristic opera featuring the i-unit*,

robots and human performers against the backdrop of a giant
360-degree screen projecting dynamic images of society inthe future. Toyota Industries’ guidance technology, cultivatedthrough the development of the automatic guided vehicle
system, was incorporated to enable unmanned operation of
the i-unit.

Low-speed mode

High-speed mode

* The i-unit is a future concept vehicle envisioned by Toyota Motor
Corporation. Made for a single passenger, the i-unit embodies
the concept of “expanding human abilities” and realizes a formof “personal mobility” that seeks to enable greater freedom of
movement. The vehicle has a variable positioning system, featuring
a low-speed mode for moving leisurely among other people in an
upright position and a low center of gravity that ensures stablehandling in high-speed mode.

TOYOTA INDUSTRIES CORPORATION Annual Report 2005

57

Toyota Industries’ History
Toyota Industries’ History

Foundation – 1980s
1926

1952

1974

Toyoda Automatic Loom Works, Ltd.
(now Toyota Industries Corporation)
established to manufacture and market
automatic looms invented by Sakichi
Toyoda.

Automobile engine (S-type gasoline
engine) production starts.

6P compressor production starts.

1953
Kyowa Plant starts operations,producing engines and assembling
automobiles.

1955
Vehicle Division set up.

1956
Lift truck production starts.

Founder

Sakichi Toyoda
Sakichi Toyoda was born inShizuoka Prefecture, Japan, in
1867. He became an inventor
while still in his teens anddevoted his life to the study anddevelopment of textile machinery.
Starting with a wooden handloom,

1929
Spinning frame production starts.
Automatic loom patent sold to PlattBrothers & Co., Ltd. of the U.K.

1933
Automobile Division set up.

1934
A-type automobile engine completed.

he subsequently pioneered a new1935

era in textile machinery with

Prototype of Model A1 passenger carcompleted.

inventions that included Japan’s
first power loom, the circular loom

his lifetime and is rememberedworld’s greatest inventors. We
carry on the engineering spirit of
our illustrious founder.

Company unveils Model G1 truckat a new-car-release exhibition in
Shibaura, Tokyo.

1937
Automobile Division separates andbecomes Toyota Motor Co., Ltd. (nowToyota Motor Corporation).

1940
Steel Production Division separates
and becomes Toyoda Steel Works,
Ltd. (now Aichi Steel Corporation).

1944
Obu Plant starts operations, producing
castings.

58

Starlet (automobile) production starts.
Aerial lift equipment production starts.

1980
1981
10P compressor production starts.

1960
Shovel loader production starts.
Car air-conditioning compressor(CC3A type, CC3B type) production
starts.

1963

1982
Production starts on C-type diesel
engines for small passenger cars.
Hekinan Plant starts operations,producing automobile diesel engines.

Dump truck production starts.

1985

Friction welder production starts.

Engine Division separates from
Vehicle Division.

1964

10PA compressor production starts.

1986
Company awarded
the Deming Prize
for quality control
implementation.

Publica (van) and Mini Ace(automobile) production starts.

with pride in Japan as one of theat Toyota Industries are proud to1978

JA air-jet loom production starts.

Nagakusa Plant starts operations,producing small commercial vehicles.

patents and 35 utility models in

Compressor Division separates from
Textile Machinery Division.

P-type gasoline engine production
starts.

1967

Type G. Sakichi was awarded 84

Swash plate compressor technology
licensed to Chrysler and Ford.

1959

J-type diesel engine production starts.

and the Toyoda Automatic Loom

1977

1924

1949

Toyoda Automatic Loom Type G
invented by Sakichi Toyoda.

Company stock listed on Tokyo,
Osaka and Nagoya Stock Exchanges.

TOYOTA INDUSTRIES CORPORATION Annual Report 2005

Electric counterbalanced lift truck
production starts.

1968
Open-end spinning machine
production starts.

Deming Prize
X300 series lift truck production
starts.

1987
Sprinter Cielo (exported as the Corolla
Lift Back) production starts.
Electronics Sub-Division set up.

1970
Takahama Plant starts operations,producing industrial vehicles.

1971
Corolla (van) production starts.
Divisional organization system
introduced (3 divisions: Textile
Machinery, Industrial Vehicle, andVehicle).
Toyoda-Sulzer Manufacturing Ltd.
established as a joint venture with
Sulzer Brothers, Ltd. of Switzerland to
produce projectile looms.

1988
Toyota Industrial Equipment Mfg.,
Inc. (TIEM) established in Columbus,
Indiana, U.S., as a joint venture with
Toyota Motor Corporation.
RX100 ring spinning frame production
starts.

1989
Michigan Automotive Compressor,
Inc. (MACI) established in Jackson,
Michigan, U.S., as a joint venture with
DENSO Corporation.

2000s –

1990

1997

Sprinter Carib (automobile;
exported as the Corolla Wagon)
production starts.

Compressor production at Kariya
Plant reaches 100 million units.

Company receives 1990 PM
Excellent Plant Award.

Higashichita Plant starts operations,producing foundry parts.

GENEO-E (7FBE outside Japan)
three-wheel electric counterbalanced
lift truck production starts.

6SE compressor production starts.
ST Liquid Crystal Display Corp.
(STLCD) established as a joint venturewith Sony Corporation.

Toyota Industries’ History

1990s –

1998

1992
Materials Handling System
Division set up.
Production starts on automatedstorage and retrieval systems.

TD Deutsche Klimakompressor
GmbH (TDDK) established inGermany as a joint venture with
DENSO Corporation to produce car
air-conditioning compressors.
GENEO (7FG/D outside Japan)
internal combustion counterbalanced
lift trucks introduced.

JAT600 air-jet loom production
starts.

2001
GENEO-R (7FBR outside Japan)
reach truck production starts.
Company takes over the Industrial
Equipment Sales Division of Toyota
Motor Corporation.
TOYOTA Material Handling
Company established as an in-housecompany.
RAV4 production starts.

1993
RX200 ring spinning frame
production starts.

1994
X500 series internal combustion
counterbalanced lift truck
production starts.
Toyota Industry (Kunshan) Co.,
Ltd. (TIK) established in China asa joint venture with Toyota Tsusho
Corporation and Lioho MachineWorks, Ltd.
R500 reach truck production starts.

TIBC Corporation (TIBC) established
as a joint venture with Ibiden Co., Ltd.
to produce semiconductor package
substrates.

Name changed to Toyota Industries
Corporation.

10S compressor production starts.

1999
Vitz (Yaris in Europe) production
starts.
Company takes over water-jet loom
business from Nissan Texsys Co., Ltd.

1995

1CD diesel engine production starts.

Toyota Industrial Equipment, S.A.
(TIESA) established in France asa joint venture with Toyota Motor
Corporation and Manitou B.F.

GENEO-B (7FB outside Japan)
electric counterbalanced lift trucks
introduced.

7SB compressor production starts.

2000

B500 electric counterbalanced lift
truck production starts.

LW600 series water-jet loom
production starts.

Kirloskar Toyoda Textile
Machinery Private Limited (KTTM)
established in India as a joint
venture with the Kirloskar Group.

BT Industries AB of Sweden, aworld-leading manufacturer of
warehouse trucks, becomes a Toyota
Industries subsidiary.

1996

2002
Advanced Logistics Solutions Co.,
Ltd. (ALSO) established to planoverall logistics operations andoperate distribution centers.
Higashiura Plant starts operations,producing parts for car
air-conditioning compressors.

Toyota Motor Industries Poland
Sp.zo.o. (TMIP) established in Poland
as a joint venture with Toyota Motor
Corporation to produce diesel engines.

Aichi Corporation, a manufacturer of
special-purpose vehicles, becomes a
Toyota Industries subsidiary.

2004
Toyota Industry Automotive
Parts (Kunshan) Co., Ltd. (TIAP)
established in China as a joint venturewith Toyota Tsusho Corporationand Lioho Machine Works, Ltd. to
produce foundry parts.
TD Automotive Compressor
Georgia, LLC (TACG) establishedin the U.S. as a joint venture with
DENSO Corporation to produce car
air-conditioning compressors.

2005
Asahi Security Co., Ltd., which
engages in collection and delivery ofcash, management of sales proceeds
and equipment security, becomes a
subsidiary of Toyota Industries.
Vitz (Yaris) production starts after afull model change.

TD Automotive Compressor Kunshan,Co., Ltd. (TACK) established in
China as a joint venture with DENSO
Corporation and other entities
to produce car air-conditioning
compressors.

2003

JAT610 air-jet loom production
starts.

JAT710 air-jet loom production starts.

2UZ gasoline engine production starts.
RX240 ring spinning frame
production starts.

TOYOTA INDUSTRIES CORPORATION Annual Report 2005

59

Corporate Organization
Corporate Organization

Corporate Auditors(As of July 1, 2005)

Corporate Auditor’s Office

Board ofCorporate Auditors

Corporate Center

Board of Directors

Management
Committee

Corporate Planning Dept.
Corporate Management Dept.
Audit Office
Investor Relations OfficePublic Affairs Dept.
Global Human Resources Dept.
Global Quality Control Dept.
Business Planning Dept.
TMHG Coordination Office
Toyota Sales Dept.
Osaka Office

Mechatronics Systems Dept.
Research & Development Dept.

President

TOYOTA Material Handling Company*

Textile Machinery Division

Compressor Division

Vehicle Division

Engine Division

Electronics Division
Business Support Center
Business Operation
Committee

Legal Dept.
Secretarial Dept.
General Administration Dept.
Technical Training Center
Accounting Dept.
Global IT Dept.
Purchasing Dept.
Safety, Health & Environment Dept.
Operations Management Consulting Dept.
Plant Engineering Dept.
Intellectual Property Dept.
Health Care Administration CenterTokyo Office
Corporate Code of Conduct Committee
Environmental Committee
Export Supervisory Committee
Safety and Health Committee
Stock Option Committee
Production Division Committee
Technology Committee
Personnel Development/General Affairs Committee
Cost/Procurement Management Committee
Investment/Financing Management Committee

60

TOYOTA INDUSTRIES CORPORATION Annual Report 2005

Advanced Logistics Division

Machinery & Tools Sub-Division

New Electronics Sub-Division

Trading & Logistics Sub-Division*TOYOTA Material Handling Company is the name of adivision of Toyota Industries Corporation, not a legallyincorporated entity.

Directors and Corporate Auditors(As of June 22, 2005)

Directors and Corporate Auditors

Board of Directors

ChairmanTadashi Ishikawa*Vice Chairman

Vice Chairman

Shozo Nakayama*

Koichiro Noguchi*

President

Tetsuro Toyoda*

Executive Vice President
Norio Sato*

Senior Managing Directors

Tatsuo Matsuura*
Shigetaka Yoshida*
Masafumi Kato*
Yasuharu Toyoda*

Executive Vice President
Shiro Endo*Managing Directors

Yutaka Murodono
Kazunori Yoshida
Shoji Shimo
Ryoji Inoue
Kosaku Yamada
Kimpei Mitsuya
Honorary Chairman

Yoshitoshi Toyoda

Executive Vice President

Executive Vice President

Kazuhiko Takeuchi*

Shinjiro Kamimura*

Directors

Tatsuro Toyoda
Kenji Takenaka
Hirofumi Tsuji
Yukio Yamakita
Takaki Ogawa
Kazue Sasaki
Toshiyuki Sekimori
Hirotaka Morishita
Shinya Furukawa
Hironori Ito
Akira Onishi* Representative Director

Corporate Auditors
Standing Corporate Auditors

Shigetaka Mitomo
Masanori Ito

Corporate Auditors

Kosuke Ikebuchi
Masaaki Furukawa
Takeshi Uchiyamada

TOYOTA INDUSTRIES CORPORATION Annual Report 2005

61

Corporate Data

(As of March 31, 2005)

Corporate Data

Plants and Offices (Parent Company)
Kariya Plant
Hekinan Plant
Nagakusa Plant
Obu Plant
Kyowa Plant
Takahama Plant
Higashichita Plant
Higashiura Plant
Head Office and Others
Total

Number of
Employees

Land Area

1,751
1,634
2,185
458
1,029
1,464
387
93
1,157
10,158

173
347
301
148
162
333
333
245
780
2,822

(1,000m2)

Consolidated Subsidiaries
Company NameJapan
Aichi Corporation Group (4 companies) *1
TIBC Corporation
Asahi Security Co., Ltd.
TOYOTA L&F Tokyo Co., Ltd.
Logistics Planning Tokyo Co., Ltd.
Altex Co., Ltd.
Sun River Co., Ltd.
Izumi Machine Mfg. Co., Ltd.
TOYOTA L&F Keiji Co., Ltd.
Tokyu Co., Ltd.
Mino Tokyu Co., Ltd.
Advanced Logistics Solutions Co., Ltd.
Teion Shokuhin Ryutsu Inc.
Toyoda High System, Incorporated
Nishina Industrial Co., Ltd.
Suzaka Nishina Industrial Co., Ltd.
ALTRAN Corporation
KTL Co., Ltd.
TF Logistics Co., Ltd.
Tokaiseiki Co., Ltd.
Taikoh Transportation Group (5 companies) *2
SKE Inc.
SK Maintenance Inc.
Unica Co., Ltd.
Iwama Loom Works, Ltd.
Kawamoto System Corporation
Nagao Industry Co., Ltd.
TOYOTA L&F Shizuoka Co., Ltd.
Hara Corporation
Sun Valley Inc.
Sun Valley CVS Takaramachi Inc.
Mizuho Industry Co., Ltd.
Sun Staff, Inc.
ALT Logistics Co., Ltd.
Shine’s Inc.
Toyota Industries Well Support Corporation

62

TOYOTA INDUSTRIES CORPORATION Annual Report 2005

Location in Japan

–
Aichi
Tokyo
Tokyo
Tokyo
Shizuoka
Osaka
Aichi
Kyoto
Aichi
Gifu
Aichi
Tokyo
Aichi
NaganoNagano
Aichi
Tokyo
Tokyo
Shizuoka
–
Aichi
Aichi
Aichi
Aichi
Aichi
Aichi
Shizuoka
Gifu
Aichi
Aichi
Aichi
Aichi
Aichi
Aichi
Aichi

Capital(thousands in local currency)–¥3,250,000¥516,360¥350,000¥10,000¥200,000¥150,000¥150,000¥140,000¥135,000¥18,000¥100,000¥55,000¥100,000¥100,000¥50,000¥100,000¥100,000¥100,000¥98,000–¥80,000¥50,000¥50,000¥49,920¥47,000¥31,000¥30,000¥23,193¥22,500¥3,000¥20,000¥20,000¥20,000¥10,000¥10,000

EquityOwnership–
60.0%
100.0%
100.0%
100.0%
75.0%
100.0%
68.8%
75.0%
63.3%
93.4%
100.0%
60.0%
90.0%
69.2%
96.8%
60.0%
50.5%
51.0%
92.1%
–
100.0%
70.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
93.8%
100.0%
60.0%
100.0%
100.0%

Outside Japan
Toyota Industries Sweden AB *3
BT Industries Group *3*4 (64 companies)
Toyota Industries Finance International AB *3
Michigan Automotive Compressor, Inc.
Toyota Industries North America, Inc. *5
Toyota Industrial Equipment Mfg., Inc. *5
TD Automotive Compressor Georgia, LLC *5
Toyota Material Handling USA, Inc. *5
ACTIS Manufacturing, Ltd. LLC *5
Toyoda Textile Machinery, Inc. *5
Toyota-Lift of Los Angeles, Inc. *5
Toyota Industries Personnel Service of America, Inc. *5
Aichi Corporation Group (1 company) *1
TD Deutsche Klimakompressor GmbH
Kirloskar Toyoda Textile Machinery Private Limited
Toyota Industry (Kunshan) Co., Ltd.
Toyota Material Handling (Shanghai) Co., Ltd.
Toyota Industry Automotive Parts (Kunshan) Co., Ltd.
Toyota Truck Norge AS
Toyota Truckutleie Norge AS
Toyota Truck Danmark A/S
Toyota Truckudlejning Danmark A/S
Toyota Industrial Equipment, S.A.
Toyota Gabelstapler Deutschland GmbH
Toyota Industrial Equipment (UK) Limited
Toyota Industrial Equipment (Northern) Limited
Toyota Industrial Equipment Europe, S.A.R.L.
Toyota Carrelli Elevatori Italia S.r.l.
Toyota Textile Machinery Europe, AG
Toyota Maquinas Texteis do Brasil Ltda.
Toyota Industries Corporation Australia Group *6 (9 companies)
Toyota Industries Mercosur Ltda.

CapitalLocation(thousands in local currency)

Mjölby, Sweden–
Mjölby, Sweden
Parma, Michigan, U.S.A.
Schaumburg, Illinois, U.S.A.
Columbus, Indiana, U.S.A.
Jefferson, Georgia, U.S.A.
Irvine, California, U.S.A.
Grapevine, Texas, U.S.A.
Charlotte, North Carolina, U.S.A.
Santa Fe Springs, California, U.S.A.
Schaumburg, Illinois, U.S.A.
–
Straßgräbchen, Germany
Bangalore, Karnataka, India
Kunshan, Jiangsu, China
Shanghai, China
Kunshan, Jiangsu, China
Trondheim, Norway
Trondheim, Norway
Vejle, Denmark
Vejle, Denmark
Ancenis, France
Duisburg, Germany
Castleford, West Yorkshire, U.K.
Castleford, West Yorkshire, U.K.
Ancenis, France/Brussels, Belgium
Bologna, Italy
Zurich, SwitzerlandSão Paulo, Brazil
Sydney, Australia
São Paulo, Brazil

SEK6,652,977–
SEK25,000
US$146,000
US$37,900
US$60,000
US$27,000
US$12,500
US$2,000
US$1,300
US$1,500
US$100–EUR20,452
Rs2,426,200
US$23,000
US$1,000
US$12,500
NOK110,000
NOK100
DKK9,000
DKK500EUR9,000
EUR720
GBP48
GBP1,243
EUR75
EUR3,249
SFR3,000
US$200–
R$26,510

EquityOwnership

Corporate Data

Company Name

100.0%–
100.0%
60.0%
100.0%
100.0%
65.0%
100.0%
60.0%
100.0%
100.0%
100.0%
–
65.0%
95.1%
70.0%
70.0%
60.0%
100.0%
100.0%
100.0%
100.0%
60.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%–
100.0%

Affiliates Accounted for by the Equity Method
Company NameJapan
ST Liquid Crystal Display Corp.
Fuji Logistics Co., Ltd.
Aichi Corporation Group (1 company) *1
Outside JapanBT Industries Group *4 (16 companies)
Aichi Corporation Group (1 company) *1

Location

Aichi
Tokyo
–
–
–

Capital(thousands in local currency)

EquityOwnership¥23,000,000¥2,979,675
–

50.0%
26.8%
–

–
–

–
–

*1 Aichi Corporation Group comprises Aichi Corporation, its four subsidiaries and two affiliates. Aichi Corporation is headquartered in Saitama Prefecture and capitalized at ¥10,425 million.
Toyota Industries Corporation holds 51.0% of the outstanding shares of Aichi Corporation.
*2 Taikoh Transportation Group comprises Taikoh Transportation Co., Ltd. and its four subsidiaries. Taikoh Transportaion Co., Ltd. is headquartered in Aichi Prefecture and capitalized at ¥83,985 thousand.
Toyota Industries Corporation holds 51.4% of the outstanding shares of Taikoh Transportation Co., Ltd.
*3 Toyota Industries Sweden AB is a holding company which holds a 100.0% of the outstanding shares of BT Industries AB and Toyota Industries Finance International AB.
*4 BT Industries Group comprises BT Industries AB, its 63 subsidiaries and 16 affiliates. BT Industries AB is headquartered in Mjölby, Sweden and capitalized at SEK560 million.
*5 Toyota Industries North America, Inc. is a holding company that exercises control over Toyota Industrial Equipment Mfg., Inc., Toyota Material Handling USA, Inc., ACTIS Manufacturing, Ltd. LLC,
Toyota-Lift of Los Angeles, Inc., Toyoda Textile Machinery, Inc., Toyota Industries Personnel Service of America, Inc. and TD Automotive Compressor Georgia, LLC.
*6 Toyota Industries Corporation Australia Group comprises Toyota Industries Corporation Australia Pty Limited and its eight subsidiaries. Toyota Industries Corporation Australia Pty Limited is headquartered in Sydney,
Australia and capitalized at AUD62.8 million. Toyota Industries Corporation holds 100.0% of the outstanding shares of Toyota Industries Corporation Australia Pty Limited.
Note: ¥−Japanese yen; SEK−Swedish krona; US.$−US. dollar; EUR−Euro; Rs−Indian rupee; NOK−Norwegian krone; DKK−Danish krone; GBP−British pound, AUD−Australian dollar, R$−Brazilian real, SFR−Swiss franc

TOYOTA INDUSTRIES CORPORATION Annual Report 2005

63

Locations of Major Subsidiaries outside Japan(As of March 31, 2005)

Locations of Major Subsidiaries outside Japan12 13 26
17 18
19 20
22 23
1
3

9

5

14 15

2
8
7 6

4

16
15
25

24
21
28 29
30
31

10 11

27

Company Name
North America

16

Toyota Gabelstapler Deutschland GmbH1

Toyota Industries North America, Inc.

17

Toyota Truck Norge AS

2

Toyota Industrial Equipment Mfg., Inc.

18

Toyota Truckutleie Norge AS

3

Toyota Material Handling USA, Inc.

19

Toyota Truck Danmark A/S

4

Toyota-Lift of Los Angeles, Inc.

20

Toyota Truckudlejning Danmark A/S

5

Michigan Automotive Compressor, Inc.

21

Toyota Carrelli Elevatori Italia S.r.l.

6

TD Automotive Compressor Georgia, LLC

22Toyota Industrial Equipment (UK) Limited

7

ACTIS Manufacturing, Ltd. LLC

23Toyota Industrial Equipment (Northern) Limited

8

Toyoda Textile Machinery, Inc.

24

TD Deutsche Klimakompressor GmbH

9

Toyota Industries Personnel Service of America, Inc.

25

Toyota Textile Machinery Europe, AG

South America

26

Toyota Industries Finance International AB

10Toyota Industries Mercosur Ltda.

11

Toyota Maquinas Texteis do Brasil Ltda.

27

Toyota Industries Corporation Australia Pty Limited

Europe28

Toyota Industry (Kunshan) Co., Ltd.

29

Toyota Industry Automotive Parts (Kunshan) Co., Ltd.

30

Toyota Material Handling (Shanghai) Co., Ltd.
Kirloskar Toyoda Textile Machinery Private Limited

12

Toyota Industries Sweden AB*1

Asia & Oceania

13

BT Industries AB

14

Toyota Industrial Equipment, S.A.

31

Toyota Industrial Equipment Europe, S.A.R.L.*2*1 BT Industries AB is a holding company that exercises control of 79 subsidiaries and affiliates(as of December 31, 2004).
*2 Toyota Industrial Equipment Europe’s sales and marketing office is located in Brussels, Belgium.

1564Company NameTOYOTA INDUSTRIES CORPORATION Annual Report 2005

Financial Section

66 Consolidated Eleven-Year Summary
68 Management’s Discussion and Analysis ofFinancial Condition and Results of Operations
78 Consolidated Balance Sheets
80 Consolidated Statements of Income
81 Consolidated Statements of Shareholders’ Equity
82 Consolidated Statements of Cash Flows
83 Notes to Consolidated Financial Statements
102 Report of Independent Accountants

TOYOTA INDUSTRIES CORPORATION Annual Report 2005

65

Consolidated Eleven-Year Summary
Consolidated Eleven-Year Summary

Toyota Industries Corporation
Years ended March 31
The figures in this table are unaudited.
Millions of yen

2005

2004

2003

2002

For The Year
¥1,241,538¥1,164,379¥1,069,219¥ 980,163

Operating income

53,12052,63152,47846,330Ordinary income

70,91358,971

51,37547,866

Income before income taxes

70,35457,741

43,67047,866

Net income

43,35833,623

21,93427,311¥ 539,003¥ 497,357¥ 451,594¥ 396,470

Depreciation and amortization

70,21365,35259,15455,174

Capital expenditures

136,506

89,50987,55988,320Research and development expenses

30,051

29,562

29,70529,985Net sales

Overseas sales

Per share of common stock (yen, U.S. dollars):
Net income — basic¥

135.09¥108.04

¥

70.19

¥

87.28

Net income — diluted

135.03101.97

62.90

78.26

Shareholders’ equity

3,504.80

3,199.69

2,522.52

2,809.54

32.00

24.00

22.00

19.00

Total assets¥2,326,824¥2,011,995¥1,650,391¥1,770,401

Shareholders’ equity

1,115,747

1,016,764

738,868

878,812

Cash dividends
At Year-End

Common stock

80,46380,46368,04768,022

Number of shares outstanding (excluding treasury stock) (thousands)

318,237

317,666

292,777

312,796

Cash FlowsNet cash provided by operating activities¥ 100,095

92,406¥ 103,183(128,231)(92,668)(95,121)

Net cash provided by (used in) financing activities

50,021(56,015)

57,776

1,225

Cash and cash equivalents at end of year

100,536

77,212

136,929

71,120Return on equity (ROE) (%)

4.1

3.8

2.7

3.0

Return on assets (ROA) (%)

2.0

1.8

1.3

1.5

Net cash used in investing activities¥¥

81,078(106,711)

Indices

Return on sales (ROS) (%)

3.5

2.9

2.1

2.8

Debt/equity ratio (%)

34.4

31.6

55.6

35.9

Interest coverage (times)
EBITDA (millions of yen, thousands of U.S. dollars)
Number of employees at year-end

7.7

7.4

¥ 128,381¥ 113,676

30,99027,431

6.7¥

95,47225,0305.8¥

97,54023,056

Notes: 1. U.S. dollar amounts have been translated from yen, for convenience only, at the rate of ¥107.39 = US$1, the exchange rate on March 31, 2005.
2. Main changes in accounting standards and methods during the above periods are as follows. These changes have not been applied to the financial statements presented prior to each year retroactively.
(1) Effective beginning the year ended March 31, 2005, the new accounting standards for impairment on fixed assets have been applied. Details are described in Notes to Consolidated Financial
Statements.
(2) Effective beginning the year ended March 31, 2003, the new accounting standards for net income per share have been applied. Details are described in Notes to Consolidated Financial Statements.
(3) Effective beginning the year ended March 31, 2001, the new accounting standards for retirement benefits, financial instrument and foreign currency transactions have been applied.
(4) Effective beginning the year ended March 31, 2000, Toyota Industries Corporation (the “Company”) has used the annual average exchange rate instead of the year-end rate in order to present
the operating results more precisely as significance of the overseas consolidated subsidiaries had been increasing and their revenue and expenses were incurred throughout the fiscal years. The
Company also has adopted tax effect accounting due to the amendment of the accounting standards for income taxes.
Deferred tax assets have been newly recognized in current assets, and investments and other assets. Deferred tax liabilities have been recognized in current and long-term liabilities.

66

TOYOTA INDUSTRIES CORPORATION Annual Report 2005

2001

2000

1999

1998

1997

1996

1995

2005

¥ 767,383¥625,773¥558,876¥572,698¥530,851¥476,084¥457,565$11,561,021

47,304

28,867

24,81432,72932,67519,926

16,796494,646

44,525

27,162

23,172

33,202

31,157

21,56016,775660,332

38,22027,162

23,172

33,202

31,157

21,56016,775655,126

22,637

13,686

10,391

20,491

17,931

13,54910,638403,743¥ 298,794¥191,992¥178,737¥150,417¥116,738¥119,358¥ 99,835$ 5,019,117¥

46,45442,752

34,38027,95828,04327,24026,359653,813

127,273

44,74660,46862,00735,40829,62927,583

1,271,124

26,19624,062

23,231

23,112

19,691

18,77017,633279,831

75.90

¥

48.32

¥

36.30

¥

72.33

¥

63.55

¥

48.03

¥

37.72

$

1.26

67.77

43.18

32.62

63.48

55.20

47.13

37.10

1.26

3,036.77

1,116.62

1,063.05

1,056.81

996.18947.04905.89

32.64

17.00

16.00

16.00

16.00

16.00

13.00

13.00

0.30

¥1,869,642¥685,914¥617,071¥593,004¥556,291¥454,503¥427,206$21,667,045

951,298

316,293

301,158

304,097

281,154

267,145

255,536

10,389,673
749,260¥¥

68,01940,17840,17840,13331,45831,322

31,321

313,260

283,260

283,296287,752

282,233

282,083

282,082$

932,070

78,413¥ 68,058¥ 44,133¥ 50,952¥ 51,327

N/A

N/A(155,871)(67,187)(96,222)(26,897)(74,968)

N/A

N/A(1,194,068)

94,47227,50024,368(12,918)

69,081

N/A

N/A

465,788

95,297

77,332

49,95574,30362,322

N/A

N/A

936,177

3.6

4.4

3.4

7.0

6.5

5.2

4.2

1.8

2.1

1.7

3.6

3.6

3.1

2.5

2.9

2.2

1.9

3.6

3.4

2.8

2.3

30.7

60.5

51.6

37.5

46.0

20.4

20.2

9.1

14.5

16.4

17.6

13.0

8.7

6.4

79,921¥ 64,681¥ 51,033¥ 55,212¥ 55,548¥ 44,830¥ 41,502

21,11813,132

12,797

11,23910,73810,806

10,452

Consolidated Eleven-Year Summary

Thousands of
U.S. dollars

Millions of yen$ 1,195,465(5) Effective beginning the year ended March 31, 1999, the Company has presented consolidated financial statements as follows: In the consolidated statements of income, enterprise taxes, which had
been included in selling, general and administrative expenses up to and including the previous year, have been included in income taxes.
Amortization of goodwill, which had been classified as a deductible item from income before income taxes until the previous year, has been included in selling, general and administrative expenses.
Equity in earnings/losses of affiliates, which had been added to or deducted from income before income taxes until the previous years, has been included in non-operating income or expenses.
3. Net income per share, ROE and ROA are computed based on the average number of shares, shareholders’ equity and total assets, respectively, for each year.
4. Debt/equity ratio = Interest-bearing debt / Shareholders’ equity
5. Interest coverage = (Operating income + Interest and dividends income) / Interest expenses
6. EBITDA = Income before income taxes + Interest expenses - Interest and dividends income + Depreciation and amortization

TOYOTA INDUSTRIES CORPORATION Annual Report 2005

67

Management’s Discussion and Analysis of Financial Condition and Results of Operations

Management’s Discussion and Analysis ofFinancial Condition and Results of Operations
The following Management’s Discussion and Analysis of Financial Condition and Results of Operations is based on information
known to management as of June 2005.
This section contains projections and forward-looking statements that involve risks, uncertainties and assumptions. You should
be aware that certain risks and uncertainties could cause the actual results of Toyota Industries Corporation and its consolidated
subsidiaries to differ materially from any projections or forward-looking statements. These risks and uncertainties include, but are notlimited to, those listed under “Risk Information” and elsewhere in this annual report.
The fiscal year ended March 31, 2005 is referred to as fiscal 2005 and other fiscal years are referred to in a corresponding manner.
All references to the “Company” herein are to Toyota Industries Corporation, and references to “Toyota Industries” herein are to theCompany and its 146 consolidated subsidiaries.

Results of Operations
Operating Performance
In fiscal 2005, consumer spending did not fully recover due
to unstable employment conditions. However, the Japanese
economy continued on its slow path to recovery as private-sector
capital investment increased on the back of improved corporate
earnings. Overseas, the overall economic outlook was brighter,with an expanding U.S. economy and the European economy
maintaining its underlying strengths.
In this operating environment, Toyota Industries made efforts
to strengthen its corporate structure by attempting to ensure
customer trust through a dedication to quality, the developmentof appealing new products, aggressive sales promotions andexecution of a Group-wide effort to reduce costs. As a result,
total consolidated net sales of Toyota Industries amounted

Net Sales, Overseas Sales andOverseas Sales Ratio

Ordinary Income andOrdinary Income Ratio(¥ Billion)(%)(¥ Billion)

1,400

70

80

8

1,200

60

1,000

50

60

6

800

40
40

4

600

30

400

20

20

2

200

10

0
FY

01

02

03

04

05

0

Net sales (left)
Overseas sales (left)
Overseas sales ratio (right)68

to ¥1,241.5 billion, an increase of ¥77.2 billion (6.6%) overfiscal 2004. (For a breakdown of operating results by businesssegment, refer to Operating Performance Highlights by Business
Segment.)
At the profit level, ordinary income amounted to ¥70.9
billion, an increase of ¥11.9 billion (20.3%) over fiscal 2004.
Despite the effects of a steep rise in crude oil and steel prices,increases in labor and pre-production expenses and unfavorable
exchange rate fluctuations, this increase was largely achieved
due to an increase in global sales centered on the Materials
Handling Equipment Segment, improvements in productivity
and Group-wide cost-reduction activities, as well as a strong
performance by ST Liquid Crystal Display Corp. (STLCD), a
joint venture with Sony Corporation (Sony) that is accounted forby the equity method. Net income amounted to ¥43.4 billion, an
increase of ¥9.7 billion (29.0%) over fiscal 2004.

TOYOTA INDUSTRIES CORPORATION Annual Report 2005

0
FY

01

(%)

02

03

Ordinary Income
Ordinary Income Ratio

04

05

0

Operating Income andOperating Income Ratio

Net Sales ofAutomobile Segment

Operating Income ofAutomobile Segment(%)(¥ Billion)(¥ Billion)

60

12

800

40

50

10
600

30

40

8

30

6

400

20

20

4
200

10

10

2

0
FY

01

02

03

04

05

0

0

FY 01

02 03 04 05

0
FY

01 02 03 04 05

Operating income (left)
Operating income ratio (right)

Cost of Sales and Selling,
General and Administrative Expenses
Cost of sales for fiscal 2005 increased ¥63.3 billion (6.5%) overfiscal 2004 to ¥1,041.8 billion, due mainly to an increase in net
sales.
Selling, general and administrative expenses increased ¥13.3
billion (10.0%) to ¥146.6 billion, due mainly to an increase in
selling expenses accompanied by an increase in net sales, aswell as the introduction of pro forma standard taxation.

Operating Income
Operating income for fiscal 2005 increased ¥0.5 billion (0.9%)
over fiscal 2004 to ¥53.1 billion. Despite a decrease in operating
income by the Company, overall operating income increased
due primarily to the brisk performance of Toyota Industries’
subsidiaries.

Operating Performance Highlights
by Business Segment
Below are the operating results by business segment. Net sales
for each segment do not include intersegment transactions.

for Europe increased. Sales of the fully remodeled Vitz, which
was re-launched in Japan in February 2005, also contributed tooverall results.
Net sales of the Engine Business totaled ¥113.3 billion,
an increase of ¥5.9 billion (5.5%) over fiscal 2004. Despite
decreases in sales of the UZ gasoline engine, which is mounted
on the Land Cruiser, and the AZ gasoline engine, which isinstalled in the Estima, sales of the CD diesel engine, which
is mounted on TOYOTA-brand cars for Europe, such as theRAV4 and Avensis, increased. Toyota Industry Automotive Parts(Kunshan) Co., Ltd. in Jiangsu Province, China, which wasestablished as a joint venture with Toyota Tsusho Corporationand Lioho Machine Works, Ltd. to produce and sell automotive
foundry parts, began operations in April 2005. Also, Toyota

Management’s Discussion and Analysis of Financial Condition and Results of Operations(¥ Billion)

Car Air-Conditioning
Compressor Unit Sales(Million Units)
20

15

Automobile Segment
Net sales of the Automobile Segment totaled ¥616.2 billion,
an increase of ¥12.3 billion (2.0%) over fiscal 2004. However,operating income decreased ¥4.8 billion (17.3%) to ¥22.8
billion.
In the automobile industry as a whole, domestic sales were
almost the same as in fiscal 2004. Domestic production, on theother hand, increased over the same period.
Within this segment, net sales of the Vehicle Businesstotaled ¥278.8 billion, almost the same as in fiscal 2004.
While sales of the Corolla Sedan for North America and Yaris(European version of the Vitz) decreased, sales of the RAV4

10

5

0
FY

01

02

03

04

05

Japan
North America
EuropeAsia and Oceania

TOYOTA INDUSTRIES CORPORATION Annual Report 2005

69

Management’s Discussion and Analysis of Financial Condition and Results of Operations

Net Sales of
Textile Machinery
Segment

Operating Income (Loss) of
Textile Machinery
Segment(¥ Billion)(¥ Billion)(¥ Billion)

30

50

3

40

2

30

1

20

0

10

(1)

Net Sales ofMaterials Handling
Equipment Segment

Operating Income ofMaterials Handling
Equipment Segment(¥ Billion)
600
500

25

400

20

300

15

200

10

100

5

0

FY 01

02 03 04 05

0

FY 01

02 03 04 05

Motor Industries Poland Sp.zo.o., jointly established with Toyota
Motor Corporation (TMC) in October 2002, started production of
the latest AD diesel engine to be mounted on the Avensis, whichis assembled in England by TMC.
Net sales of the Car Air-Conditioning Compressor Businesstotaled ¥198.0 billion, approximately the same level as for fiscal
2004. While sales in the domestic market increased as a resultof an increase in models incorporating our car air-conditioning
compressors, sales overseas suffered due mainly to sluggish salesof some automobiles fitted with our products. In July 2004, theCompany and DENSO Corporation (DENSO) jointly established
TD Automotive Compressor Georgia, LLC (TACG) in Georgia,
the United States, as a plant manufacturing variable-displacement
compressors. TACG is slated to start plant operations in
December 2005. In April 2004, our cumulative productionof car air-conditioning compressors in Japan, North America
and Europe reached 200 million units since we commenced
production in 1960.

Materials Handling Equipment Segment
Net sales of the Materials Handling Equipment Segment
increased ¥60.5 billion (13.7%) over fiscal 2004 to ¥504.0 billion.
Operating income increased ¥6.7 billion (34.8%) to ¥26.1 billion.
In the materials handling equipment industry as a whole,sales increased substantially over fiscal 2004. Sales were strong
in the Japanese market thanks to an improvement in private-sector
capital investment, while the global economic recovery
contributed to brisk sales in overseas markets.
Toyota Material Handling Company (TMHC), our in-housecompany, sold more than 103,000 TOYOTA-brand lift trucks andother materials handling equipment in calendar year 2004, anincrease of 21% over the same period in 2003. This increase wasdue largely to the implementation of a variety of sales measures,such as proposal-based sales, in Japan, as well as the enhancement

70

TOYOTA INDUSTRIES CORPORATION Annual Report 2005

0

FY 01

02 03 04 05

(2)

FY 01

02 03 04 05

of the global sales network, especially in North America, Europe,
Asia and South America, and vigorous sales promotion activities
targeting major clients. This marked a world first for a single
brand to sell more than 100,000 units in a single year. TMHC
achieved a 42.6% share in the Japanese lift truck market in 2004,
the same percentage as in 2003. In August 2004, we enhanced our
product lineup with the re-introduction of all 14 models of large
lift trucks (10-ton to 24-ton) after a full model change.
During the same period, BT Industries AB, one of our
subsidiaries and a major manufacturer of warehouse trucks,
achieved a substantial increase in sales on the back of vigorous
sales activities and strong sales in North American and European
markets.

Textile Machinery Segment
Net sales of the Textile Machinery Segment decreased ¥2.1
billion (4.5%) from fiscal 2004 to ¥43.9 billion. This segment
posted an operating loss of ¥0.8 billion, a decrease of ¥0.9 billion(871.0%).
In the textile machinery industry, the mainstay Chinese
market showed signs of recovery. However, the lingering effects
of monetary tightening and other factors contributed to a lack in
dynamism in terms of capital investment.
Although orders for spinning frames from Pakistan increased,a decrease in orders for air-jet looms from China, as well asa decrease in orders for water-jet looms due to high prices ofsynthetic yarns arising from a drastic hike in crude oil prices
worldwide, were incurred.

Others Segment
Net sales of the Others Segment increased ¥6.3 billion (8.9%)
over fiscal 2004 to ¥77.4 billion. Operating income decreased¥0.5 billion (8.8%) to ¥5.2 billion.
TIBC Corporation, a joint venture with Ibiden Co., Ltd.

Operating Income of
Others Segment

Net Income per Share

(Including Elimination ofIntersegment Transactions)(¥ Billion)(¥ Billion)

(¥)

80

6

140
120

5
60

100
4
80

40

3
60
2

40

20

0
FY

01 02 03 04 05

1

20

0

0

FY

01 02 03 04 05(Ibiden) that manufactures and sells semiconductor plastic
package substrates, underwent strong demand for plastic package
substrates for personal computers.
As one core business for driving future growth, Toyota
Industries entered the Logistics Solutions Business, which
undertakes all phases of logistics from logistics planning to theoperation of distribution centers for the purpose of reducing
logistics costs for customers. Sales of this business are steadily
expanding. To expand the scope of services available in thisbusiness, Toyota Industries made Asahi Security Co., Ltd.
(Asahi Security) into one of its subsidiaries in March 2005. The
company provides comprehensive cash management outsourcing
services, including cash collection and delivery, sales proceeds
management and electronic security, to retailers, service
businesses and transportation operators.

Basic
Diluted

FY

01

02

03

04

05

EuropeNet sales increased ¥21.2 billion (12.6%) over fiscal 2004 to¥188.7 billion. Operating income was ¥4.7 billion, an increase of¥1.5 billion (49.1%). Both increases resulted from an increase insales volumes by lift truck-manufacturing subsidiaries.

Others
Net sales were ¥25.6 billion, an increase of ¥12.7 billion (98.9%)
over fiscal 2004. Operating income amounted to ¥0.6 billion,
a turnaround of ¥0.8 billion (584.8%) from an operating loss
recorded in the previous fiscal year.

Non-Operating Income and Expenses

Below are Toyota Industries’ operating results by geographicalsegment. Net sales for each geographical segment do not include
intersegment transactions.

Non-operating income for fiscal 2005 totaled ¥38.3 billion, an
increase of ¥8.1 billion (26.8%) over fiscal 2004. This increase
resulted mainly from an increase in dividends income from TMC
and higher equity in earnings of STLCD.
Non-operating expenses decreased ¥3.4 billion (14.1%) fromfiscal 2004 to ¥20.5 billion, due mainly to decreases arising froman exchange loss and a loss on disposal of fixed assets.

Japan

Income before Income Taxes

Net sales totaled ¥815.0 billion, an increase of ¥29.8 billion (3.8%)
over fiscal 2004, due largely to an increase in sales volume ofmaterials handling equipment. On the other hand, operating
income decreased ¥2.3 billion (4.9%) to ¥43.6 billion as a resultof an increase in prices of raw materials.

Income before income taxes increased ¥12.6 billion (21.8%) overfiscal 2004 to ¥70.4 billion, attributable primarily to an increasein ordinary income and a decrease in provision for retirement andseverance benefits for directors and corporate auditors posted infiscal 2004.

North America

Income Taxes

Net sales amounted to ¥212.3 billion, an increase of ¥13.5 billion(6.8%) over fiscal 2004. Operating income increased ¥0.2 billion(3.1%) to ¥6.3 billion. These increases were due primarily tohigher sales volumes by lift truck-manufacturing subsidiaries.

Income taxes totaled ¥22.3 billion, an increase of ¥1.5 billion(7.3%) over fiscal 2004. An increase in income taxes at
subsidiaries offset a decrease in income taxes at the Company.

Sales by Geographical Segment

Management’s Discussion and Analysis of Financial Condition and Results of Operations

Net Sales of
Others Segment

TOYOTA INDUSTRIES CORPORATION Annual Report 2005

71

Minority Interest in Consolidated Subsidiaries
Management’s Discussion and Analysis of Financial Condition and Results of Operations

Minority interest in consolidated subsidiaries increased ¥1.4
billion (40.7%) over fiscal 2004 to ¥4.7 billion, due primarily torobust business performance of subsidiaries.

Net Income
Net income totaled ¥43.4 billion, an increase of ¥9.7 billion(29.0%) over fiscal 2004. Net income per share was ¥135.09,
compared with ¥108.04 in fiscal 2004. Diluted net income pershare increased from ¥101.97 in fiscal 2004 to ¥135.03.

Liquidity and Capital Resources
Toyota Industries’ financial policy is to ensure sufficientfinancing and liquidity for its business activities and to maintainstrong balance sheets. Currently, funds for capital investments
and other long-term capital needs are provided from retained
earnings and long-term debt, and working capital needs are met
through short-term loans. Long-term debt financing is carriedout mainly through issuance of corporate bonds and loans fromfinancial institutions.
In addition to current assets such as cash and cash
equivalents and securities, Toyota Industries maintained acommercial paper issuance capacity of ¥100.0 billion as ofMarch 31, 2005.
Toyota Industries continues to maintain its solid financial
condition. Through the use of such current assets as cash andcash equivalents and securities, as well as free cash flows andfunds procured from financial institutions, Toyota Industries
believes that it will be able to provide sufficient funds for theworking capital necessary to expand existing businesses anddevelop new projects, and for future investments.
Regarding fund management, the Company undertakes
integrated fund management of its subsidiaries in Japan, while
Toyota Industries North America, Inc. (TINA) and Toyota
Industries Finance International AB (TIFI) centrally manage thefunds of subsidiaries in North America and Europe, respectively.
Through close cooperation among the Company, TINA
and TIFI, we strive for efficient, unified fund management on a
global consolidated basis.

Assets, Liabilities and Shareholders’ Equity
Total assets at the end of fiscal 2005 amounted to ¥2,326.8
billion, an increase of ¥314.8 billion (15.6%) over the end of
fiscal 2004. This increase was attributable mainly to an increase
in investments and other assets as well as the inclusion of Asahi
Security into consolidation.
Current assets increased ¥113.1 billion (32.3%) fromthe previous fiscal year-end to ¥463.0 billion. This increase

72

TOYOTA INDUSTRIES CORPORATION Annual Report 2005

Total Assets, Shareholders’ Equity
and Shareholders’ Equity Ratio(¥ Billion)

(%)

2,500

100

2,000

80

1,500

60

1,000

40

500

20

0
FY

01

02

03

04

05

0

Total assets (left)
Shareholders’ equity (left)
Shareholders’ equity ratio (right)

primarily reflected an increase in trade notes and accounts
receivable as well as the inclusion of Asahi Security into
consolidation.
Property, plant and equipment increased ¥67.7 billion(17.4%) to ¥457.1 billion. Intangible assets increased ¥17.1
billion (17.1%) to ¥117.0 billion due to an increase in goodwill.
Investments and other assets increased ¥117.0 billion(10.0%) to ¥1,289.8 billion. This increase was mainly the resultof an increase in the market prices of shares of Toyota Group
companies, including TMC, held by Toyota Industries.
On the liabilities side, current liabilities increased ¥95.2
billion (29.2%) from the previous fiscal year-end to ¥421.5
billion. This increase was due mainly to an increase in tradenotes and accounts payable as well as the inclusion of Asahi
Security into consolidation.
Long-term liabilities amounted to ¥748.6 billion, an increaseof ¥114.7 billion (18.1%) over the previous fiscal year-end. Thiswas due chiefly to an increase in deferred tax liabilities as aresult of an increase in the market value of investment securities.
Minority interest in consolidated subsidiaries increased ¥6.0
billion (17.1%) to ¥40.9 billion.
Shareholders’ equity increased ¥99.0 billion (9.7%) to¥1,115.7 billion. This was mainly because of an increase of¥57.1 billion in net unrealized gains on other securities in
response to an increase in the market value of investment
securities. The ratio of shareholders’ equity to total assets
decreased to 48.0% from 50.5% at the end of the previous fiscal
year, while shareholders’ equity per share at year-end increasedto ¥3,504.80 from ¥3,199.69.

Investment in Property,
Plant and Equipment(¥ Billion)(¥ Billion)

150

140

100

120

50

100

0

80

(50)

60

(100)

40

(150)

20

(200)
FY

01

02

03

04

05

Net cash provided by operating activities
Net cash used in investing activities
Net cash provided by (used in) financing activities

Cash Flows
Cash flows from operating activities amounted to ¥100.1 billion
in fiscal 2005, due largely to income before income taxes
amounting to ¥70.4 billion. Net cash provided by operating
activities increased ¥7.7 billion from ¥92.4 billion in fiscal 2004.
Cash flows from investing activities resulted in a decrease in cashof ¥128.2 billion in fiscal 2005, attributable primarily to paymentsfor purchases of property, plant and equipment amounting to¥110.1 billion. Net cash used in investing activities increased¥35.6 billion from ¥92.7 billion for fiscal 2004. Cash flows fromfinancing activities resulted in an increase in cash of ¥50.0 billion
in fiscal 2005, due mainly to proceeds from issuances of bonds
in an amount of ¥50.0 billion. Net cash provided by financing
activities increased ¥106.0 billion from ¥56.0 billion in net cashused in financing activities for fiscal 2004.
After translation adjustments, cash and cash equivalents asof March 31, 2005 stood at ¥100.5 billion, an increase of ¥23.3
billion (30.2%) over fiscal 2004.

Investment in Property, Plant and Equipment
During fiscal 2005, Toyota Industries invested in property, plantand equipment in the amount of ¥131,296 million (including¥19,974 million in vehicles and materials handling equipment
for lease) for the primary purposes of new product launches,
streamlining and renewal of production equipment, andaugmentation of R&D facilities. Necessary funds were provided
by a portion of bonds, treasury stock and bank loans.
By segment, investments in property, plant and equipment
totaled ¥81,554 million in the Automobile Segment, ¥31,860

0
FY

01

02

03

04

05

Automobile
Materials Handling Equipment
Textile Machinery
Othersmillion in the Materials Handling Equipment Segment, ¥1,236
million in the Textile Machinery Segment and ¥16,646 million
in the Others Segment.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

Cash Flows

Strategies and Outlook
Business Strategies
Since its establishment as a specialized textile machinery
manufacturer in 1926, Toyota Industries has steadily expanded
the scope of its businesses. Its operations are divided into
three strategic categories based on the characteristics of these
operations and the mission assigned to each.

First Category: Vehicle Business and Engine Business<Mission>
As a member of the Toyota Group, to contribute to the highquality and technological advances of TOYOTA cars, thus
expanding our market presence.

Second Category: Car Air-Conditioning Compressor
Business, Materials Handling Equipment Business andTextile Machinery Business<Mission>
To aggressively cultivate and expand global markets through thedesign and development of products using Toyota Industries’
unique technologies. The Car Air-Conditioning Compressor
Business and Materials Handling Equipment Business, inparticular, serve as core businesses driving the growth of ouroperations.

TOYOTA INDUSTRIES CORPORATION Annual Report 2005

73

Management’s Discussion and Analysis of Financial Condition and Results of Operations

74

Third Category: Electronics Business, Logistics Solutions
Business and Other Businesses, etc.
<Mission>
To be a key source of Toyota Industries’ future growth.
The first category, the Vehicle Business and the Engine Business,handles mainly the production of vehicles consigned by TMC
and the production of engines for TOYOTA cars. Determined
to play a more important role in the Toyota Group, Toyota
Industries is making ongoing efforts to improve its production
technologies and strengthen quality control. While contributing
to the further development of the Toyota Group, these twobusinesses also serve as the foundation intrinsic to Toyota
Industries’ growth.
Toyota Industries remains committed to strengthening its
R&D capability and improving productivity as it strives to takea more proactive approach to the development and productionof TOYOTA cars and engines. Toyota Industries will also
make proposals to TMC for the design and launch of auto partsand small cars, and actively work to ensure such proposals
are adopted. In the Engine Business, Toyota Industries willcontribute to TMC’s global strategy, especially in Europe, by
supplying its diesel engines to TMC. Through such strategies
and actions, Toyota Industries fully expects to expand its market
presence.
The second category comprises the Car Air-Conditioning
Compressor Business, the Materials Handling Equipment
Business and the Textile Machinery Business. In thesebusinesses, Toyota Industries will aim to cultivate global markets
by accurately pinpointing customer needs and applying our
proprietary technologies to develop and sell products tailored tothese needs. Recognizing that technological improvement is the
key to competitiveness, Toyota Industries strives to strengthen
its technological development capabilities by nurturing superior
engineers. Because our Car Air-Conditioning Compressor
Business and the Materials Handling Equipment Business are
positioned as core businesses, Toyota Industries intends toconcentrate its allocation of management resources toward thesebusinesses. In the Materials Handling Equipment Business, wewill move toward the further integration of TOYOTA Material
Handling Company and the BT Industries Group, as we strive tocreate additional synergies.
The third category primarily consists of the Electronics
Business and the Logistics Solutions Business. Toyota Industries
will give these businesses priority in allocating management
resources, with the aim of cultivating these into future
core businesses. Electronics-related businesses, principally
involving power electronics parts for automobiles, consumer
electronics and LCDs, are characterized by rapid advances intechnological innovation that require a stronger R&D capability
and ongoing capital investment to maintain competitiveness.
The key to success in this field is to get production on track

TOYOTA INDUSTRIES CORPORATION Annual Report 2005

quickly, improve the product rejection rate and achieve aquick return on investment. To participate in the Electronics
Business and expand operations within a short period of timealong with diversifying the risks of entering new areas of thisbusiness, Toyota Industries has carried out independent productdevelopment, while also establishing successful joint ventureswith Sony and Ibiden. In relation with conducting R&D on
power electronics parts for automobiles, radio tuners and organic
light-emitting diodes, we envision the Electronics Business as a
key source of future corporate growth.
In recent years, Japanese industries have been increasingly
moving toward outsourcing of product distribution and storage
functions to reduce logistics costs. Viewing this trend as anopportunity, Toyota Industries launched the Logistics Solutions
Business in Japan. Backed by our extensive materials handlingknow-how accumulated through the production and sales oflift trucks and other materials handling equipment, we strive tooffer customer-oriented proposals for optimized logistics andcost reduction. Toyota Industries intends to proactively allocate
management resources to the Logistics Solutions Business tobuild it into a new source of stable revenues in the years ahead.

Outlook for Results for Fiscal 2006
Toyota Industries expects the Japanese economy to continue
along a steady path toward recovery. However, the pace ofrecovery will likely remain slow, and temporary economic
stagnation is anticipated due to a correction phase. Conversely,
uncertainties persist regarding the fluctuations of exchange rates
and the rising prices of raw materials such as crude oil and steel
in Japan and abroad. Overseas, concerns over the deceleration of
the U.S., European and Chinese economies preclude optimism.
For fiscal 2006, ending March 31, 2006, Toyota Industries
forecasts consolidated net sales of ¥1,450.0 billion, ordinary
income of ¥75.0 billion and net income of ¥45.0 billion. We aredetermined to heighten the comprehensive capabilities of Toyota
Industries as a whole through the development of appealing new
products with an unwavering emphasis on quality, as well as
the enhancement of sales, service and cost-reduction activities
Group-wide.
Our projections are based on an exchange rate of¥105.0=US$1.

Dividend Policy
The Company regards the benefits of shareholders as one ofits most important management policies. Based on this stance,
we will strive to strengthen Toyota Industries’ corporate
constitution, promote proactive business development and raise
its corporate value.
The Company’s dividend policy is to meet the expectationsof shareholders while giving full consideration to businessRisk Information
The following represent risks that could have a material impact
on Toyota Industries’ financial condition, business results andshare prices. The risks mentioned in this annual report represent
only a portion of the risks that could have an impact on Toyota
Industries’ financial condition and business results, and do notnecessarily cover all possible risks. There is also a possibility
that Toyota Industries could be affected in the future by risks
currently unknown or not considered noteworthy or significant.

Principal Customers
Toyota Industries’ automobile and engine products are soldprimarily to TMC. In fiscal 2005, net sales to TMC accounted
for 33.4% of consolidated net sales. Therefore, TMC’s vehicle
sales could have an impact on Toyota Industries’ businessresults. As of March 31, 2005, TMC held 24.1% of theCompany’s voting rights.

Product Development Capabilities
Based on the concept of “developing appealing new products,”
Toyota Industries proactively develops new products by
utilizing its leading-edge technologies, as it strives to anticipate
increasingly sophisticated and diversifying needs of the market
and ensure the satisfaction of its customers. R&D activities arefocused mainly on developing and upgrading products in current
business fields and peripheral sectors. Toyota Industries expects
that revenues derived from these fields will continue to accountfor a significant portion of total revenues and anticipates that
future growth will be contingent on the development and salesof new products in these fields. Toyota Industries believes thatit can continue to develop appealing new products. However,Toyota Industries may not be able to forecast market needs
and develop and introduce appealing new products in a timely
manner. This could result in lower future growth and have an

adverse impact on Toyota Industries’ financial condition andbusiness results. Such a situation could result from risks that
include no assurance Toyota Industries can allocate sufficient
future funds necessary for the development of appealing new
products; no assurance that product sales will be successful, as
forecasts of products supported by the market may not always be
accurate; and no assurance that newly developed products andtechnologies will always be protected as intellectual property.

Intellectual Property Rights
In undertaking its business activities, Toyota Industries has
acquired numerous intellectual property rights, including
those acquired overseas, such as patents related to its products,
product designs and manufacturing methods. However, not allpatents submitted will necessarily be registered as rights, andthese patents could thus be rejected by patent authorities orinvalidated by third parties. Also, a third party could circumventa patent of Toyota Industries and introduce a competing productinto the market. Moreover, Toyota Industries’ products utilize awide range of technologies. Therefore, Toyota Industries could
become a party subject to litigation involving the intellectual
property rights of a third party.

Product Defects
Guided by the basic philosophy of “offering products andservices that are clean, safe and of high quality,” Toyota
Industries makes its utmost efforts to enhance quality.
However, Toyota Industries cannot guarantee all its products
will be defect-free and that product recalls will not be madein the future. Toyota Industries is insured for product liability
indemnity. However, Toyota Industries cannot guarantee that
this insurance will sufficiently cover final indemnity amounts
incurred. Product defects that could lead to large-scale recalls
and product liability indemnities could result in large costburdens and have a significant negative impact on the evaluationof Toyota Industries. It could also have an adverse effect on
Toyota Industries’ financial condition and business results due toa decrease in sales, deterioration of profitability and decrease inshare prices of Toyota Industries.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

performance, capital demand, the dividend payout ratio on aconsolidated basis and other factors. Toyota Industries’ Ordinary
General Meeting of Shareholders, held on June 22, 2005,
approved a year-end cash dividend of ¥19.0 per share. Including
the interim cash dividend of ¥13.0 per share, cash dividends forthe year totaled ¥32.0 per share, an increase of ¥8.0 per shareover fiscal 2004.
The dividend payout ratio was 39.1%. On a consolidated
basis, it was 23.7%.
The Company intends to use retained earnings to improvethe competitiveness of its products, augment production capacity
in Japan and overseas, as well as expand into new fields ofbusiness and strengthen its corporate constitution in securing
future profits for its shareholders. It will also use retained
earnings to repurchase treasury stock.

Price Competition
Toyota Industries faces extremely harsh competition in eachof the industries in which it conducts business, including its
Automobile and Materials Handling Equipment businesses,
which are the core of Toyota Industries’ earnings foundation.
Toyota Industries believes it offers high-value-added productsthat are unrivalled in terms of technology, quality and cost.
Amid an environment characterized by intensifying pricecompetition, however, Toyota Industries may be unable tomaintain or increase market share against low-cost competitors
or to maintain profitability. This could have an adverse impact
on Toyota Industries’ financial condition and business results.

TOYOTA INDUSTRIES CORPORATION Annual Report 200575

Management’s Discussion and Analysis of Financial Condition and Results of Operations

76

Reliance on Suppliers of Raw Materials andComponents
Toyota Industries’ products rely on various raw materials andcomponents from suppliers outside the Toyota Industries Group.
Toyota Industries has concluded basic business contracts withthese external suppliers and assumes it can carry out stabletransactions for raw materials and components. However,Toyota Industries has no assurances against future shortagesof raw materials and components, which arise from a global
shortage due to tight supply or an unforeseen accident involving
a supplier. Such shortages could have a negative effect on
Toyota Industries’ product production and cause an increase incosts, which could have an adverse impact on Toyota Industries’
financial condition and business results.

Environmental Regulations
In view of its social responsibilities as a company, Toyota
Industries strives to reduce any burden on the environment
resulting from its production processes, as well as strictly
adheres to applicable environmental laws and regulations.
However, various environment-related regulations could also
be revised and strengthened in the future. Accordingly, any
expenses necessary for continuous strict adherence to theseenvironmental regulations could result in increased businesscosts and have an adverse impact on Toyota Industries’ financial
condition and business results.

Share Price Fluctuations
At the end of fiscal 2005, Toyota Industries held marketablesecurities, and therefore bears the risk of price fluctuationof these shares. Based on fair market value of these sharesat the end of this period, Toyota Industries had unrealized
gains. However, unrealized gains on marketable securities
could worsen depending on future share price movements.
Additionally, a fall in share prices could reduce the value ofpension assets, leading to an increase in the pension shortfall.

Effects of Disasters, Power Blackouts and Other
Incidents
Toyota Industries carries out regular checks and inspections of
its production facilities to minimize the effect of production
disruptions. However, there is no assurance Toyota Industries
can completely prevent or lessen the impact of man-madeor natural disasters, including malfunctions of production
facilities, fires at production facilities and power blackouts. For
example, the majority of Toyota Industries’ domestic production
facilities and most of its business partners are situated in the
Chubu region. Therefore, a major earthquake such as the Tokai
Earthquake, or an incident that affects other operations, could
delay or stop production or shipment activities. Such prolonged
delays and stoppages could have an adverse impact on Toyota
Industries’ financial condition and business results.

Alliances with Other Companies

Latent Risks Associated with International
Activities

Aiming to expand its businesses, Toyota Industries engages
in joint activities with other companies through alliances andjoint ventures. However, a wildly fluctuating market trend or adisagreement between Toyota Industries and its partners, owing
to business, financial or other reasons, could prevent Toyota
Industries from deriving the intended benefits of its alliances.

Toyota Industries manufactures and sells products and provides
services in various countries. Such unforeseen factors as social
chaos, including political disruptions, terrorism and wars, aswell as changes in economic conditions, could have an adverse
impact on Toyota Industries’ financial condition and businessresults.

Exchange Rate Fluctuations

Retirement Benefit Liabilities

Toyota Industries’ businesses encompass the production andsales of products and the provision of services worldwide.
Generally, the strengthening of the yen against other currencies(especially against the U.S. dollar and the euro, which
account for a significant portion of Toyota Industries’ sales)
has an adverse impact on Toyota Industries’ business, while aweakening of the yen has a favorable impact. An increase in
the value of currencies in countries or regions where Toyota
Industries carries out production could lead to an increase inlocal production, procurement and distribution costs. Suchan increase in costs could reduce Toyota Industries’ pricecompetitiveness. Additionally, because export sales of several
businesses are denominated mainly in yen, exchange rate
fluctuations could have an adverse impact on Toyota Industries’
financial condition and business results due to a change inmarket prices.

Toyota Industries’ employee retirement benefit expenses andliabilities are calculated based on expected rates of return on
pension assets as well as assumptions upon making actuarial
calculations that incorporate discount rates and other factors.
Therefore, differences between actual results and assumptions
as well as changes in the assumptions could have a significant
impact on recognized expenses and calculated liabilities infuture accounting periods.

TOYOTA INDUSTRIES CORPORATION Annual Report 2005

Significant Accounting Policies andEstimates
Toyota Industries’ financial statements are prepared inconformity with accounting principles and practices generally
accepted in Japan. In preparing financial statements,(then Toyoda Automatic Loom Works, Ltd.), established theAutomobile Division within the Company based on his resolve
to manufacture Japanese-made automobiles. In 1937, theAutomobile Division was spun off and became an independentcompany, Toyota Motor Co., Ltd. (the present Toyota Motor
Corporation).

Allowance for Doubtful Accounts

Capital RelationshipTo prepare for the risk of receivables becoming uncollectible,
Toyota Industries estimates its allowance for doubtful accounts
by utilizing the percentage of historical experiences in credit
losses for ordinary receivables and individually examining
the feasibility of collection for receivables that seem to beuncollectible. Evaluating the allowance for doubtful accounts
involves judgments made in accordance with the nature of thesituation, and this allowance represents an essential and crucial
estimate—including future estimates of cash flow amounts andtiming—that could change significantly. Based on currently
available information, Toyota Industries’ management believes
its present allowance for doubtful accounts is sufficient.
However, the need to significantly increase allowance for
doubtful accounts in the future could have an adverse impact on
Toyota Industries’ business results.

In light of this historical background, Toyota Industries and
TMC have maintained a close capital relationship. As of March
31, 2005, Toyota Industries held 5.45% (196,725 thousand
shares) of TMC’s total shares issued. Likewise, as of the samedate, TMC held 24.10% (76,600 thousand shares) of Toyota
Industries’ total voting rights and 23.51% of total shares issued.
Toyota Industries is a TMC affiliate accounted for by the equity
method.

Allowance for Retirement Benefits
Calculations differ for retirement benefits, retirement benefit
expenses and liabilities after employee retirement, as well as
benefits for employees on leave of absence because different
assumptions are used at the time of calculation. Assumptions
include such factors as discount rates, amount of benefits,interest expenses, expected rates of return on pension assets
and mortality rates. The difference in amounts between theseassumptions and actual results is calculated cumulatively
and amortized over future accounting periods, and thus
becomes an expense and is recognized as a liability in futureaccounting periods. Toyota Industries believes its assumptions
are reasonable. However, differences between actual results orchanges in the assumptions could have an impact on retirement
benefits and retirement benefit expenses and liabilities after
employee retirement.

Business RelationshipToyota Industries assembles certain cars and produces
automobile engines under consignment from TMC. Toyota
Industries also sells car air-conditioning compressors to DENSO,
a Toyota Group company. Additionally, we sell a portion of ourother components and products directly or indirectly to otherToyota Group companies. In fiscal 2005, our net sales to TMC
and DENSO accounted for 33.4% and 8.5% of our consolidated
net sales, respectively.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

management must make estimates, judgments and assumptions
that affect reported amounts of assets and liabilities at fiscal
year-end as well as revenues and expenses during each fiscal
year. Among Toyota Industries’ significant accounting policies,
the following categories require a considerable degree of
judgment and estimation and are highly complex.

Contributions to the Toyota GroupAs a member of the Toyota Group, Toyota Industries aims tocontribute to strengthening the competitiveness of TMC andother Toyota Group companies in such areas as quality, cost,delivery and technologies. Toyota Industries is confident thatraising the Toyota Group’s competitiveness will lead to increases
in our sales to and profits from the Toyota Group, thereby
contributing to raising Toyota Industries’ corporate value.

Toyota Industries’ Relationship to Toyota
Motor Corporation
Due to historical reasons, Toyota Industries maintains close
relationships with TMC and Toyota Group companies in termsof capital and business dealings.

Historical BackgroundIn 1933, Kiichiro Toyoda, the eldest son of founder Sakichi
Toyoda and then Managing Director of Toyota Industries

TOYOTA INDUSTRIES CORPORATION Annual Report 2005

77

Consolidated Balance Sheets
Consolidated Balance Sheets

Toyota Industries Corporation
As of March 31, 2005 and 2004
Thousands of
U.S. dollars (Note 1)

Millions of yen

ASSETS

2005

2005

2004

Current assets:
Cash and cash equivalents
Trade notes and accounts receivable (Note 7)¥ 100,536 ¥

77,212

173,459

144,575$

936,177
1,615,225

Short-term investments

199

228

1,853

Inventories (Note 5)

94,02477,574875,538

Deferred tax assets (Note 15)

20,37917,534

189,766

Other current assets

76,72935,128714,488

Less — allowance for doubtful accounts(2,352)(2,337)(21,901)

Total current assets

462,974

349,914

4,311,146

Buildings and structures (Note 7)

132,419

124,423

1,233,066

Machinery, equipment and vehicles (Note 7)

185,425

160,787

1,726,651

Tools, furniture and fixtures

18,834

15,565

175,380

Land (Note 7)

78,65971,787732,461

Construction in progress

41,742

16,835

388,695

Total property, plant and equipment

457,079

389,397

4,256,253

Software

12,411

11,993

115,569

Goodwill

104,561

87,863

973,657

Total intangible assets

116,972

99,856

1,089,226

1,198,337

1,095,031

11,158,739

31,06323,208289,254

Fixed assets:
Property, plant and equipment:

Intangible assets:

Investments and other assets:
Investments in securities (Notes 4 and 7)
Investments in unconsolidated subsidiaries and affiliated companies
Long-term loans

9,804

9,756

91,294Long-term prepaid expenses

13,21913,554

123,093

Deferred tax assets (Note 15)

7,234

3,538

67,362Other investments and other assets

30,47327,991

283,760

(331)

(250)

(3,082)

1,289,799

1,172,828

12,010,420

1,863,850

1,662,081

17,355,899¥2,326,824 ¥2,011,995$21,667,045

Less — allowance for doubtful accounts
Total investments and other assets
Total fixed assets
Total assets
The accompanying notes are an integral part of these financial statements.

78

TOYOTA INDUSTRIES CORPORATION Annual Report 2005

LIABILITIES, MINORITY INTERESTS AND SHAREHOLDERS’ EQUITY

2005

2004

2005

¥ 160,231¥ 129,822$ 1,492,048

59,94570,442

558,199–

15,000–Current portion of bonds (Note 7)

20,300–

189,031

Other payables

45,462

19,067423,336

Accrued expenses

59,35751,587552,724

Accrued income taxes

15,297

8,845

142,443

Deposits received from employees

20,055

19,497

186,749

Deferred tax liabilities (Note 15)

4,067

2,743

37,871Other current liabilities (Note 7)

36,8269,334

342,918

Total current liabilities

421,540

326,337

3,925,319

Bonds (Note 6)

230,000

200,300

2,141,726

Long-term debt (Notes 6 and 7)

73,49235,225684,347

Deferred tax liabilities (Note 15)

381,787

346,336

3,555,145

Allowance for retirement benefits (Note 14)

44,46334,264

414,033

Other long-term liabilities

18,891

17,843

175,910

Total long-term liabilities

748,633

633,968

6,971,161

1,170,173

960,305

10,896,480

40,90434,926

380,892

749,260

Current liabilities:
Trade notes and accounts payable
Short-term bank loans (Note 7)
Commercial paper

Consolidated Balance Sheets

Thousands of
U.S. dollars (Note 1)

Millions of yen

Long-term liabilities:

Total liabilities
Minority interests in consolidated subsidiaries
Shareholders’ equity (Note 10):
Common stock:
Authorized — 1,091,245,000 shares

80,46380,463

Capital surplus

105,601

105,743

983,341

Retained earnings

325,331294,6723,029,435

Net unrealized gains on other securities

591,218534,079

5,505,335

Foreign currency translation adjustments

29,861

19,783

278,061

Treasury stock at cost — 7,603,825 shares in 2005 and 8,174,958 shares in 2004

(16,727)(17,976)(155,759)

Total shareholders’ equity

1,115,747

1,016,764

10,389,673

Total liabilities, minority interests and shareholders’ equity¥2,326,824¥2,011,995$21,667,045

Issued—325,840,640 shares in 2005 and 325,840,640 shares in 2004

TOYOTA INDUSTRIES CORPORATION Annual Report 2005

79

Consolidated Statements of Income
Consolidated Statements of Income

Toyota Industries Corporation
For the years ended March 31, 2005, 2004 and 2003
Thousands of
U.S. dollars (Note 1)

Millions of yen

2005

2004

2003

2005

Net sales¥1,241,538¥1,164,379¥1,069,219$11,561,021

Cost of sales (Note 11)

1,041,780

978,459

899,7029,700,903

Gross profit

199,758

185,920

169,517

1,860,118

146,638

133,289

117,039

1,365,472

53,12052,63152,478494,646

Selling, general and administrative expenses (Note 11)
Operating income
Non-operating income:Interest income

8,160

8,175

8,985

75,985

Dividends income

13,761

10,998

8,888

128,140

Equity in net earnings of unconsolidated subsidiaries and

6,805

1,842

–

63,367

9,558

9,169

8,461

89,003(9,735)(9,756)(10,522)(90,651)––(4,634)–(10,756)(14,088)(12,281)(100,158)

70,91358,971

51,375660,332

–

621

–

–

(559)

–

–

(5,206)–(1,851)––

Revalued loss of investment securities––(4,298)–Loss on disposal of property, plant and equipment––(3,407)–70,35457,741

43,670655,126

Income taxes — current (Note 15)

26,80923,96728,121

249,641

Income taxes — deferred (Note 15)(4,557)(3,220)(7,304)(42,434)

Minority interests in consolidated subsidiaries

4,744

3,371

919

44,176affiliated companies
Other non-operating income (Note 12)
Non-operating expenses:
Interest expenses
Equity in net loss of unconsolidated subsidiaries andaffiliated companies
Other non-operating expenses (Note 12)
Ordinary income
Extraordinary gains:
Gain on transfer to a defined contribution pension plan
Extraordinary losses:
Impairment loss of fixed assets (Note 9)
Provision for retirement and severance benefits for directors andcorporate auditors

Income before income taxes and minority interests

Net income¥

43,358¥33,623¥

21,934

Yen

403,743

U.S. dollars

Net income per share — basic (Note 20)¥135.09¥108.04¥70.19$1.26

Net income per share — diluted (Note 20)

135.03101.97

62.90

1.26

Cash dividends per share

32.00

24.00

22.00

0.30

The accompanying notes are an integral part of these financial statements.

80$

TOYOTA INDUSTRIES CORPORATION Annual Report 2005

Consolidated Statements of Shareholders’ Equity
Millions of yen

Balance at March 31, 2002
Net income
Cash dividends
Bonuses to directors and corporate auditors
Net unrealized losses on other securities
Foreign currency translation adjustments
Conversions of convertible bonds
Repurchase of treasury stock
Gain on disposal of treasury stock
Balance at March 31, 2003
Net income
Cash dividends
Bonuses to directors and corporate auditors
Net unrealized gains on other securities
Foreign currency translation adjustments
Conversions of convertible bonds
Repurchase of treasury stock
Gain on disposal of treasury stock
Change in subsidiaries’ year-ends
Balance at March 31, 2004
Net income
Cash dividends
Bonuses to directors and corporate auditors
Net unrealized gains on other securities
Foreign currency translation adjustments
Repurchase of treasury stock
Exercise of stock options
Loss on disposal of treasury stock
Effect of adoption of a new accounting standards
for retirement benefits by foreign subsidiaries
Balance at March 31, 2005

Numberof shares(Thousands)

Commonstock

CapitalsurplusRetainedearnings

Net unrealized
gains (losses) onother securities

Translation
adjustments

Treasurystock
at cost313,299
–
–
–
–
–
25
–
–
313,324–––––
12,517–––
325,841
–
–
–
–
–
–
–
–
–

¥68,022
–
–
–
–
–
25
–
–
68,047–––––
12,416–––80,463
–
–
–
–
–
–
–
–
–

¥ 89,327
–
–
–
–
–
25
–
13
89,365–––––
12,416–
3,962–
105,743
–
–
–
–
–
–
–
(142)
–

¥253,975
21,934(6,246)
(282)
–
–
–
–
–
269,381
33,623(7,417)
(290)
–
–
–
–
–
(625)
294,672
43,358(7,949)
(331)
–
–
–
–
–
(4,419)¥456,415–––(124,747)––––
331,668–––
202,411–––––534,079–––
57,139–––––¥12,361
–
–
–
–
4,529
–
–
–
16,890
–
–
–
–
2,893
–
–
–
–
19,783––––
10,078––––¥ (1,288)
–
–
–
–
–
–
(35,195)–(36,483)–––––
35,601(17,094)––(17,976)
–
–
–
–
–
(53)
1,302
–
–

325,841¥80,463¥105,601¥325,331¥591,218¥29,861¥(16,727)

Net unrealized
gains on othersecurities

Translation
adjustments

Treasurystock
at cost$749,260
–
–
–
–
–
–
–
–
–

$984,663 $2,743,943 $4,973,266–
403,743––(74,020)––(3,082)–––532,069
–
–
–
–
–
–
–
–
–
(1,322)–––(41,149)–$184,216––––
93,845––––$(167,390)
–
–
–
–
–
(494)
12,125––$749,260$983,341 $3,029,435 $5,505,335$278,061$(155,759)

Consolidated Statements of Shareholders’ Equity

Toyota Industries Corporation
For the years ended March 31, 2005, 2004 and 2003

Thousands of U.S. dollars (Note 1)
Commonstock

Balance at March 31, 2004
Net income
Cash dividends
Bonuses to directors and corporate auditors
Net unrealized gains on other securities
Foreign currency translation adjustments
Repurchase of treasury stock
Exercise of stock options
Loss on disposal of treasury stock
Effect of adoption of a new accounting standards
for retirement benefits by foreign subsidiaries
Balance at March 31, 2005

CapitalsurplusRetainedearnings

The accompanying notes are an integral part of these financial statements.

TOYOTA INDUSTRIES CORPORATION Annual Report 2005

81

Consolidated Statements of Cash Flows
Consolidated Statements of Cash Flows

Toyota Industries Corporation
For the years ended March 31, 2005, 2004 and 2003

Cash flows from operating activities:
Income before income taxes and minority interests
Adjustments to reconcile income before income taxes
to net cash provided by operating activities:
Depreciation and amortization
Impairment loss of fixed assets
Increase in allowance for doubtful accounts
Interest and dividends income
Interest expenses
Equity in net (earnings) loss of affiliates
Increase in receivables(Increase) decrease in inventories
Increase in payables
Others, net
SubtotalInterest and dividends income received
Interest expenses paid
Income taxes paid
Net cash provided by operating activities
Cash flows from investing activities:
Payments for purchases of marketable securities
Proceeds from sales of marketable securities
Payments for purchases of property, plant and equipment
Proceeds from sales of property, plant and equipment
Payments for purchases of investment securities
Proceeds from sales of investment securities
Proceeds from acquisition of subsidiaries’ stock resulting inchange in scope of consolidation
Payments for acquisition of subsidiaries’ stock resulting inchange in scope of consolidation
Payments for loans madeProceeds from collections of loans
Payments for acquisition of business
Others, net
Net cash used in investing activities
Cash flows from financing activities:(Decrease) increase in short-term loans(Decrease) increase in commercial paper
Proceeds from long-term bank loans
Repayments of long-term bank loans
Proceeds from issuances of bonds
Repayments of bonds
Payments to convertible bond redemption funds
Proceeds from convertible bond redemption funds
Payments for repurchase of treasury stock
Cash dividends paid
Cash dividends paid to minority shareholders
Others, net
Net cash provided by (used in) financing activities
Translation adjustments of cash and cash equivalents
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of year
Net decrease in cash and cash equivalents due to change in subsidiaries’ year-ends
Cash and cash equivalents at end of year
The accompanying notes are an integral part of these financial statements.

82

Thousands of
U.S. dollars (Note 1)

Millions of yen

TOYOTA INDUSTRIES CORPORATION Annual Report 2005

2005

2004

2003

2005

¥ 70,354¥ 57,741¥ 43,670$ 655,126

70,213559
371(21,921)9,735(6,805)(22,923)(12,851)
26,893(4,063)
109,562
21,972(8,711)(22,728)
100,095

65,352–
46(19,173)
9,756(1,842)(11,051)
751
2,631
9,741
113,952
18,900(9,845)(30,601)
92,40659,154–220(17,874)
10,522
4,634(7,406)
1,253
5,431
20,416
120,020
17,983(10,945)(23,875)
103,183

653,8135,206
3,455(204,125)
90,651(63,367)(213,456)(119,667)
250,423(37,834)
1,020,225
204,600(81,115)(211,640)
932,070––(110,112)
10,043(9,563)
3,300
–

(101)
3,874
(78,268)3,201(14,301)
2,615
1,216

(1,664)
8,447(86,703)749(21,896)
9,792
944

–
–
(1,025,347)
93,519(89,049)
30,729–(16,943)––(157,771)(2,371)
2,784–(5,369)(128,231)(4,978)5,448(961)(10,413)(92,668)(1,664)
2,931–(6,057)(95,121)(22,078)
25,924–(49,995)(1,194,068)(13,687)(15,000)
40,786(6,964)50,000–––(53)(7,949)(667)
3,555
50,021
1,439
23,324
77,212–¥100,536(10,959)
15,0004,522(8,530)–(31,677)(56,670)
56,670(17,094)(7,414)(252)
389(56,015)323(55,954)
136,929(3,763)¥ 77,212

5,886–
21,797(9,808)79,690–––(35,195)(6,244)(195)
1,845
57,776(29)
65,80971,120–¥136,929(127,451)(139,678)
379,793(64,848)465,593–––(494)(74,020)(6,211)
33,104
465,788
13,400217,190
718,987–$ 936,177

Notes to Consolidated Financial Statements
The accompanying consolidated financial statements havebeen prepared based on the accounts maintained by Toyota
Industries Corporation (the “Company”) and its consolidated
subsidiaries (together, hereinafter referred to as “Toyota
Industries”) in accordance with the provisions set forth in theCommercial Code of Japan and the Securities and Exchange
Law, and in conformity with accounting principles generally
accepted in Japan, which are different in certain respects as tothe application and disclosure requirements of International
Financial Reporting Standards.

Certain items presented in the consolidated financial
statements submitted to the Director of Kanto Finance Bureau
in Japan have been reclassified in these accounts for theconvenience of readers outside Japan.
Amounts in U.S. dollars are included solely forthe convenience of readers outside Japan. The rate of¥107.39=US$1, the rate of exchange prevailing at March
31, 2005, has been used in translation. The inclusion of suchamounts are not intended to imply that the Japanese yen actually
represent, or have been or could be converted into, equivalentamounts in U.S. dollars at this rate or any other rates.

Notes to Consolidated Financial Statements

1. Basis of presenting consolidated financial statements

2. Summary of significant accounting policies(1) Consolidation
The consolidated financial statements include the accounts of
the Company and its 146 subsidiaries (43 domestic subsidiaries
and 103 overseas subsidiaries, which are listed on pages 62 and63) in 2005, 140 subsidiaries (42 domestic subsidiaries and 98
overseas subsidiaries) in 2004 and 118 subsidiaries (33 domestic
subsidiaries and 85 overseas subsidiaries) in 2003.
For the year ended March 31, 2005, 11 subsidiaries were
newly added to the scope of consolidation and six companies
were excluded from the scope of consolidation because ofmerger and acquisition.
For the year ended March 31, 2004, 22 subsidiaries were
newly added to the scope of consolidation. One unconsolidated
subsidiary is excluded from the scope of consolidation due totemporary investments.
For the year ended March 31, 2003, eight subsidiaries were
newly added to the scope of consolidation and one company
was excluded from the scope of the consolidation. Twounconsolidated subsidiaries were excluded from the scope of
consolidation due to temporary investments.
The fiscal years of certain subsidiaries are different from thefiscal year of the Company. Since the difference is not morethan three months, the Company is using those subsidiaries’
statements for those fiscal years, making adjustments for
significant transactions that materially affect the financial
position or results of operations.
All significant intercompany transactions, balances andunrealized profits within Toyota Industries have been eliminated.
A full portion of the assets and liabilities of the acquired
subsidiaries is stated at fair value as of the date of acquisitionof control.

(2) Investments in unconsolidated subsidiaries andaffiliates
Investments in 20 major affiliates in 2005, one unconsolidated
subsidiary and 19 major affiliates in 2004 and two
unconsolidated subsidiaries and 16 major affiliates in 2003 are
accounted for by the equity method of accounting. Investments
in unconsolidated subsidiaries and affiliates not accounted forby the equity method are stated at cost due to their insignificant
effect on the consolidated financial statements.
The major affiliates accounted for by the equity method arelisted on page 63.

(3) Translation of foreign currencies
Foreign currency denominated receivables and payables aretranslated into Japanese yen at the year-end exchange rates andthe resulting transaction gains or losses are included in income
statements.
All asset and liability accounts of foreign subsidiaries andaffiliates are translated into Japanese yen at year-end exchange
rates and all revenue and expense accounts are translated at
prevailing fiscal average rates.

(4) Cash and cash equivalents
Cash and cash equivalents include all highly liquid investments,
generally with original maturities of three months or less, thatare readily convertible to known amounts of cash and are so near
maturity that they present insignificant risk of changes in value
because of changes in interest rates.

(5) Marketable securities and investment insecurities
Toyota Industries classifies securities into four categories
by purpose of holding: trading securities, held-to-maturity
securities, other securities and investments in unconsolidated

TOYOTA INDUSTRIES CORPORATION Annual Report 2005

83

Notes to Consolidated Financial Statements

subsidiaries and affiliates. Toyota Industries did not have trading
securities or held-to-maturity securities as of March 31, 2005
and 2004.
Other securities with readily determinable fair values
are stated at fair value based on market prices at the end of
the year. Unrealized gains and losses are included in “Netunrealized gains on other securities” as a separate componentof shareholders’ equity. Cost of sales of such securities isdetermined by the moving-average method. Other securities
without readily determinable fair values are stated at cost, as
determined by the moving-average method.
Investments in unconsolidated subsidiaries and affiliates areaccounted for by the equity method (see Note 2 (2)).

(6) Inventories
Inventories are stated mainly at cost determined by themoving-average method.

(7) Property, plant and equipment, and depreciation
Property, plant and equipment are stated at cost. Depreciation
expenses of property, plant and equipment are computed mainlyby the declining-balance method for the Company and Japanesesubsidiaries and by the straight-line method for overseas
subsidiaries.
Significant renewals and additions are capitalized at cost.
Repair and maintenance are charged to income as incurred.
Accumulated depreciation as of March 31, 2005 and 2004
was ¥541,383 million (US$5,041,279 thousand) and ¥509,379
million, respectively.

(8) Intangible assets and amortization
Amortization of intangible assets is computed using thestraight-line method. Software costs for internal use areamortized by the straight-line method over their expected useful
lives (mainly five years).
Goodwill, if material, is amortized principally over less than
20 years on a straight-line basis, while immaterial goodwill ischarged to income as incurred. Goodwill incurred before April 1,
2000 has been amortized over five years on a straight-line basis.
Accumulated amortization of intangibles and goodwill as ofMarch 31, 2005 and 2004 was ¥42,637 million (US$397,030
thousand) and ¥30,743 million, respectively.

(9) Impairment of fixed assets
Calculation of the impairment of fixed assets is based onreasonable and supportable assumptions and projection of thegrouping of assets and recoverable value, with due consideration
for the specific condition of each company.
The recoverable amount of assets is calculated based on the
net selling price. The change in accounting policy is describedin Note 3.

84

TOYOTA INDUSTRIES CORPORATION Annual Report 2005(10) Allowance for doubtful accounts
Toyota Industries adopted the policy of providing an allowancefor doubtful accounts in an amount sufficient to cover possible
losses on collection by estimating individually uncollectible
amounts and applying to the remaining accounts a percentage
determined by certain factors such as historical collection
experiences.

(11) Deferred charges
Stock issuance costs and bond issuance costs are expensed as
incurred.

(12) Allowance for retirement benefits
Toyota Industries accrues an amount which is considered to be
incurred in the period based on the estimated projected benefit
obligations and estimated pension assets at the end of the year.
To provide for the retirement benefits for directors and corporate
auditors, an amount, which is calculated at the end of the year as
required by an internal rule describing the retirement benefits for
directors and corporate auditors, is accrued.

(13) Lease transactions
Finance leases other than those that are deemed to transfer
the ownership of the leased assets to lessees are accounted
for mainly by a method similar to that applicable to ordinary
operating leases.

(14) Consumption tax
The consumption tax under the Japanese Consumption Tax Law
withheld by Toyota Industries on sales of goods is not includedin the amount of net sales in the accompanying consolidated
statements of income, and the consumption tax paid by Toyota
Industries under the law on purchases of goods and services, andexpenses is not included in the related amount.

(15) Hedge accounting(a) Method of hedge accounting
Mainly the deferral method of hedge accounting is applied.
In the case of foreign currency forward contracts and foreign
currency option contracts, the hedged items are translated atcontracted forward rates if certain conditions are met.

(b) Hedging instruments and hedged items
Hedging instruments: Derivatives instruments (interest rate
swaps, foreign currency forwards andforeign currency option contracts)
Hedged items:
Risk of change in interest rate on
borrowings and risk of change inforward exchange rate on transactions
denominated in foreign currencies (assets
and liabilities, and forecasted transactions)(17) Income taxes

Hedging transactions are executed and controlled based on
Toyota Industries’ internal rule, and Toyota Industries is hedging
interest rate risks and foreign currency risks. Toyota Industries’
hedging activities are reported periodically to a director
responsible for accounting.

The provision for income taxes is computed based on the pretax
income included in the consolidated statements of income. The
asset and liability approach is used to recognize deferred tax
liabilities and assets for the expected future tax consequences of
temporary differences between the carrying amounts and the tax
bases of assets and liabilities.
Valuation allowances are recorded to reduce deferred tax
assets when it is more likely than not that a tax benefit will not
be realized.

(d) Method used to measure hedge effectivenessHedge effectiveness is measured by comparing accumulatedchanges in market prices of hedged items and hedging
instruments or accumulated changes in estimated cash flows
from the inception of the hedge to the date of measurements
performed. Currently it is considered that there are highcorrelations between them.

(e) Others
Due to the fact that counterparties to Toyota Industries represent
major financial institutions which have high creditworthiness,
Toyota Industries believes that the overall credit risk related toits financial instruments is insignificant.

(16) Appropriation of retained earnings
In the accompanying consolidated statements of shareholders’equity, the approved amount during the relevant fiscal year
is reflected for the appropriation of retained earnings ofconsolidated subsidiaries. In Japan, the payment of bonuses todirectors and corporate auditors is made out of retained earnings
through an appropriation, instead of being charged to income forthe year.

(18) Net income per share
The computation of basic net income per share is based on theweighted-average number of outstanding shares of common
stock. The calculation of diluted net income per share is similar
to the calculation of basic net income per share, except that theweighted-average number of shares outstanding includes the
additional dilution from potential common stock equivalents
such as convertible bonds. Cash dividends per share shownin the statements of income are the amounts applicable to therespective years. The change in accounting policy is describedin Note 3.

Notes to Consolidated Financial Statements(c) Hedging policy

3. Changes in accounting policies and adoption of new accounting standards(1) For the year ended March 31, 2003

(2) For the year ended March 31, 2005

Accounting Standard for Earnings Per Share

Impairment of Fixed Assets

Effective beginning the year ended March 31, 2003, Financial
Accounting Standard No. 2 “Accounting Standard for Earnings
Per Share” and Financial Accounting Standards Implementation
Guidance No. 4 “Implementation Guidance for AccountingStandards for Earnings Per Share” issued by the AccountingStandards Board of Japan have been applied. The impact of
adoption for new accounting standards is described in “Note 20.
Net income per share.”Toyota Industries applied Accounting Standards for Impairmentof Fixed Assets (Opinions Concerning Establishment of
Accounting Standards for Impairment of Fixed Assets) issued on
August 9, 2002 by the Business Accounting Council in Japan,
and the application guideline for Accounting Standards for
Impairment of Fixed Assets (the Financial Accounting Standard
Implementation Guideline No. 6 issued on October 31, 2003),
to the consolidated financial statements for fiscal 2005, as
early adoption of such standards and guidelines, which shall beeffective for fiscal years beginning on and after April 1, 2005,
is permitted for the consolidated accounting for the fiscal year
ended March 31, 2005.

TOYOTA INDUSTRIES CORPORATION Annual Report 200585

Notes to Consolidated Financial Statements

4. Marketable securities(1) As of and for the year ended March 31, 2005(a) Other securities with readily determinable fair value as of March 31, 2005 are as follows:
Millions of yen

Acquisition
cost

Thousands of U.S. dollars

Carrying
amountDifference

Acquisition
cost

Carrying
amountDifference

Securities with carrying amountexceeding acquisition cost:
Stocks¥191,932¥1,177,188¥985,256$1,787,243 $10,961,803$9,174,560

Subtotal

191,932

1,177,188985,256

1,787,243

10,961,803

9,174,560

3,348

2,911

(437)

31,17627,107(4,069)Government and municipal bonds, etc.

0

0

0

0

0

0

Other bonds

1

1

0

9

9

0

31,185

27,116(4,069)$1,818,428 $10,988,919$9,170,491

Securities with carrying amountnot exceeding acquisition cost:
Stocks
Bonds

3,349

2,912

(437)

¥195,281¥1,180,100¥984,819

SubtotalTotal

In this year, Toyota Industries recorded ¥35 million (US$326 thousand) of impairment on an equity security included in securities withcarrying amount not exceeding the cost lines.
(b) Other securities sold during the year ended March 31, 2005 are as follows:
Millions of yen

Proceeds

Realized gains¥3,189¥1,789Thousands of U.S. dollars

Realized losses¥32

Proceeds

Realized gains$29,696$16,659

Realized losses$298(c) Contents and carrying amount of securities (excluding held-to-maturity bonds within securities with fair value) without readily
determinable for practicable to fair value as of March 31, 2005 are as follows:
Carrying amountThousands of
U.S. dollars

Millions of yen

Other securities
Domestic unlisted stocks excluding over-the-counter stocks¥18,288$170,295

Money management funds

40,006

372,530(d) Redemption schedule of securities which have maturities within other securities as of March 31, 2005 is as follows:
Millions of yen

Within1 yearThousands of U.S. dollars

Over 1 year
within5 years

Over 5 years
within
10 yearsOver
10 yearsWithin1 yearOver 1 year
within5 years

Over 5 years
within
10 yearsOver
10 years

Bonds
Government bonds

¥–

¥–

¥0

¥–

$–

$–

$0

$–

Other bonds

1

–

–

–

9

–

–

–

¥1

¥–

¥0

¥–

$9

$–

$0

$–

Total

86

TOYOTA INDUSTRIES CORPORATION Annual Report 2005

(a) Other securities with readily determinable fair value as of March 31, 2004 are as follows:
Millions of yen

Acquisition
cost

Carrying
amountDifference

Securities with carrying amount exceeding acquisition cost:
Stocks¥185,252¥1,075,222¥889,970

Subtotal

185,252

1,075,222

889,970

2,097

1,653

(444)

Government and municipal bonds, etc.

0

0

0

Other bonds

1

1

0

Securities with carrying amount not exceeding acquisition cost:
Stocks
Bonds

Subtotal
Total

2,098

1,654

(444)

¥187,350¥1,076,876¥889,526

Notes to Consolidated Financial Statements(2) As of and for the year ended March 31, 2004

In this year, Toyota Industries recorded ¥184 million of impairment on an equity security included in securities with carrying amountnot exceeding the cost lines.
(b) Other securities sold during the year ended March 31, 2004 are as follows:
Millions of yen

Proceeds

Realized gains

Realized losses

¥803

¥11

¥2,181(c) Contents and carrying amount of securities (excluding held-to-maturity bonds within securities with fair value) without readily
determinable for practicable to fair value as of March 31, 2004 are as follows:
Carrying amountMillions of yen

Other securities
Domestic unlisted stocks excluding over-the-counter stocks¥18,200

Money management funds

20,019(d) Redemption schedule of securities which have maturities within other securities as of March 31, 2004 is as follows:
Millions of yen

Within1 yearOver 1 year
within5 years

Over 5 years
within
10 yearsOver
10 years

Bonds
Government bonds and municipal bonds, etc.

¥ –

¥–

¥0

¥–

Other bonds

46

0

–

–

¥46

¥0

¥0

¥–

Total

TOYOTA INDUSTRIES CORPORATION Annual Report 2005

87

Notes to Consolidated Financial Statements

5. Inventories
Inventories as of March 31, 2005 and 2004 consist of the following:Thousands of
U.S. dollars

Millions of yen

2005

2004

2005

Finished goods¥35,616¥31,265$331,651

Raw materials

15,331

11,722

142,760

Work in process

34,587

26,893322,069

Supplies

8,490

7,694

79,058¥94,024¥77,574$875,538

Total

6. Long-term debt
(1)Long-term debt as of March 31, 2005 and 2004 consists of the following:Thousands of
U.S. dollars

Millions of yen

2005

2004

2005

2.70% bonds due 2008 without collateral¥ 30,000¥ 30,000$ 279,356

2.15% bonds due 2008 without collateral

20,00020,000186,237

1.50% bonds due 2006 without collateral

15,00015,000139,677

1.94% bonds due 2009 without collateral

15,00015,000139,677

1.25% bonds due 2005 without collateral

20,00020,000186,237

1.91% bonds due 2010 without collateral

20,00020,000186,237

0.41% bonds due 2007 without collateral

30,00030,000279,356

1.13% bonds due 2012 without collateral

50,00050,000465,593

1.03% bonds due 2012 without collateral

30,000–279,356

1.46% bonds due 2014 without collateral

20,000–186,237

300

300

2,794

Long-term bank loans

77,522

38,263721,874

Less: current portion of long-term debt

(24,330)(3,038)(226,558)

Total¥303,492¥235,525$2,826,073

The Company:

Consolidated subsidiaries:
1.80% bonds due 2005

(2) Annual maturities of long-term debt as of March 31, 2005 are as follows:

88

Year ending March 31

Millions of yen

Thousands of
U.S. dollars

2005¥ 24,330$ 226,558

2006

21,079196,285

2007

33,803314,769

2008

51,653

480,985

2009

18,375

171,105

2010 and thereafter

178,582

1,662,929

Total¥327,822$3,052,631

TOYOTA INDUSTRIES CORPORATION Annual Report 2005

(1) Assets pledged as collateral as of March 31, 2005 and 2004 are as follows:
Thousands of
U.S. dollars

Millions of yen

2005

2004

2005

Investments in securities¥33,345¥33,126$310,504

Buildings and structures

3,155

3,837

29,379

Land

3,798

8,466

35,366

Machinery, equipment and vehicles

–

2

–

Trade notes and accounts receivable

1,033

431

9,619

Other

41

232

382

Total

¥41,372¥46,094$385,250

Notes to Consolidated Financial Statements

7. Assets pledged as collateral(2) Secured liabilities as of March 31, 2005 and 2004 are as follows:
Thousands of
U.S. dollars

Millions of yen

2005

2004

2005

Other current liabilities¥19,966¥19,422$185,920

Short-term bank loans

3,158

5,059

29,407

Current portion of bonds

300

–

2,794

2,685

2,435

25,002¥26,109¥26,916$243,123

Long-term debt
Total

8. Contingent liabilities
Toyota Industries is contingently liable for guarantees as of March 31, 2005 and 2004 as follows:
Thousands of
U.S. dollars

Millions of yen

2005

2004

2005

¥25,401¥11,250$236,530

Guarantees given by consolidated subsidiaries

700

10,030

6,518

Guarantee forwards given by the Company

2,954

3,314

27,507

Guarantees given by the Company

9. Impairment loss of fixed assets
Millions of yen

Thousands of
U.S. dollars

2005

2005

RegionItems

Details of Fixed assets

Hyogo

One idle property

Building

¥ 28

$ 261

Land

338

3,148

Tochigi

One idle property

Land

86

801

NaganoOne idle property

Land

59

549

KagawaOne idle property

Land

Total

48

447

¥559

$5,206TOYOTA INDUSTRIES CORPORATION Annual Report 200589

Notes to Consolidated Financial Statements

10. Shareholders’ equity
Under the Japanese Commercial Code, amounts equal toat least 10% of the sum of the cash dividends and otherexternal appropriations paid by the Company and its domestic
subsidiaries must be set aside as a legal reserve until it equals
25% of common stock. The legal reserve may be used to reducea deficit or may be transferred to common stock by taking
appropriate corporate action. In consolidation, the legal reservesof the Company and its domestic subsidiaries are accounted foras retained earnings.
A year-end cash dividend is approved at the Ordinary

General Meeting of Shareholders of the Company held after theclose of the fiscal year to which the dividend is applicable. In
addition, an interim cash dividend may be paid upon resolutionof the Board of Directors, subject to limitations imposed by theJapanese Commercial Code.
Proceeds from the conversion of convertible bonds havebeen accounted for in approximately equal amounts as common
stock and capital surplus. At least 50% of the proceeds havebeen accounted for as common stock, in accordance with theprovisions of the Japanese Commercial Code.

11. Research and development expenses
Research and development expenses, which are included inselling, general and administrative expenses and manufacturingcosts, amounted to ¥30,051 million (US$279,831 thousand),¥29,562 million and ¥29,705 million for the years ended March
31, 2005, 2004 and 2003, respectively.

12. Other non-operating income and expenses
Thousands of
U.S. dollars

Millions of yen

2005

2004

2003

2005

Gain on sales of securities¥ 1,659¥819¥ 1,851$ 15,448

Rental income of fixed assets

Other non-operating income:
1,932

1,833

2,036

17,991

Exchange gain

500

836

1,709

4,656

Gain on sales of fixed assets

957

808

332

8,911

4,510

4,873

2,533

41,997¥ 9,558¥ 9,169¥ 8,461$ 89,003

¥

¥

¥

$

Sundries
Total
Other non-operating expenses:
Loss on impairment of securities

251

–

521

Depreciation

2,381

2,342

2,202

22,172

Loss on disposal of fixed assets

2,381

3,523

3,101

22,172

610

1,283

1,224

5,680

Exchange loss
Bond issue costs
Sundries
Total

90

56

TOYOTA INDUSTRIES CORPORATION Annual Report 2005

205

502

329

1,909

5,123

6,187

5,425

47,704¥10,756¥14,088¥12,281$100,158

(1) Qualitative disclosure about derivatives(a) Contents of derivative instruments into which Toyota
Industries entered, policy with respect to entering into
derivative instruments, and purpose of using derivative
instruments:
Toyota Industries uses interest rate swap agreements to
reduce interest rate risks on borrowings. Toyota Industries
also uses foreign currency forward contracts and foreign
currency option contracts to hedge foreign currency
risks on transactions denominated in foreign currencies(receivables and payables and forecasted transactions).
(b) Contents of risks related to derivative instruments:
Interest rate swaps, foreign currency forward contracts
and foreign currency option contracts into which
Toyota Industries entered have risks of fluctuations ininterest rates and in foreign currency exchange rates.

Due to the fact that counterparties to Toyota Industries
represent major financial institutions which have highcreditworthiness, Toyota Industries believes that theoverall credit risk related to its financial instruments is
insignificant.
(c) Controls in place over transactions handling derivative
instruments:
Hedging transactions are executed and controlled basedon Toyota Industries’ internal rule and Toyota Industries’
hedging activities are reported periodically to a director
responsible for accounting.

Notes to Consolidated Financial Statements

13. Derivative instruments(2) Quantitative disclosure about derivatives
Toyota Industries omitted this information because hedge
accounting is applied to all of the derivative instruments into
which Toyota Industries entered.

14. Retirement benefits(1) Outline of retirement benefit plans:
The Company and its domestic subsidiaries maintain tax
qualified pension plans and lump-sum indemnities plans, bothof which are defined benefit pension plans. In addition, certain
foreign subsidiaries maintain non-contributory defined benefit
pension plans. Since 1987, the Company has been transferring

the covering percentages of its pension plan from its lump-sum
indemnities plan to its tax qualified pension plan. As of March
31, 2005, its tax qualified pension plan covers 50% of total
plans.
Also, the Company established an employee retirement
benefit trust.

(2) Components of allowance for retirement benefits as of March 31, 2005 and 2004 are as follows:
Thousands of
U.S. dollars

Millions of yen

2005

2004

2005

Benefit obligation¥124,570¥ 96,344$1,159,978

Plan assets(77,121)(57,929)(718,140)

Unfunded benefit obligation

47,44938,415441,838

Unrecognized actuarial gain or loss

(14,564)(15,372)(135,618)

Unrecognized loss in prior service obligation

(350)

(597)

(3,259)Net amount recognized on the balance sheets

32,53522,446302,961

Prepaid pension expenses(6,694)(7,218)(62,334)¥ 39,229¥ 29,664$ 365,295

Allowance for retirement benefits

Certain subsidiaries use the simplified method to determine benefit obligations. Prepaid pension expenses are included in otherinvestments and other assets. Allowance for retirement benefits on the balance sheets includes ¥5,234 million (US$48,738 thousand)and ¥4,600 million of allowance for retirement and severance benefits for directors and corporate auditors as of March 31, 2005 and2004, respectively.

TOYOTA INDUSTRIES CORPORATION Annual Report 2005

91

(3) Components of retirement benefit expenses for the years ended March 31, 2005, 2004 and 2003 are as follows:
Notes to Consolidated Financial Statements

Thousands of
U.S. dollars

Millions of yen

2005

2004

2003

2005

Service cost

¥ 7,446¥ 7,424¥6,615$ 69,336Interest cost

3,987

4,559

2,036

37,126

Expected return on plan assets(2,196)

(822)

(797)

(20,449)

Amortization of prior service obligation
Amortization of unrecognized actuarial gain or loss
Retirement benefit expenses

85

79

12

792

1,030

1,854

484

9,591

¥10,352¥13,094¥8,350$ 96,396

Retirement expenses of subsidiaries which adopted the simplified method are included in service cost.
(4) Assumptions used for calculation of retirement benefits for the years ended March 31, 2005, 2004 and 2003 are as follows:
2005

2004

2003

2.00%

2.00%

2.00%

Method of attribution of estimated retirement benefits
to periods of employee service: Straight-line method
Discount rate
Expected return on plan assets
Amortization period of prior service obligation

3.00%

3.00%

6–11 years

6–11 years

3.00%
6–11 years — Straight-line method over
the remaining service
period of employees
starting from the year
incuredAmortization period of unrecognized actuarial gains
or losses

20 years

20 years

20 years — Straight-line method over
the average remaining
service period of
employees starting fromfollowing year

(5) Plan assets relating to welfare pension fund under multiemployer pension plan:
Amounts of plan assets calculated based on proportion of contribution to the fund made by each domestic subsidiary are ¥8,226 million(US$76,599 thousand) as of March 31, 2005 and ¥3,200 million as of March 31, 2004, respectively.

92

TOYOTA INDUSTRIES CORPORATION Annual Report 2005

(1) The significant components of deferred tax assets and liabilities as of March 31, 2005 and 2004 are as follows:
Thousands of
U.S. dollars

Millions of yen

2005

2005

2004

Deferred tax assets:
8,927$ 119,583

Trade receivables

5,270

5,026

49,073

Accrued expenses

6,049

5,458

56,327

Net operating loss carry-forwards for tax purposes

1,979

4,985

18,428Depreciation

5,222

3,732

48,627

Securities

2,195

2,238

20,440Allowance for retirement benefits¥ 12,842¥

Enterprise tax payable

1,059

1,566

9,861

Other

15,96214,800148,636

Subtotal

50,57846,732

470,975

Less — valuation allowance(2,689)(6,556)(25,040)

47,88940,176445,935

Other securities

392,618

354,600

3,656,001

Depreciation

5,355

4,298

49,865

Land

1,110

1,110

10,336

537

468

5,000

Total deferred tax assets

Notes to Consolidated Financial Statements

15. Income taxes

Deferred tax liabilities:

Reserve for advanced depreciation

529

589

4,926

5,981

7,118

55,695Reserve for special depreciation
Other
Total deferred tax liabilities

406,130

368,183

3,781,823

Net deferred tax liabilities¥(358,241)¥(328,007)$(3,335,888)

Net deferred tax liabilities consist of the following components on the consolidated balance sheets.
Thousands of
U.S. dollars

Millions of yen

Current assets — deferred tax assets

2005

2004

2005

¥ 20,379¥ 17,534$ 189,766

Investments and other assets — deferred tax assets

7,234

3,538

67,362Current liabilities — deferred tax liabilities(4,067)(2,743)(37,871)

Long-term liabilities — deferred tax liabilities(381,787)(346,336)(3,555,145)

Net deferred tax liabilities¥(358,241)¥(328,007)$(3,335,888)(2) Reconciliations of differences between the statutory rate of income taxes and the effective rate of income taxes for the years ended
March 31, 2005, 2004 and 2003 are as follows:
2005

2004

2003

39.9%

41.2%

41.2%

Dividends income and others permanently not recognized as taxable income

(3.8)

(3.4)

(3.5)

Equity in earnings of affiliates

(3.8)

–

–

(0.7)

(1.9)

10.0

31.6%

35.9%

47.7%

Statutory rate of income taxes
Addition (reduction) in taxes resulting from:

Other
Effective rate of income taxes

TOYOTA INDUSTRIES CORPORATION Annual Report 2005

93

Notes to Consolidated Financial Statements

16. Leases(1) Finance leases (as a lessee) which do not transfer ownership of leased properties to lessees(a) Pro forma information regarding the leased properties such as acquisition cost and accumulated depreciation, which are notreflected in the accompanying consolidated balance sheets under finance leases as of March 31, 2005 and 2004 is as follows:
Thousands of
U.S. dollars

Millions of yen

2005

2005

2004

Buildings and structures:
Acquisition cost equivalents

¥

–

¥

13

$

–

–

11

–

–

2

–

Acquisition cost equivalents

13,791

10,095

128,420

Accumulated depreciation equivalents

7,050

5,203

65,649

6,741

4,892

62,771

Acquisition cost equivalents

12,146

5,340

113,102

Accumulated depreciation equivalents

6,232

3,279

58,032

5,914

2,061

55,070Acquisition cost equivalents

128

147

1,192

Accumulated depreciation equivalents

59

63

549

69

84

643

¥12,724¥ 7,039$118,484

Accumulated depreciation equivalents
Buildings and structures net balance equivalents
Machinery and equipment:

Machinery and equipment net balance equivalents
Tools, furniture and fixtures:

Tools, furniture and fixtures net balance equivalents
Software:

Software net balance equivalents
Total net leased properties

Acquisition cost equivalents include the imputed interest expense portion because the percentage which is computed by dividing future
minimum lease payments by total balance of property, plant and equipment at year-end is immaterial.
(b) Pro forma information regarding future minimum lease payments as of March 31, 2005 and 2004 is as follows:
Thousands of
U.S. dollars

Millions of yen

2005

2004

2005

Due within 1 year

¥ 4,061¥2,696$ 37,815

Due after 1 year

8,663

4,343

80,669¥12,724¥7,039$118,484

Total

The amount equivalent to future minimum lease payments as of the end of the year includes the imputed interest expense portion
because the percentage which is computed by dividing future minimum lease payments by total balance of property, plant andequipment at year-end is immaterial.
(c) Total lease payments for the years ended March 31, 2005, 2004 and 2003 are as follows:
Millions of yen

Thousands of
U.S. dollars

2005¥4,927$45,880

2004

3,614

–

2003

2,566

–

Pro forma depreciation expenses, which are not reflected in the accompanying consolidated statements of income, are computed mainlyby the straight-line method, which assumes zero residual value and leasing term to be useful lives for the years ended 2005, 2004 and2003, and are equivalent to the amount of total lease payments of the above.

94

TOYOTA INDUSTRIES CORPORATION Annual Report 2005

Pro forma future lease payments under operating leases as of March 31, 2005 and 2004 are as follows:
Millions of yen

Thousands of U.S. dollars

2005

2004

2005

Due within 1 year

¥ 4,165¥ 3,091$ 38,784

Due after 1 year

17,392

13,584

161,952

Total¥21,557¥16,675$200,736(3) Finance leases (as a lessor) which do not transfer ownership of leased properties to lessees(a) Information regarding leased properties such as acquisition cost and accumulated depreciation under finance leases as of March 31,
2005 and 2004 is as follows:
Thousands of U.S. dollars

Millions of yen

2005

2004

2005

Acquisition cost

¥8,928¥8,061$83,136

Accumulated depreciation

5,221

4,686

48,617¥3,707¥3,375$34,519

Notes to Consolidated Financial Statements(2) Operating leases (as a lessee)

Machinery and equipment:

Total net leased property(b) Pro forma information regarding future minimum lease income as of March 31, 2005 and 2004 is as follows:
Thousands of U.S. dollars

Millions of yen

Due within 1 year

2005

2004

2005

¥1,763¥1,673$16,417

Due after 1 year

3,202

2,842

29,816

Total¥4,965¥4,515$46,233

The amount equivalent to future minimum lease income includes the imputed interest income portion because the percentage which iscomputed by dividing future minimum lease income by total balance of property, plant and equipment at year-end is immaterial.
(c) Total lease receipts and depreciation expenses for the years ended March 31, 2005 and 2004 are as follows:
Millions of yen

Thousands of U.S. dollars

2005

2004

2005

Total lease payments to be received¥2,358¥2,179$21,957

Depreciation expenses

1,830

1,847

17,041(4) Operating leases (as a lessor)
Pro forma information regarding future minimum rentals under operating leases as of March 31, 2005 and 2004 is as follows:
Millions of yen

Thousands of U.S. dollars

2005

2004

2005

Due within 1 year

¥10,040¥ 7,217$ 93,491

Due after 1 year

16,382

10,741

152,547

Total¥26,422¥17,958$246,038

17. Subsequent event
On June 22, 2005, the shareholders of the Company authorized
payment of a year-end cash dividend to shareholders of record
as of March 31, 2005 of ¥19 (US$0.177) per share, or a total of¥6,046 million (US$56,299 thousand), and bonuses to directors

and corporate auditors of ¥279 million (US$2,598 thousand).
Cash dividends for the year totaled ¥32 (US$0.298) per share,including an interim dividend of ¥13 (US$0.121).

TOYOTA INDUSTRIES CORPORATION Annual Report 200595

Notes to Consolidated Financial Statements

18. Segment information(1) Business segments
As of and for the years ended March 31, 2005, 2004 and 2003:
Thousands of
U.S. dollars

Millions of yen

2005

2004

2003

2005

¥ 616,200¥ 603,863¥ 595,460$ 5,737,964

Sales:
Automobile
Outside customer sales

18,223

15,69815,523

169,690

634,423

619,561

610,983

5,907,654

503,990

443,444

373,008

4,693,081

149

138

90

1,387

504,139443,582373,098

4,694,468

43,90245,96948,740408,809

25

16

6

233

43,92745,98548,746

409,042

Outside customer sales

77,446

71,10352,011

721,167Intersegment transactions

21,57914,132

13,078200,940

Intersegment transactions
Materials Handling Equipment
Outside customer sales
Intersegment transactions
Textile Machinery
Outside customer sales
Intersegment transactions
OthersSubtotal

99,02585,23565,089922,107

1,281,514

1,194,363

1,097,916

11,933,271(39,976)(29,984)(28,697)(372,250)¥1,241,538¥1,164,379¥1,069,219$11,561,021

Elimination of intersegment transactions
Total
Operating costs and expenses:¥ 611,660¥ 592,031¥ 580,875$ 5,695,688

Materials Handling Equipment

478,054424,233

356,923

4,451,568

Textile Machinery

44,69845,88546,437416,221

Automobile

Others93,782

79,48561,177873,285

Elimination of intersegment transactions(39,776)(29,886)(28,671)(370,387)¥1,188,418¥1,111,748¥1,016,741$11,066,375

¥

¥

¥

$

Total
Operating income (loss):
Automobile

27,53030,108211,966

26,085

19,34916,175242,900

Textile Machinery

(771)

100

2,309

(7,179)Others

5,243

5,750

3,912

48,822Elimination of intersegment transactions

(200)

(98)

(26)

(1,863)

Materials Handling Equipment

Total

96

22,763

TOYOTA INDUSTRIES CORPORATION Annual Report 2005¥

53,120¥52,631¥52,478$494,646

2005

2004

2003

2005

¥ 407,436¥ 338,247¥ 328,370$ 3,793,985

465,832

406,384

337,453

4,337,760

Assets:Automobile
Materials Handling Equipment
Textile Machinery

25,622

24,74430,922

238,588

Others148,712

100,626

51,8391,384,784

1,279,222

1,141,994

901,807

11,911,928¥2,326,824¥2,011,995¥1,650,391$21,667,045

¥

¥

¥

$

Corporate assets or elimination
Total

Notes to Consolidated Financial Statements

Thousands of
U.S. dollars

Millions of yen

Depreciation and amortization:
Automobile
Materials Handling Equipment
Textile Machinery
OthersCorporate or elimination of intersegment transactions
Total

¥

37,07535,79334,157345,237

27,01623,53820,801

251,569

898

931

1,006

8,362

5,215

5,443

3,487

48,561

9

(353)

(297)

84

70,213¥

92,692¥65,352¥

48,793¥59,154$

653,813

49,380$863,134

Capital expenditures:
Automobile¥

Materials Handling Equipment

33,97332,20524,350316,352

Textile Machinery

1,613

1,204

2,164

15,020

Others

8,223

7,749

12,06876,571

5

(442)

(403)

47

87,559$ 1,271,124

Corporate or elimination of intersegment transactions
Total¥ 136,506¥

89,509¥Main products of each segment are as follows:
Automobile .....................................................Passenger vehicles, diesel and gasoline engines, car air-conditioning compressors
Materials handling equipment .......................Counterbalanced lift trucks, warehouse trucks, skid steer loaders, aerial work platforms
Textile machinery ...........................................Ring spinning frames, air-jet looms, water-jet looms
Others.............................................................Semiconductor package substrates, transportation services

Corporate assets included in corporate assets or elimination consist mainly of cash and cash equivalents, short-term investments andinvestments in securities held by the Company.

TOYOTA INDUSTRIES CORPORATION Annual Report 2005

97

(2) Geographical segments
Notes to Consolidated Financial Statements

As of and for the years ended March 31, 2005, 2004 and 2003:
Thousands of
U.S. dollars

Millions of yen

2005

2004

2003

2005

¥ 815,039¥ 785,253¥ 733,869$ 7,589,524

99,46487,271

78,518926,194

914,503872,524

812,387

8,515,718

212,253

198,753

192,385

1,976,469

Sales:
Japan
Outside customer sales
Intersegment transactions
North America
Outside customer sales

1,126

1,113

1,411

10,485

213,379

199,866

193,796

1,986,954

Outside customer sales

188,669

167,512

139,515

1,756,858

Intersegment transactions

7,222

5,896

4,899

67,250195,891

173,408

144,414

1,824,108

Outside customer sales

25,577

12,861

3,450

238,170

Intersegment transactions

2,776

1,630

1,034

25,85028,353

14,491

4,484

264,020

Subtotal

1,352,126

1,260,289

1,155,081

12,590,800

Elimination of intersegment transactions(110,588)(95,910)(85,862)(1,029,779)¥1,241,538¥1,164,379¥1,069,219$11,561,021¥ 870,928¥ 826,696¥ 767,342$ 8,109,954

North America

207,068

193,745

187,596

1,928,187

Europe191,202170,263

142,469

1,780,445

Intersegment transactions
EuropeOthers

Total
Operating costs and expenses:
Japan

27,713

14,6234,560

258,060(108,493)(93,579)(85,226)(1,010,271)¥1,188,418¥1,111,748¥1,016,741$11,066,375

¥

¥

¥

$

OthersElimination of intersegment transactions
Total
Operating income (loss):Japan

45,82845,045405,764

North America

6,311

6,121

6,200

58,767

Europe

4,689

3,145

1,945

43,663

Others

640

(132)

(76)

5,960

(2,095)(2,331)(636)(19,508)

Elimination of intersegment transactions
Total

98

43,575TOYOTA INDUSTRIES CORPORATION Annual Report 2005¥

53,120¥52,631¥52,478$494,646

2005

2004

2003

2005

¥ 788,828¥ 643,180¥ 554,034$ 7,345,451

North America

151,048

136,830

144,739

1,406,537

Europe264,274

238,388

223,4462,460,881

Others33,64022,082

9,759

313,251

1,089,034

971,515

718,413

10,140,925¥2,326,824¥2,011,995¥1,650,391$21,667,045

Assets:Japan

Corporate assets or elimination
Total

Notes to Consolidated Financial Statements

Thousands of
U.S. dollars

Millions of yen

Significant countries or areas belonging to each segment as of March 31, 2005 are as follows:
North America ........................................... U.S.A., Canada
Europe ....................................................... Sweden, France, Germany
Others ........................................................ Australia, China

Corporate assets included in corporate assets or elimination consist mainly of cash and cash equivalents, short-term investments andinvestments in securities held by the Company.

(3) Overseas sales
For the years ended March 31, 2005, 2004 and 2003:
Thousands of
U.S. dollars

Millions of yen

2005

2004

2003

2005

Overseas sales:¥ 208,676¥ 196,861¥ 192,422$ 1,943,160

Europe225,409

211,081

181,347

2,098,976

Others104,918

89,41577,825976,981

North America

Total¥ 539,003¥ 497,357¥ 451,594$ 5,019,117

Total sales¥1,241,538¥1,164,379¥1,069,219$11,561,021

North America

16.8%

16.9%

18.0%

Europe

18.2

18.1

17.0

Others

8.4

7.7

7.2

43.4%

42.7%

42.2%

Ratio of overseas sales to total sales (%):

Total
Significant countries or areas belonging to each segment as of March 31, 2005 are as follows:
North America ........................................... U.S.A., Canada
Europe ....................................................... Germany, France, Italy
Others ........................................................ China, Pakistan, Australia

TOYOTA INDUSTRIES CORPORATION Annual Report 200599

Notes to Consolidated Financial Statements

19. Related party transactions
The following transactions were carried out with related parties:(1) Sales of goods and services for the years ended March 31, 2005, 2004 and 2003 were as follows:
Thousands of
U.S. dollars

Millions of yen

Toyota Motor Corporation

2005

2004

2003

2005

¥414,235¥406,267¥417,058$3,857,296

Toyota Motor Corporation held 24.1% of the Company’s voting rights as of March 31, 2005. The above transactions were carried out
on commercial terms and conditions.
(2) Purchase of goods and services for the years ended March 31, 2005, 2004 and 2003 was as follows:
Purchase of goods:
Thousands of
U.S. dollars

Millions of yen

Toyota Motor Corporation

2005

2004

2003

2005

¥285,019¥285,412¥293,853$2,654,055

Purchase of services:
Thousands of
U.S. dollars

Millions of yen

2005

Toyota Industries Health Insurance Society
Toyota Medical Corporation
Toyota Technological InstituteToyota Motor Corporation

2004

2005

2003

¥ 60

¥ 66

¥ 69

$ 559

46

37

39

428

50

50

–

466

¥156

¥153

¥108

$1,453

Toyota Industries Health Insurance Society’s chairman as of March 31, 2005, 2004 and 2003 is Shiro Endo, who is a director of theCompany and holds 0.01% of the Company’s shares. Toyota Medical Corporation’s chairman as of March 31, 2005, 2004 and 2003
is Yoshitoshi Toyoda, who is a director of the Company and holds 0.06% of the Company’s shares. Toyota Technological Institute’s
chairman as of March 31, 2005 and 2004 is Tatsuro Toyoda, who is a director of the Company and holds 0.08% of the Company’s
shares. The transactions above were carried out on commercial terms and conditions.
(3) Outstanding balances arising from sale/purchase of goods/services as of March 31, 2005 and 2004 are as follows:
Receivables from a related party:
Millions of yen

Toyota Motor Corporation

Thousands of
U.S. dollars

2005

2004

2005

¥31,594¥23,421$294,199

Payable to a related party:
Millions of yen

Toyota Motor Corporation

100

TOYOTA INDUSTRIES CORPORATION Annual Report 2005

Thousands of
U.S. dollars

2005

2004

2005

¥35,780¥29,247$333,178

Basis of calculation for net income per share and net income per share diluted are as follows:
Thousands of
U.S. dollars

Millions of yen

2005

2004

2005

¥ 43,358¥ 33,623$403,743

390

330

3,631

Net income attributable to common shareholders

42,96833,293400,112Weighted-average shares (thousand)

318,079

308,144–

Net income per share (exact yen amounts)¥ 135.09¥ 108.04

$

¥

¥

$

Net income per share:
Net income
Net income not attributable to common shareholders(bonuses for directors and statutory auditors that are paid through appropriation)

Notes to Consolidated Financial Statements

20. Net income per share (EPS)

1.26

Net income per share diluted:
Adjustment for effect of dilutive securities (interest expenses of convertible bonds)
Weighted-average shares for diluted computation (thousand)Net income per share diluted (exact yen amounts)

–

12

139

18,468¥ 135.03¥ 101.97

–
–

$

1.26

TOYOTA INDUSTRIES CORPORATION Annual Report 2005

101

Report of Independent Accountants
Report of Independent Accountants

Report of Independent Auditors

To the Board of Directors and Shareholders of
Toyota Industries Corporation
We have audited the accompanying consolidated balance sheets of Toyota Industries Corporationand its consolidated subsidiaries as of March 31, 2005 and 2004, and the related consolidated
statements of income, shareholders’ equity, and cash flows for the years then ended, all expressedin Japanese Yen. These consolidated financial statements are the responsibility of the Company’s
management. Our responsibility is to express an opinion on these consolidated financial
statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted in Japan.
Those standards require that we plan and perform the audit to obtain reasonable assurance about
whether the consolidated financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated
financial statements. An audit also includes assessing the accounting principles used andsignificant estimates made by management, as well as evaluating the overall consolidated financial
statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in all material
respects, the consolidated financial position of Toyota Industries Corporation and its consolidated
subsidiaries as of March 31, 2005 and 2004, and the consolidated results of their operations andtheir cash flows for the years then ended in conformity with accounting principles generally
accepted in Japan.
The amounts expressed in U.S. dollars, which are provided solely for the convenience of thereader, have been translated on the basis set forth in Note 1 to the accompanying consolidated
financial statements.

ChuoAoyama PricewaterhouseCoopers
Nagoya, Japan
June 22, 2005

102

TOYOTA INDUSTRIES CORPORATION Annual Report 2005

Toyota Industries
in Numbers

TOYOTA INDUSTRIES CORPORATION Annual Report 2005

103

Toyota Industries in Numbers(Years ended March 31)

Toyota Industries in Numbers

Net Sales, Ordinary Income andOrdinary Income Ratio(¥ Billion)
2,000

5.8%
4.9%

4.8%

5.1%

Millions of yen(¥ Billion)
200
5.7%

1,500

150

1,000

100

500

50

0

FY

01

02

03

04

05

0

Net sales
Ordinary income
Ordinary income ratio (%)

Net sales (left)

Ordinary income (right)

2003

2002

¥767,383
44,5255.8¥980,163 ¥1,069,219 ¥1,164,379 ¥1,241,538
47,866
51,37558,971
70,913
4.9
4.8
5.1
5.7

Millions of yen(¥ Billion)
75

Depreciation and amortization:
Automobile Segment
Materials Handling Equipment Segment
Textile Machinery Segment
Others Segment (including corporate or
elimination)

50

25

FY

01

02

03

04

Automobile

05

Materials Handling Equipment

2001

2002

2003

2004

2005

¥46,454
31,764
10,7661,034
2,890¥55,174
33,403
18,882797
2,092¥59,154
34,15720,801
1,006
3,190¥65,352
35,79323,538931
5,090¥70,21337,07527,016898
5,224

Textile Machinery

OthersCapital Expenditures

Millions of yen(¥ Billion)
150

Capital expenditures:
Automobile Segment
Materials Handling Equipment Segment
Textile Machinery Segment
Others Segment (including corporate or
elimination)

100

50

0

FY

01

02

03

04

Automobile

05

Materials Handling Equipment

2001

2002

2003

2004

2005

¥127,273
54,73470,673
320
1,546¥88,32061,023
26,337523
437¥87,559
49,38024,3502,164
11,665¥89,509
48,79332,205
1,204
7,307¥136,506
92,692
33,973
1,613
8,228

Textile Machinery

OthersR&D Expenses andR&D Expenses to Net Sales Ratio(¥ Billion)
40

(%)
4

3

20

2

10

1

FY

104

Millions of yen

30

0

01

02

03

2004

Ordinary income ratio

Depreciation and Amortization

0

2005

2001

04

05

0

R&D expenses:
Automobile Segment
Materials Handling Equipment Segment
Textile Machinery Segment
Others Segment (including corporate or
elimination)
R&D expenses to net sales ratio (%)
Automobile
Materials Handling Equipment
R&D expenses to net sales ratio (right)

TOYOTA INDUSTRIES CORPORATION Annual Report 2005

2001

2002

2003

2004

2005

¥26,196
16,275
7,908
615
1,398

¥29,985
18,060
9,246
1,335
1,344

¥29,705
18,748
9,298
1,053
606

¥29,562
15,755
10,651
1,164
1,992¥30,051
17,214
10,976
1,030
831

3.4

3.1

2.8

2.5

2.4

Textile Machinery

Others (left)(¥ Billion)
750

Millions of yen(¥ Billion)
75

500

50

250

25

0

FY

01

02

03

04

0

05

Net sales of Automobile Segment
Operating income of Automobile Segment

Net sales (left)

2001

2002

2003

2004

2005

¥457,631
28,525¥563,599
28,960¥595,460
30,108¥603,863
27,530¥616,200
22,763Operating income (right)

Net Sales and Operating Income ofMaterials Handling Equipment Segment

Millions of yen(¥ Billion)
60(¥ Billion)
600

400

40

200

20

0

FY

01

02

03

04

0

05

Net sales of Materials Handling Equipment
Segment
Operating income of Materials Handling
Equipment Segment

Net sales (left)

2001

2002

2003

2004

2005

¥236,502¥353,043¥373,008¥443,444¥503,990

14,547

13,366

16,175

19,34926,085

Operating income (right)

Net Sales and Operating Income (Loss)of Textile Machinery Segment(¥ Billion)
60

Millions of yen(¥ Billion)
6

40

4

20

2

0

0

(20)
FY

01

02

03

04

05

(2)

Net sales of Textile Machinery Segment
Operating income (loss) of Textile
Machinery Segment

Net sales (left)

2001

2002

2003

2004

2005

¥33,23835¥30,705(391)¥48,740
2,309¥45,969
100¥43,902
(771)

2001

2002

2003

2004

2005

¥40,0124,365¥32,816
4,482¥52,011
3,912¥71,103
5,750¥77,446
5,243

Operating income (loss) (right)

Net Sales and Operating Income of
Others Segment

Millions of yen(¥ Billion)
8(¥ Billion)
80

60

6

40

4

20

2

0

FY

01

02

03

04

05

Toyota Industries in Numbers

Net Sales and Operating Income ofAutomobile Segment0

Net sales of Others Segment
Operating income of Others Segment

Net sales (left)

Operating income (right)

Note: Segment net sales figures do not include intersegment transactions. However, segment operating income figures do include operating income (loss) arising from intersegment transactions.

TOYOTA INDUSTRIES CORPORATION Annual Report 2005

105

Toyota Industries in Numbers(Years ended March 31)

Toyota Industries in Numbers

ROE and ROA

%

2001

(%)
6

Return on equity (ROE)
Return on assets (ROA)

2002

3.6
1.8

2003

3.0
1.5

2005

2004

2.7
1.3

4.1
2.0

3.8
1.8

4

2

0
FY

01

02

03

04

ROE

05

ROA

Net Income per Share

Yen

(¥)
150

Net income per share — basic
Net income per share — diluted

2001

2002

2003

2004

2005

¥75.9067.77¥87.2878.26¥70.1962.90¥108.04
101.97¥135.09135.03

2004

2005

100

50

0

FY

01

02

03

04

Basic

05

DilutedInterest-Bearing Debt, Shareholders’Equity and Debt/Equity Ratio

Millions of yen(¥ Billion)
1,250

(%)
100

1,000

80

750

60

500

40

250

20

0

FY

01

02

03

04

05

0

Interest-bearing debt
Shareholders’ equity
Debt/equity ratio (%)

Interest-bearing debt (left)

2001

2002

2003

¥291,688
951,298
30.7¥315,354
878,81235.9¥410,622 ¥ 320,967 ¥ 383,737
738,868 1,016,764 1,115,747
55.6
31.6
34.4

Shareholders’ equity (left)

Debt/equity ratio (right)

Shareholders’ Equity per Share

Yen

(¥)
4,000

Shareholders’ equity per share

3,000

2,000

1,000

0
FY

106

01

02

03

04

05

TOYOTA INDUSTRIES CORPORATION Annual Report 2005

2001

2002

2003

2004

2005

¥3,036.77¥2,809.54¥2,522.52¥3,199.69¥3,504.80

Yen

(¥)
40

(%)
40

30

30

20

20

10

10

0

FY

01

02

03

04

05

0

Cash dividends per share
Payout ratio (%)

Cash dividends per share (left)

2001

2002

2003

2004

2005

¥17.0024.4¥19.0023.8¥22.0034.0¥24.0035.5¥32.0039.1

Toyota Industries in Numbers

Cash Dividends per Share andPayout Ratio

Payout ratio (right)

Market Capitalization

Millions of yen(¥ Billion)
1,000

Market capitalization

2001

2002

2003

2004

2005

¥767,487¥649,052¥513,824¥786,223¥961,075

2004

2005

750

500

250

0
FY

01

02

03

04

05

PER and PBR

Times(Times)40(Times)
1.0

30

0.75

20

0.5

10

0.25

0
FY

01

02

03

04

05

0

2001

Price/earnings ratio (PER)
Price/book value ratio (PBR)

PER (left)

32.3
0.8

2002

23.8
0.7

2003

25.0
0.7

22.9
0.8

22.4
0.9

PBR (right)

Number of Employees

Persons(Thousands)
40

Number of employees

2001

2002

2003

2004

2005

21,11823,05625,03027,43130,990

30

20

10

0
FY

01

02

03

04

05

TOYOTA INDUSTRIES CORPORATION Annual Report 2005

107

Investor Information(As of March 31, 2005)

Investor Information

Corporate Head OfficeTransfer Agent

TOYOTA INDUSTRIES CORPORATION
2-1, Toyoda-cho, Kariya-shi, Aichi-ken,
448-8671, Japan
Telephone: +81-(0)566-22-2511
Facsimile: +81-(0)566-27-5650

UFJ Trust Bank Limited
1-4-3, Marunouchi, Chiyoda-ku, Tokyo-to, 100-0005, Japan
Telephone: +81-(0)3-3287-2211

Major Shareholders

Date of Establishment% ofVoting rights

November 18, 1926

Common Stock
No par value
Authorized: 1,091,245,000 shares
Issued:325,840,640 shares

Stock Exchange Listings
Tokyo, Osaka and Nagoya (Ticker Code: 6201)

Number of Shareholders
17,279Toyota Motor Corporation

24.10

DENSO Corporation

9.33

The Master Trust Bank of Japan, Ltd.

6.81

Third Avenue Fund-Custodial Trust Company

3.58

Bank of Bermuda Limited, Hamilton

2.66

Japan Trustee Services Bank, Ltd.

2.58

Towa Real Estate Co., Ltd.

2.42

Nippon Life Insurance Company

2.12

Aisin Seiki Co., Ltd.

2.07

Toyota Tsusho Corporation

1.98

Independent Accountants
ChuoAoyama PricewaterhouseCoopers
3-28-12, Meieki, Nakamura-ku, Nagoya-shi,
Aichi-ken, 450-8565, Japan

Common Stock Price and Trading Volume(Tokyo Stock Exchange)High
Closing
Opening
Low

(yen)

High
Opening
Closing
Low

White: Closing Price > Opening Price
Black: Opening Price > Closing Price(Thousand shares)

3,500

28,0003,000

24,0002,500

20,000Common stock price (left scale)

16,000

2,000

1,500

1,000

8,000

500

4,000

0

108

12,000

Trading volume (right scale)

4/00

7

10

1/01

4

7

10

1/02

TOYOTA INDUSTRIES CORPORATION Annual Report 2005

4

7

10

1/03

4

7

10

1/04

4

7

10

1/05

0

Publications
Our Corporate Brochure and Social & Environmental Report are available in both English and Japanese upon written request to the Public Affairs
Department at our Corporate Head Office.

Internet Home Page
Updated information is published regularly on our Web site. (http://www.toyota-industries.com)

Further Information
For further information, please write to the Investor Relations Office at our Corporate Head Office.

2-1, Toyoda-cho, Kariya-shi, Aichi-ken 448-8671, Japan
Telephone: +81-(0)566-22-2511 Facsimile: +81-(0)566-27-5650
www.toyota-industries.com

This annual report is printed onrecycled paper using soy ink to minimize
the impact on the environment.
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