Notes to Consolidated Financial Statements
1. Basis of presenting consolidated financial statements:
The accompanying interim consolidated financial statements
have been 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 interim consolidated financial

statements submitted to the Director of the 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 for theconvenience of readers outside Japan. The rate of ¥117.90=US$1,
the rate of exchange prevailing at September 30, 2006, hasbeen used in translation. The inclusion of such amounts are notintended to imply that the Japanese yen actually represent, or
have been or could be converted into, equivalent amounts in U.S.
dollars at this rate or any other rates.

2. Summary of significant accounting policies:(1) Consolidation
The interim consolidated financial statements include the accountsof the Company and its 159 subsidiaries (45 domestic subsidiaries
and 114 overseas subsidiaries, which are listed on pages 24 and25) as of September 30, 2006 and 149 subsidiaries (43 domestic
subsidiaries and 106 overseas subsidiaries) as of September 30,
2005.
For the six-month period ended September 30, 2006, sevensubsidiaries were newly added to the scope of consolidation and
one company was excluded from the scope of consolidation
because of merger and acquisition.
For the six-month period ended September 30, 2005, four
subsidiaries were newly added to the scope of consolidation and
one company was excluded from the scope of consolidation
because of merger and acquisition.
The interim periods of certain subsidiaries are different fromthe interim period of the Company. Since the difference is not
more than three months, the Company is using those subsidiaries’
statements for their interim periods, 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 acquisition ofcontrol.
In the six-month period ended September 30, 2006, Toyota
Industries Sweden AB and its consolidated subsidiaries havedecided to change their fiscal year-end from December 31 toMarch 31. As a result, the Company’s consolidated financial
statements include nine months of their operating results.

(2) Investments in unconsolidated subsidiaries andaffiliates
Investments in 21 affiliates as of September 30, 2006 and 2005 are
accounted for by the equity method of accounting.
Investments in unconsolidated subsidiaries and affiliates notaccounted for by the equity method are stated at cost due to theirinsignificant effect on the consolidated financial statements.
The major affiliates accounted for by the equity method arelisted on page 25.

(3) Translation of foreign currencies
Foreign currency denominated receivables and payables aretranslated into Japanese yen at exchange rates as of September 30,
2006, and the resulting transaction gains or losses are included inincome statements.
All asset and liability accounts of foreign subsidiaries andaffiliates are translated into Japanese yen at exchange rates as of
September 30, 2006 and all revenue and expense accounts aretranslated at prevailing average rates for the period.

(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 in securities
Toyota Industries classifies securities into four categories bypurpose of holding: trading securities, held-to-maturity securities,
other securities and investments in unconsolidated subsidiaries
and affiliates. Toyota Industries did not have trading securities orheld-to-maturity securities as of September 30, 2006 and 2005.
Other securities with readily determinable fair values arestated at fair value based on market prices at the end of the year.
Unrealized gains and losses are included in “Net unrealized gains
on other securities” as a separate component of shareholders’equity. Cost of sales of such securities is determined by themoving-average method. Other securities without readily
determinable fair values are stated at cost, as determined by themoving-average method.
Investments in unconsolidated subsidiaries and affiliates areaccounted for by the equity method (see Note 2 (2)).

SEMIANNUAL REPORT 200715

Notes to Consolidated Financial Statements

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

auditors, an amount which is calculated at the end of the period as
required by an internal rule describing the retirement benefits for
directors and corporate auditors is accrued.

(7) Property, plant and equipment, and depreciation(14) Lease transactions

Property, plant and equipment are stated at cost. Depreciation
expenses of property, plant and equipment are computed
mainly by the declining-balance method for the Company andJapanese subsidiaries 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 September 30, 2006 and 2005
was ¥620,382 million (US$5,261,936 thousand) and ¥561,736
million, respectively.

Finance leases other than those that are deemed to transfer theownership of the leased assets to lessees are accounted for mainly
by a method similar to that applicable to ordinary operating leases.

(6) Inventories(15) 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.

(8) Intangible assets and amortization
Amortization of intangible assets is computed using thestraight-line method. Software costs for internal use are amortizedby 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 is charged
to income as incurred.

(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 conditions of each company.
The recoverable amount of assets is calculated based on net
selling price.

(16) Hedge accounting(a) Method of hedge accounting
Mainly the deferral method of hedge accounting is applied. In thecase of foreign currency forward contracts and foreign currency
option contracts, the hedged items are translated at contracted
forward rates if certain conditions are met.
(b) Hedging instruments and hedged items
Hedging
instruments: Derivatives instruments (interest rate swaps, foreign
currency forwards and foreign currency option
contracts)
Hedged items: Risk of change in interest rate on borrowings
and risk of change in forward exchange rate ontransactions denominated in foreign currencies(assets and liabilities, and forecasted transactions)(10) Allowances for doubtful accounts
Toyota Industries adopted the policy of providing an allowance for
doubtful accounts in an amount sufficient to cover possible losses
on collection by estimating individually uncollectible amounts andapplying to the remaining accounts a percentage determined bycertain factors such as historical collection experiences.

(c) Hedging policy
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 foraccounting.

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

(12) Allowance for bonuses to directors andcorporate auditors
Bonuses to directors and corporate auditors are recorded on an
accrual basis with a related change to income.

(13) 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 period.
To provide for the retirement benefits for directors and corporate

16

TOYOTA INDUSTRIES CORPORATION(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 inceptionof the hedge to the date of measurements performed. Currently it
is considered that there are high correlations 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 to its
financial instruments is insignificant.

(17) Appropriation of retained earnings
In the accompanying consolidated statements of shareholders’equity, the approved amount during the relevant fiscal year isreflected for the appropriation of retained earnings of consolidated
subsidiaries. In Japan, the payment of bonuses to directors andcorporate auditors was made out of retained earnings through anappropriation, instead of being charged to income for the year.
Bonuses to directors and corporate auditors are recorded on theaccrual basis with a related change to income.

3. Changes in accounting policies and adoption of new accounting standards
For the six-month period ended September 30, 2006
Accounting Standard for Directors’ Bonus
Effective from the fiscal year beginning April 1, 2006, Toyota
Industries applied Financial Accounting Standard No. 4“Accounting Standard for Directors’ Bonus” issued on November
29, 2005 by the Accounting Standards Board of Japan. As
a result, ordinary income and income before income taxes
and minority interests decreased by ¥252 million (US$2,137
thousand).
Accounting Standards for Presentation of Net Assets in the
Balance Sheet
Effective from the fiscal year beginning April 1, 2006, Toyota
Industries applied Financial Accounting Standard No. 5“Accounting Standards for Presentation of Net Assets in the
Balance Sheet” and its Implementation Guidance No. 8“Guidance on Accounting Standards for Presentation of Net
Assets in the Balance Sheet” issued on December 9, 2005 by the
Accounting Standards Board of Japan. If the previous accounting
policy were to be applied, net assets at September 30, 2006 were
¥1,571 billion.

Accounting Standard for Share-based Payment
Effective from the fiscal year beginning April 1, 2006, Toyota
Industries applied Financial Accounting Standard No. 8“Accounting Standard for Share-based Payment” issued on
December 27, 2005 by the Accounting Standards Board ofJapan, and its Implementation Guidance No. 11 “Guidanceon Accounting Standard for Share-based Payment” issued on
May 31, 2006 by the Accounting Standards Board of Japan. As
a result, ordinary income and income before income taxes andminority interests decreased by ¥50 million (US$424 thousand).
Accounting Standard for Business Combinations
Effective from the fiscal year beginning April 1, 2006, Toyota
Industries applied Financial Accounting Standard for Business
Combinations issued on October 27, 2005 by the BusinessAccounting Council in Japan, and Financial AccountingStandard No. 7 “Accounting Standard for Business Divestitures”
and the related Implementation Guidance No. 10 “Guidance on
Accounting Standard for Business Combinations and AccountingStandard for Business Divestitures” issued on December 27, 2005
by the Accounting Standards Board of Japan.

4. Assets pledged as collateral(1) Assets pledged as collateral as of September 30, 2006 and 2005 are as follows:
Millions of yen

Investments in securities
Property, plant and equipment
Buildings and structures
Trade notes and accounts receivable
Machinery, equipment and vehicles
Total

Thousands of
U.S. dollars

2006

2005

2006

¥52,265
2,365
1,319
–
1,357
¥57,306¥41,655
2,840
2,133
467
438
¥47,533$443,299
20,05911,188–
11,510$486,056(2) Secured liabilities as of September 30, 2006 and 2005 are as follows:
Millions of yen

Other current liabilities
Short-term bank loans
Long-term debt
Total

Thousands of
U.S. dollars

2006

2005

2006

¥21,433857
710¥23,000¥20,707390
1,195¥22,292$181,790
7,269
6,022
$195,081

SEMIANNUAL REPORT 200717

Notes to Consolidated Financial Statements

5. Contingent liabilities
Toyota Industries is contingently liable for guarantees as of September 30, 2006 and 2005 as follows:
Thousands of
U.S. dollars

Millions of yen

Guarantees given by the Company
Guarantees given by consolidated subsidiaries
Guarantee forwards given by the Company

2006

2005

2006

¥4,200
621
508

¥ 400
845
2,759

$35,623
5,267
4,309

6. 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 not reflectedin the accompanying consolidated balance sheets under finance leases as of September 30, 2006 and 2005 is as follows:
Thousands of
U.S. dollars

Millions of yen

Machinery and equipment:
Acquisition cost equivalents
Accumulated depreciation equivalents
Machinery and equipment net balance equivalents
Others:Acquisition cost equivalents
Accumulated depreciation equivalents
Others net balance equivalents
Total net leased properties

2006

2005

2006

¥14,956
7,982
6,974

¥13,313
6,548
6,765

$126,853
67,701
59,152

13,301
6,205
7,096¥14,070

11,823
6,122
5,701¥12,466

112,816
52,62960,187$119,339

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 September 30, 2006 and 2005 is as follows:
Thousands of
U.S. dollars

Millions of yen

Due within one year
Due after one year
Total

2006

2005

2006

¥ 4,326
9,744¥14,070¥ 3,986
8,744¥12,730$ 36,692
82,646$119,338

Future minimum lease payments under finance leases include the imputed interest expense portion.
(c) Total lease payments for the six-month periods ended September 30, 2006 and 2005 are as follows:
Millions of yen

2006
2005

¥2,866
2,345

Thousands of
U.S. dollars$24,309–

Pro forma depreciation expenses, which are not reflected in the accompanying interim consolidated statements of income, are computed
mainly by the straight-line method, which assumes zero residual value and leasing term to be useful lives for the six-month periods ended
September 30, 2006 and 2005, and are equivalent to the amount of total lease payments of the above.

18

TOYOTA INDUSTRIES CORPORATION

(2) 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 September
30, 2006 and 2005 is as follows:
Thousands of
U.S. dollars

Millions of yen

Machinery and equipment:
Acquisition cost
Accumulated depreciation
Total net leased property

2006

2005

2006

¥8,625
4,804¥3,821¥9,256
5,069¥4,187$73,155
40,746$32,409(b) Pro forma information regarding future minimum lease income as of September 30, 2006 and 2005 is as follows:
Thousands of
U.S. dollars

Millions of yen

Due within one year
Due after one year
Total

2006

2005

2006

¥1,0703,223¥4,293¥1,756
3,213¥4,969$ 9,075
27,337$36,412Future minimum lease payments under finance leases include the imputed interest expense portion.
(c) Total lease receipts and depreciation for six-month periods ended September 30, 2006 and 2005 are as follows:
Thousands of
U.S. dollars

Millions of yen

Total lease payments to be received
Depreciation expenses

2006

2005

¥1,097848¥1,227901

2006$9,305
7,193(3) Operating leases (as a lessee)
Pro forma future lease payments under operating leases as of September 30, 2006 and 2005 are as follows:
Millions of yen

Due within one year
Due after one year
Total

Thousands of
U.S. dollars

2006

2005

2006

¥ 5,418
16,193¥21,611¥ 4,835
16,359¥21,194$ 45,954
137,345$183,299(4) Operating leases (as a lessor)
Pro forma information regarding future minimum rentals under operating leases as of September 30, 2006 and 2005 is as follows:
Millions of yen

Due within one year
Due after one year
Total

Thousands of
U.S. dollars

2006

2005

2006

¥13,251
24,629¥37,880¥ 8,457
14,770¥23,227$112,392
208,897$321,289

SEMIANNUAL REPORT 200719

Notes to Consolidated Financial Statements

7. Marketable securities(1) As of September 30, 2006(a) Other securities with readily determinable fair value are as follows:
Thousands of U.S. dollars

Millions of yen

Stocks
Total

Acquisition cost

Carrying amount

Difference¥220,327¥220,327¥1,895,563¥1,895,563¥1,675,236¥1,675,236

Acquisition cost

Carrying amount

Difference$1,868,762 $16,077,718 $14,208,956$1,868,762 $16,077,718 $14,208,956(b)Significant contents and carrying amount of securities (excluding held-to-maturity bonds within securities with fair value) without
readily determinable fair value are as follows:
Carrying amountMillions of yen

Other securities:
Domestic unlisted stocks excluding over-the-counter stocks
Money management funds¥18,458
25,021Thousands of
U.S. dollars$156,556
212,222(2) As of September 30, 2005(a) Other securities with readily determinable fair value are as follows:
Millions of yen

StocksBonds:
Government and municipal bonds, etc.
Total

Acquisition cost

Carrying amount

Difference¥211,010¥1,524,647¥1,313,637

0¥211,010

0¥1,524,647–¥1,313,637(b)Significant contents and carrying amount of securities (excluding held-to-maturity bonds within securities with fair value) without
readily determinable fair value are as follows:
Carrying amountMillions of yen

Other securities:
Domestic unlisted stocks excluding over-the-counter stocks
Money management funds¥18,897
10,0008. Derivative instruments
Notes relating to derivative instruments are omitted, since Toyota Industries has not used derivative instruments for other than hedging.

20

TOYOTA INDUSTRIES CORPORATION

9. Segment information(1) Business segments

Sales:
Automobile
Outside customer sales
Intersegment transactions
Materials Handling Equipment
Outside customer sales
Intersegment transactions
Logistics
Outside customer sales
Intersegment transactions
Textile Machinery
Outside customer sales
Intersegment transactions
Others
Outside customer sales
Intersegment transactions
Subtotal
Elimination of intersegment transactions
Total
Operating costs and expenses:
Automobile
Materials Handling Equipment
Logistics
Textile Machinery
OthersElimination of intersegment transactions
Total
Operating income:Automobile
Materials Handling Equipment
Logistics
Textile Machinery
OthersElimination of intersegment transactions
Total

Millions of yen

Thousands of
U.S. dollars

For the six months
ended September 30

For the six months
ended September 30

2006

2005

2006

¥431,025
9,972
440,997¥337,752
10,195347,947$3,655,852
84,5803,740,432

388,271311
388,582

281,598137
281,735

3,293,223
2,638
3,295,861

39,8983,436
43,33430,616
2,786
33,402

338,406
29,143
367,549

27,495
3
27,49824,094
11
24,105233,20626
233,232

26,396
11,33337,729938,140(25,055)¥913,085

24,968
8,824
33,792
720,981(21,953)¥699,028

223,885
96,124320,009
7,957,083(212,511)$7,744,572¥427,235
365,782
42,781
26,94035,432(25,136)¥873,034¥336,528
263,416
32,87423,914
31,674(21,429)¥666,977$3,623,707
3,102,477
362,858
228,499
300,526(213,198)$7,404,869¥ 13,762
22,800
553
558
2,297
81
¥ 40,051¥ 11,419
18,319
528
191
2,118
(524)
¥ 32,051$ 116,725
193,384
4,691
4,733
19,483687$ 339,703

Main products of each segment are as follows:
Automobile ......................................... Passenger vehicles, diesel and gasoline engines, car air-conditioning compressors, foundry parts, electronic components
Materials Handling Equipment ........... Counterbalanced lift trucks, warehouse trucks, automated storage and retrieval systems, truck mount aerial work platforms
Logistics.............................................. Transportation services, logistics planning, operation of distribution centers, collection and delivery of cash and management of sales proceeds
Textile Machinery ............................... Air-jet looms, water-jet looms, ring spinning frames
Others ................................................ Semiconductor package substrates

SEMIANNUAL REPORT 200721

Notes to Consolidated Financial Statements(2) Geographical segments

Sales:
Japan
Outside customer sales
Intersegment transactions
North America
Outside customer sales
Intersegment transactions
EuropeOutside customer sales
Intersegment transactions
Others
Outside customer sales
Intersegment transactions
Subtotal
Elimination of intersegment transactions
Total
Operating costs and expenses:
Japan
North America
EuropeOthersElimination of intersegment transactions
Total
Operating income:Japan
North America
EuropeOthersElimination of intersegment transactions
Total

Millions of yen

Thousands of
U.S. dollars

For the six months
ended September 30

For the six months
ended September 30

2006

2005

2006

¥579,172
58,800637,972¥461,877
53,537515,414$4,912,400
498,728
5,411,128

154,772953
155,725

119,484743
120,227

1,312,740
8,083
1,320,823

157,7443,436
161,180

102,181
4,184
106,365

1,337,947
29,143
1,367,090

21,3982,341
23,739978,616(65,531)¥913,085

15,486
1,750
17,236759,242(60,214)¥699,028

181,493
19,856201,349
8,300,390(555,818)$7,744,572¥607,833
151,460
157,106
22,306(65,671)¥873,034¥490,894
116,134
103,236
16,631(59,918)¥666,977$5,155,496
1,284,648
1,332,536
189,194(557,005)$7,404,869¥ 30,139
4,265
4,074
1,433
140
¥ 40,051¥ 24,520
4,093
3,129
605
(296)
¥ 32,051$ 255,632
36,17534,554
12,155
1,187$ 339,703

Significant countries or areas belonging to each segment as of September 30, 2006 are as follows:
North America ............................................ U.S.A., Canada
Europe ........................................................ Sweden, Germany, France
Others......................................................... Australia, China, Brazil

10. Subsequent event
On October 20, 2006, the Company issued bonds without collateral in the principle amount of ¥20.0 billion. The Company intends touse the proceeds from the bond issue for capital investment.
16th series of bonds without collateral
Total amount of issue
Maturity date
Interest rate

22¥20.0 billion
September 20, 2016
1.95%

TOYOTA INDUSTRIES CORPORATION