Management’s Discussion and Analysis ofFinancial Condition and Results of Operations
The following Management’s Discussion and Analysis ofFinancial Condition and Results of Operations is based on
information known to management as of June 28, 2001.
Further, this Management’s Discussion and Analysis ofFinancial Condition and Results of Operations includes
forward-looking statements concerning the expected future
performance of Toyota Industries Corporation (“Toyota
Industries”). Please refer to “Cautionary Statement with
Respect to Forward-Looking Statements” at the beginning of
this annual report. This cautionary statement pertains to thereport as a whole.

Finance

36
TOYOTA INDUSTRIES CORPORATIONANNUAL REPORT 2001

Toyota Industries’ financial policy is to ensure sufficient
funds for its business activities, to maintain appropriate
liquidity and to sustain healthy balance sheets.
Currently, in principle, funds for capital expenditures andother long-term capital needs are raised from retained
earnings and long-term debt, and working capital needs are
met through short-term bank loans. Long-term debt
financing is carried out mainly through issuances of bonds,
including convertible bonds.
The 7.4 billion Swedish krona (¥89.2 billion) used for theacquisition of BT Industries AB (“BT Industries”) in June
2000 was raised temporarily through issuances ofcommercial paper, to be replaced later through issuances ofbonds and new shares. Toyota Industries issued ¥80.0 billion
in commercial paper for the tender offer. Then, in July 2000,
Toyota Industries carried out its eighth and ninth issuancesof bonds without collateral, ¥20.0 billion each for a total of¥40.0 billion. The funds raised in this way were used mainly
to redeem ¥60.0 billion in commercial paper. In addition, in
October 2000, Toyota Industries carried out a capitalincrease by issuing 30 million shares, comprising 20 million
shares for distribution in Japan and 10 million for
distribution outside Japan, at the market price. This raised a
total of ¥55.7 billion. Part of these funds was used to redeem
the remaining ¥20.0 billion in commercial paper. The
decision to issue the new shares was made based on acomprehensive management evaluation made from a
medium-term perspective. The intention was to maintain asound financial condition and expand Toyota Industries’
range of shareholders and investors worldwide. Part of thefunds raised through the issuance of new shares has been
appropriated as capital expenditures for the car airconditioning compressor business and for other operations.
Toyota Industries’ financial condition remains solid.
Through the use of cash and cash equivalents, short-term
investments and other current assets, as well as free cash

flows and fund-raising from financial institutions, Toyota
industries believes that it will be able to provide sufficient
funds for the working capital necessary to expand existing
operations and develop new projects, and for future capital
expenditures.

Financial Position
Total assets as of the end of the fiscal year ended March 31,
2001 stood at ¥1,896.6 billion (of which BT Industries
accounted for ¥193.8 billion), an increase of ¥1,183.7 billion(172.6%) from the previous fiscal year. This is due largely toa sharp increase in the valuation of investment in securities
following the application of new accounting standards forfinancial instruments (fair value accounting). It also reflects
an increase in assets and liabilities accounts that
accompanied the consolidation of BT Industries.
Current assets increased ¥106.1 billion (54.3%) to ¥301.4
billion (of which BT Industries accounted for ¥65.9 billion).
This is attributable mainly to increases in trade notes andaccounts receivable, inventories, and cash and cash
equivalents that accompanied the consolidation of BT
Industries. Trade notes and accounts receivable increased¥31.0 billion (46.6%) to ¥97.5 billion. Inventories increased¥22.6 billion (74.6%) to ¥52.8 billion, while the inventory
turnover period increased from 16.8 days to 19.7 days. Cashand cash equivalents increased ¥18.0 billion (23.2%) to¥95.3 billion.

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

(%)

2,000

80

1,500

60

1,000

40

500

20

0
FY

0

97

98

99

Total Assets
Shareholders’ Equity
Shareholders’ Equity Ratio (%)

00

01¥951.3 billion (including BT Industries’ ¥99.7 billion). This isdue mainly to the application of fair value accounting and anaccompanying net unrealized gain on other securities of¥558.7 billion (net of tax). The capital increase by issuanceof new shares at market price resulted in an addition of¥27.8 billion each to common stock and capital surplus,
making a combined addition of ¥55.7 billion to shareholders’equity. Shareholders’ equity per share increased to ¥3,036.77
from ¥1,116.62 as of March 31, 2000.

Cash FlowsNet cash provided by operating activities was ¥78.4 billion,
an increase of ¥10.3 billion (15.2%) over the previous fiscal
year. Net cash used in investing activities increased ¥88.7
billion (132.0%) to ¥155.9 billion. Net cash provided byfinancing activities increased ¥67.0 billion (243.5%) to ¥94.5
billion. As a result, cash and cash equivalents increases ¥18.0
billion (23.2%) to ¥95.3 billion, which includes a slight
upward adjustment for the effect of translation adjustmentsof cash and cash equivalents.

Cash Flows(¥ Billion)
100

37
TOYOTA INDUSTRIES CORPORATIONANNUAL REPORT 2001

Property, plant and equipment increased ¥36.0 billion(13.9%) to ¥294.7 billion (including BT Industries’ ¥19.1
billion). More than half of this increase is attributable to anincrease in machinery, equipment and vehicles, and buildings
and structures due to the addition, after consolidation, of BT
Industries’ machinery, equipment and vehicles, and buildings
and structures.
In intangible assets, due to the acquisition of BT
Industries, goodwill is newly accounted for at ¥86.4 billion(including BT Industries’ portion, and reflecting ¥2.3 billion inamortization of goodwill during the fiscal year). Goodwill forthe acquisition of BT Industries will be amortized using thestraight-line method over a period of 20 years.
Investments and other assets increased ¥965.9 billion(439.6%) to ¥1,185.6 billion (including BT Industries’ ¥22.2
billion). This is attributable largely to a reevaluation (¥950.4
billion effect, gross of tax) at market prices as of March 30,
2001 of shares of Toyota Group companies, including Toyota
Motor Corporation (“TMC”), and other shares held by Toyota
Industries, due to the adoption of fair value accounting. Theseshares had been valued at their acquisition cost up to theprevious fiscal year. In total, investment in securities increased¥954.0 billion (498.9%) to ¥1,145.2 billion.
Toyota Industries, primarily in its Automobile Segment, hasa very close business relationship with each of the Toyota
Group companies, and it recognizes that holding securities ofeach of these business partners contributes to mutual
management stability. From a long-term point of view, Toyota
Industries firmly believes that maintaining and improving thecompetitive strength of the Toyota Group raises its
profitability and contributes to increasing its corporate value.
Current liabilities increased ¥67.7 billion (46.4%) from theprevious fiscal year to ¥213.6 billion (including BT Industries’¥42.7 billion). This is due mainly to increases in trade notes
and accounts payable and short-term bank loans reflecting
the consolidation of BT Industries. Trade notes and accounts
payable was ¥103.4 billion, an increase of ¥25.3 billion(32.4%). Short-term bank loans increased by ¥12.9 billion(125.2%) to ¥23.2 billion.
Long-term liabilities were ¥686.6 billion (including BT
Industries’ ¥50.5 billion), an increase of ¥483.2 billion(237.5%) from the previous fiscal year. The main reason forthis increase is the application of fair value accounting, which
added an amount of ¥391.6 billion, and increased deferred tax
liabilities by ¥385.5 billion. Other significant factors in thisincrease are ¥40.0 billion in issuances of bonds without
collateral, and an increase in long-term bank loans
accompanying the consolidation of BT Industries. Long-term
debt increased ¥87.4 billion (48.3%) to ¥268.5 billion.
Shareholders’ equity increased ¥635.0 billion (200.8%) to

50

0

(50)

(100)

(150)

(200)
FY

97

98

99

00

01

Net Cash Provided by Operating Activities
Net Cash Used in Investing Activities
Net Cash Provided by (Used in) Financing Activities

The increase in net cash provided by operating activities
reflects the following: factors reducing cash and cash
equivalents were outweighed by factors augmenting cash
and cash equivalents. Reducing factors include a reduced
increase in payables and a decrease in equity in net loss ofaffiliates, while augmenting factors include an increase inincome before income taxes, an increase in net payments ofallowance for retirement benefits (included in others, net), arise in increase in receivables, and an increase inManagement’s Discussion and Analysis ofFinancial Condition and Results of Operations
depreciation and amortization (including amortization of
goodwill). The increase in net payments of allowance forretirement benefits is the result of the requirement tocompensate for the aggregate funding shortfall in retirement
benefit obligation that accompanied the application of new
accounting standards for retirement benefits, as well as the
addition of provision for retirement and severance benefits
for directors and corporate auditors that accompanied achange in accounting. Depreciation and amortization
increased ¥3.7 billion (8.7%) to ¥46.5 billion.

accounted for by ¥61.6 billion recorded in goodwill
pertaining to the acquisition of BT Industries. Payments forpurchases of investment securities were ¥9.7 billion, adecrease of ¥6.4 billion (40.0%). Approximately half of thisamount was for additional purchases of shares of Toyota
Group companies, such as DENSO Corporation. About aquarter was for purchases of bonds.
Capital Expenditures(¥ Billion)
150

Depreciation and Amortization(¥ Billion)
50

100

38
40

TOYOTA INDUSTRIES CORPORATION

50

30

20
0
FY

10

0
FY

97

98

99

00

01

ANNUAL REPORT 2001

Automobile
Materials Handling Equipment
Textile Machinery*
Others (Including Corporate or Elimination)

An amount of ¥86.1 billion, more than 50% of the net
cash f low used in investing activities, is accounted for by
payments for acquisition of subsidiaries’ stock resulting in achange in scope of consolidation. Of this amount, ¥86.0
billion was utilized for the acquisition of BT Industries’
shares. This type of payment did not occur in the previous
fiscal year. Payments for purchases of tangible assets were
¥55.1 billion, an increase of ¥3.0 billion (5.8%).
In this connection, capital expenditures increased ¥82.6
billion to ¥127.3 billion (184.4%). This figure includes theamount recorded in goodwill pertaining to the acquisition of
BT Industries. By principal segment, capital expenditures
includes the following: in the Automobile Segment, ¥54.7
billion, an increase of ¥21.7 billion (65.6%); in the Materials
Handling Equipment Segment, ¥70.7 billion, an increase of¥65.3 billion (1,202.5%); and in the Textile Machinery
Segment, ¥0.3 billion, a decrease of ¥0.7 billion (69.3%). In
the Automobile Segment, more than half of the amount wasused to strengthen Toyota Industries’ production capability
for car air-conditioning compressors, while most of theamount in the Materials Handling Equipment Segment was* From fiscal 1999, the Textile Machinery Segment has been separated
from the Others Segment.

97

98

99

00

01

Automobile
Materials Handling Equipment
Textile Machinery*
Others (Including Corporate or Elimination)

Net cash provided by financing activities includes ¥55.2
billion in proceeds from issuances of common stock. There
were no such proceeds in the previous fiscal year. In
addition, proceeds from issuances of bonds increased ¥10.0
billion (33.3%) to ¥39.8 billion. In this connection, ¥80.0
billion received from issuances of commercial paper in June
2000 was fully redeemed by October 2000 using theproceeds from the issuances of bonds and common stock.
These funds were raised primarily for the acquisition of BT
Industries. In addition, Toyota Industries paid ¥5.0 billion in
cash dividends (including for minority shareholders).

Overview of Performance
Management of Foreign Exchange Risks
The average exchange rate of the yen to the U.S. dollar(TTM) in the fiscal year ended March 31, 2001 was ¥110.58,
a year-on-year appreciation of ¥1.04 (0.9%).
Overseas sales increased ¥106.8 billion (55.6%) over theprevious year to ¥298.8 billion, and account for 38.9% of
total sales, an increase of 8.2 percentage points. This sharp
rise in the ratio to total sales is due primarily to the large
expansion of sales in Europe and North America whichaccompanied the consolidation of BT Industries’ results into

Toyota Industries’ accounts, which started in the second halfof the fiscal year under review.
For the future, as the pace of globalization accelerates,
Toyota Industries expects the consolidation of BT Industries
into its annual accounts and the integration of production
and sales in the materials handling equipment business toresult in an upward trend in overseas sales and a further risein the ratio of overseas sales to total sales. To hedge foreignexchange risks arising from the export and import ofmaterials, parts and products, Toyota Industries uses
derivative instruments (interest rate swaps and foreign
currency forwards). Toyota Industries will also expand
efforts to procure materials and parts and engage inproduction in areas closer to overseas markets in order toreduce inventories and cut costs.

(¥ Billion)

(%)

800

40

Net Sales
As a result of the factors mentioned above, net sales
increased ¥141.6 billion (22.6%) from the previous fiscal
year to ¥767.4 billion. BT Industries’ net sales contributed¥69.3 billion to this figure.
Cost of Sales andSelling, General and Administrative Expenses

600

30

20

200

10

0
FY

0

97

98

99

00

01

Net Sales
Overseas Sales
Overseas Sales Ratio (%)

Operating Performance
Although private sector capital investment in Japan showedsigns of a slight recovery during the first half of the fiscal
year under review, in the second half of the year an
economic slowdown in the United States and a slump in theJapanese stock market dampened corporate production
activity. These factors, coupled with sluggish consumer
spending and other negative factors, led to continued
stagnation of the Japanese economy. Outside Japan, although
the booming U.S. economy began to falter, the European andAsian economies generally held firm.
In this operating environment, Toyota Industries focused
its efforts on product quality and retaining the trust of its
customers. It also made efforts to strengthen its corporate
structure by stepping up the development of attractive

ANNUAL REPORT 2001

400

Due mainly to the consolidation of BT Industries’ ¥49.8
billion in cost of sales, Toyota Industries’ cost of sales for the
fiscal year under review increased ¥105.4 billion (18.9%) to¥663.0 billion. The ratio of cost of sales to net sales
improved from 89.1% to 86.4%, due primarily to the effectsof rises in productivity and capacity utilization ratio driven
by increased production, cost reduction activities and theconsolidation of BT Industries. Selling, general andadministrative expenses increased ¥17.7 billion (45.0%) to¥57.1 billion. (BT Industries accounted for ¥16.2 billion ofthis figure.) The ratio of selling, general and administrative
expenses to net sales increased from 6.3% to 7.4%, largely asa result of the consolidation of BT Industries. These
expenses include ¥7.1 billion for labor and ¥3.1 billion foradvertising and publicity. The consolidation of BT Industries
brought amortization of goodwill for the fiscal year underreview (including BT Industries’ portion) to ¥2.3 billion.
Research and development expenses, which are included
in selling, general and administrative expenses andmanufacturing cost, increased ¥2.1 billion (8.9%) to ¥26.2
billion, representing 3.4% of net sales. By principal segment,
research and development expenses were ¥16.3 billion in
the Automobile Segment, ¥7.9 billion in the Materials
Handling Equipment Segment (of which BT Industries
accounted for ¥1.3 billion) and ¥0.6 billion in the Textile
Machinery Segment.

39
TOYOTA INDUSTRIES CORPORATIONNet Sales, Overseas Sales andOverseas Sales Ratio

products, aggressively conducting sales promotions, andcarrying out a company-wide program to reduce costs. In
addition, as a result of the consolidation of BT Industries’
results starting in the second half of the fiscal year, Toyota
Industries’ net sales increased 22.6% and operating income
increased 63.9%—for the second consecutive year. Both sales
and profit recorded historic highs. The increase in net sales
is due primarily to the consolidation of BT Industries andhealthy growth in the production of car air-conditioning
compressors. The increase in operating income is due
largely to the growth in net sales, the success of efforts to
reduce costs and raise productivity, and the consolidation of
BT Industries.

Management’s Discussion and Analysis ofFinancial Condition and Results of Operations
R&D Expenses andR&D Expenses to Net Sales Ratio(¥ Billion)

40

(%)

30

6

20

4

10

2

0
FY

0

97

98

99

00

01

TOYOTA INDUSTRIES CORPORATION

R&D Expenses
R&D Expenses to Net Sales Ratio (%)

Operating Income
Due to the factors summarized above, operating income forthe fiscal year under review increased ¥18.4 billion (63.9%)
to ¥47.3 billion. (After deducting amortization of goodwill,
BT Industries’ contribution was ¥3.3 billion.) The operating
income ratio increased from 4.6% to 6.2%.

ANNUAL REPORT 2001

Operating Income andOperating Income Ratio(¥ Billion)

(%)

50

10

40

8

30

6

20

4

10

2

0
FY

0

an increase of ¥34.2 billion (8.1%), due to increases in sales
both in Japan and outside of Japan. In the vehicle business,
although the number of Sprinter Carib (Corolla Wagon) units
sold decreased from the previous fiscal year, production of
the Vitz (Yaris) increased and sales continued to grow, which
led to a ¥4.4 billion (2.3%) increase in net sales for thisbusiness to ¥195.9 billion. In the engine business, the start ofproduction in August 2000 of the 2UZ-type gasoline engine
contributed significantly to the ¥10.2 billion (11.1%) increasein net sales to ¥102.1 billion. In addition, an increase inproduction capacity in Japan and sales expansion in North
America and Europe led to strong growth in the car airconditioning compressor business, whose net sales rose
¥19.3 billion (16.0%) to ¥139.6 billion. As a result, operating
income in the Automobile Segment increased ¥4.1 billion(16.8%) to ¥28.5 billion.
In the Materials Handling Equipment Segment, sales inJapan recovered and steady growth was achieved in sales inNorth America and Europe. Continued healthy demand inEuropean and North American markets led to an increase in
the revenue and earnings of BT Industries, which wasconsolidated into Toyota Industries accounts starting in thesecond half of the fiscal year under review. As a result of theabove, net sales increased ¥87.4 billion (58.6%) to ¥236.5
billion. Operating income for this segment increased ¥8.8
billion (153.0%) to ¥14.5 billion.
In the Textile Machinery Segment, a recovery in capital
investment in Asia, Toyota Industries’ leading market, createda positive operating environment. Toyota Industries’
energetic sales and service activities led to increased exports
to China, Indonesia and Pakistan. As a result, net sales
increased ¥10.1 billion (43.7%) to ¥33.2 billion. The increasein net sales plus a major streamlining of operations leading to
reduced costs and expenses resulted in operating income, forthe first time in many years, of ¥35 million. This compareswith an operating loss of ¥3.0 billion for the previous fiscal
year.
Non-Operating Income and Expenses

97

98

99

00

01

Operating Income
Operating Income Ratio (%)

Operating Performance Highlights by
Business Segment
The performances of Toyota Industries’ main businesssegments are described below.
In the Automobile Segment, net sales were ¥457.6 billion,

Non-operating income for the fiscal year under review
decreased ¥69 million (0.4%) to ¥16.2 billion. Realized gains
on sales of securities decreased ¥5.1 billion (87.5%) to ¥0.7
billion. However, including BT Industries’ contribution of¥3.3 billion, interest income increased ¥3.3 billion (370.8%)
to ¥4.2 billion.
Non-operating expenses increased ¥1.0 billion (5.6%)
from the previous fiscal year to ¥19.0 billion. Although
equity in net loss of affiliates decreased ¥4.0 billion (80.7%)
to ¥1.0 billion, interest expenses increased ¥3.9 billion(154.6%) to ¥6.4 billion. This latter increase was largely theIncome before Income Taxes

The adoption of new accounting standards for retirement
benefits, which became effective in the fiscal year started
April 1, 2000, led to an aggregate funding shortfall of ¥19.1
billion in retirement benefit obligation, and the whole
shortfall was disposed of as an extraordinary loss(“cumulative effect of change in accounting standards for
retirement benefits”). To compensate for this loss, ¥15.1
billion was posted as an extraordinary gain (“gain on
securities contribution to employee retirement benefit
trust”) by an employee retirement benefit trust establishedthrough the contribution of certain investment securities
held by Toyota Industries.
Also, a change was made in the treatment of Toyota
Industries’ retirement and severance benefits for directors
and corporate auditors. This had been treated as an expense
recorded at the time of payment. In order to make period
earnings more appropriate and the financial statements
healthier from the fiscal year under review, Toyota
Industries changed the accounting method to provide for
actual amounts payable during the term based on its internal
rules. Accordingly, a ¥2.3 billion provision for retirement
and severance benefits for directors and corporate auditors
was recorded as an extraordinary loss.

Income before income taxes was ¥38.2 billion (including BT
Industries’ contribution of ¥3.4 billion after deducting
amortization of goodwill), an increase of ¥11.0 billion(40.7%) over the previous fiscal year.

Disposition of the Shortfall in Retirement Benefit
Obligation
In accordance with new accounting standards for retirement
benefits, the present total amount of Toyota Industries’
benefit obligation (including lump-sum severance payment
obligation) as of April 1, 2000 was calculated at ¥62.0 billion.
As of the same date, the aggregate fair market value ofToyota Industries’ pension assets was ¥24.2 billion, and theamount of allowance for retirement benefits recorded in the
consolidated balance sheets was ¥18.8 billion. Accordingly,

Income Taxes
Net of current and deferred income taxes was ¥14.8 billion,up ¥2.2 billion (17.8%) over the previous fiscal year. The
ratio of income taxes to income before income taxes, i.e.,
effective income tax rate, decreased from 46.3% to 38.8%.
Net Income
Net income for the fiscal year under review was ¥22.6
billion (including BT Industries’ contribution of ¥2.0 billion
after deducting amortization of goodwill), an increase of¥8.9 billion (65.4%). The ratio of net income to net sales, i.e.,
return on sales (ROS), increased from 2.2% in the previous
fiscal year to 2.9%. However, the ratio of net income toshareholders’ equity (using the average of such amounts at
the end of the fiscal year under review and the previous
fiscal year), i.e., return on equity (ROE), decreased from 4.4%
to 3.6%. This is because the application of fair value
accounting resulted in a sharp increase in shareholders’equity. Net income per share (EPS) increased from ¥48.32 to¥75.90, and diluted net income per share increased from
¥43.18 to ¥67.77.

41

ANNUAL REPORT 2001

Extraordinary Gains and Losses

Ordinary Income

TOYOTA INDUSTRIES CORPORATION

Ordinary income increased ¥17.3 billion (63.9%) over theprevious fiscal year to ¥44.5 billion. This included ¥3.4
billion contributed by BT Industries after deducting
amortization of goodwill.

the aggregate funding shortfall in retirement benefit
obligation as of that date was ¥19.1 billion. Toyota Industries
disposed of the whole shortfall by recording the total
amount as “cumulative effect of change in accounting
standards for retirement benefits.” To compensate, a portionof Toyota Industries’ shares in DENSO Corporation was
contributed to an employee retirement benefit trust andaccounted for as a pension asset. The difference between
the fair value and acquisition cost of these shares, ¥15.1
billion, was recorded as gain on securities contribution toemployee retirement benefit trust. As a result of thisdisposition of the shortfall in retirement benefit obligation,
income before income taxes decreased ¥4.0 billion.

result of ¥3.3 billion in interest expenses due to theconsolidation of BT Industries and ¥0.6 billion in interest
expenses for the eighth and ninth issuances of bonds
without collateral. The large decrease in equity in net loss ofaffiliates is due primarily to a better performance, including
expanded production volume and improved rejection rate ofproducts, at ST Liquid Crystal Display Corp.

Management’s Discussion and Analysis ofFinancial Condition and Results of Operations
Net Income per ShareFirst Category: Vehicle Business and Engine Business<Mission>
As a member of the Toyota Group, to contribute to the highquality and technological advances of TOYOTA-brand cars.

(¥)
80

Second Category: Car Air-Conditioning Compressor
Business, Materials Handling Equipment Business andTextile Machinery Business<Mission>
To aggressively expand global markets through thedevelopment of products using Toyota Industries’ unique
technologies.

60

40

20

0
FY

42

97

98

99

00

Third category: Electronics Business<Mission>
To be a key source of Toyota Industries’ future growth

01

Basic
DilutedTOYOTA INDUSTRIES CORPORATIONNet Income, ROE and ROS

ANNUAL REPORT 2001(¥ Billion)

(%)

25

10

20

8

15

6

10

4

5

2

0
FY

0

97

98

99

00

01

Net Income
ROE (%)ROS (%)

Strategies and Projections
Business Strategies
Since its establishment as a textile machinery manufacturer
75 years ago, Toyota Industries has expanded the scope of its
business activities. Following successful diversification,
Toyota Industries is poised for innovation and growth in the
21st century. Toyota Industries’ strategic lines of business are
currently classified into three categories on the basis of their
specific characteristics. The operational strategies for thesecategories are based on the mission assigned to each.

The first category, the vehicle business and the engine
business, handles mainly the production of vehicles
consigned by TMC and production of engines for TOYOTAbrand cars. To play a more important role in the Toyota
Group, Toyota Industries is making continual efforts toimprove its production technologies and strengthen quality
control. For Toyota Industries, this field of business provides
a stable platform for its own growth, while also contributing
to the success of the Toyota Group. Aiming to play a more
important role in the development and production of
TOYOTA-brand cars and engines, Toyota Industries will step
up its efforts to strengthen its research and development
capability and improve productivity. In its work in thiscategory for TMC, Toyota Industries will also makeproposals for the design and launch of auto parts andcompact cars, and actively work to ensure that suchproposals are adopted.
The second category, which comprises the car airconditioning compressor business, the materials handlingequipment business and the textile machinery business, isidentified as a business field in which Toyota Industries must
cultivate further development of global markets by precisely
grasping customers’ needs and developing and marketingstate-of-the-art products that meet these needs through theapplication of original technologies. Firmly believing thattechnological improvement is the key to competitiveness,
Toyota Industries strives to strengthen its technologicaldevelopment capabilities by fostering the training anddevelopment of superior engineers. Since the car airconditioning compressor business and the materials
handling equipment business are positioned as corebusinesses, Toyota Industries places a priority on them in its
allocation of management resources. In addition, on April 1,
2001, Toyota Industries established TOYOTA MaterialDespite continuing deregulation and further pump-priming
measures that may be taken by the Japanese government, theshort-term outlook for the Japanese economy remains
problematic. In the face of deflation and rising
unemployment, it is uncertain whether consumer
confidence will increase enough to kick-start the economy
into growth. There is a fear that a sustained economic
slowdown in the United States will adversely affect Japanand other exporting countries.
For the fiscal year ending March 31, 2002, Toyota
Industries projects a 19.9% year-on-year increase in net sales
to ¥920 billion. Income before income taxes will increase
38.7% to ¥53 billion and net income will increase 36.9% to¥31 billion. Toyota Industries expects these increases to beachieved by all-out efforts in launching new products,
energetic sales and service activities, and improvements incosts and expenses. In addition, Toyota Industries
anticipates that the consolidation of BT Industries for acomplete fiscal year and the integration of production andsales in the materials handling equipment business will also

Dividend Policy
Toyota Industries’ dividend policy is based on the underlying
goals of strengthening competitiveness, augmenting
corporate value and maintaining stable dividends. Toyota
Industries gives full consideration to business performance,
its dividend payout ratio and other factors as it makes every
effort to meet the expectations of shareholders. Toyota
Industries views retained earnings as an important resource
for securing future profits for its shareholders, and it intends
to strategically invest portions of those earnings in researchand development and future growth, and to aggressively
pursue business expansion and strengthen its corporate
constitution.
A year-end cash dividend of ¥9.0 per share was approvedat Toyota Industries’ Ordinary General Meeting of
Shareholders held on June 28, 2001. Including the interim
cash dividend of ¥8.0 per share, cash dividends for the year
totaled ¥17.0 per share, an increase of ¥1.0 per share over theprevious fiscal year. The dividend payout ratio was 24.4%.

Change in Share Trading Unit
To broaden the range of investors in Toyota Industries’ stockand to promote the trading of its shares, effective August 1,
2001, Toyota Industries lowered the minimum trading unitof its shares from 1,000 to 100. This alteration was made inaccordance with a partial revision of Toyota Industries’
Articles of Incorporation approved at the Ordinary General
Meeting of Shareholders held on June 28, 2001. As a result,
starting on August 1, 2001, Toyota Industries’ shares listed on
Tokyo and Nagoya Stock Exchanges and Osaka Securities
Exchange have been traded in units of 100 shares.

43

ANNUAL REPORT 2001

Forecasts of Consolidated Results
for the Fiscal Year Ending March 31, 2002

contribute to these increases. Toyota Industries also projects¥93 billion in capital expenditures and ¥52 billion in
depreciation and amortization.

TOYOTA INDUSTRIES CORPORATION

Handling Company as a uniquely independent company
within the larger company. The main purpose of this move
was to strengthen independent management in the unit bygiving it the authority needed to respond flexibly andspeedily to changes in the business environment and to
emerge a winner in the face of intensifying global
competition.
The third category, the electronics business, which
includes the production of LCDs, will also be made a priority
in Toyota Industries’ allocation of management resources inorder to develop this activity into a core business in the
future. This is a field characterized by rapid advances intechnological innovation. Toyota Industries recognizes that it
must strengthen its research and development capability tomaintain competitiveness in this field. Continuing capital
expenditures will be required to do this. Swift decisionmaking is also required for success in this business, which
depends on rapidly getting production on track, improving
the rejection rate of products and achieving a return on
investment. Aiming to participate in the electronics businessand expand operations in the short term, and to diversify risks
by entering new areas of this business, Toyota Industries has
not only carried out independent product development, but
has also entered into joint ventures with both Sony
Corporation and Ibiden Co., Ltd. Toyota Industries believes
that this strategy has been successful to date and views thiscategory as a key source for future corporate growth.