ANNUAL REPORT
Year ended March 31, 2006

2006

Sustained Innovation
and Creativity

Profile
Toyota Industries Corporation was founded in 1926 by Japan’s “master of
invention,” Sakichi Toyoda, to manufacture automatic looms. During theintervening years, Toyota Industries broadened the scope of its businessdomains to include textile machinery, automobiles, materials handlingequipment, electronics and logistics solutions. With production bases in North
America, Europe and Asia, including Japan, China and India, as well as aworldwide sales network, mainly in its Materials Handling Equipment andTextile Machinery segments, the operations of the Toyota Industries Group
span the globe.
In November 2006, Toyota Industries will celebrate its 80th anniversary.
We remain committed to further growth of our businesses in the unwavering
pursuit of sustained innovation and creativity.

About the Cover“Be ahead of the times through endless creativity, inquisitiveness and pursuit of improvement,”
reads one of the five Toyota Precepts, symbolizing the wisdom of company founder Sakichi Toyoda.
The precepts have served as the basis of the thinking and guiding principles of the entire Toyota
Group. “Sustained innovation and creativity,” which serves as the theme of this year’s annual report,
embodies our determination to stay on a path to further growth through this spirit.

Definition of Terms“Fiscal 2006” refers to the fiscal year ended March 31, 2006, 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,” “Toyota Industries Group” or the “Group” herein are to the Company and its 153 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” andsimilar 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 thatyou should not rely solely upon these projections and forward-looking statements in making your investment 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 anduncertainties 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 alliances with 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.

Contents
2

Consolidated Financial Highlights

4Letter to Shareholders

6

Message from the President

14

At a Glance

16

Focus on Business

16
26
30
34
38
41
42
42

43
44
46
48
51
54
56
57
58
60

61
62
64
74
76
77
78
79
98

Materials Handling Equipment
Car Air-Conditioning Compressor
Vehicle/Engine
Electronics
Logistics Solutions
Textile Machinery
Automotive Stamping Dies
Manufacturing Equipment

Exploring Toyota Industries
Medium-Term Management Plan
Research and Development
Corporate Governance
Environmental and Social Contribution Efforts
Toyota Industries’ 80 Years of History
Corporate Organization
Directors, Corporate Auditors and Managing Officers
Corporate Data
Locations of Major Subsidiaries Outside Japan

Financial Section
Consolidated Eleven-Year Summary
Management’s Discussion and Analysis ofFinancial 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 Auditors

99

Toyota Industries in Numbers

104

Investor Information

Toyota Industries Corporation

Annual Report 2006

1

Consolidated Financial Highlights
Toyota Industries Corporation and Consolidated Subsidiaries
Years ended March 31

Thousands of
U.S. dollars

Millions of yen%change

2006

2005

2004

2003

2002

2006

¥1,505,956¥1,241,538¥1,164,379¥1,069,219¥980,163

Operating income

64,04053,12052,63152,47846,33020.6

545,160

Ordinary income

80,63570,91358,971

51,37547,866

13.7

686,431

Net income

47,07743,35833,623

21,93427,3118.6

400,758

Overseas sales

620,946

539,009497,357

451,594

396,470

15.2

5,285,996

Depreciation and amortization

87,28870,21365,35259,15455,17424.3

743,066

Capital expenditures

158,836

136,506

89,50987,55988,32016.4

1,352,141

Research and development

31,16630,051

29,562

29,70529,985

3.7

265,310Net income — basic¥146.16¥135.09¥108.04¥70.19¥87.28

8.2%

$1.24

Net income — diluted

146.02135.03101.97

62.90

78.26

8.1

1.24

Cash dividends

38.00

32.00

24.00

22.00

19.00

18.8

0.32

Total assets¥3,245,341¥2,326,824¥2,011,995¥1,650,391¥1,770,401

Shareholders’ equity

1,611,227

1,115,747

1,016,764

738,868

878,81244.4

32,97730,99027,431

25,03023,056

6.4

For the YearNet sales

21.3% $12,819,920

expenses
Per Share Data (yen, U.S. dollars)

At Year-End

Number of employees

39.5% $27,626,977
13,716,072

Note: U.S. dollar amounts have been translated from yen, for convenience only, at the rate of 117.47 yen = US$1, the approximate exchange rate on March 31, 2006.

Sales by Business Segment
Thousands of
U.S. dollars

Millions of yen

2006

2005

2004

2003

2002

2006

Automobile¥746,796¥616,200¥603,863¥595,460¥563,599$6,357,334

Materials Handling Equipment

595,237

503,990

443,444

373,008

353,043

5,067,141

Logistics

65,145––––554,567

Textile Machinery

49,78943,90245,96948,74030,705423,844

Others48,98977,446

71,10352,01132,816

417,034

Net sales

2

Toyota Industries Corporation

Annual Report 2006

Operating Income

Net Sales

Net Income(¥ Billion)(¥ Billion)(¥ Billion)

2,000

70

50

60
40
1,500

50
30

40
1,000
30

20

20

500

10
10

0

02

FY

03

04

05

0

06

FY

02

03

04

05

0

06

FY

Total Assets

Overseas Sales andOverseas Sales Ratio

02

03

04

05

06

05

06

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

700

70

3,500

2,000

600

60

3,000

500

50

2,500

400

40

2,000

300

30

1,500

200

20

1,000

100

10

500

0

0

1,500

1,000

0
FY

02

03

04

05

06

FY

500

02

03

04

05

0

06

02

FY

03

04

Overseas sales ratio (right)

Net Income per Share (Basic)

Cash Dividends per Share andConsolidated Payout Ratio

R&D Expenses andR&D Expenses Ratio

(¥)

(¥)

(%)

(¥ Billion)

150

50

50

40

(%)

4

40

40

30

3

30

30
20

2

20

20

10

10

10

1

100

50

0

0
FY

02

03

04

05

06

FY

0

02

03

04

Payout ratio (right)

05

06

0
FY

0

02

03

04

05

06

R&D expenses to net sales ratio (right)

Toyota Industries Corporation

Annual Report 20063

Letter to Shareholders
Dear Shareholders:
Toyota Industries made tremendous strides in strengthening our management structureand expanding our business foundation under a five-year Medium-Term Management
Plan that was completed in the fiscal year ended March 31, 2006 (fiscal 2006). As a result,
we are pleased to report that in fiscal 2006, the plan’s final year, Toyota Industries achieved
consolidated net sales of ¥1,506.0 billion and consolidated ordinary income of ¥80.6
billion, thereby surpassing the targets of ¥1,200 billion in consolidated net sales and ¥80.0
billion in consolidated ordinary income.
In spite of these positive results, we will continue to push ahead to realize a potentiallygreater level of performance. In the fiscal year ending March 31, 2007, Toyota Industries
initiated a new five-year Medium-Term Management Plan (April 2006 – March 2011)that we believe will guide us on a path to further growth. Under the new plan, we havesignificantly raised the bar for performance by setting the extremely challenging targetsof surpassing ¥2,000 billion in consolidated net sales and ¥140.0 billion in consolidated
ordinary income. To achieve these objectives, we will strive to further reinforce the strengthsof such core businesses as the Materials Handling Equipment and automobile-related
businesses while actively cultivating the Logistics Solutions and other new businesses. In
essence, our new management plan clearly articulates the strategic directions Toyota
Industries plans to pursue as we enter a new phase of growth.
Along with the new management plan, we have devised the 2010 Vision, which
envisions the desired status of the Toyota Industries Group in 2010—namely, the attainment
by each business division of an overwhelmingly dominant competitive advantage in
the areas of quality, cost and delivery. To achieve this, we need to continue to develop
leading-edge technologies that anticipate the needs of the times and enhance ourvalue chain by forging deeper synergies among business divisions, which would not be
possible without the combined efforts and capabilities of our employees. Accordingly, we
intend to commit our energy to the development of personnel with superior skills as well as
the augmentation of workplace strengths that foster a spirit of teamwork.

4

Toyota Industries Corporation

Annual Report 2006

Tadashi Ishikawa

Tetsuro Toyoda

ChairmanPresident

To achieve stable growth over the long term, it is essential that companies undertake
business activities with a view toward promoting harmony between society and theglobal environment while maintaining healthy relationships with stakeholders. Furthermore,
we believe that initiatives to ensure thorough compliance and strengthen corporate
governance are also indispensable. With an eye toward the future, we remain committed
to attaining sustainable growth and raising our corporate value to meet the expectationsof our shareholders and other stakeholders.
August 2006

Tadashi Ishikawa

Tetsuro Toyoda

ChairmanPresident

Toyota Industries Corporation

Annual Report 2006

5

Message from the President

Tetsuro Toyoda
President

Celebrating Our 80th Anniversary
In November 2006, Toyota Industries will mark a momentous milestone when it celebrates the80th anniversary of its founding. Over the past eight decades, Toyota Industries has successfully
navigated numerous challenges to steadily expand the scope of its business through sustained
innovation and creativity. Our achievements have been made thanks to the loyal patronageof customers, devotion of employees, understanding of local communities and the supportof our shareholders, all of whom I wish to express my deepest appreciation. Toyota Industries’
management remains committed to ensuring the ongoing growth of its businesses while
supporting the livelihood of employees and their families, contributing to society and providing
customers with excellent products and services. Above all, we have renewed our resolve to fulfill
our crucial responsibility of meeting the expectations of our shareholders.

6

Toyota Industries Corporation

Annual Report 2006

Record-Breaking Results for Fiscal 2006
In fiscal 2006, ended March 31, 2006, Toyota Industries achieved record-high consolidated net
sales and income amid an expanding global economy. Fueled mainly by increases in the
Automobile and Materials Handling Equipment segments, consolidated net sales for the fiscal
year jumped 21.3% to ¥1,506.0 billion. Consolidated operating income increased 20.6% to ¥64.0
billion, as the rise in net sales and the success of cost-reduction activities compensated forincreased depreciation expenses in the Vehicle and Engine businesses and higher prices for raw
materials. Consolidated ordinary income increased 13.7% to ¥80.6 billion and consolidated net
income rose 8.6% to ¥47.1 billion.

Factors for Increase (Decrease) in Consolidated Ordinary Income
+4.6

-13.2

+21.0
Exchange rate
fluctuations-12.0
Increase indepreciation
expenses

+23.5
Cost
reductions-6.6
Increase in
raw material
prices(¥ Billion)

70.9

Up 9.7 billion yen
over fiscal 2005

-6.4
Increase inpersonnel
expenses

- 1.2

80.6

Increase in Non-operating
miscellaneous income (losses)
expenses

Increase in
net sales

FY

05

06

All Business Segments Maintain Generally Solid
Performances
During fiscal 2006, all segments once again reported favorable results, as evidenced byacross-the-board increases in net sales. Additionally, with the exception of the Automobile
Segment, most segments achieved increases in operating income over the previous fiscal year.
A summary of business results by segment is as follows.
Note: Segment net sales figures do not include intersegment transactions. However, segment operating income (loss) figures do
include operating income (loss) arising from intersegment transactions.

Automobile Segment
In fiscal 2006, net sales increased 21.2% from the previous fiscal year to ¥746.8 billion, but
operating income declined 11.7% to ¥20.1 billion. The increase in net sales was fueled primarily byrobust sales in the Vehicle Business of the Vitz (Yaris outside Japan) and the RAV4, both of which
underwent a full model change in February and November 2005, respectively. In the Engine
Business, factors contributing to higher sales in this segment included the commencement of
production of 2.2-liter direct-injection AD diesel engines for the European market in March 2005
and the start of production of 2.5-liter and 3.0-liter direct-injection KD diesel engines for Toyota
Motor Corporation’s (TMC) Innovative International Multi-Purpose Vehicle (IMV) Project in June

Toyota Industries Corporation

Annual Report 2006

7

2005. Also contributing to growth in net sales in the Automobile Segment was an increase inoverseas unit sales in the Car Air-Conditioning Compressor Business. On the other hand, thedecline in operating income resulted from higher depreciation expenses and pre-production
costs associated with the introduction of new products and release of model changes in the
Vehicle and Engine businesses.

Materials Handling Equipment Segment
Net sales by the Materials Handling Equipment Segment rose 18.1% from the previous fiscal
year to ¥595.2 billion. This rise was underpinned by large increases in sales of the TOYOTA, BT and
Raymond brands supported by an expanding global economy in addition to favorable results by
Aichi Corporation, which manufactures and sells aerial work platforms. Operating income surged
48.6% to ¥38.8 billion.

Logistics Segment
The Logistics Segment was newly established in fiscal 2006, separating the logistics-related
businesses (logistics solutions and transportation businesses) that were previously part of the
Others Segment.
During fiscal 2006, the Logistics Segment achieved net sales of ¥65.1 billion. This increasereflected solid results by Asahi Security Co., Ltd. (Asahi Security), which was acquired by Toyota
Industries in March 2005 and provides comprehensive total cash management outsourcing.
Other contributing factors were higher sales in the Logistics Solutions Business, which handles allphases of customers’ logistics and enhances their overall supply chain management, as wellas improved results of the Taikoh Transportation Group, which is involved in cargo transport andother logistics businesses. Operating income of the Logistics Segment was ¥1.6 billion.

Textile Machinery Segment
Net sales by the Textile Machinery Segment advanced 13.4% to ¥49.8 billion, primarily reflecting
higher sales of air-jet looms to our principal markets of China and India, as well as robust sales ofring spinning frames mainly by our production and sales subsidiary in India. This segment posted
an operating loss of ¥70 million, an improvement of ¥0.7 billion from the previous fiscal year.

Others Segment
Because we separated our logistics-related businesses from the Others Segment and establishedthe Logistics Segment, net comparisons with the previous year’s results cannot be made. In fiscal
2006, net sales were ¥49.0 billion and operating income amounted to ¥3.7 billion.

Key Initiatives Undertaken during Fiscal 2006
Underscoring a strong determination to expand current and future businesses, Toyota Industries
adopted a number of forward-looking strategic initiatives during the fiscal year under review.
Several of the more notable initiatives are as follows.

8

Toyota Industries Corporation

Annual Report 2006

Further Deploying Our Engine Business
Overseas
In March 2005, production of 2.2-liter direct-injection AD
diesel engines for the European market was successively
started at the Hekinan Plant in Japan and at Toyota
Motor Industries Poland Sp.zo.o. (TMIP)*, a joint venturein Europe with TMC. Reflecting a rising awareness that

Toyota Motor Industries
Poland Sp.zo.o.

diesel engines offer superior environmental performance,
the proportion of diesel vehicles in Europe is increasing.
This trend makes it imperative for TMC to strengthen its

2AD diesel engine

lineup of diesel vehicles for the European market where
it is striving to raise its presence. Toyota Industries will work
to contribute to TMC’s European strategy through thejoint development of diesel engines with TMC as well as
the production of these engines.
In June 2005, the Higashichita Plant started
producing 2.5-liter and 3.0-liter direct-injection KD diesel
engines for TMC’s IMV Project. While contributing to

Higashichita Plant

TMC’s overseas strategy, Toyota Industries also continues
to press ahead with initiatives for further expanding its
own business.
* Toyota Industries’ stake in TMIP is 40%. Toyota Industries is chiefly
responsible for production operations at TMIP.

2KD diesel engine

Versatile Approach to Overseas Production of Car Air-Conditioning
Compressors
December 2005 marked the start of production at TD Automotive Compressor Georgia, LLC(TACG), established jointly in July 2004 by Toyota Industries and DENSO Corporation (DENSO) asa second North American compressor production base near Atlanta in the U.S. state of Georgia.
Although fixed-displacement compressors have been
the main compressor used in North America, in view ofincreasing global environmental awareness, we foreseerising demand for variable-displacement compressors,which offer excellent fuel efficiency. TACG is producing
variable-displacement compressors to meet thisdemand.
TD Automotive Compressor Georgia, LLC

In May 2005, Toyota Industries established TD
Automotive Compressor Kunshan Co., Ltd. (TACK), a
joint venture with DENSO, Toyota Tsusho Corporationand others, as its second car air-conditioning
compressor production base in China. In April 2006,
TACK inaugurated production of variable-displacement
compressors, which are being supplied to car makers

TD Automotive Compressor Kunshan Co., Ltd.

mainly in the southern part of China.

Toyota Industries Corporation

Annual Report 2006

9

Official Launch of Toyota Material Handling Group (TMHG)In April 2006, Toyota Industries officially launched TMHG as a new organization to integrate the BT
Industries Group and TOYOTA Material Handling Company (TMHC). We have so far successfully
expanded synergies between the BT Industries Group and TMHC by mutually supplying eachother’s brand products, sharing sales and production know-how, exchanging personnel andjointly procuring components. Through this strategic reorganization, we aim to create additional
synergies as well as further solidify the positioning of this segment as “undisputed No. 1” in the
global lift truck market.

Expanding the Scope of Our Logistics Solutions BusinessIn its Logistics Solutions Business, Toyota Industries has redefined the concept of “logistics” toencompass the “flow of cash” and the “flow of information” in addition to the traditional “flowof goods.” During the course of business activities, the flow of goods is usually accompanied byflows of information and money. By broadening our concept of “logistics” to include this overall
flow as well as offering companies optimal logistics by improving this flow, we intend to create
new business models and seize new business opportunities. As part of these efforts, in March
2005 we acquired Asahi Security and made this company into a wholly owned subsidiary. Asahi
Security offers comprehensive cash management outsourcing services, including cash collection
and delivery as well as cash proceeds management for the retail, service and transportation
sectors. In January 2006, we further bolstered our Logistics Solutions Business by acquiring
an equity stake (41.4% share) in Wanbishi Archives Co., Ltd., which provides comprehensive
information management that includes handling collection and distribution of vital documents,
magnetic tapes and crucial corporate data.

Quality-Improvement andCost-Reduction Activities
Toyota Industries believes that enhancing its ability tooffer products and services of unrivalled quality while
continually reducing costs are essential for achieving
competitive superiority. Acting on this conviction, we
continually undertake initiatives directed toward raisingquality to ensure that we can offer products andservices that satisfy our customers. Toyota Industries
is especially aware that in a worst-case scenario,
any serious quality-related problem could inevitably

Toyota Industries’ top management conducts aquality inspection at a factory

threaten a company’s foundation that supports its
future existence. Accordingly, Toyota Industries has designated “thorough quality assurance”
and “maintenance and improvement of quality” as priority management policies, and therefore
undertakes quality-improvement activities throughout the Toyota Industries Group. These activities
include comprehensive employee quality education such as quality control (QC) methods andthe setting of high-quality targets in each division. Each of the division managers (or an in-housecompany president) overseeing product quality as well as I myself make on-site inspections tocheck quality-improvement activities and confirm progress in reaching our quality targets.
Toyota Industries is also pushing forward with a diversity of cost-cutting initiatives. As prime

10

Toyota Industries Corporation

Annual Report 2006

examples, each division undertakes cost-reduction projects through organized and well-planned
cost-reduction activities. Besides our unceasing value engineering (VE) and value analysis (VA)
activities, these cost-reduction activities also extend to an array of other areas that include
consideration of optimized global procurement of materials. These efforts also cover our Head
Office, where we are implementing comprehensive activities to trim fixed costs via improved
operational efficiency and other such measures.

Unveiling a New Medium-Term Management Plan
In October 2005, Toyota Industries formulated a new five-year medium-term management planthat was subsequently launched in the fiscal year beginning April 2006.
The new medium-term management plan integrates management and business plans forthe next five years while articulating the directions that Toyota Industries will pursue. With thefoundation of this plan being the attainment of the spirit of harmony and enhancement of
workplace strengths, which includes nurturing employees, we will strive for the highest levels of
quality, intend to execute reforms by fortifying our value chain and developing leading-edge
technologies as well as achieve growth as a company with dominant businesses. We expect
these measures will allow us to attain our targets of consolidated net sales exceeding ¥2,000
billion and ordinary income of ¥140 billion by fiscal 2011, the fiscal year ending March 31, 2011.
By business segment, we have set a net sales target of ¥1,000 billion for automobile-related
businesses and net sales of ¥1,000 billion in the Logistics and Materials Handling Equipment
businesses. To facilitate the attainment of these challenging targets, we expect to make acapital investment of around ¥500 billion during the five-year period (April 2006 - March 2011).

Business Outlook for Fiscal 2007
In fiscal 2007, ending March 31, 2007, the Japanese economy is anticipated to remain on arecovery track while the economies of the United States, China and other principal countries are
expected to attain stable growth. Nevertheless, the outlook for fiscal 2007 precludes optimism as
there are concerns regarding risk factors such as a further rise in crude oil prices accompanying
political instability in the Middle East as well as possible rapid adjustments in exchange rates.
Amid this economic environment, Toyota Industries expects the Materials Handling Equipment
Segment to continue expanding its business results and also anticipates increased sales in the
Automobile and Logistics segments. Accordingly, consolidated net sales are forecast to rise 10.9%
to ¥1,670.0 billion for fiscal 2007. Despite an increased burden of depreciation expenses in the
Automobile Segment, we expect that a rise in net sales coupled with a bolstering of Group-wide
cost-reduction activities will enable a 5.4% rise in ordinary income to ¥85.0 billion and a 4.1%
increase in net income to ¥49.0 billion.
Note: The financial projections set forth above are based upon a number of assumptions and estimates that, while presented
with numerical specificity and considered reasonable by us when taken as a whole, are inherently subject to significant
economic, business, competitive, regulatory and operational uncertainties, contingencies and risks, many of which arebeyond our control. Financial projections are necessarily speculative in nature, and it can be expected that one or more of
the assumptions underlying the projections will prove not to be valid, and unanticipated events and circumstances are likely
to occur. 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
rapidly changing market trends in the global economy make it particularly difficult to predict product demand and otherrelated matters.

Toyota Industries Corporation

Annual Report 200611

Looking toward the Future“United We Grow”
In April 2005, Toyota Industries World Convention 2005 was held in Japan to gather all persons
involved with Toyota Industries’ Materials Handling Equipment Business under the slogan, “United
We Grow.” This slogan represents our aspirations to continually grow with capabilities befitting theworld’s leading company in materials handling equipment, backed by the solidarity of the BT
Industries Group and TMHC under the framework of TMHG. As I have often pointed out, I believe
the “United We Grow” slogan also transcends the Materials Handling Equipment Segment andsymbolizes the future direction of the entire Toyota Industries Group. Additionally, not only does
the slogan express our strong intention to create new value by fostering further collaboration
among employees within the Toyota Industries Group and creating synergies through the organicinteraction among the Group’s business divisions, but it also symbolizes our resolve to promotestronger relationships with shareholders, customers, members of the local community and otherstakeholders.

Aiming to Increase Corporate Value
The management team of Toyota Industries—your company—believes that its most criticalmission is to raise our long-term, stable earnings power and create even higher corporate value.
To that end, we expect to carry out dynamic and strategic business operations while establishing
more efficient company management systems and steadily improving our business results
through stable growth of our businesses. Throughout its history, Toyota Industries has diversified its
businesses into a broad range of fields. By strategically and organically combining management
resources that are the wellspring of its competitive advantage—namely, the know-how, key
technologies, human resources and markets cultivated by each business—Toyota Industries isconfident it can create new value and realize further growth and development in each business.
In this way, we can attain a “conglomerate premium” whereby the worth of Toyota Industries asa whole adds up to more than the sum of individual businesses.

Cultivating Global-Oriented Personnel to Support Monozukuri
We recognize that raising corporate value depends on how we can cultivate our humanresources. Although in recent years we have achieved solid growth in our logistics and othernon-manufacturing businesses as we steadily diversify our portfolio of businesses, Toyota Industries
is still essentially a company that engages in monozukuri (literally meaning “creating things” butit implies a philosophy that recognizes the value of the innovative creation of quality products).
Unquestionably, the main source of our competitiveness is employees who are well versed in
the Toyota Production System (TPS) and filled with passion and a sense of mission. Therefore,
strengthening employee education in monozukuri will be essential for Toyota Industries to further
hone monozukuri and ensure its ongoing existence amid intensifying competition. At the sametime, we must resolutely promote initiatives to ensure that the specialized knowledge and skills
cultivated over the course of our long history are successfully handed down to subsequent
generations.
Toyota Industries is also moving ahead quickly with the globalization of its businesses, andnon-Japanese employees now account for over half of all staff on a consolidated basis.
Centered around the Materials Handling Equipment Segment, which has achieved the most12

Toyota Industries Corporation

Annual Report 2006

progress in globalizing its business, Toyota Industries is actively
promoting globalization as it accelerates overseas local
production in its other businesses as well. Crucial to sustaining
this globalization will be the cultivation of global-oriented
personnel who have specialized knowledge and technicalskills to handle the transfer of production know-how such
as TPS—a source of Toyota Industries’ competitiveness—
to overseas production bases and who can execute theirduties within different cultural environments. In the Materials

Employees strive to perfect their skills at theTechnical Training Center

Handling Equipment Segment, in particular, we aim for the effective utilization of humanresources by placing the right people in the right jobs regardless of their nationalities.

Earning Greater Trust of Stakeholders
Deeply committed to strengthening our bonds of trust with shareholders and other stakeholders,
Toyota Industries is proactively bolstering its corporate governance to firmly establish a structurethat facilitates efficient and highly transparent management. As part of these efforts, to respondquickly and flexibly to changes in the management environment and accelerate future-oriented
reforms, we recently adopted our unique Managing Officer System. In addition to a streamlined
Board of Directors for quicker decision-making, managing officers assume greater responsibility
for business operations, thereby contributing to the realization of a more efficient management
structure that enables the further enhancement of operational-based management. At thesame time, we are also implementing thorough compliance measures. Moreover, as a good
corporate citizen, we will work to earn the further trust of society by earnestly undertaking
environmental and social contribution activities.

Sustained Innovation and Creativity
As I mentioned at the outset of my message, in November 2006 Toyota Industries willcommemorate its 80th anniversary. Toyota Industries’ founder, Sakichi Toyoda, aspired to be an
inventor who would contribute to society, and subsequently established Toyota Industries tocommercialize automatic looms, which he invented after numerous trials and errors. His founding
spirit—sustained innovation and creativity, a venture spirit as well as a belief in contributing tosociety—hasn’t lost its luster even after 80 years. Toyota Industries continues to carry on this spirit
to write a new history through sustained innovation and creativity.
In closing, I ask our shareholders for your continued understanding and support.

August 2006

Tetsuro Toyoda
President

Toyota Industries Corporation

Annual Report 2006

13

At a
GlanceToyota Industries is active in a diverse
range of business domains. These extend
from the Textile Machinery Segment,a business we have carried out since
our founding, to such core businesses
as the Automobile Segment and theMaterials Handling Equipment Segment.
Our extensive portfolio of businesses
also includes the Logistics Segment,
which we expect will grow steadily in

Automobile Segment

Materials Handling
Equipment Segment

Business Overview

Business Overview

The Automobile Segment is Toyota Industries’
largest business segment and accounts for
49.6% of consolidated net sales. Within thissegment, the Vehicle Business manufactures
the Vitz (Yaris outside Japan) and RAV4
(for Europe and North America), while
the Engine Business produces diesel andgasoline engines. The Car Air-Conditioning
Compressor Business develops andproduces swash-plate fixed-displacement
compressors, one-way swash-plate continuous
variable-displacement compressors andscroll-type compressors. Power electronics
devices for automobiles are also included inthis segment. In fiscal 2006, net sales of theAutomobile Segment were ¥746.8 billion andoperating income amounted to ¥20.1 billion.

The Materials Handling Equipment Segment’s
mainstay products are counterbalanced
lift trucks, warehouse trucks, aerial work
platforms, automated storage and retrieval
systems, and automatic guided vehicle
systems. This segment is mainly composed of
the Toyota Material Handling Group, which isa leading manufacturer of lift trucks, and Aichi
Corporation, which holds the top share of thedomestic market for aerial work platforms. In
fiscal 2006, net sales of the Materials Handling
Equipment Segment amounted to ¥595.2
billion. Operating income totaled ¥38.8 billion.

the future, in addition to the Others
Segment, which includes promising

Net Salesbusinesses that are still relatively small in(¥ Billion)(¥ Billion)

800

746.8

scale. Given these characteristics of ouroperations, Toyota Industries is essentially

Net Sales

603.9

600

616.2

800

a diversified company encompassing

400

400

a wide variety of businesses, each with

200

200

clearly defined core businesses. By
strategically and organically combining
key technologies and production
know-how cultivated in our numerous

595.2

600

443.4

0

0

04

FY

05

06

04

FY

(¥ Billion)

businesses with our extensive customer

80

80

bases, we aim to create new value

60

60

27.5
20

22.8

20.1

20

05

06

FY

Percentage of Net Sales
3.3% 3.3%
4.3%

38.8
19.3

26.1

0

0

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

06

40

40

value to exceed the simple sum of
individual businesses.

05

Operating Income

Operating Income(¥ Billion)

added that allows our overall corporate

504.0

04

FY

04

05

06

Main Products

Main Products• Passenger vehicles• Counterbalanced lift trucks• Diesel engines• Warehouse trucks• Gasoline engines• Aerial work platforms• Car air-conditioning compressors• Automated storage and retrieval
systems• Electronic components forautomobiles• Automatic guided vehicles, etc.

• Foundry parts for engines• Automotive stamping dies, etc.

49.6%

GENEO (8FG25)
Internal combustion
counterbalanced lift
truck

39.5%

Automobile Segment
Materials Handling Equipment Segment
Logistics Segment
Textile Machinery Segment
Others Segment

14

Toyota Industries Corporation

Annual Report 2006

Vitz

2AD

(Yaris outside Japan)

Diesel engine

7SEU17
Compressor

DC-DC converter

ReflexTZ-10A type “RR”

Reach truck

Truck mount aerial
work platform

Logistics Segment

Textile Machinery Segment

Others Segment

Business Overview

Business Overview

Business Overview

In fiscal 2006, the Logistics Segment wasestablished as a new segment, integrating
into a single segment the distribution-related
businesses (Logistics Solutions Business andTransportation Business) previously included in
the Others Segment. Toyota Industries expects
that these businesses will grow to become
one of its core businesses in the future. In
particular, the Logistics Solutions Business offersa unique business model that optimizes theoverall flow of goods, money and information
to comprehensively address customers’
logistics needs. In fiscal 2006, net sales of the
Logistics Segment amounted to ¥65.1 billion.
Operating income was ¥1.6 billion.

The Textile Machinery Segment produces
and sells spinning and weaving machinery.
Spinning machinery includes the manufactureand sales of ring spinning frames, roving
frames and combing machines, while
weaving machinery involves the manufactureand 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 2006, net salesof the Textile Machinery Segment were ¥49.8
billion. The segment posted an operating lossof ¥70 million.

The Others Segment consists mainly of newer
businesses that Toyota Industries has enteredrelatively recently and that are thus still smallin scale. At the core of this segment is TIBC
Corporation, a joint venture with Ibiden Co.,
Ltd. that produces semiconductor package
substrates. Although it is an equity-method
affiliate, we regard ST Liquid Crystal Display
Corp. (STLCD)*, a joint venture with Sony
Corporation that produces low-temperaturepolysilicon TFT-LCDs, as part of this segment.
In fiscal 2006, net sales of the Others Segment
amounted to ¥49.0 billion and operating
income was ¥3.7 billion.
* 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.

Net Sales

Net Sales

Net Sales(¥ Billion)(¥ Billion)(¥ Billion)

80

80

80

65.1
60

60

60

46.0
40

40

20

20

43.9

49.8

06

FY

20
0

04

05

06

Operating Income

Operating Income

49.0
40

0

0
FY

FY

(¥ Billion)(¥ Billion)

8

6

8

6

4

6

4

2

4

1.6

0

0.1
(0.1)
(0.8)

(2)

0

06

FY

FY

04

05

04

05

06

Operating Income(¥ Billion)

2

77.4

71.1

5.8

5.2
3.7

2
0

06

FY

04

05

06

Main Services

Main Products

Main Products• Transportation services• Ring spinning frames• Wire bonding package substrates• Logistics planning• Roving frames• Flip chip package substrates• Operation of distribution centers• Drawing frames• Total cash management
outsourcing, etc.

• Air-jet looms• Flexible printed circuit (FPC)
substrates• Low-temperature polysilicon
TFT-LCDs, etc.

• Water-jet looms• Sizing machines, etc.

Wire bonding
package substrate

Logistics solutions

RX240NEW

JAT710Ring spinning frame

Air-jet loom

FPC substrate

Low-temperaturepolysilicon TFT-LCDs

Toyota Industries Corporation

Annual Report 2006

15

Focus on
Business

1

Materials Handling Equipment

Exploiting Synergies and Brand
Power for Top Market Share
Determined to further strengthen its global competitiveness, the Materials Handling
Equipment Segment has commenced a host of activities under Toyota Material
Handling Group, a new organization that integrates TOYOTA Material Handling
Company, the world leader in counterbalanced lift trucks, and the BT Industries
Group, the world’s top company in warehouse trucks. Although not included in
TMHG, this segment also includes Aichi Corporation, one of Toyota Industries’
subsidiaries that commands the dominant share of Japan’s market for aerial work
platforms. By providing optimum solutions to meet diverse customer needs, theMaterials Handling Equipment Segment maintains a solid position as a leading
manufacturer of materials handling equipment.

16

Toyota Industries Corporation

Annual Report 2006

Toyota Material Handling Group—Maximizing Synergies
Within the Materials Handling Equipment Segment, Toyota

Toyota Production System—the source of our competitive

Material Handling Company (TMHC) and the BT Industries

edge—joint procurement of components, joint transport

Group have made strenuous efforts to realize synergies byof components and products, standardization of platforms

mutually supplying each other’s brand products, sharing

and joint development of key components. By undertaking

sales and production know-how, exchanging personnel andbusiness closely focused on the needs of customers in its own

jointly procuring components. Backed by the success ofgeographic region, TMHG aims to further accelerate global

these efforts, in April 2006 we integrated both entities underdevelopment and capture a one-third share of the global lift

the framework of Toyota Material Handling Group (TMHG),

truck market as early as possible in the 2010s.

a new organization that we expect will allow us to maximize
synergies as we strive to achieve our target of becoming“undisputed No. 1” in the global lift truck market.
In carrying out its operations, TMHG has divided its
global markets into four regions—Europe, North America,
Japan and International—and established a Board as thedecision-making body within each of these four regionalorganizations. A Management Committee, composedof TMHG top management and representatives of eachregional organization, formulates strategies and manages
TMHG as a whole.
TMHG has also set up Sub-Committees, comprising
functional sections of each regional organization, to handle
such principal functions as quality, R&D, product planning,
information system/information technology, plant operation,
human resources and finance. Cross-sectional linkages
permeating the entire organization facilitate the sharingof best practices and know-how cultivated regionally aswell as by TMHC and the BT Industries Group. Measures tobe stressed include the ongoing transfer and sharing of the

The formation of Toyota Material Handling Group was announced at the
Toyota Industries World Convention 2005 to maximize the synergies of
TOYOTA, BT and Raymond brands.

Organizational Chart of Toyota Material Handling Group

TMHG President

Tatsuo Matsuura

Management Committee Global Strategy, Optimum Resource Allocation, Global Management Control

TMHJ
TMHE

TMHNA

TMHI

TMHJ

Toyota Material Handling
EuropeToyota Material HandlingNorth America

Toyota Material HandlingInternational

Toyota Material HandlingJapan

R&D, Product Planning, Information System/Information Technology, Plant Operation,
Sub-Committees Quality,
Human Resources and FinanceToyota Industries Corporation

Annual Report 2006

17

Focus on
Business

1

Materials Handling Equipment

Brand Portfolio
Subsequent to establishing TMHG, we will continue to firmly

its business utilizing these brand assets. Although not a part

maintain the TOYOTA, BT and Raymond brands, with TMHG

of the TMHG organization, Aichi Corporation (Aichi) also

carrying out activities globally utilizing the strong power

possesses its own strong brand and is promoting its businessof each of these brands. The BT and Raymond brands

globally.

boast strong recognition in Europe and the United States,
respectively, while the TOYOTA brand is solidly positioned inJapan and the United States. TMHG seeks to fully execute

TOYOTA Brand

BT BrandTOYOTA-brand lift trucks and other industrial vehicles

BT-brand warehouse trucks enjoy strong recognition inare sold in Japan under the brand name of TOYOTA

Europe and other regions.

L&F (Logistics and Forklifts). Outside Japan, the TOYOTAINDUSTRIAL EQUIPMENT brand/emblem is used.

Raymond Brand
The Raymond brand is well recognized in North America.

Aichi Brand

Other Brands

Aichi, a leading manufacturer of aerial work platforms in

The CESAB and Lift-Rite brand names are also used inJapan, uses the AICHI brand throughout the world. Visit

designated markets.

www.aichi-corp.jp for further information.

18

Toyota Industries Corporation

Annual Report 2006

Business Activities in Fiscal 2006
Japanese Market

position in this critical segment of the materials handling

Amid a strong recovery in the Japanese economy, total

market. The combination of these industry-leading brands

demand in the domestic market for lift trucks in calendar year

firmly establishes TMHNA as the number-one supplier of2005 increased 9% from 2004 to 82.0 thousand units.

materials handling equipment in North America.

Responding to brisk demand, aggressive sales activities

Calendar year 2005 was not only a record sales year for

implemented within Toyota Industries’ Materials Handling

TMHNA but also one of significant milestones. The RaymondEquipment Business included promoting proposal-based

brand introduced two new models featuring its exclusive

marketing and fortifying response to large-scale and

ACR System™: the AC-powered 5000 Series orderpickers andwide-ranging customers. Mirroring the rising environmental

8000 Series pallet trucks. In addition, the TOYOTA brand wasawareness of companies, we achieved a particularly large

recently honored by Reed Research Group as the leading

increase in sales of electric counterbalanced lift trucks. As a

supplier of lift trucks in terms of quality and value in the

result, the Materials Handling Equipment Business recorded an

United States for the second consecutive year. Additionally,

11% increase in sales to 35.6 thousand units.

the 5,000-pound capacity TOYOTA internal combustion,

For calendar year 2005, Toyota Material Handling Japan

cushion tire lift truck was named the most fuel efficient and(TMHJ) garnered a record-high market share of 43.4% for sales

productive lift truck by USAC Properties, Inc., a subsidiary ofof lift trucks in Japan, marking the seventh year running that

the United States Auto Club.

its market share has topped 40% and the 40th consecutive

Year-to-date 2006 has already provided some significant

year that it has maintained the top-ranked position in themilestones. Toyota built and celebrated the production of its

Japanese lift truck industry.

250,000th lift truck at the Toyota Industrial Equipment Mfg.,
Inc. (TIEM) facility in Columbus, Indiana. TIEM, home to the

Toyota’s Growing Share in theJapanese Lift Truck Market(%)

state-of-the-art National Customer Center (NCC), builds 99%of the TOYOTA-brand lift trucks sold in North America. During
its first year of operation, the NCC welcomed more than 340

50

40.6

41.2

42.6

42.6

43.4

01

02

03

04

05

guests representing nearly 100 companies.

40
30
20
10
0
CY

Aichi recorded a sharp rise in sales from the previous
fiscal year, supported by solid replacement demand
from such principal customers as the electric power andtelecommunications industries.

North American Market
The North American market for lift trucks showed continued

Sonny Toyoda, president of TIEM; Al Rawson, president of Atlas
Toyota Material Handling and chairman of Toyota’s National
Dealer Advisory Council; Shankar Basu, president and CEOof Toyota Material Handling USA, Inc.; and Tatsuo Matsuura,president of Toyota Material Handling Group, celebrate theproduction of the 250,000th lift truck, a four-wheel internal
combustion cushion tire model.

strong growth in 2005. Toyota Material Handling North
America (TMHNA) took advantage of the sustained growth,

TOYOTA-brand lift trucks are sold and supported by awith the TOYOTA brand recording its highest sales volume

network of 69 dealers through 187 locations. Raymond-brandto date, and solidified its position as the top-selling lift truck

trucks are sold and supported by an international network

brand in North America for the fourth consecutive year,of Raymond dealers who provide comprehensive materials

improving its position relative to other industry players. Sales ofhandling solutions. In North America, 39 dealers serve theRaymond-brand electric lift trucks were also at record levels,

United States, Canada and Mexico, selling and servicing

exhibiting particularly strong sales growth in the warehousing

Raymond trucks through 108 locations.

and distribution segment to maintain Raymond’s top-selling

Toyota Industries Corporation

Annual Report 2006

19

Focus on
Business

1

Materials Handling Equipment

counterbalanced lift trucks and warehouse trucks are strong.

European Market
The European market for industrial trucks continued to

The key approach in international markets has centered

grow significantly during the year in continuation of aon maximizing our business opportunities by offering a full

decades-long period of solid growth. At the same time, there

range of products to meet our customers’ total materials

has recently been a marked increase in cyclical demand

handling needs. We must also ensure our impressive productas well. As a whole, market growth was strongest in Eastern

portfolio is available to all customers in all markets throughEurope.

our different distribution channels.

The total European market at the end of calendar year

The total market for lift trucks in 2005 expanded 17%, along2005 reached 298,000 units. Market share in Europe for Toyota

with 15% and 25% growth for counterbalanced lift trucks

Material Handling Europe (TMHE) was close to 20%, clearly

and warehouse trucks, respectively. Overall market sharesdemonstrating TMHE’s prominence as one of the three major

for Toyota Material Handling International (TMHI) showed

suppliers in the European market.

favorable growth over the same period. Encouragingly, both

The competitive climate continues to be intense. Further,a prolonged rise in raw materials costs combined with agrowth in total market size and market share for TMHI wasachieved in all of these other international areas.

recurrent unwillingness of large customers to absorb priceincreases present a significant challenge in a market withvery strong European-based competitors.
During the year, close integration between the Toyota
and BT organizations within TMHG became even stronger,
underpinned by the two-brand strategy. As one sign of thisdeeper integration, a joint development project was carried

Topic
Record-High Unit Sales of TOYOTA-Brand
Lift Trucks

out, resulting in the launch of a new range of 24-volt electriccounterbalanced lift trucks towards the end of 2005. The

During calendar year 2005, total worldwide unit

market reception of this new product has been extremely

sales of TOYOTA-brand lift trucks amounted to a

positive.

record-high 116.4 thousand units. TOYOTA is the
only brand in the industry to achieve annual sales
exceeding 100,000 units as a single brand.
Currently manufactured at production basesin Japan, the United States, France and China,
TOYOTA-brand lift trucks are sold and serviced at 320
global sales and service bases all over the world.
Please visit www.global-toyotaforklifts.com for

Cargo

Blitz

TRAIGO

24-volt three-wheel counterbalanced lift trucks jointly developedby Toyota, BT and CESAB

more information on the global sales network and
TOYOTA-brand products.

Unit Sales of TOYOTA-Brand Lift Trucks(Thousand units)

Other International Markets
Africa, Asia, Oceania, the Middle East and South America,(Target)which comprise substantial and varied business areas,

100

encompass emerging markets with rapid growth prospects,

80such as the BRICs (Brazil, Russia, India and China) countries.

60

This range of diversity clearly means that the challenges and

117.8

120

116.4

40

economic performance factors are different in character.
In general, all markets have demonstrated growth, witheconomic development inevitably spurring higher levels of
business activity. In such an environment, potential sales of20

Toyota Industries Corporation

Annual Report 2006

20

0
CY

01

02

03

04

05

06

Looking Ahead
Japanese Market
The year 2006 marks the 50th anniversary since thecommencement of sales of TOYOTA-brand lift trucks in Japan.
During this commemorative year, TMHJ expects continued
solid growth in the domestic lift truck market.
In the future, TMHJ will strive to expand sales and market
share by offering products and services that we hope will
deliver even greater customer satisfaction. In line with these
efforts, TMHJ plans to carry out proposal-based marketingthat offers solutions that accurately address customer needs
as well as promote fleet management contracts to major
customers spanning a wide range of geographic regions. In
September 2006, the series of 1- to 3.5-ton internal combustion
counterbalanced lift trucks with higher standards for both
safety and environmental features will be reintroduced inJapan after a full model change. TMHJ believes this will serveas the tailwind to further penetrate the market. Also, TMHJ will
actively market and sell a wide lineup of materials handlingsystems that include racks, automatic guided vehicle systems
and automated storage and retrieval systems.

North American Market
In 2006, TMHNA anticipates the North American market formaterials handling equipment will reflect the overall economic
outlook, with a slowing pace of growth. Both the TOYOTA andRaymond brands are well situated to take advantage ofthese market conditions to expand their industry leadership
positions. We hope to strengthen the TOYOTA brand’s position
as the number-one selling brand in North America with
the introduction of the much-anticipated 8-Series line, withinternal combustion, pneumatic and cushion tire models
that range from 3,000 to 6,500 pounds. The 8-Series has been
designed to build on Toyota’s strengths with increased visibility,
improved ergonomics, enhanced productivity and superior
durability, all while maintaining its position as the industry’s
safety leader. In January 2007, Toyota will exhibit at ProMat,
the largest materials handling show in North America, where
consumers will get their first look at the 8-Series. We hope tosolidify the Raymond brand’s leadership role in the warehouseand distribution market with products featuring improved
performance and reliability at reduced cost of ownership,
expanding the range of products with the advantages of
AC power. Both of TMHNA’s
brands will seek to expand fleet
services and fleet management
offerings in response to demandby large customers who want to
optimize their lift truck fleetsand control costs.
The year 2006 will
mark a number of
8FGU25significant events for TMHNA. Toyota will commemorate its 40th
anniversary of establishing operations in North America andRaymond celebrates its 85th anniversary. Additionally, in early2007 the Raymond brand expects to ship its 300,000th lift truck.
TMHNA will continue to accelerate the implementationof the Toyota Production System (TPS) at its manufacturing
facilities in Columbus, Indiana; Greene, New York; Muscatine,
Iowa; and Brantford, Ontario, Canada. As a result, we willfurther improve our already strong reputation for productquality and reliability. In conjunction with TPS, TMHNA operates
under a global charter that promotes environmental
responsibility throughout the entire company. Of significant
importance is the exclusive emissions system employed by
the 8-Series that not only surpasses 2007 Federal EPA emissions
standards, but also meets California’s stringent 2010 emission
standards—three years early.

European Market
For 2006, the general growth trend in the European market is
expected to continue, albeit at a somewhat lower rate thanthe last couple of years. Most regional areas are expected
to show growth, especially in Eastern Europe. On the other
hand, an overall increase in GDP levels in Western Europe
is expected to fuel higher market demand in the materials
handling industry in these markets as well.
In line with continued integration of its European
organizations, TMHE expects to reap additional synergies indifferent areas, further increasing its competitiveness to thebenefit of its customers.

Other International Markets
In 2006, TMHI anticipates continued growth in other key
international markets, with strong growth expected indesignated markets, along with business expansion in theautomotive sector and other industries in each region.
In line with ongoing growth in important markets such as
China and Australia, TMHI plans to further strengthen its levelsof activity and local operations. TMHI aims to ensure that its
reputation for quality products is complemented by strong
support capabilities, including maintaining an emphasis on
providing sophisticated systems solution sales for the more
complex warehousing installations planned by many of its
internationally active customers in third party logistics andwarehousing sectors.
It is also clear that key markets in the Middle East, Asia andSouth America require ever-higher levels of sales and service
support, and the focus will remain directed toward satisfying
these needs. Backed by the current Toyota/BT sales network,
TMHI approaches the market with a determination to forge
deeper relationships and develop stronger ties with its dealers
and customers.

Toyota Industries Corporation

Annual Report 2006

21

Focus on
Business

1

Materials Handling Equipment

TopicsToyota Industries World Convention 2005

CESAB Carrelli Elevatori S.p.A of Italy in 1999, BT Industries

In April 2005, the Toyota Industries World Convention was held

subsequently established a production and sales structure

in Japan to share the vision for further growth of the Materials

in the United States, while expanding its product lineup in

Handling Equipment Business among the TOYOTA/BT-related

Europe. In 2000, BT Industries became one of Toyota Industries’

distributors and dealers around the world. At the convention,

subsidiaries and is now carrying out its business by pursuing

everyone present pledged their unity to solidify Toyotasynergies with the TOYOTA brand under the framework ofIndustries’ global top position in the materials handling

TMHG.

equipment industry under the slogan “United We Grow.” Theintegration of TMHC and the BT Industries Group under theframework of TMHG as a means of further creating synergies
was also announced.

50th Anniversary of Lift Truck Sales in Japan and20th Anniversary of Domestic Sales of Materials
Handling Systems
In 2006, Toyota Industries marked the 50th anniversary of selling

Development of Fuel-Cell Lift Trucks

TOYOTA-brand lift trucks in Japan and its 20th anniversary

Toyota Industries developed the fuel-cell hybrid system forsince commencing sales of materials handling systems such

lift trucks in-house, a first among lift truck manufacturers. The

as automatic guided vehicle systems. A ceremony was held

TOYOTA FCHV-F lift truck, which incorporates the fuel-cellin April 2006 to celebrate these anniversaries with domestic

hybrid system jointly developed with Toyota Motor Corporation

distributors and related persons.

(TMC), was exhibited at CeMAT 2005, an international
trade fair for intralogistics held in
Hannover, Germany, in October

Joint Development of Electric Counterbalanced
Lift Trucks for the European Market

2005. Although a few technical issues

TMHC and the BT Industries Group jointly developed amust still be addressed prior tothree-wheel electric counterbalanced lift truck for thecommercialization and widespread

European market and started shipment of the product inuse, the fuel-cell lift truck has great

January 2006. Cesab, which is part of the BT Industries Group,

market potential due to its

took the initiative in the development and produces thesuperior features.

FCHV-F fuel-cell lift truck

product in Italy. The lift truck is marketed as the TRAIGO under
the TOYOTA brand, the Cargo under the BT brand and the Blitz

Full Model Change of Compact Electric Tow
Tractors

under the CESAB brand.

The new Tugnova* (CBT/CBTY) series of electric tow tractors (2to 4-ton towing capacity) was introduced into the Japanese

Full Model Change of 1- to 3.5-Ton Internal
Combustion Lift Trucks

and overseas markets in March 2006 after

In September 2006, Toyota Industries will commence sales ofa full model change. This was the first

1- to 3.5-ton internal combustion lift trucks in Japan following

time for Toyota Industries to incorporatea full model change (sold as the GENEO in Japan and thean AC drive system in its compact tow

8-Series overseas). The 1- to 3.5-ton class internal combustion lift

tractors, achieving superior operability

trucks dominate approximately 50% of the Japanese lift truck

and lower maintenance costs andensuring a high standard of safety.

market and are used by a wide variety of customers primarily
Tugnova (CBT)* A coined word that combines the English word “tug” and the Latin word “nova,”
which means “new,” as well as the English word “innovation,” meaning a newkind of tow tractors

in the transport and warehouse industries. Toyota Industries
embarked on the development of new
lift trucks to attain an even higher levelof performance and functionality in

BT Industries Celebrates its 60th Anniversary

the areas of safety, environmental

A key part of TMHG’s operations, BT Industries AB wasfeatures and ease of operation. Thisestablished in Sweden in 1946, when it began selling

product series will be introduced

construction and transportation equipment, and has since

gradually to the U.S. andexpanded its operations worldwide. In addition to acquiring

European markets.

The Raymond Corporation of the United States in 1997 and22

Toyota Industries Corporation

Annual Report 2006

New GENEO (8-Series) internal
combustion counterbalanced lift truck

Products for the Japanese Market

Products for the Japanese Market — Industrial Vehicles

GENEO (8FG25)
Internal combustion
counterbalanced lift truck

GENEO-B (7FB15)

GENEO-E (7FBE15)

GENEO-R (7FBR15)

2TE18

Electric counterbalanced
lift truck

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

Rail-less mobile rack

Automated storage andretrieval system(Plastic container type)

Automated storage
and retrieval system(Pallet type)Road Sorter H(ACBH10)
Automatic guided
vehicle system

2AFBR15APLB8Automatic
guided lift truck

Automatic guided
pallet truck

Please visit www.aichi-corp.jp
for more information.

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 important part of the Materials Handling Equipment Segment.

Toyota Industries Corporation

Annual Report 2006

23

Focus on
Business

1

Materials Handling Equipment
Products for the North American Market
Please visit www.toyotaforklift.com
for more information.

7FGU708FGCU25

7FGCU55-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

8FGU25

7FBEU20

7FBCU25

7BPUE15

Three-wheel electriccounterbalanced lift truck

Electric cushion tire
counterbalanced lift truck

Electric order picker

Internal combustion pneumatic
tire counterbalanced lift truck

Please visit www.raymondcorp.com
for more information.

Raymond Model 7400
Reach-Fork Truck

Raymond EASi Pacer Stand-Up
Counterbalanced Truck

Reach truck

Electric counterbalanced truck

Raymond Model 8400 Pallet Truck
Electric pallet truck

24

Toyota Industries Corporation

Annual Report 2006

Raymond Model 5600
Orderpicker

RaymondSwing-Reach Truck

Order picking truck

Very narrow aisle truck

Products for the European Market
Please visit www.toyota-tiee.com
for more information.

7FG/DF30

7FBMF25

7FBEF15Internal combustion counterbalanced
lift truck with deluxe cabinElectric counterbalanced lift truck(80V)

Three-wheel electriccounterbalanced lift truck (48V)

7FBRE14

7SLL

Electric reach truck

Powered stacker

Three-wheel electriccounterbalanced lift truck (24V)

Please visit www.bt-industries.com
for more information.

Cargo E*

Cargo D

Vector*ReflexThree-wheel electriccounterbalanced truck

Diesel-engined counterbalanced
truck

Very narrow aisle truck with shuttle
forks

Reach truck

Ixion*

Opus

Minimover*

Pro Lifter

Support arm stacker truck

Low-level order picking truck

Electric stacker truck

Hand pallet truck* Launched during the years 2005-2006

Toyota Industries Corporation

Annual Report 2006

25

Focus on
Business

2

Car Air-Conditioning Compressor

Applying Unrivalled Technologies toCreate Revolutionary Products
The Car Air-Conditioning Compressor Business is a core business of the Automobile Segment
in addition to being an important strategic business of Toyota Industries. Drawing on a wealthof cutting-edge technologies, we efficiently develop and manufacture high-quality productsthat are closely tailored to customer needs. By doing so, Toyota Industries is contributing toenhancements in comfort and technological advances of vehicles manufactured not only by
Toyota Motor Corporation but the world’s other top-name automakers as well.

26

Toyota Industries Corporation

Annual Report 2006

Breakthrough Innovations and Cutting-Edge
Compressors for Hybrid Vehicles

acceleration. Demonstrating a dedicated commitment to

Toyota Industries’ car air-conditioning compressors are noted

the earth’s ozone layer and global warming, in 2002 Toyota

for unsurpassed quality and reliability, attributes that haveIndustries and DENSO Corporation (DENSO) developed an

won extensive acclaim from Toyota Motor Corporationelectrically driven compressor for fuel-cell hybrid vehicles that

(TMC) and other leading automakers. As testimony to ouruses CO2 as a substitute refrigerant for hydrofluorocarbons.

unsurpassed technological development capabilities, our Car

Also in collaboration with DENSO, in 2003 we developed a

Air-Conditioning Compressor Business has solidly established

two-way compressor with a built-in motor for hybrid vehicles

its competitive superiority in the industry.

and an electrically driven compressor for hybrid vehicles.

combating such environmental problems as destruction ofThis business has a proven track record in consistently

The two-way compressor is driven alternately by the engine

developing new epoch-making products that continuallyduring driving and by a built-in motor during engine stop,

foresee evolving market needs, and in turn, stimulate further

while the electrically driven compressor realizes an optimal

technological innovation of automakers. As prime examples,balance between fuel efficiency and comfort since the carin the 1960s we developed Japan’s first swash-plate

air conditioner can remain turned on even during engine

compressor, while in the 1980s we developed a compact,

stop. Each of these pioneering compressors was developed

lightweight 10-cylinder swash-plate fixed-displacement

and commercialized ahead of our competitors, offering

compressor noted for its outstanding reliability at highfurther evidence of our technological and competitive

operating speeds. We followed this accomplishment insuperiority.

the 1990s by responding to growing concerns about
the environment with the development of an internallycontrolled one-way swash-plate variable-displacement

At the Forefront of the Market with Superb
Technological Capabilities

compressor that reduces the load on the engine to raise

In fiscal 2006, Toyota Industries’ total global production

fuel efficiency. Building on this momentum, in the late 1990s

and sales of car air-conditioning compressors amounted

Toyota Industries unveiled an externally controlled continuous

to 19.1 million units, giving us the top share of the global

variable-displacement clutchless compressor that enhancesmarket. In the Japanese market, we sold approximately

acceleration and reduces energy consumption by sensing

5.5 million compressors to TMC and other principalchanges in the external environment, such as engine

domestic automakers, which made us the market leader.

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

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*

Toyota Industries Corporation

Annual Report 2006

27

Focus on
Business

2

Car Air-Conditioning Compressor

Car Air-Conditioning Compressor Manufacturing Bases
Toyota Industries produces

TDDK

MACI

compressors through a global

Munichtripolar structure encompassing

DetroitDNTS
YSD

Toyota Industries
Corporation

Europe, the United States and Asia,

TACG

including Japan, established throughdirect investments. We also license

DWHI

ACTIS

production in Asia (excluding Japan)

TACKand South America. By carrying out
production near our markets, we

SUBROSare better able to supply products

DNIA
Consolidated subsidiaries
Licensed manufacturers
Local offices

In the United States, during fiscal 2006 Toyota Industries

precisely tailored to local market

DNBR

needs while reducing shipment costs
and exchange rate risks.

In Japan, our largest production base, we have built ansold 7.6 million car air-conditioning compressors, primarily

efficient three-plant integrated production structure thatcomprising fixed-displacement compressors (including

encompasses all phases of operations from production ofexports and local production), to major U.S. automakers

materials to processing and assembly.

and Japanese auto manufacturers in North America. In

In the United States, Michigan Automotive Compressor,

Europe, we sold approximately 5.6 million compressors, mainly

Inc. (MACI)* produces swash-plate fixed-displacement

variable-displacement compressors (including exports andcompressors. In July 2004, Toyota Industries and DENSO jointly

local production), during fiscal 2006.

established TD Automotive Compressor Georgia, LLC (TACG)**,a second North American compressor production base

Operating an Optimal Global Production
Structuresituated near Atlanta in the U.S. state of Georgia that began

With bases in Japan, North America, Europe and Asia, Toyota

compressors have been the main type of compressor

Industries has established an optimal global productionused in North America, we expect that rising global

structure for its Car Air-Conditioning Compressor Business.

environmental awareness will spur increased demand for

operations in December 2005. Although fixed-displacement

Consolidated Compressor Sales(Million units)

20.0

World’s first mass-produced
electrically driven compressor
for hybrid vehicles

18.0

18.2
17.9

19.1

World’s first two-way
compressor for hybrid vehicles

16.0
14.0

World’s first variable-displacement
clutchless compressor

12.0World’s first one-way swash-plate
variable-displacement compressor

10.0World’s first 10-cylinder
swash-plate fixeddisplacement compressor

8.0
6.0
4.0

OthersVariable-displacement compressor
Fixed-displacement compressor

2.0
0
FY

28

80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05

Toyota Industries Corporation

Annual Report 2006

variable-displacement

variable-displacement compressors on schedule in April

compressors, which2006. Yantai Shougang DENSO Co., Ltd. (YSD, in which Toyota

offer excellent energy

Industries holds a 15% stake), a joint venture establishedefficiency. To respondin 1994 with DENSO and Shougang Corporation, began

to this increase inproducing variable-displacement compressors in April 2006

demand, TACG wasin addition to fixed-displacement compressors already being

established as a newplant specializing in

produced.
TD Automotive Compressor Georgia,
LLC

variable-displacement

Looking Ahead

compressors in the

Regarding the future direction of our business, we plan tosouthern United States, where automakers have been

undertake activities geared mainly toward further penetration

actively setting up operations. TACG plans to produce 2of overseas markets. In Europe, where the proportion of new

million compressors annually by 2010.

cars fitted with car air conditioners has risen to nearly 80%,

In Europe, TD Deutsche Klimakompressor GmbH (TDDK)*

Toyota Industries will work to expand sales by cultivating new

produces swash-plate variable-displacement compressors.

customers and further penetrating markets. These efforts will*

be directed mainly toward supplying products matched to

MACI and TDDK are joint ventures with DENSO. As of March 31, 2006, Toyota
Industries held 60% and 65%, respectively, of the shares of these companies.
** TACG is capitalized at US$78 million as of March 31, 2006. 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%.

the needs of the European market.
In the United States, we expect to work actively to secure
new orders. Aggressive sales promotion activities will also be
undertaken in cooperation with DENSO in the BRICs (Brazil,

In China, where future
demand is expected to

Russia, India and China) markets, where automobile sales
continue to expand.

grow, Toyota Industries
established a joint
venture, TD AutomotiveCompressor Kunshan Co.,
TD Automotive Compressor
Kunshan Co., Ltd.

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.

Ltd. (TACK), in May 2005.
TACK began producing

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 2006

29

Focus on
Business

3

Vehicle/Engine

Realizing Global Competitiveness via
Operational Excellence
Toyota Industries contributes to Toyota Motor Corporation’s car production through theassembly of automobiles and the manufacture of engines. In recent years, the Vehicle andEngine businesses have undertaken a host of initiatives for expanding their operations in
response to TMC’s global strategy. Highly aware that outstanding production capabilities are
the wellspring of competitiveness for these businesses, we expect to make unrelenting efforts
to achieve continuous improvements and further strengthen competitiveness.

30

Toyota Industries Corporation

Annual Report 2006

Vehicle Business
Advantages as a Compact and Midsize
Automobile Manufacturer

Highly Efficient Pre-Production Process

Toyota Industries plays a vital role in Toyota Motortime period, we conducted a sweeping review of our entire

Corporation’s (TMC) car production as one of the vehicle

pre-production process that included reducing the burden

assembly arms within the Toyota Group. Our Vehicle Businessof the actual pre-production process as well as equalizing

primarily assembles compact and midsize automobiles underpeak burdens. Along with these measures, we removed

consignment from TMC. At present, we manufacture twomany barriers among relevant manufacturing, production

models, the RAV4 for Europe and the United States and thetechnology and quality control departments. By eliminating

Vitz (Yaris outside Japan). Our Vehicle Business has won highsuch obstacles as communication gaps—an impedimentacclaim for its top-class quality and quick production launchto speed—and delayed decision-making, we successfully

within the Toyota Group. Moreover, the adoption of theimplemented concurrent engineering whereby everyone

Toyota Production System ensures the thorough elimination ofworked as part of a unified organization to handle multiple

all waste from production operations and that our plants aretasks simultaneously.

utilized with the utmost efficiency.
The Vehicle Business’s automobile assembly operations
date back to the Publica (van) and Corolla (van) in thelate 1960s and early 1970s. Based on the success of these
operations, the full-scale assembly business commenced with

To launch production of the new Vitz and RAV4 in a short

We also improved infrastructure at our assembly plant tobetter respond to TMC’s global expansion and be ready to
manufacture at a high, stable level.
While further raising production capabilities, which are
the strength of our Vehicles Business, we expect to produce

the Starlet at the Nagakusa Plant in 1978. We subsequently

vehicles with superior quality and cost efficiency, thereby

started manufacturing the Vitz (Yaris outside Japan), thefurther contributing to TMC’s car manufacturing operations.

successor vehicle of the Starlet, in 1999. The first-generation
Vitz sparked an expansion in the compact car market in
Japan and was later recognized as a global-standard
compact car. Re-introduced in Japan in February 2005 after
undergoing a full model change, the second-generation

Topic
AD Diesel Engine Fitted in the RAV4 for Europe
Highly fuel-efficient, diesel engine vehicles are widely popular as

Vitz integrates the most advanced safety features andecological vehicles, especially in Europe sinceenvironmental technologies, offering the highest level ofthey emit less CO2.
Toyota Industries developed thequality.
The RAV4 also underwent a full model change and was
re-introduced in November 2005. The newest RAV4 is a truly
global model, offering an even wider interior, high driving
performance and world-class environmental and safety

ecological AD diesel engine jointly with
TMC. The engine is produced at Toyota
Industries’ Hekinan Plant and fitted in the
new RAV4 for Europe, which is assembled
AD diesel engine

by the Vehicle Business.

performance.

Vehicles

Vitz

RAV4

(Yaris outside Japan)

Toyota Industries Corporation

Annual Report 2006

31

Focus on
Business

3

Vehicle/Engine

Pre-Production Process Innovation
Drawing phase
Construction
drawing

SE drawing

Actual production phase
Mass
Trial production Line-off
production

Drawing completed

Final drawing

The pre-production process forthe new RAV4 began in parallelwith that for the Vitz (Yaris outside
Japan). To prepare for the
production launch of the two

Vehicle review
Equipment review

Traditional
pre-production
processmodels in a short period of time,RedoToyota Industries conducteda sweeping review of its

Process configuration

pre-production process in order toCreation of classstandards

Improvement of
production line

reduce the burden of the actual
pre-production process as well as
to equalize peak burdens.

Confirmation step
Vehicle review

Pre-production
process for RAV4

Moved upMoved up

Redo

Equipment review
Process configuration

Consideration of items for
improvement of
production line

Creation of class standards

Trial production
completed

Engine Business
Our Strengths in Development and Production

Industries aims to contribute to their European strategy

Toyota Industries’ Engine Business manufactures diesel andthrough joint development of diesel engines with TMC andgasoline engines ranging in capacity from 1500 cc to 5200

production of high-quality diesel engines.

cc. Manufactured under consignment from TMC, all our
automobile engines are installed on designated TOYOTA cars.

Establishment of Global Production Structure

Our diesel engines developed in collaboration with TMC, in

In March 2005, we started production of 2.2-liter

particular, offer high power and lighter weight in addition

direct-injection AD diesel engines at the Hekinan Plant into lower noise and vibration. Moreover, Toyota Industries

Japan and at Toyota Motor Industries Poland Sp.zo.o.* (TMIP),

commands the world’s largest market share of high-output,

a joint venture in Europe with TMC. This engine is also fitted inenvironmentally friendly industrial engines for lift trucks andthe RAV4 and Lexus IS in addition to the Avensis and Corolla

other materials handling equipment in addition to engines

Verso that TMC assembles in the United Kingdom and Turkey,

such as gas engine-driven heat pumps. Other activities of therespectively.

Engine Business include the manufacture of an assortment offoundry parts integrating sophisticated technologies.

The Hekinan Plant, together with the Kyowa andHigashichita plants, function as mother plants for overseas

Utilizing an automatic guided vehicle system, our Engine

bases that manufacture engines and foundry parts. In

Business operates a flexible structure that responds quickly tocarrying out this crucial role, these mother plants takeproduction fluctuations and achieves operational excellence,

the lead in adopting the latest production technologies

which includes superior capabilities in making quick

developed in Japan and work to refine the production

production launches.

process and technologies before transferring the most

The Engine Business is also at the forefront of developing

advanced production know-how and expertise to overseas

new technologies that reduce environmental load. A

bases.

noteworthy trend in recent years has been an increase in* Toyota Industries’ stake is 40%. Toyota Industries is chiefly responsible for
production operations at TMIP.

the proportion of diesel engine vehicles, especially in Europe,
spurred by the realization that diesel engines are more32

effective in enhancing fuel efficiency and lowering CO2

Contributing to TMC’s IMV Projectemissions. At the same time, TMC aims to raise its presence

In June 2005, the Higashichita Plant commenced productionin the European market and thus plans to increase salesof the 2.5-liter and 3.0-liter direct-injection KD diesel engines

by bolstering its diesel vehicle lineup. In response, Toyota

for TMC’s Innovative International Multi-Purpose Vehicle (IMV)

Toyota Industries Corporation

Annual Report 2006

Project. This project involves the establishment of a globallytransmissions. KTTM supplies these components to Toyota

optimal production and supply structure to develop new

Kirloskar Auto Parts Private Ltd. (TKAP, a joint venture in India

pickup trucks and multi-purpose vehicles to be marketed inwith TMC and the Kirloskar Group, in which Toyota Industries

more than 140 countries around the world. Utilizing Toyota

has a 26% stake), which in turn supplies manual transmission

Industries’ strengths in production operations, we launchedsystems to the IMV Project.

the production line for manufacturing and processing

Toyota Industry (Kunshan) Co., Ltd. (TIK), our subsidiary inaluminum die cast components and assembly of engines

China, is manufacturing foundry parts mainly for automobile

within a short pre-production period.

engines. Addressing a shortage in production capacity

Toyota Industries will continue contributing to theresulting from increased demand, we established ourestablishment of TMC’s IMV supply structure that will mutuallysecond manufacturing base in the country, Toyota Industry

link numerous production bases on a global scale. As a prime

Automotive Parts (Kunshan) Co., Ltd. (TIAP), a joint venture in

example, in May 2004, Kirloskar Toyoda Textile Machinery

which Toyota Industries has a 60% stake, in cooperation with

Private Limited (KTTM), one of Toyota Industries’ subsidiaries in

Taiwan-based Lioho Machine Works, Ltd. and Toyota Tsusho

India that manufactures and sells textile machinery, initiatedCorporation. TIAP commenced production in April 2005.

production of aluminum die cast components for manual

Worldwide Manufacturing Bases of Engine Business

Poland
India

China

Japan

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

TKAP
Manufacture of transmissions for
the IMV Project

KTTM

TIK

Hekinan Plant

Kyowa Plant

Manufacture of foundry parts forJapan and manufacturing basesin Poland and India

Manufacture of diesel andgasoline engines

Manufacture of engine
parts

TIAP
Manufacture of foundry parts forengines

Higashichita Plant
Manufacture of foundry parts
Manufacture and supply of
diesel engines for IMV Project

Manufacture of transmission partsfor TKAP

Engines

2AD diesel engine

2KD diesel engine

1HD-FTE diesel engine

2AZ-FE gasoline engine

1FZ-FE gasoline engine(Displacement: 2.2 liters,
used in the Avensis, RAV4,
Corolla Verso and Lexus IS)(Displacement: 2.5 liters,
used in the Hilux Vigo)(Displacement: 4.2 liters,
used in the Land Cruiser)(Displacement: 2.4 liters, usedin the Estima)(Displacement: 4.5 liters,
used in the Land Cruiser)

Toyota Industries Corporation

Annual Report 2006

33

Focus on
Business

4

Electronics

Aiming for Future Growthwith Leading-Edge
Electronics Components
The Electronics Business engages in the development, manufacture and sales of powerelectronics components for automobiles as well as manufactures and sells low-temperaturepolysilicon TFT-LCDs and semiconductor package substrates through joint ventures. Toyota
Industries expects the Electronics Business to be a key driver of its future growth.

34

Toyota Industries Corporation

Annual Report 2006

Car Electronics
Toyota Industries’ Electronics Division develops andthese are currently installed in TMC’s Harrier Hybrid (RX 400h)

manufactures an assortment of automobile-related

and Kluger Hybrid (Highlander Hybrid). As an integral partelectronics components.

of our product lineup, we also develop and manufacture

Our DC-DC converters, which are fitted in Toyota Motora diverse choice of DC-AC inverters for cars with hybrid

Corporation’s (TMC) Prius and Camry Hybrid, were developed

and conventional engines that are capable of convertingby tapping an abundance of know-how and experiencecurrents into the same voltage as household electricity,

acquired through the development of control devices forthereby allowing the operation of various household

electric counterbalanced lift trucks. A key device in hybrid

electronic appliances.

cars, the converter down-converts the high-voltage DC

With growing worldwide interest in environmental

current of the main battery to a lower voltage to recharge

protection, we foresee a steady rise in demand for hybrid

the auxiliary battery and supply power to the lights, wipers,

cars. In gearing up to meet such demand, the Electronics

horn and other in-car devices. The division also develops

Division will continue working to establish a solid position as aand manufactures compact, low-cost DC-DC converters

manufacturer of power electronics devices for hybrid cars.

for electric power steering (EPS) systems for hybrid cars, andCar Electronics Products for Hybrid Cars

DC-DC converter for EPS

New products

fitted in the Harrier Hybrid (RX 400h)
and Kluger Hybrid (Highlander Hybrid)

DC-DC converters
for EPS

DC-DC converter
fitted in the Prius

DC-DC converters

DC-AC inverter
fitted in the Estima Hybrid

DC-AC inverters
FY 2002

2005

2011

Car Electronics

DC-DC converter for the Prius

DC-DC converter for electric
power steering for the Harrier
Hybrid (RX 400h) and Kluger
Hybrid (Highlander Hybrid)

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

DC-AC inverter for
the Tacoma (400 W)

Toyota Industries Corporation

Annual Report 2006

35

Focus on
Business

4

Electronics

Low-Temperature Polysilicon TFT-LCD Panels
ST Liquid Crystal Display Corp. (STLCD) was established as aCo., Ltd. and subsequently established ST Mobile Display

joint venture with Sony Corporation (Sony). Holding a 50%

Corporation (STMD) in March 2005 to manufacture

stake in this company, Toyota Industries accounts for STLCD as

low-temperature poly-Si TFT-LCD panels for mobile devices

an affiliate by the equity method.

in anticipation of expanded market demand. STMD

As a core operation within the Electronics Business, STLCD

commenced mass production in April 2006. Sony will position

manufactures small and medium-sized low-temperature

STMD alongside STLCD as a crucial manufacturing base forpolysilicon (poly-Si) TFT-LCD panels primarily for such

low-temperature poly-Si TFT-LCD panels for mobile devices.

applications as video and digital still cameras and mobile

Toyota Industries made a 20% capital investment in STMD.

phones. These TFT-LCD panels are noted for such basic
features as high resolution and low energy consumption.
In addition, Sony is actively promoting its system-on-glass
technology that integrates the display device and its drivercircuits onto a single glass substrate (panel), enablinghighly reliable, lightweight and miniaturized display
modules. Accordingly, these TFT-LCD panels integrate Sony’s
cutting-edge technological prowess.
By combining Sony’s excellent LCD development
capabilities with Toyota Industries’ outstanding expertise inquality control and manufacturing technology, STLCD has built
an optimal production system for manufacturing high-quality,

ST Liquid Crystal Display Corp.

high-performance LCD panels. Since inaugurating mass
production in 1999, STLCD has earned a high level oftrust from an extensive range of customers for its productquality, cost competitiveness and reliable, on-time delivery.
STLCD presently operates with a monthly production
capacity of 40,000 panels (600 x 720 mm) and is establishinga structure capable of providing stable supplies of displays
for mobile devices that quickly meet customer needs.
On a different front, Sony acquired the LCD panel
manufacturing business of International Display Technology

ST Mobile Display Corporation

STLCD

Low-temperature polysilicon TFT-LCDs

36

Toyota Industries Corporation

Annual Report 2006

Semiconductor Package Substrates
Toyota Industries entered the semiconductor package

and smart card suppliers mainly in Europe and China for

substrates business in 1998 when it established TIBC

integration into credit cards and telephone cards.

Corporation (TIBC), a joint venture with Ibiden Co., Ltd. (Ibiden).

Amid high demand for applications in PCs andSemiconductor package substrates are indispensable

mobile phones during fiscal 2006, TIBC recorded a strong

components of PCs, digital still and video cameras, mobile

performance primarily as a result of a switch to highphones, home video game consoles, IC cards and memory

value-added products.

cards. Adopting technologies introduced from Ibiden, TIBC
has steadily expanded its product lineup from its initial
manufacturing of flexible printed circuit (FPC) substrates for IC
cards to wire bonding (WB) package substrates and flip chip(FC) package substrates.
TIBC’s semiconductor package substrates are soldthrough Ibiden to the world’s premier semiconductor
manufacturers and semiconductor-packaging companies
for such applications as PCs and mobile phones. TIBC’s FPC
TIBC Corporation

substrates are also marketed through Ibiden to SIM card

Semiconductor Package Substrate Trend and TIBC’s Production Engineering Development
Substrate trend
Flip-chipped
Super fineMulti-layered

IC signal pins

FC package substrate

FC substrates
Flip chipbonding

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

Main applications:

Fine
Super thin-filmed
WB substrates

CPU for PCs, PC graphics,
chipsets for PCs

WB package substrate

LSI wirebonding

Main applications:Double-sided

FPC substrates for IC cards
1980

1990

2000

2005

Memory for portabledevices, chipsets for PCs

2010

FPC package substrate

TIBC product line

Sep. 1997

FPC package substrates

Apr. 1999
Sep. 1998
TIBC founded

WB package substrates
Oct. 2002

Main applications:Contact IC cards

FC package substrates

TIBC

Wire bonding (WB)
package substrate

Flip chip (FC) package
substrate

Flexible printed circuit(FPC) package substrate

Toyota Industries Corporation

Annual Report 2006

37

Focus on
Business

5

Logistics Solutions

Applying Proven Expertise to Offer
Comprehensive Logistics Solutions
In addition to cargo transport and warehousing operations, Toyota Industries carries out the Logistics
Solutions Business to help companies reduce logistics costs. We handle all aspects of customers’
logistics by combining our extensive business experience in lift trucks, automated storage andretrieval systems and other materials handling equipment with our production and logistics know-how
cultivated from monozukuri (creating things). As we proactively undertake our Logistics Solutions (3PL)
Business, we are building proprietary business models that strive to optimize the overall flow of goods,
money and information from the manufacturer to the consumer.

38

Toyota Industries Corporation

Annual Report 2006

In March 2005, we took an important step in bolstering

Creating Logistics Solutions by Adopting
Proprietary Know-How

our Logistics Solutions Business by acquiring Asahi Security

As one core business that will support future growth, Toyota

Co., Ltd. (Asahi Security) and making this company into a

Industries is involved in the full-scale operation of its Logistics

wholly owned subsidiary. Asahi Security offers comprehensive

Solutions (3PL) Business in Japan. Through this business, we offer

cash management outsourcing services, including cash

comprehensive solutions to customers’ logistics that include

collection and delivery, cash proceeds management andhandling all aspects of their logistics from the planning andequipment security for the retail, services and transportation

operation of distribution centers to improving their entire

sectors. We further bolstered our Logistics Solutions Businesssupply chain. Toyota Industries aims to help customers

in January 2006 by acquiring an equity stake (41.4% share)

reduce their total logistics costs and address their needs forin Wanbishi Archives Co., Ltd., which stores and manages

logistics improvements by tapping a wealth of accumulated

crucial data for companies and government agencies

experience gained via the production and sales of lift trucks,

as well as provides data backup services in the event of

automated storage and retrieval systems and other materials

disasters. Based on the view that logistics extends far beyond

handling equipment, as well as our production know-how

the mere “flow of goods” to encompass the “flow of cash”

that is exemplified by the Toyota Production System. Toyota

and “flow of information,” the aforementioned acquisitions

Industries considers “logistics” as an ongoing process thatand investments were aimed at expanding the spheres ofcontinues until a product passes the checkout counter at aour Logistics Solutions Business and were also in line with our

retail store. From the perspective of optimizing the overall flowbusiness strategy of providing solutions that enable customersof goods, we thus aim to build proprietary business models

to optimize their overall supply chain.

that enable extensive improvements, including logistics
reforms within retail outlets.

We plan to effectively allocate management resources to
our Logistics Solutions Business, while making major efforts toaccelerate the growth of this business and position it as a key

Formats for Optimizing the Entire Flow of Goods,
Money and Information

aspect of Toyota Industries’ future operations.

Primarily through the Advanced Logistics Division, Toyota
Industries is promoting an array of business formats aimed

Supporting Customers’ Logistics through Cargo
Transport and Warehousing Operationsat providing optimal solutions for individual customers. These

Toyota Industries is engaged in general logistics activities,

include the establishment of Advanced Logistics Solutions

including cargo transport. Taikoh Transportation Co., Ltd.,

Co., Ltd. (ALSO), a wholly owned subsidiary, along with thea Toyota Industries Group company, provides a variety

planning, total design and operation of distribution centersof trucking services that extend throughout Japan via its

via joint ventures with customers and logistics operators as

automotive parts logistics network, as well as warehouse

well as the acquisition of equity stakes in logistics operators.

storage operations.

Operational Scopeof the Logistics
Solutions BusinessDistribution center

Store improvement
consulting

Financial services• Planning/design• Planning and overall designof efficient distribution center
operations• Operation/contracted
management• Cost reduction throughconstant improvements• Receipt of goods/storage• Provide guidance on asimplified goods storage
method that prevents
maintaining unnecessary
inventories• Goods presentation/display• Provide guidance on ways to
get rid of wasteful operations
and increase time spent withcustomers• Cash registers• Sales management for eachcash register and cash
collection and delivery• ATMs• Cash replenishment andmaintenanceComprehensive information
management• Safe-keeping of crucial documents• Document collection and delivery services

Manufacturer

Distribution center

Retailer

Consumer

Toyota Industries Corporation

Annual Report 2006

39

Focus on
Business

5

Logistics Solutions

Principal Initiatives of the Logistics
Solutions Business

Topic

March 2002:
Advanced Logistics Solutions Co., Ltd. (ALSO) established as awholly owned subsidiary to plan logistics and operate distribution
centers.

In June 2006, Toyota Industries acquired a 50.5%

Entry into Mail-Order Logistics
stake from Nissen Co., Ltd. (Nissen), one of the largest
mail-order companies in Japan that engages in

November 2002:
Commenced operation of a room-temperature distribution centerfor convenience stores commissioned by Mitsui & Co., Ltd.

producing and selling clothing and interior goods,
in Nissen Logistics Service Co., Ltd. The company,

Invested in Teion Shokuhin Ryutsu Inc., which engages in storage
and delivery of frozen and chilled foods (in which Toyota Industries
has a 60% stake via indirect investment through ALSO).

which became a subsidiary and was renamed Mail &eBusiness Logistics Service Co., Ltd. (Mail & eBusiness

October 2003:
KTL Co., Ltd. (KTL) established as a joint venture (in which Toyota
Industries has a 50.5% stake) with Kokuyo Logitem Co., Ltd., alogistics subsidiary of Kokuyo Co., Ltd.

Logistics), is involved in the shipping, storage andinspection of goods made by Nissen and its affiliates.
Toyota Industries will cooperate with Nissen to reform

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

Mail & eBusiness Logistics’ operations by optimizing theoverall flow of logistics from procurement to customer

March 2004:
Acquired a share of Fuji Logistics Co., Ltd. (Fuji Logistics, in which
Toyota Industries has a 26% stake, with shares acquired from Fuji
Electric Holdings Co., Ltd.).

delivery. Toyota Industries aims to further develop its
Logistics Solutions Business through expansion into themail-order logistics business, which has a broad-based

April 2004:
TF Logistics Co., Ltd. established as a joint venture (in which Toyota
Industries has a 51% stake) with Fuji Logistics for the transport andmaintenance of information devices.

supply chain.

March 2005:
Asahi Security Co., Ltd. made into a wholly owned subsidiary.
January 2006:
Acquired a share of Wanbishi Archives Co., Ltd. (in which Toyota
Industries has a 41.4% stake).
June 2006:
Nissen Logistics Service Co., Ltd. (currently Mail & eBusiness Logistics
Service Co., Ltd.) became a subsidiary (in which Toyota Industries
has a 50.5% stake).

Toyota Industries’ Expanding Logistics Solutions BusinessPharmaceuticalproducts

Frozen foods

Cosmetics anddaily use products

Chilled foods

Establishment ofjoint ventures

Electronicequipment

Takasue

Teion
ShokuhinRyutsuUnrefrigerated
foods

Direct capital relationships
Fuji
Logistics

Ryoshoku

Wanbishi
Archives

Building
equipment

KokuyoLogitem

Asahi
Security

Distribution

Mail &
eBusiness
Logistics
Servive

Stationery
supplies

ApparelStarted operations by fiscal 2005

Printedmatter40

Toyota Industries Corporation

Annual Report 2006

Others(area platform)

Negotiations underway

Focus on
Business

6

Textile Machinery

Realizing Distinctive,
All-Around Quality and Top Customer Service
The history of the Toyota Group began with the invention of
an automatic loom by Toyota Industries’ originator Sakichi
Toyoda. During the intervening years, the Textile Machinery
Business, Toyota Industries’ founding business, has madesignificant contributions to the development of the textile
industry not only in Japan but also around the globe.
Toyota Industries’ Textile Machinery Business undertakes
integrated operations encompassing development,
manufacturing and sales of top-quality spinning and weaving
machinery. Backed by cutting-edge technologies and finely
tailored services, we are able to meet evolving customer
needs the world over.
With an increasing global population and economic
advancement in emerging countries, continued expansionof textile consumption is expected. On the other hand, theindustry is also witnessing intensifying competition for survival
as a result of the emergence of regional manufacturers. Amid
this trend, Toyota Industries will strengthen its technologicaldevelopment capabilities and raise levels of customer
services as it works to reinforce its position as one of theleading manufacturers of textile machinery. We will strive
to differentiate ourselves by exploiting our technologicalcapabilities to develop weaving machinery that is capableof weaving high value-added fabrics for the latest fashion.
To meet increasingly sophisticated market needs, wedevelop and produce superior spinning and weaving
machinery that incorporates cutting-edge control,
communications and mechatronics technologies. Of
particular note, Toyota Industries commands the top global
share for its mainstay air-jet looms. Additionally, as an industry

leader, we have also earned high global acclaim from
customers for ring spinning frames and roving frames.
Please visit www.toyota-industries.com/textile for further
information about our Textile Machinery Business.

Weaving Machinery
Toyota Industries develops, 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 purpose. We provide customers around theworld with state-of-the-art products that meet and exceed
basic performance requirements demanding high speed
and reliability as well as that incorporate such advanced
functions as monitoring and remote setting of the machines
via the Internet. Toyota Industries also develops, manufacturesand sells such preparatory machinery for weaving as sizing
machines that enable uniform, high-quality sizing of yarns.

Spinning Machinery
Toyota Industries provides spinning-related machinery such as
high-speed ring spinning frames and roving frames to meeta vast spectrum of customer needs. These products excel
in spinning high-quality yarns as well as in providing superior
productivity. We also produce and sell drawing frames andcombers.
Toyota Kirloskar Textile Machinery Private Limited, oursubsidiary in India, manufactures ring spinning frames for the
local market.

Weaving Machinery

JAT710 air-jet loom

LW600 water-jet loom

MackeeSizing machine for spun yarn

Filamaster
Sizing machine for filament yarn

Spinning Machinery

RX240NEW ring spinning frame

FL100 roving frame

DX8 drawing frame

VC5A comber

Toyota Industries Corporation

Annual Report 2006

41

Focus on
Business

7

Automotive Stamping Dies

Manufacture and Quick Delivery of High-Quality Automotive
Stamping Dies
Toyota Industries’ Machinery & Tools Sub-Division handles thelocations is also being actively pursued. Addressing the rapid

design and manufacture of stamping dies for Toyota Motor

growth of the Chinese automobile market, Toyota Industries

Corporation (TMC), Toyota Industries’ Vehicle Division andestablished Lio Fung Tool & Die (Kunshan) Co., Ltd. (LFTD, in

TOYOTA Material Handling Company (TMHC). The sub-division

which Toyota Industries has a 35% stake) as a joint venture

manufactures and provides quick delivery of top-quality

with Taiwan-based Lioho Machine Works, Ltd. LFTD began

stamping dies by blending the skills of its experienced

operation in April 2004 and currently produces stamping diesengineers with leading-edge simulation technology.

for TOYOTA vehicles manufactured in China as well as forMoreover, the sub-division is winning high acclaim for its

Toyota Industries’ lift trucks.

outstanding capabilities and has received such accolades

By manufacturing these stamping dies, Toyota Industries

as TMC’s “Super” Award for Quality Performance on numerous

is contributing to TMC’s automobile business as well as theiroccasions.

global strategy.

Expanding manufacturing stamping dies at overseas

Hood panel trim die

Focus onBusiness

8

Rear door outer draw die

Manufacturing Equipment

In-House Production of Vital Manufacturing Equipment andProduction Technologies to Support Product CompetitivenessToyota Industries actively produces its own essential

skilled in various production technologies for creating new

manufacturing equipment such as machining and assembly

manufacturing equipment and deploying these personnel

equipment. Our Mechatronics Systems Department

where needed throughout the Group.

manufactures and supplies customized manufacturing
equipment for the Compressor Division, Engine Division, TMHC,
our affiliates and other divisions. The internal productionof manufacturing equipment permits unified productdevelopment and design, quick development and production
times, and facilitates the rapid launch of production lines.
Toyota Industries’ excellent production facilities contribute to
the Toyota Industries Group’s monozukuri (creating things),
serve as a source of competitiveness in each businessand protect against any outflow of proprietary production
know-how. The Mechatronics Systems Department is also
entrusted with the crucial role of cultivating human resources

42

Toyota Industries Corporation

Annual Report 2006

NC machine tool
for aluminum parts

Circuit board inspection
system with high-resolution
line scan camera

Exploring
Toyota Industries
Toyota Industries’ diverse businesses derive their competitiveness from its
clear-cut management principles and corporate strategy. It also comesfrom a fair and unwavering corporate stance, organizational capabilities
that enable strategies to be firmly executed, an 80-year tradition andhistory, and our high aspirations. These attributes combine to form ourcorporate DNA and support the competitive advantage of each of
our businesses. Also shaping Toyota Industries are our vision, systems,
organizational structure and our fulfillment of responsibilities as a corporate
citizen. On the following pages, we explore the various elements, including
our management and Toyota Industries Group companies, which form thefoundation of Toyota Industries’ efforts to realize its aspirations.

Toyota Industries Corporation

Annual Report 2006

43

Medium-Term Management Plan
Toyota Industries formulated a new Medium-Term Management Plan and is undertaking strategic
management from a mid-term perspective to ensure future business growth and achieve a stable increasein corporate value.

Previous Medium-Term Management Plan (Fiscal 2002 - Fiscal 2006)
Targets Achieved through Proactive Growth Strategies

Specifically, we took steps to further sharpen the

Under the recently completed five-year Medium-Termcompetitiveness of the Materials Handling Equipment

Management Plan, which we launched in fiscal 2002, we set

and Automobile segments, our core businesses, while also

the ambitious targets of consolidated net sales of more thanpromoting initiatives to build a solid foundation for our¥1,200 billion and consolidated ordinary income of ¥80.0

Logistics Solutions and Electronics businesses. Thanks tobillion by fiscal 2006, the final year of the plan. In working tothese measures, we exceeded our targets by recording

attain these targets, Toyota Industries proactively carried out

consolidated net sales of ¥1,506.0 billion and consolidated

a wide range of activities.

ordinary income of ¥80.6 billion in fiscal 2006.

New Medium-Term Management Plan Launched (Fiscal 2007 - Fiscal 2011)
Aiming for Sustainable GrowthIn fiscal 2007, ending March 2007, Toyota Industries launched

Vision 2010—Uniting Our Group Strengths

a new five-year Medium-Term Management Plan (April 2006–
Undisputed No. 1

March 2011). We have set the targets of achieving more than

Make further inroads into
Automobile, Materials
Handling Equipment andLogistics businesses

Growth¥2,000 billion in consolidated net sales and ¥140.0 billion inconsolidated ordinary income in fiscal 2011, the final year of
the plan.
Through our business, we are striving to generate ¥1,000

Innovation

billion in sales in the Automobile Segment, which engages invehicles, engines, car air-conditioning compressors and car
electronics. Concurrently, we will aim for ¥1,000 billion in sales

Diffusion ofGood
Practicesin the Materials Handling Equipment Segment,consisting

Growth Trajectory

Consolidated
Ordinary Income (¥ Billion)

Advanced Technology

Value Chain•Pursuit of global best quality•Reduce environmental burden
via product development andinnovative manufacturing•Contribute to car innovation•Strategic M&A and alliances tocreate value•Synergies between business units•Higher value-added sales andservices

Enhance Team Strength and Spirit•Leadership•Unique skills, unique techniques•Toyota Production System•Spirit of harmony (Teamwork)

140.0

Over
2,000.0
85.0Electronics

80.6

70.9
51.4

59.0
Logistics

1,670.0

Consolidated
Net Sales (¥ Billion)
1,164.4¥1,000 billion inMaterials Handling/
Logistics businesses

1,506.0
Materials Handling Equipment

1,241.5

1,069.2

Car Air-Conditioning Compressor

Car Electronics

Vehicle/Engine

Textile Machinery, etc.
FY

03

04

05

06

07
(Projection)

44

Toyota Industries Corporation

Annual Report 2006

.

.

.

11
(Target)¥1,000 billion in
automobile-related
businesses

of the Toyota Material Handling Group (TMHG) and Aichi
Corporation, and in the Logistics Segment.
Along with the new plan, the Vision 2010 was formulated,

Solidifying the Strengths of Our Businesses for
Sustainable Growth
By fiscal 2011, we hope to reach our desired status of

expressing the desired status of Toyota Industries. With theeach business, which will aim to reinforce the strengths

cornerstone of our plan being building a spirit of harmonyof each business and fortify the competitiveness of ourand fortifying workplace strengths, beginning with humancore businesses, while accelerating the growth of our new

resources development, we will strive for the highest levels of

businesses through measures that include establishing new

quality and execute reforms by developing leading-edgebusiness models.

technologies and strengthening our value chain in order torealize growth as a company with market-leading businesses.

Status in 2010 by BusinessBusiness

Materials
Handling
Equipment

Future Market•Stable growth in the U.S. and European
markets•Expanding markets in BRICs and East
European countries•Heightening awareness toward theenvironment and safety•Increasing need to improve logistics
efficiency in Japan

Logistics

VehicleEngine

Car Electronics

Car
Air-Conditioning
Compressor

Textile Machinery•Shift to outsourcing logistics operations atcompanies•Rising need for large-scale distribution
centers

Status in 2010
•Securing undisputed global No. 1 position by
maximizing synergies under the frameworkof TMHG•Annual lift truck sales of 250,000 units(one-third of global market share)•Growth as one of the core businesses•Establishment of new business models
Toyota Production System (TPS)
Establishing platforms
M&As, alliances•Toyota Global 15 (Toyota Motor
Corporation’s [TMC] scheme to secure 15%
global share in the early 2010s)•Shift to fuel-efficient vehicles and compact
cars•Establishing position as a specializedcompact car manufacturer•Global No. 1 in quality, cost and delivery (bycontributing to development andpre-production process)•Toyota Global 15•Top manufacturer of diesel engines in Toyota
Group (joint development with TMC)
•Serialize the new generation of clean, quiet
and fuel-efficient diesel engines•Expansion of diesel engines in Europe•Reassessment of diesel engines in the UnitedStates and Japan•Expansion of hybrid vehicles•Advancement in electronic in-car devices
through technological innovation•Leading manufacturer in power source
devices and systems for hybrid vehicles•Marketing of new electronics products forautomobiles•Steady market expansion in Europe and theUnited States•Rapid market expansion in China andemerging countries•Expansion in hybrid vehicles•Commercialization of car air conditioners
using CO2 as refrigerant•Aiming for 50% global market share•Expanded sales of electrically driven
compressors and CO2 compressors•Asia as the primary market•Although susceptible to economic trends,
expanded demand expected as a result of
increasing global population and growth inemerging countries•Top share and leading technological edgein air-jet looms•Growth of air-jet looms as core product•Establishing position to outdistance otherglobal players

Toyota Industries Corporation

Annual Report 200645

Research and Development
In keeping with its founding spirit of “Be ahead of the times through endless creativity, inquisitiveness andpursuit of improvement,” Toyota Industries carries out strategic research and development (R&D) that aims
not merely at improving short-term business results but also at attaining sustained growth in the future.
Recognizing that R&D activities are essential for maintaining the competitive advantage of the Toyota
Industries Group in the years ahead, we undertake efficient R&D activities by concentrating the allocation ofmanagement resources in specifically targeted fields.
Toyota Industries’ R&D activities can be broadly classified into

for shortening product development times and reducing

the two areas of product development and improvements

lead-times from development to production and shipping.

performed independently within each business division andAlso, the lab engages in the development of an optimal

R&D undertaken mainly by the Research & Development

network system for joint development of parts with suppliers

Center. The latter is conducted separate from the activities

as well as for parts procurement.

of the business divisions and carried out with a view toward
Company-wide management strategy.
Toyota Industries is active in a variety of business domains,

In fiscal 2006, R&D expenditures totaled ¥31.2 billion,up ¥1.1 million (3.7%) from the previous fiscal year. R&D
expenditures accounted for 2.1% of consolidated net sales, aand each of its divisions possesses its own distinctive

decline of 0.3 percentage point. By segment, R&D expenses

technological strengths, core technologies and market

amounted to ¥16.6 billion in the Automobile Segment, ¥12.9

characteristics. Instrumental to efficiently developing

billion in the Materials Handling Equipment Segment, ¥731

new products matched to customer needs, the technicalmillion in the Textile Machinery Segment and ¥1.0 billion in thedepartments of each division must lead the way in product

Others Segment.

improvement, technology development and appliedresearch. For this purpose, each division maintains its own staff
of engineers, experiment facilities and research laboratories
and engages in proactive technology development efforts
guided by product development plans.
The Research & Development Center is involved in R&D
in such technology fields as materials fields that serve as acommon foundation for all divisions as well as R&D in new
fields that include leading-edge technologies. In accordancewith specific research themes, we also collaborate with
Toyota Central Research & Development Laboratories, Inc.,an R&D facility of the Toyota Group involved in basic research,
as well as with universities and other outside R&D institutions.
The Research & Development Center, situated within the
Corporate Center (corporate headquarters), handles thepromotion of Company-wide new business development andtechnology management. To enhance the efficiency of ourCompany-wide R&D structure, the center facilitates lateraltransfers of technologies among divisions that span various
domains and investigates new technology development
themes. At the same time, the center promotes the systematicand continuous creation of new products and services thatwill serve as pillars of future business utilizing the extensive
accumulated technological know-how and external networks(both human and information) of each business division.
Functioning as a development base for our information
systems, our “e-Lab” IT research laboratory is engaged in
R&D activities in various IT-related fields. This laboratory’s
activities include research on digital simulation technologies

46

Toyota Industries Corporation

Annual Report 2006

e-Lab, Toyota Industries’ development basefor in-house information systems

New Products Developed and Launched in Fiscal 2006

Materials Handling Equipment Segment
Development of Fuel-Cell Lift Truck

Full Model Change for Compact Electric Tow Tractors

Toyota Industries developed the TOYOTA FCHV-F fuel-cell
lift truck that incorporates a fuel-cell hybrid system jointly
developed with Toyota Motor Corporation (TMC). Toyota
Industries exhibited the lift truck at CeMAT 2005, aninternational trade fair for intralogistics held in Hannover,Germany, in October 2005. By collaborating with TMC
in the use of leading-edge
technologies and components
for automobiles, we willcontinue to aim for thefurther development ofhigh-performance, low-cost
fuel-cell systems and plan tocarry out mass production ofsuch systems.

Toyota Industries introduced the new Tugnova (CBT/CBTY)
series of electric tow tractors (2- to 4-ton towing capacity)
into the Japanese and overseas markets in March 2006 after
a full model change. Addressing the recent trend toward
small-lot logistics, the Tugnova series is Toyota Industries’
first compact electric tow tractors to be fitted with an
AC drive system, featuring superior operability and lower
maintenance costs. Additionally, this series offers the highest
levels of safety, operability and economical operationthat includes excellent safety
features, a compact design toenable superior tight turningand an extended battery life
with a larger capacity for longer
operation.

TOYOTA FCHV-F

Tugnova (CBT)

Automobile Segment [Car Air-Conditioning Compressors]
Development of 7SBH17 Externally Controlled
One-Way Swash-Plate Variable-Displacement
Compressor for the TOYOTA Estima

These compressors offer enhanced efficiency and increased
cooling capabilities compared with previous externallycontrolled variable-displacement compressors.

Toyota Industries began supplying
an upgraded externallycontrolled one-way swash-plate
variable-displacement
compressor* for the TOYOTA
Estima, which underwent a fullmodel change in January 2006.

* Externally controlled variable-displacement compressors send signals
about interior temperature, external temperature and revolution
to the control valve. This highly precise displacement control allows
compressors to operate at optimal displacement, thereby enabling large
improvements in fuel economy.

7SBH17

Automobile Segment [Car Electronics]
Development of Air-Cooled DC-DC Converter

Development of 150W DC-AC Inverter

Toyota Industries has developed an air-cooled DC-DC
converter that down-converts the high voltage of the mainbattery—the drive source for hybrid cars—to a lower voltage.
The realization of high efficiencies enables this DC-DC
converter to be air-cooled instead of the conventional
method of water-cooling, thus allowing greater freedom
for positioning within
the vehicle. The DC-DC
converter is fitted on the
Camry Hybrid that TMC
began selling in North
America in May 2006.

With the development of a new 150W AC inverter, wehave expanded our lineup of DC-AC inverters that convert
currents used in vehicles to the same voltage as household
electricity. We began supplying these for the DaimlerChrysler
Dodge Caliber in January 2006.

Air-Cooled DC-DC Converter

150W DC-AC Inverter

Toyota Industries Corporation

Annual Report 2006

47

Corporate GovernanceToyota Industries believes that achieving a stable increase in corporate value over the long term andmaintaining the trust of society are crucial management issues. Therefore, we consider it imperative to build
good relationships with such stakeholders as shareholders, customers, business partners, local communities
and employees based on our determination to contribute to the enrichment of society through our businessactivities.
In accordance with these objectives, we are striving to maintain and enhance management efficiency
as well as the fairness and transparency of our corporate activities. To that end, we are aiming to improve ourcorporate governance through measures that include strengthening management monitoring and ensuring
timely information disclosure, while building a governance system that can respond quickly and flexibly tochanges in the business environment.

Toyota Industries’ Management System

Reforming the Management System

Toyota Industries’ Board of Directors, Management Council,

Effective June 22, 2006, we reformed our management system

Management Committee and Business Operation Committee

by streamlining the Board of Directors and newly creating thework to ensure prompt decision-making on matters with aposition of managing officer. To ensure quick decision-making

major influence on shareholders’ interests and on crucial

amid intensifying global competition, we reduced theissues affecting business operations. The Board of Directors

number of Board members from 30 to 17. At the same time,

generally convenes once a month to discuss and resolve

we adopted the Managing Officer System to ensure speedy

crucial management matters, such as those necessitated byoperational execution. Managing officers are non-Board

law. As of June 22, 2006, the Board of Directors consisted of 17

members, who are appointed for a one-year term, tasked

directors, including one external director.

with the operational execution of respective businesses of

Based on Japan’s Commercial Code, Toyota Industries has

which they are in charge.

chosen to maintain the traditional “Corporate Auditor/Boardof Corporate Auditors” system. With a long history in Japan,

Information Disclosure

a Board of Corporate Auditors is a body that is completely

Toyota Industries considers it an important element of

independent from the management of a company andcorporate governance to disclose corporate and financial

functions in parallel with the Board of Directors. Toyota

information, and accordingly, strives for strict accountability

Industries believes this auditing system adequately ensures

to shareholders and investors. Starting from fiscal 2004, wethe proper execution of duties by the Board of Directors.

have been publishing quarterly financial statements. In 2005,

As of June 22, 2006, Toyota Industries’ Board of Corporate

Toyota Industries set up the Information Disclosure Committee

Auditors consisted of five corporate auditors, with two

to monitor the completeness, appropriateness and timelinessstanding corporate auditors and three outside corporateof important information disclosed in financial statements

auditors. Appointed at the Shareholders’ Meeting, theand other materials. Pertinent information is also promptly

corporate auditors’ primary duties encompass auditing

disclosed to the public through the Investor Relations sectionof business operations and accounting activities. An auditof our Web site and other media channels.

of business operations determines whether directors are
stringently adhering to ordinances and the articles ofincorporation in the execution of their duties. An audit
of finances involves the oversight of business results anda variety of financial-related activities. In addition, thecorporate auditors have the authority to inspect relevant
documents, make auditing visits to headquarters, businessdivisions and subsidiaries and conduct investigations firsthand.
The Corporate Auditor’s Office at Toyota Industries has been
staffed with specialist personnel who facilitate the proper
execution of the corporate auditors’ duties.
Investor relations section of Toyota Industries’
Web site48

Toyota Industries Corporation

Annual Report 2006

Corporate Governance Structure of Toyota Industries Corporation
With the exception of matters resolved at the Shareholders’Meeting, the Board of Directors discusses and decides
all important management matters. Toyota Industries has
also independently set up the Management Council,
Management Committee and Business Operation
Committee to increase efficiency and the speed ofmanagement and decision-making as well as facilitate
appropriate judgment. By deliberating on important mattersrelated to management strategies and individual businesses,
these bodies assist top management and the Board of
Directors in appropriate decision-making. Among the issues
deliberated on by the Management Council, Management
Committee and Business Operation Committee, the crucial
issues prescribed in Japan’s Commercial Code are put forth
for discussion by the Board of Directors.

Shareholders' Meeting
Appointment/
Dismissal

Appointment/
Dismissal

Appointment/
Monitoring
ReportingBoard of Corporate Auditors
5 auditors(including 3 external auditors)

Independent Auditors
ReportingMonitoring

Board of Directors
Monitoring

Monitoring/
ReportingAccounting
audit

Reporting

17 directors(including 1 external director)
Appointment/
Monitoring

Corporate Auditor’s Office
President

Directives
Directives

Management
Committee(Deliberates onimportant matters frommanagement's
perspective)

Management
CouncilBusiness Operation
Committee(Reports on executionof business operations)(Follows up on executionof business operations)

Directives

Directives

Directives

ReportingCommittees*
Directives

Discussing/Reporting

Discussing/Reporting

Reporting

Reporting

Audit OfficeInternal audits

Reporting

ReportingDirectors/Managing Officers
Business Divisions & In-House Company

Management Council
Directors and managing officers convene to share reports on the statusof operations of each business.

Management Committee
The Management Committee deliberates on crucial matters related
to all areas of management, including Company-wide strategy andallocation of management resources. The committee consists ofdirectors above the executive vice president level. When the president
considers it necessary, relevant other directors and managers also
attend committee meetings.

Business Operation Committee
The Business Operation Committee deliberates on crucial mattersrelated to each business segment. The president, directors in chargeof corporate planning and directors assigned to oversee divisional
operations (division managers, etc.) attend committee meetings.

* Major Committees
Corporate Code of Conduct Committee

Compliance Subcommittee

Data Security Subcommittee

Crisis Response Subcommittee

Regional Society Contribution Subcommittee

Environmental Committee

Export Transaction Control Committee

Stock Option Committee

Toyota Industries Corporation

Annual Report 200649

Corporate Governance
Strengthening ComplianceToyota Industries believes that compliance extends beyond
adherence to laws and ordinances to also include respecting
local cultures and customs in step with changes in the times.
The Corporate Code of Conduct Committee plays a central

The Toyoda Precepts*
1. Be a contributor to the development and welfare of thecountry by working together, regardless of position, infaithfully fulfilling your duties.

role in strengthening our compliance systems and frameworks

2. Be ahead of the times through endless creativity,
inquisitiveness and pursuit of improvement.

while stipulating conduct guidelines and thoroughly informing

3. Be practical and avoid frivolity.

all employees of these guidelines via education activities.

4. Be kind and generous; strive to create a warm, homelike
atmosphere.

Additionally, Toyota Industries is reinforcing compliancesystems at domestic and overseas subsidiaries, while its
Purchasing Department closely monitors suppliers to ensure
their compliance as well.

5. Be reverent, and show gratitude for things great and small
in thought and deed.
* The Toyoda Precepts were assembled in 1935 to commemorate the six-year
passing of company founder Sakichi Toyoda. Since then, the precepts
have served as the basis of the thinking and guiding principles of the entire
Toyota Group.

With Toyota Industries’ president serving as chairman,
the Corporate Code of Conduct Committee is tasked with
controlling the Group’s corporate activities in areas related
to compliance and crisis response. Consisting of mostdirectors, corporate auditors and managing officers, thecommittee convenes several times per year to confirm thestatus of any crucial problems that may have arisen as well as
countermeasures and responses to be taken. The committee
also deliberates on initiatives to be taken in the next fiscal
year.

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

Committee, we designated a number of departments as

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 inthose regions and countries.

legal compliance departments, which monitor laws andRespect for the Natural Environment

ordinance for ensuring thorough Company-wide compliance.

Toyota Industries believes that economic growth andconservation of the natural environment are compatible.
It strives to offer products and services that are clean, safeand of high quality.

Under the jurisdiction of the Corporate Code of Conduct

We also set up the Compliance Subcommittee and theData Security Subcommittee. Chaired by a director, these
subcommittees consist of members selected from relevant
divisions and departments, and in principle, convenemonthly while undertaking activities in accordance with their

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

Respect for Employees

respective plans.
The Audit Office and designated legal compliancedepartments cooperate in implementing compliance audits

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
can realize their full potential.

of each department and domestic and overseas subsidiaries.
We also implement Company-wide employee education
programs according to the level of employees’ positions andfields of specialization, while the designated legal compliancedepartments handles education of persons in charge ofrelated departments. In addition, we undertake various

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

Global Perspective

enlightenment activities to raise employee compliance

Learning from the best in the world, we aim to become thebest in the world.

awareness levels.

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

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

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.

50

Toyota Industries Corporation

Annual Report 2006

Environmental and Social Contribution Efforts
Toyota Industries recognizes that being a good corporate citizen entails far-reaching responsibilities tothe environment as well as to the 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 withlocal communities.

Environmental Protection Activities
In order to help protect the environment while contributing

Group company to establish an environmental management

to global economic development and the enrichment ofsystem. At the same time, every month we have collectedsociety, Toyota Industries has continually strengthened its

environmental data based on uniform criteria from our Group

Group-wide environmental activities. As examples of theseproduction companies and monitored the progress of theefforts, in January 2003 we unveiled the Toyota Industries

Group’s overall environmental management. Consequently,

Group Corporate Commitment to the Environment,

amid evolving social circumstances, the vital issues requiring

which articulated the Group’s basic policies toward the

responses from the Toyota Industries Group became

environment. Since then, we have worked vigorously toevident. For that reason, in July 2005 we revised the Toyota

promote the sharing of a unified environmental awarenessIndustries Group Corporate Commitment to the Environment

among subsidiaries around the world and directed eachand renamed it the Global Environmental Commitment,

Global Environmental Commitment
The Toyota Industries Group will contribute to a balance between environmental protection and economic growth in its
wide-ranging businesses.

Basic Policies•The Toyota Industries Group will continue to set challenging
targets aimed at further reducing the environmental
impact of its business activities, listening carefully to thevoices of its stakeholders, and acting in compliance withthe letter and spirit of laws and regulations.

•The Toyota Industries Group plans to improve its
environmental management, placing environmental
activities among its highest priorities. In particular, Toyota
Industries will give priority to the following items.
Curb global warming— Aiming to reduce energy

consumption and the output of greenhouse gases

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

through the entire lifecycle of its products, services andproduction activities
Use resources more efficiently— Utilizing raw materials,

water and other resources efficiently while working to
reduce, reuse and recycle waste products
Harmony

Reduce environmental risk factors— Reducing the use andoutput of harmful chemical substances of concern while
evaluating environmental risk factors at the planningstage of business activity in order to prevent pollution

Sustainable
Management
Improvement

Responsibility

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

Fulfill our social responsibilityof environmental
protection.

•The Toyota Industries Group will aim to foster greatercommunication and teamwork within a wide range ofpartnerships, including those with customers and suppliers,
in order to promote sustainable management of theenvironment. In addition, the Toyota Industries Group will
act as an upstanding corporate citizen, taking an active
part in the planning of activities that contribute to various
regional communities as well as to our global society.

Toyota Industries Corporation

Annual Report 2006

51

Environmental and Social Contribution Efforts
Scope of Group-Wide Environmental Management (As of March 31, 2006)

North America
Manufacturing companies: 8
Sales companies: 3
Other: 1

Japan
Toyota Industries Corporation(non-consolidated): 11 bases
Manufacturing companies: 18
Sales companies: 41
Other: 14

Total: 12

Total: 73

EuropeAsia

Australia

South America

Manufacturing companies: 6
Sales companies: 5
Other: 1

Manufacturing
companies: 4
Sales companies: 1
Other: 1

Sales companies: 1

Sales companies: 1

Total: 12

Total: 6

Note: Toyota Industries determined the scope of Group-wide environmental managementcompanies by considering the characteristics of each of its subsidiaries and affiliates.
Consequently, the scope of consolidation for environmental management companies isdifferent from the scope of consolidation based on financial definition.

which embodies policies shared by all consolidated

the environmental impact of all our business activities. We

Group companies, as we further bolster our Group-wide

also formulated and implemented the Third Environmental

environmental management.

Action Plan, which ran from fiscal 2002 through fiscal 2006,
and successfully attained the plan’s targets for the Company

Environmental Management Systems and the
Fourth Environmental Action Plan

on a non-consolidated basis in all categories (for detailed

Since 1996, Toyota Industries has been striving to enhance

Report). To further promote our environmental activities,

its environmental activities by improving its environmental

in October 2005 we formulated the Fourth Environmental

management system. In line with these efforts, we acquired

Action Plan to be implemented from fiscal 2007 throughISO 14001 certification for all eight of the Company’s

fiscal 2011. Aimed at further strengthening Group-wide

non-consolidated production bases in Japan by March

environmental management, the Fourth Environmental

2003. From fiscal 2002, Toyota Industries expanded theAction Plan establishes activity policies and targets covering

scope of sections securing ISO 14001 certification beyond

the entire Toyota Industries Group in Japan and overseas,

manufacturing sections to include product development,with the overall objective of reducing the environmental

management and service sections. Furthermore, in response

load throughout the entire product lifecycle as well as into the revision of ISO 14001 in November 2004, we have been

production activities.

information, please refer to our Social & Environmental

strengthening initiatives to reduce the indirect environmental
impact of our operations.
In our efforts to further improve the effectiveness of
our environmental management system, in fiscal 2005 we
promoted measures that included on-site verification andevaluation of the status of implementation of environmental
management systems at domestic manufacturing subsidiaries
and instructed the management to make any necessary
improvements. Our environmental management system also
extends to reducing the environmental load throughout theentire product lifecycle and within our supply chain.
Further demonstrating our commitment to addressing
various environmental issues, we also established theEnvironmental Committee, chaired by the president andcomposed of four specialized subcommittees. Recognizing
the importance of taking a Group-wide approach toenvironmental protection, in fiscal 2001 we introduced
consolidated environmental management to ascertain

52

Toyota Industries Corporation

Annual Report 2006

Key Points of the Fourth Environmental Action Plan
(1) Expanding our lineup of ecological products
Strengthen development and sales of environment-friendly
products that help protect the environment during the usage
stage in which a product exerts the greatest environmental
impact, with these efforts covering the entire product lifecycle.
(2) Reducing emissions of greenhouse gases
Actively promote measures to tackle global warming.
(3) Using resources more efficiently
Promote a reduction in resource loss, bearing in mind the sharp
rises in raw material costs caused by energy and other resource
problems.
(4) Reducing environmental risk factors
Upgrade chemical substance monitoring and curb emissionsof environment-impacting substances, thereby reducing
environmental risk factors, preventing the incurrence of costs
arising from damage claims and preventing a loss of trust bysociety.
(5) Augmenting consolidated environmental management
Be aware of the Group-wide trend toward increased
environmental impact accompanying an expansion in
production by the Group’s consolidated companies.

Social Contribution Activities
Toyota Industries actively promotes support activities that

Support for the Special Olympics

contribute to society by providing human resources, facilities

Toyota Industries supports the activities of the Special

and financial resources. Toyota Industries’ employees also

Olympics Nippon Aichi. The Special Olympics is an

make self-initiated efforts to serve the community via suchinternational organization that provides persons withmeans as volunteer activities.

intellectual disabilities with opportunities for daily training in

At present, Toyota Industries and its global subsidiaries are

sports and for displaying their training results at year-roundundertaking social contribution activities that are self-initiatedathletic competitions. In accordance with the primary mission

by local bases and tailored to each community. To carry outof its activities, we make our athletic grounds, gymnasiums

balanced Group social contribution activities as our businessand other facilities available for use at these competitions, as

operations become even more globalized, Toyota Industries

well as provide donations to Special Olympics and support its

established the Corporate Citizenship Subcommittee in fiscal

activities and events.

2006 and has begun devising medium-term initiatives for oursocial contributions.

In March 2006, 23 athletes from Toyota Industries’ women’s
softball club participated in the Special Olympics Nippon
Aichi-sponsored Sports Experience Caravan as support staff,

Participating in the Management of the Toyota
Commemorative Museum of Industry andTechnology

providing more thanFounded jointly by 13 Toyota Group companies, the Toyota

on catching

Commemorative Museum of Industry and Technology strives

and batting, andto promote an understanding by young people about thethereby showing“spirit of research and creation” and the importance andparticipants the funpleasure of monozukuri (creating things). The museum alsoof softball.

100 participants
with instruction

Athletes from Toyota Industries’ women’s softballclub instructing participants at the Sports Experience
Caravanaims to preserve and utilize the museum building, designatedas an important urban landmark building by Nagoya City, as
a historic industrial site.
Toyota Industries provides the museum with humanCommunications on Environmental Protectionand Social Contribution Activities
Toyota Industries publishes the Social & Environmental Report,

resources, funds to cover operating costs and articles

which summarizes the initiatives and achievements of ourfor exhibit, while also participating in the museum’s

environmental protection and social contribution activities.

management.

To obtain a copy of this report, please see the contact
information listed on the last page of this annual report.
The contents of the Social & Environmental Report, alongwith 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 theways in which we fulfill our social responsibilities.

Toyota Commemorative Museum of
Industry and Technology

Circular loom invented by Sakichi
Toyoda on display at the entrance of
the Toyota Commemorative Museumof Industry and Technology

Social & Environmental Reports

Toyota Industries Corporation

Annual Report 2006

53

Toyota Industries’ 80 Years of History
Foundation – 1980s
1926

1952

1974

Toyoda Automatic Loom Works, Ltd.
(now Toyota Industries Corporation)
established to manufacture andmarket 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

1929

Sakichi Toyoda

Spinning frame production starts.

Sakichi Toyoda was born inShizuoka Prefecture, Japan,

Automatic loom patent sold to PlattBrothers & Co., Ltd. of the U.K.

in 1867. He became an1933

inventor while still in his teens

Automobile Division set up.

and devoted his life to thestudy and development of

1934

P-type gasoline engine production
starts.

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

A-type automobile engine
completed.

1963

he subsequently pioneered a1935

Friction welder production starts.

new era in textile machinery

Prototype of Model A1 passenger carcompleted.

1964

textile machinery. Startingwith a wooden handloom,with inventions that included

Dump truck production starts.

J-type diesel engine production
starts.

Japan’s first power loom,
the circular loom and the

1967

Toyoda Automatic LoomNagakusa Plant starts operations,producing small commercial vehicles.

Type G. Sakichi was awarded
models in his lifetime and isremembered with pride inJapan as one of the world’s
greatest inventors. We at
Toyota Industries are proud tocarry on the engineering spiritof 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.

1924

1949

Toyoda Automatic Loom Type G
invented by Sakichi Toyoda.

Company stock listed on Tokyo,
Osaka and Nagoya stock exchanges.

Toyota Industries Corporation

Swash-plate compressor technology
licensed to Chrysler and Ford.
Compressor Division separates from
Textile Machinery Division.

1978
Starlet (automobile) production starts.
Aerial lift equipment production
starts.

1980
JA air-jet loom production starts.

1981
10P compressor production starts.

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

1985
Engine Division separates from
Vehicle Division.
10PA compressor production starts.

1986
Company awarded
the Deming Prize
for quality control
implementation.
Deming Prize

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

84 patents and 35 utility

54

1959

1977

Annual Report 2006

Electric counterbalanced lift truck
production starts.

1968
Open-end spinning machine
production starts.

X300 series lift truck production starts.

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

1970

1988

Takahama Plant starts operations,producing industrial vehicles.

Toyota Industrial Equipment Mfg.,
Inc. (TIEM) established in Columbus,
Indiana, U.S., as a joint venture with
Toyota Motor Corporation.

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.

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.

1990s –2000s –

1990

1998

2001

2004

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

TD Deutsche Klimakompressor GmbH(TDDK) established in Germany as a
joint venture with DENSO Corporation
to produce car air-conditioning
compressors.

GENEO-R (7FBR outside Japan) reachtruck production starts.

Toyota Industry Automotive Parts(Kunshan) Co., Ltd. (TIAP) establishedin China as a joint venture with
Toyota Tsusho Corporation and Lioho
Machine Works, Ltd. to produce
foundry parts.

Company
receives 1990 PM
Excellent Plant
Award.

1992
Materials Handling System Division
set up.
Production starts on automatedstorage and retrieval systems.
JAT600 air-jet loom 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.

1995

GENEO (7FG/D outside
Japan) internal combustion
counterbalanced lift trucks
introduced.

Company takes over the Industrial
Equipment Sales Division of Toyota
Motor Corporation.
TOYOTA Material Handling Company
established as an in-house company.
RAV4 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.

Advanced Logistics Solutions Co., Ltd.
(ALSO) established to plan overalllogistics operations and operate
distribution centers.

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

TD Automotive Compressor
Georgia, LLC (TACG) establishedin the U.S. as a joint venture with
DENSO Corporation to produce car
air-conditioning compressors.

2005

2002

Higashiura Plant starts operations,producing parts for car
air-conditioning compressors.

Asahi Security Co., Ltd., which
engages in collection and deliveryof cash, management of sales
proceeds and equipment security,
becomes a subsidiary of Toyota
Industries.
Vitz (Yaris outside Japan) production
starts after a full model change.

1CD diesel engine production starts.
GENEO-B (7FB outside Japan)
electric counterbalanced lift trucks
introduced.

2000
LW600 series water-jet loom
production starts.
BT Industries AB of Sweden, aworld-leading manufacturer of
warehouse trucks, becomes a Toyota
Industries subsidiary.

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

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

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.
AD diesel engine production starts.

2003

KD diesel engine production starts.

JAT710 air-jet loom production starts.

New RAV4 production starts
after a full model change.

7SB compressor production starts.
B500 electric counterbalanced lift
truck production starts.
Kirloskar Toyoda Textile Machinery
Private Limited (KTTM) establishedin India as a joint venture with the
Kirloskar Group.

1996

2UZ gasoline engine production
starts.
Higashichita Plant starts operations,producing foundry parts.

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

JAT610 air-jet loom production
starts.

2006
New GENEO (8FG/D outside
Japan) internal combustion
counterbalanced lift truck production
starts.

RX240 ring spinning frame
production starts.

1997
Compressor production at Kariya
Plant reaches 100 million units.
6SE compressor production starts.
ST Liquid Crystal Display Corp.
(STLCD) established as a joint
venture with Sony Corporation.

Aichi Corporation, a manufacturer of
special-purpose vehicles, becomes
one of Toyota Industries’ subsidiaries.

Toyota Industries Corporation

Annual Report 200655

Corporate Organization
Board ofCorporate Auditors(As of July 1, 2006)

Corporate Auditor’s Office

Corporate Auditors
TOYOTA
Material Handling Company*

Corporate Center

Board of Directors

Management
CouncilAudit Office
Corporate Planning Dept.
Business Management Dept.
TMHG Coordination Office
Toyota Sales Dept.
Legal Dept.
Public Affairs Dept.
General Administration Dept.
Global Human Resources Dept.
Technical Training Center
Accounting Dept.
Global IT Dept.
Purchasing Dept.
Research & Development Center
Intellectual Property Dept.
Safety, Health & Environment Dept.
Global Quality Control Dept.
Operations Management Consulting Dept.
Plant Engineering Dept.
Osaka OfficeTextile Machinery Division

Compressor Division

Vehicle Division

Engine Division

Electronics Division

Advanced Logistics Division

New Electronics Sub-Div.

President
Tokyo Office

Machinery & Tools Sub-Div.
Management
Committee
Business Operation
Committee

Nagoya Office
Trading & Logistics Sub-Div.
Loan and Investment Control Committee
Corporate Code of Conduct Committee
Environmental Committee
Personnel Development Committee
Export Transaction Control Committee
Safety and Health Committee
Stock Option Committee

Personnel
Quality

Functional Committees

Production
Procurement
Sales
Technology

56

Toyota Industries Corporation

Annual Report 2006

* TOYOTA Material Handling Company is thename of a division of Toyota Industries
Corporation, not a legally incorporated entity.

Directors, Corporate Auditors and Managing Officers(As of June 22, 2006)

Board of Directors

ChairmanPresident

Tadashi Ishikawa*

Tetsuro Toyoda*

Executive Vice President

Executive Vice President

Executive Vice President

Executive Vice President

Norio Sato*

Shinjiro Kamimura*

Yoshikatsu Mizuno*

Tatsuo Matsuura*

Senior Managing Directors

Akira Imura
Shigetaka Yoshida
Masafumi Kato
Yasuharu Toyoda
Yutaka Murodono

Honorary Chairman

Kazunori Yoshida
Kosaku Yamada
Toshiyuki Sekimori
Kimpei Mitsuya

Yoshitoshi Toyoda
Director

Tatsuro Toyoda* Representative Director

Corporate Auditors
Standing Corporate Auditors

Shigetaka Mitomo
Masanori Ito

Corporate Auditors

Hiroshi Okuda
Fumio Kawaguchi
Katsuaki Watanabe

Managing Officers
Hiroya Kono
Kenji Takenaka
Satoshi Kaseda
Hirofumi Tsuji
Yukio Yamakita
Takaki Ogawa
Kazue Sasaki

Hirotaka Morishita
Shinya Furukawa
Hironori Ito
Akira Onishi
Per Zaunders
Hiroshi Sakai
Eishi Furuta

Tadayoshi Baba
Takashi Okubo
Norio Sasaki
Toshifumi Ogawa
Hayato Ikeda
Toshifumi Onishi

Toyota Industries Corporation

Annual Report 200657

Corporate Data

(As of March 31, 2006)

Major Plants (Parent Company)

Kariya Plant
Obu Plant
Kyowa Plant
Nagakusa Plant
Takahama Plant
Hekinan Plant
Higashichita Plant
Higashiura Plant

Number of
Employees

Start of
Operations

1,723
506
890
2,238
1,566
1,505
665
120

1927
1944
1953
1967
1970
1982
2001
2002

Textile machinery, car air-conditioning compressors
Parts for car air-conditioning compressors
Electronic equipment, automotive press dies, production facilities, engine parts

Automobiles
Lift trucks, materials handling systems
Engines for automobiles and industrial equipment
Foundry parts, engine parts
Parts for car-airconditioning compressors

Consolidated Subsidiaries
Company Name

Location in JapanJapan
Aichi Corporation Group (4 companiess) *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 Corporation
Unica Co., Ltd.
Iwama Loom Works, Ltd.
Kawamoto System Corporation
Nagao Kogyo 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

58

Toyota Industries Corporation

Annual Report 2006

–
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% ofVoting Rights–
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%
82.0%
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%

Company Name

Outside Japan
Toyota Industries Sweden AB *3
BT Industries Group *3*4 (65 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
Toyota Industry (Kunshan) Co., Ltd.
Toyota Industry Automotive Parts (Kunshan) Co., Ltd.
TD Automotive Compressor Kunshan Co., Ltd.
Toyota Material Handling (Shanghai) Co., Ltd.
Toyota Industries Trading & Logistics (China) Co., Ltd.
Kirloskar Toyoda Textile Machinery Private Limited
TD Deutsche Klimakompressor GmbH
Toyota Gabelstapler Deutschland GmbH
Toyota Industrial Equipment, S.A.
Toyota Material Handling Europe NV/SA
Toyota Industrial Equipment Europe, S.A.R.L.
Toyota Material Handling Belgium SA/NV
Toyota Carrelli Elevatori Italia S.r.l.
Toyota Truck Norge AS
Toyota Truckutleie Norge AS
Toyota Truck Danmark A/S
Toyota Truckudlejning Danmark A/S
Toyota Industrial Equipment (UK) Limited
Toyota Industrial Equipment (Northern) Limited
Toyota Textile Machinery Europe AG
Toyota Maquinas Texteis Brasil Ltda.
Toyota Industries Corporation Australia Group *7 (11 companies)
Toyota Industries Mercosur Ltda.

Location

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.
–
Kunshan, Jiangsu, China
Kunshan, Jiangsu, China
Kunshan, Jiangsu, China
Shanghai, China
Shanghai, China
Bangalore, Karnataka, India
Straßgräbchen, Germany
Duisburg, Germany
Ancenis, France
Brussels, Belgium
Ancenis, France/Brussels, Belgium
Temse, Belgium
Bologna, Italy
Trondheim, Norway
Trondheim, Norway
Vejle, Denmark
Vejle, Denmark
Castleford, West Yorkshire, U.K.
Castleford, West Yorkshire, U.K.
Zurich, SwitzerlandSão Paulo, Brazil
Sydney, Australia
São Paulo, Brazil

Capital(thousands in local currency)

SEK6,652,977–
SEK25,000
US$146,000
US$37,900
US$60,000
US$78,000
US$12,500
US$2,000
US$1,300
US$1,500
US$100–
US$23,000
US$12,500
US$6,600
US$1,000
US$1,000
Rs2,426,200
EUR20,452
EUR720EUR9,000
EUR 62
EUR75
EUR2,000
EUR3,249
NOK110,000
NOK100
DKK10,000
DKK500
GBP48
GBP2,043
SFR3,000
US$200–
R$26,510% ofVoting Rights

100.0%–
100.0%
60.0%
100.0%
100.0%
65.0%
100.0%
60.0%
100.0%
100.0%
100.0%
–
70.0%
60.0%
61.0%
70.0%
100.0%
95.1%
65.0%
100.0%
60.0%
100.0%
100.0%
100.0%
100.0%
100.0%
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
Wanbishi Archives Co., Ltd.
Outside JapanBT Industries Group *4 (16 companies)
Aichi Corporation Group (1 company)*1
Toyota Motor Industries Poland Sp.zo.o.

Location

Capital(thousands in local currency)% ofVoting Rights

Aichi
Tokyo
–
Tokyo

¥23,000,000¥2,979,675–¥4,000,000

50.0%
26.8%
–
43.1%

–
–
Jelcz-Laskowice, Poland––
PLN500,000

–
–
40.0%

*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 51.1% of voting rights 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 voting rights of Taikoh Transportation Co., Ltd.
*3 Toyota Industries Sweden AB is a holding company which holds a 100% share of BT Industries AB, Toyota Industries Finance International AB and Toyota Material Handling Europe NV/SA.
*4 BT Industries Group comprises BT Industries AB, its 64 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 10 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 voting rights of Toyota Industries Corporation Australia Pty Limited.
Note: ¥−Japanese yen; SEK−Swedish krona; US$−U.S. dollar; EUR−Euro; Rs−Indian rupee; NOK−Norwegian krone; DKK−Danish krone; GBP−British Pound; AUD−Australia dollar; R$−Brazil real; SFR−Swiss franc;
PLN−Poland zloty

Toyota Industries Corporation

Annual Report 200659

Locations of Major Subsidiaries Outside Japan(As of March 31, 2006)

12 14 28
18 19
20 21
17
23 24
1

9

25

5

15 16

2
8
7 6

3 4

26
22

13 16

30 31 33
27

32 35

34

10 11

29

Company Name

60

Company Name

North America

18

Toyota Truck Norge AS

1

Toyota Industries North America, Inc.

19

Toyota Truckutleie Norge AS

2

Toyota Industrial Equipment Mfg., Inc.

20

Toyota Truck Danmark A/S

3

Toyota Material Handling USA, Inc.

21

Toyota Truckudlejning Danmark A/S

4

Toyota-Lift of Los Angeles, Inc.

22

Toyota Carrelli Elevatori Italia S.r.l.

5Michigan Automotive Compressor, Inc.

23

Toyota Industrial Equipment (UK) Limited

6

TD Automotive Compressor Georgia, LLC

24Toyota Industrial Equipment (Northern) Limited

7

ACTIS Manufacturing, Ltd. LLC

25Toyota Material Handling Belgium SA/NV

8

Toyoda Textile Machinery, Inc.

26

TD Deutsche Klimakompressor GmbH

9

Toyota Industries Personnel Service of America, Inc.

27

Toyota Textile Machinery Europe AG

South America

28

Toyota Industries Finance International AB

10Toyota Industries Mercosur Ltda.

11

Toyota Maquinas Texteis Brasil Ltda.

29

Toyota Industries Corporation Australia Pty Limited

Europe30

Toyota Industry (Kunshan) Co., Ltd.

12

Toyota Industries Sweden AB

31

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

13

Toyota Material Handling Europe NV/SA

32

Toyota Material Handling (Shanghai) Co., Ltd.

33

TD Automatic Compressor Kunshan Co., Ltd.

34

Kirloskar Toyoda Textile Machinery Private Limited
Toyota Industries Trading & Logistics (China) Co., Ltd.

Asia & Oceania*1

14

BT Industries AB

15

Toyota Industrial Equipment, S.A.
*2

16

Toyota Industrial Equipment Europe, S.A.R.L.

35

17

Toyota Gabelstapler Deutschland GmbH

*1 BT Industries AB has 80 subsidiaries and affiliates (as of March 31, 2006).
*2 Toyota Industrial Equipment Europe’s sales and marketing office is located in Brussels, Belgium.

Toyota Industries Corporation

Annual Report 2006

Financial Section

62 Consolidated Eleven-Year Summary
64 Management’s Discussion and Analysis ofFinancial Condition and Results of Operations
74 Consolidated Balance Sheets
76 Consolidated Statements of Income
77 Consolidated Statements of Shareholders’ Equity
78 Consolidated Statements of Cash Flows
79 Notes to Consolidated Financial Statements
98 Report of Independent Auditors

Toyota Industries Corporation

Annual Report 2006

61

Consolidated Eleven-Year Summary
Toyota Industries Corporation and Consolidated Subsidiaries
Years ended March 31
The figures in this table are unaudited.
Millions of yen

2006

2005

2004

2003

¥1,505,956
64,040¥1,241,538¥1,164,379¥1,069,219

53,12052,63152,478For The YearNet sales
Operating income
Ordinary income

80,63570,91358,971

51,375

Net income

47,07743,35833,623

21,934¥ 620,946¥ 539,003¥ 497,357¥ 451,594

Depreciation and amortization

Overseas sales

87,28870,21365,35259,154

Capital expenditures

158,836

136,506

89,50987,559Research and development expenses

31,16630,051

29,562

29,705Per share of common stock (yen, U.S. dollars):
Net income — basic¥

146.16¥135.09¥108.04¥70.19

Net income — diluted

146.02135.03101.97

62.90

Shareholders’ equity

5,044.45

3,504.80

3,199.69

2,522.52

38.00

32.00

24.00

22.00

Total assets¥3,245,341¥2,326,824¥2,011,995¥1,650,391

Shareholders’ equity

1,611,227

1,115,747

1,016,764

738,868

Cash dividends
At Year-End

Common stock

80,46380,46380,46368,047

Number of shares outstanding (excluding treasury stock)319,320

318,237

317,666

292,777¥ 131,785¥ 100,095

92,406¥ 103,183(thousands)
Cash FlowsNet cash provided by operating activities
Net cash used in investing activities¥(205,014)(128,231)(92,668)(95,121)

Net cash provided by (used in) financing activities

85,17350,021(56,015)

57,776

Cash and cash equivalents at end of year

112,597

100,536

77,212

136,929

Return on equity (ROE) (%)

3.5

4.1

3.8

2.7

Return on assets (ROA) (%)

1.7

2.0

1.8

1.3

Return on sales (ROS) (%)

3.1

3.5

2.9

2.1

Debt/equity ratio (%)

29.4

34.4

31.6

55.6

Interest coverage (times)

7.8

7.7

7.4

6.7

¥ 150,674¥ 128,381¥ 113,676

32,97730,99027,431

Indices

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

95,47225,030Notes: 1. U.S. dollar amounts have been translated from yen, for convenience only, at the rate of ¥117.47 = US$1, the exchange rate on March 31, 2006.
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 of fixed assets have been applied. Details are described in Notes toConsolidated Financial Statements.
(2) Effective beginning the year ended March 31, 2003, the new accounting standards for net income per share have been applied.
(3) Effective beginning the year ended March 31, 2001, the new accounting standards for retirement benefits, financial instrument and foreign currency transactions havebeen 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 andlong-term liabilities.

62

Toyota Industries Corporation

Annual Report 2006

Thousands of
U.S. dollars

Millions of yen

2002

2001

2000

1999

1998

1997

1996

2006

¥ 980,163¥ 767,383¥625,773¥558,876¥572,698¥530,851¥476,084$12,819,920

46,33047,304

28,867

24,81432,72932,67519,926545,160

47,86644,525

27,162

23,172

33,202

31,157

21,560686,431

27,311

22,637

13,686

10,391

20,491

17,931

13,549400,758¥ 396,470¥ 298,794¥191,992¥178,737¥150,417¥116,738¥119,358$ 5,285,996

55,17446,45442,752

34,38027,95828,04327,240743,066

88,320127,273

44,74660,46862,00735,40829,6291,352,141

29,98526,19624,062

23,231

23,112

19,691

18,770265,310

¥

87.28

¥

75.90

¥

48.32

¥

36.30

¥

72.33

¥

63.55

¥

48.03

$

1.24

78.26

67.77

43.18

32.62

63.48

55.20

47.13

1.24

2,809.54

3,036.77

1,116.62

1,063.05

1,056.81

996.18947.04

42.94

19.00

17.00

16.00

16.00

16.00

16.00

13.00

0.32

¥1,770,401¥1,869,642¥685,914¥617,071¥593,004¥556,291¥454,503$27,626,977

878,812951,298

316,293

301,158

304,097

281,154

267,145

13,716,072
684,966¥¥

68,02268,01940,17840,17840,13331,45831,322

312,796313,260

283,260

283,296287,752

282,233

282,083

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

N/A$ 1,121,861(106,711)(155,871)(67,187)(96,222)(26,897)(74,968)

N/A(1,745,246)

1,225

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

69,081

N/A

725,062

71,12095,297

77,332

49,95574,30362,322

N/A

958,517

3.0

3.6

4.4

3.4

7.0

6.5

5.2

1.5

1.8

2.1

1.7

3.6

3.6

3.1

2.8

2.9

2.2

1.9

3.6

3.4

2.8

35.9

30.7

60.5

51.6

37.5

46.0

20.4

5.8

9.1

14.5

16.4

17.6

13.0

8.7

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

21,11813,132

12,797

11,23910,73810,806

81,07897,54023,056¥¥$ 1,282,659(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, generaland administrative expenses. Equity in earnings/losses of affiliates, which had been added to or deducted from income before income taxes until the previous year, hasbeen 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 2006

63

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 2006.
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 Corporationand its consolidated subsidiaries to differ materially from any projections or forward-looking statements. These risks anduncertainties include, but are not limited to, those listed under “Risk Information” and elsewhere in this annual report.
The fiscal year ended March 31, 2006 is referred to as fiscal 2006 and other fiscal years are referred to in acorresponding manner. All references to the “Company” herein are to Toyota Industries Corporation; and references
to “Toyota Industries,” “Toyota Industries Group” or the “Group” herein are to the Company and its 153 consolidated
subsidiaries.

Result of Operations
Operating Performance
In fiscal 2006, the Japanese economy was on a solid
recovery track. Private-sector capital investment
increased on the back of improved corporate earnings
while consumer spending rose as employment conditions
improved. The overall economic outlook was also positive
overseas, with an expanding U.S. economy and theEuropean economy maintaining their underlying strengths.
In Asia, the Chinese economy continued to grow at a
brisk pace.

Net Sales, Overseas Sales andOverseas Sales Ratio

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

(%)

1,600

80

100

10

1,400

70
80

8

1,200

60

1,000

50

60

6

800

40

600

30

40

4

400

20
20

2

200

10

0
FY

02

03

04

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

64

In this environment, Toyota Industries made efforts
to strengthen its corporate structure by attempting toensure customer trust through its dedication to quality,
the development of appealing new products, aggressive
sales promotions and execution of a Group-wide program
to reduce costs.
As a result, total consolidated net sales of Toyota
Industries amounted to ¥1,506.0 billion, an increase of¥264.4 billion (21.3%) over fiscal 2005. (For a breakdown ofoperating results by business segment, refer to Operating
Performance Highlights by Business Segment.)
At the profit level, ordinary income amounted to ¥80.6

Toyota Industries Corporation

Annual Report 2006

05

06

0

0
FY

0

02

03

04

05

Ordinary income (left)
Ordinary income ratio (right)

06

Operating Income andOperating Income Ratio

Net Sales ofAutomobile Segment

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

70

14

800

40

60

12

50

10

600

30

40

8
400

20

30

6

20

4

200

10

10

2

0

0

FY

02

03

04

05

06

0
FY 02

0

03 04 05 06

FY

02 03 04 05 06

Operating income (left)
Operating income ratio (right)

billion, an increase of ¥9.7 billion (13.7%) over fiscal 2005.
Despite the effects of a steep rise in crude oil and steel
prices, as well as increases in depreciation and personnel
expenses, this increase was achieved due largely to an
expansion in global sales and Group-wide cost-reduction
efforts. Net income amounted to ¥47.1 billion, an increaseof ¥3.7 billion (8.6%) over fiscal 2005.

Cost of Sales and Selling,
General and Administrative Expenses
Cost of sales for fiscal 2006 increased ¥234.7 billion (22.5%)
over fiscal 2005 to ¥1,276.5 billion. This increase reflected
increases in depreciation expenses, raw materials prices
and personnel expenses in addition to an increase in net
sales.
Selling, general and administrative expenses increased¥18.8 billion (12.8%) to ¥165.4 billion, due primarily toincreases in personnel, sales promotion and depreciation
expenses.

the same period as a result of increases in the Asian and
Latin American markets.
Net sales of the Automobile Segment of Toyota
Industries totaled ¥746.8 billion, an increase of ¥130.6
billion (21.2%) over fiscal 2005.
Within this segment, net sales of the Vehicle Businesstotaled ¥372.1 billion, an increase of ¥93.3 billion (33.4%)
over fiscal 2005. Both the Vitz (Yaris outside Japan) and theRAV4, which underwent a full model change, recordedrobust sales.
Net sales of the Engine Business totaled ¥132.4 billion,
an increase of ¥19.1 billion (16.8%) over fiscal 2005. We
proactively augmented our engine production capacity
to accommodate an increase in global production of

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

Operating Income
Operating income for fiscal 2006 increased ¥10.9 billion(20.6%) over fiscal 2005 to ¥64.0 billion, attributable mainly
to an increase in sales in Japan and overseas as well asGroup-wide cost-reduction activities.

15

10

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

5

0
FY

Automobile Segment
In the automobile industry as a whole, sales in Japan were
almost the same as in fiscal 2005. Overseas sales rose over

02

03

04

05

06

Japan
North America
EuropeAsia and Oceania

Toyota Industries Corporation

Annual Report 2006

65

Net Sales ofMaterials Handling
Equipment Segment

Operating Income ofMaterials Handling
Equipment Segment

Net Sales of
Logistics Segment

Operating Income of
Logistics Segment(¥ Billion)(¥ Billion)(¥ Billion)(¥ Billion)

600

40

80

3

35

500

30
400

60
2

25

300

20

40

15

200

1

10
100

5

0
FY

20

0

02 03 04 05 06

FY

0

0

02 03 04 05 06

FY

02 03 04 05 06

FY

02 03 04 05 06

The Logistics Segment was newly created in fiscal 2006.

vehicles by Toyota Motor Corporation (TMC). This measurein turn led to increases in sales of KD diesel engines thatstarted being produced in June 2005 for TMC’s Innovative
International Multi-Purpose Vehicle (IMV) Project and AD
diesel engines fitted in the RAV4 for Europe.
Net sales of the Car Air-Conditioning Compressor
Business totaled ¥216.0 billion, an increase of ¥18.0 billion(9.1%) over fiscal 2005. While sales in the domestic market
were approximately the same level as for fiscal 2005,
overseas sales increased. TD Automotive Compressor
Georgia, LLC (TACG), which was established in the U.S.
state of Georgia in July 2004, started production ofvariable-displacement compressors in December 2005.
TD Automotive Compressor Kunshan, Co., Ltd., which
was established in China in May 2005, also commenced
production of car air-conditioning compressors in April
2006.

position in the domestic lift truck industry. Globally, we solda record 112,000 TOYOTA-brand lift trucks, an increase of
11% over the same period in 2004.
The BT brand posted a strong increase in sales of reachtrucks, low-level order picking trucks and other warehousetrucks. Aichi Corporation, one of our subsidiaries and amajor manufacturer of aerial work platforms, recorded a
substantial increase in sales over fiscal 2005 on the back ofstrong replacement demand from electricity companies
and the telecommunications industry.
In July 2005, we established the Toyota Material
Handling Group to further strengthen cooperation andmaximize synergies between TOYOTA and BT brands.
Under this new framework, we aim to consolidate ourMaterials Handling Equipment Business in Europe, North
America and Japan to enhance our global market share.

Logistics Segment
Materials Handling Equipment Segment
In the materials handling equipment industry as awhole, unit sales increased substantially over fiscal 2005.
Demand was strong in the Japanese and overseas
markets amid a sustained global economic recovery.
Within this environment, Toyota Industries strengthened
its sales network globally, while promoting vigorous sales
promotion activities targeting major clients.
Net sales of the Materials Handling Equipment
Segment of Toyota Industries totaled ¥595.2 billion, an
increase of ¥91.2 billion (18.1%) over fiscal 2005. In Japan,
unit sales of TOYOTA-brand electric counterbalanced lift
trucks increased significantly in line with a heightened
environmental awareness among domestic companies.
As a result, we achieved a 43.4% share in the Japanese lift
truck market during January to December 2005, marking
the 40th consecutive year that we maintained a top

66

Toyota Industries Corporation

Annual Report 2006

Toyota Industries has entered into the logistics solutions
business to reduce customers’ logistics costs throughoptimized logistics processes. Net sales of the Logistics
Segment amounted to ¥65.1 billion in fiscal 2006, duelargely to the solid performance of the transportation
business and the contribution made by Asahi Securities
Co., Ltd., which is engaged in comprehensive cash
management outsourcing services such as cash collection
and delivery as well as cash proceeds management. In
January 2006, we acquired the capital stock of Wanbishi
Archives Co., Ltd. to further expand our business domain.

Textile Machinery Segment
In the textile machinery industry as a whole, the mainstay
Chinese market remained strong on the back of robust
demand for capital investment, despite the Chinese
government’s monetary-tightening measures and theNet Sales of
Textile Machinery
Segment

Operating Income (Loss)of Textile Machinery
Segment

Net Sales of
Others Segment(¥ Billion)(¥ Billion)(¥ Billion)(¥ Billion)

80

6

50

3

40

2

30

1

20

0

Operating Income of
Others Segment(Including Elimination ofIntersegment Transactions)

5
60
4
40

3
2

20
(1)

10

(2)

0
FY

1

02 03 04 05 06

FY

0

0

02 03 04 05 06

FY

02 03 04 05 06

FY

02 03 04 05 06

safeguards exercised by Europe and the United States tocontain Chinese garment imports.
Net sales of the Textile Machinery Segment of Toyota
Industries totaled ¥49.8 billion, an increase of ¥5.9 billion(13.4%) from fiscal 2005, due largely to an increase in salesof air-jet looms to China and India as well as strong salesof spinning machinery.

EuropeOthers Segment

OthersBecause we separated our logistics-related businesses
from the Others Segment into the Logistics Segment, netcomparisons with the previous year’s results cannot be
made. Net sales of the Others Segment for fiscal 2006
amounted to ¥49.0 billion.
TIBC Corporation (TIBC), a joint venture with IbidenCo., Ltd. that manufactures and sells ball grid array plastic
package substrates, underwent strong demand for plastic
package substrates for personal computers.

Net sales totaled ¥34.2 billion, an increase of ¥8.7 billion(33.8%), whereas operating income rose ¥0.8 billion(131.6%) to ¥1.5 billion.

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

Japan
Net sales increased ¥194.3 billion (23.8%) over fiscal 2005
to ¥1,009.4 billion, while operating income totaled ¥52.8
billion, up ¥9.2 billion (21.1%). These increases are due
mainly to a rise in unit sales of vehicles and lift trucks.

Net sales increased ¥27.6 billion (14.6%) to ¥216.2 billion,
due largely to an increase in unit sales of lift trucks. On
the other hand, operating income decreased ¥0.1 billion(3.0%) to ¥4.5 billion, mainly as a result of a decrease inearnings of car air-conditioning compressor manufacturingsubsidiaries.

Non-Operating Income and Expenses
Non-operating income increased ¥5.6 billion (14.6%) to¥43.9 billion in fiscal 2006, owing primarily to an increase individends income from TMC.
Non-operating expenses totaled ¥27.3 billion, an
increase of ¥6.8 billion (33.0%), due mainly to increases ininterest expenses and a loss on disposal of fixed assets.

Income before Income Taxes
Income before income taxes amounted to ¥80.6 billion,up ¥10.3 billion (14.6%), as a result of a ¥9.7 billion increasein ordinary income.

Income Taxes
Income taxes increased ¥6.1 billion (27.2%) to ¥28.3
billion, due largely to an increase in income taxes of theCompany and the BT Industries Group.

North America
Net sales totaled ¥246.1 billion, an increase of ¥33.9 billion(16.0%) over fiscal 2005. Operating income was ¥6.7 billion,up ¥0.4 billion (6.4%). Both increases were the result of anincrease in unit sales of lift trucks.

Minority Interest in Consolidated Subsidiaries
Minority interest in consolidated subsidiaries amounted
to ¥5.3 billion, up ¥0.5 billion (10.7%), as a result of strong
performance by subsidiaries.

Toyota Industries Corporation

Annual Report 2006

67

Net Income per ShareTotal Assets, Shareholders’ Equity
and Shareholders’ Equity Ratio(¥)(¥ Billion)

(%)

160

3,500

70

140

3,000

60

2,500

50

2,000

40

1,500

30

1,000

20

500

10

120
100
80
60
40
20
0
FY

0

02

03

04

05

06

0
FY

02

03

04

05

06

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

Basic
DilutedNet Income
Net income totaled ¥47.1 billion, an increase of ¥3.7 billion(8.6%) over fiscal 2005. Net income per share was ¥146.16,
compared with ¥135.09 in fiscal 2005. Diluted net income
per share increased from ¥135.03 to ¥146.02.

subsidiaries in Japan, while Toyota Industries North
America, Inc. (TINA) and Toyota Industries FinanceInternational AB (TIFI) centrally manage the funds ofsubsidiaries 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.

Liquidity and Capital Resources
Toyota Industries’ financial policy is to ensure sufficientfinancing and liquidity for its business activities and tomaintain strong balance sheets. Currently, funds forcapital investments and other long-term capital needs
are provided from retained earnings and long-term debt,
and working capital needs are met through short-termloans. Long-term debt financing is carried out 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 asof March 31, 2006.
Toyota Industries continues to maintain its solid
financial condition. Through the use of such current
assets as cash and cash equivalents and securities, aswell as free cash flows and funds procured from financial
institutions, Toyota Industries believes that it will be able toprovide sufficient funds for the working capital necessary
to expand existing businesses and develop new projects,
and for future investments.
Regarding fund management, the Company
undertakes integrated fund management of its

68

Toyota Industries Corporation

Annual Report 2006

Assets, Liabilities and Shareholders’ Equity
Total assets at the end of fiscal 2006 amounted to ¥3,245.3
billion, up ¥918.5 billion (39.5%) over the end of fiscal 2005,
due largely to an increase in investments and other assets.
Current assets increased ¥46.3 billion (10.0%) over theprevious fiscal year-end to ¥509.3 billion, reflecting theincreases in cash and cash equivalents as well as tradenotes and accounts receivable.
Property, plant and equipment increased ¥69.1 billion(15.1%) to ¥526.2 billion. Intangible assets decreased ¥7.0
billion (6.0%) to ¥110.0 billion, due mainly to amortizationof goodwill.
Investments and other assets amounted to ¥2,100.0
billion, an increase of ¥810.2 billion (62.8%) over fiscal 2005.
This increase was mainly the result of an increase in themarket prices of shares of TMC and other Toyota Group
companies held by Toyota Industries.
On the liabilities side, current liabilities increased¥24.6 billion (5.8%) over the previous fiscal year-end to¥446.1 billion as a result of an increase in trade notes andaccounts payable.
Long-term liabilities amounted to ¥1,138.7 billion, anCash Flows

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

150

160

100

140

50

120

0

100

(50)

80

(100)

60

(150)

40

(200)

20

(250)

0
FY

02

03

04

05

06

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

increase of ¥390.1 billion (52.1%) over the previous fiscal
year-end. This was due chiefly to issuance of bonds andan increase in deferred tax liabilities arising from a rise in
the market value of investment securities.
Minority interest in consolidated subsidiaries increased¥8.4 billion (20.5%) to ¥49.3 billion.
Shareholders’ equity increased ¥495.5 billion (44.4%)
to ¥1,611.2 billion. This increase primarily reflected anincrease in net unrealized gains on other securities
accompanying an increase in the market value ofinvestment securities. The ratio of shareholders’ equity tototal assets increased from 48.0% in the previous fiscal
year to 49.6%, while shareholders’ equity per share at
year-end rose from ¥3,504.80 to ¥5,044.45.

Cash Flows
Cash flows from operating activities resulted in an increasein cash of ¥131.8 billion in fiscal 2006, due mainly to income
before income taxes amounting to ¥80.6 billion. Net cash
provided by operating activities increased ¥31.7 billion(31.7%) from ¥100.1 billion in the previous fiscal year. Cashflows from investing activities resulted in a decrease in
cash of ¥205.0 billion, attributable primarily to payments forpurchases of property, plant and equipment amounting to¥161.5 billion, an increase of ¥51.4 billion (46.7%) from fiscal
2005. Net cash used in investing activities increased ¥76.8
billion (59.9%) from ¥128.2 billion in the previous fiscal year.
Cash flows from financing activities resulted in an increasein cash of ¥85.2 billion due mainly to proceeds fromissuance of bonds in an amount of ¥68.7 billion. Net cash

FY

02

03

04

05

06

Automobile
Materials Handling Equipment
Logistics
Textile Machinery
Othersprovided by financing activities increased ¥35.2 billion(70.3%) from ¥50.0 billion in the previous fiscal year.
After translation adjustments, cash and cash
equivalents as of March 31, 2006 stood at ¥112.6 billion, an
increase of ¥12.1 billion (12.0%) over fiscal 2005.

Investment in Property, Plant and Equipment
During fiscal 2006, Toyota Industries made a total
investment of ¥151.8 billion in property, plant andequipment (including ¥21.7 billion in vehicles andmaterials handling equipment for lease) in order tolaunch new products, streamline and upgrade production
equipment, and augment R&D facilities.
In the Automobile Segment, investment in property,
plant and equipment totaled ¥90.5 billion. A primary
breakdown of this amount included ¥61.5 billion for theCompany, ¥8.1 billion for TACG, ¥5.9 billion for TD Deutsche
Klimakompressor GmbH, ¥5.4 billion for Izumi Machine
Mfg. Co., Ltd., ¥3.6 billion for Tokyu Co., Ltd., ¥1.3 billion for
Toyota Industry Automotive Parts (Kunshan) Co., Ltd. and¥1.2 billion for Tokaiseiki Co., Ltd.
The Materials Handling Equipment Segment madean investment in property, plant and equipment in the
total amount of ¥38.2 billion. The primary breakdown
comprised ¥6.8 billion for the Company and ¥11.3 billion
for the BT Industries Group.
Investment in property, plant and equipment in the
Logistics Segment totaled ¥3.8 billion, including ¥23 million
for the Company and ¥3.1 billion for Taikoh Transportation
Co., Ltd.
The Textile Machinery Segment made an investment inproperty, plant and equipment in the total amount of ¥0.6

Toyota Industries Corporation

Annual Report 200669

billion, including ¥0.4 billion for the Company.
In the Others Segment, the investment in property,
plant and equipment totaled ¥18.7 billion, including ¥13.1
billion for the Company and ¥4.9 billion for TIBC.
Necessary funds were provided by a portion of bonds
as well as internal funds and bank loans.

Business Strategy
Since its establishment as a specialized textile machinery
manufacturer in 1926, Toyota Industries has diversified
the scope of its businesses and achieved growth tobecome a company with such wide-ranging businesses
as automobile-related, materials handling equipment,
logistics and textile machinery businesses.
At present, Toyota Industries is undertaking an array of
initiatives aimed at achieving further growth under a new
five-year Medium-Term Management Plan begun in fiscal
2007, ending March 2007.
With an emphasis on quality as the basis of its
management, Toyota Industries regards addressing
environmental and safety-related areas and enhancing
competitiveness as crucial management issues overthe medium to long term. Accordingly, we will promote
the development of cutting-edge technologies forproviding products that anticipate customer needs,
while strengthening our value chain. Additionally, we will
create a structure for reinforcing our global consolidated
management and utilizing our overall capabilities. As thebasis for this structure, Toyota Industries plans to bolster
its workplace strengths and cultivate global-oriented
personnel who will support future business growth.
By business, our Vehicle and Engine businesses will
strive for further growth in performance by contributing to
TMC’s global strategy.
The Materials Handling Equipment and Car
Air-Conditioning Compressor businesses are expected
to maintain their respective leading positions in world
markets while implementing global business strategies,
expanding market share and enhancing business results.
Meanwhile, the Textile Machinery Business aims tomaintain its No. 1 share of the global market for air-jet
looms and aims for stable business operations.
The Electronics Business, including power electronics
devices for hybrid vehicles, and the Logistics Solutions
Business will promote initiatives aimed at achieving growth
to become future pillars of our operations.
By undertaking these measures, we intend tostrengthen our competitiveness and raise corporate
value. We also anticipate the undertaking of corporate
activities with a consideration of the environment andworking to realize growth in harmony with society.

70

Toyota Industries Corporation

Annual Report 2006

Strategies and Outlook
Outlook for Results for Fiscal 2007
Toyota Industries expects the Japanese economy tocontinue along a steady path toward recovery thanks
to a favorable ripple effect on consumer spending
arising from strong corporate performance. However,uncertainties persist regarding exchange rate fluctuations
and a further increase in the prices of crude oil and otherraw materials.
For fiscal 2007, ending March 31, 2007, Toyota Industries
forecasts consolidated net sales of ¥1,670.0 billion,
ordinary income of ¥85.0 billion and net income of ¥49.0
billion. We are determined to heighten the comprehensive
capabilities of the Toyota Industries Group as a wholeby placing utmost emphasis on product quality, giving
considerations to the environment and safety, increasing
our competitive strengths, promoting technologicaladvancements and strengthening our value chain sothat we can develop and market leading-edge productsthat anticipate customer needs. We also plan to further
augment global consolidated management and build
a business structure that can take advantage of thecollective strength of Toyota Industries while enhancing
capabilities in the workplace and nurturing personnelof international caliber who will lead Toyota Industries
to the next level of growth. We will further strive topromote adherence to compliance as well as proactive
participation in environmental protection and social
contribution activities.
Our projections are based on an exchange rate of¥115.0 = US$1.

Dividend Policy
The Company regards the benefits of shareholders as
one of its most important management policies. Based on
this stance, we will strive to strengthen Toyota Industries’
corporate constitution, promote proactive businessdevelopment and raise its corporate value.
The Company’s dividend policy is to meetthe expectations of shareholders while giving fullconsideration to business performance, capital demand,the dividend payout ratio on a consolidated basis andother factors. Toyota Industries’ Ordinary General Meetingof Shareholders, held on June 22, 2006, approved ayear-end cash dividend of ¥20.0 per share. Including theinterim cash dividend of ¥18.0 per share, cash dividends
for the year totaled ¥38.0 per share, an increase of ¥6.0
per share over fiscal 2005.
The dividend payout ratio was 40.3%. On a
consolidated basis, it was 26.0%.

Toyota Industries intends to use retained earnings to
improve the competitiveness of its products, augment
production capacity in Japan and overseas, as well
as expand into new fields of business and strengthen
its corporate constitution in securing future profits for
its shareholders. It will also use retained earnings torepurchase treasury stock.

Risk Information
The following represent risks that could have a material
impact on Toyota Industries’ financial condition, businessresults and share prices. The risks mentioned in this annual
report represent only a portion of the risks that could havean impact on Toyota Industries’ financial condition andbusiness results, and do not necessarily cover all possible
risks. There is also a possibility that Toyota Industries could
be affected in the future by risks currently unknown or notconsidered noteworthy or significant.

successful, as forecasts of products supported by themarket may not always be accurate; and no assurance
that newly developed products and technologies 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 all patents submitted will necessarily be
registered as rights, and these patents could thus berejected by patent authorities or invalidated by third
parties. Also, a third party could circumvent a patent of
Toyota Industries and introduce a competing product into
the market. Moreover, Toyota Industries’ products utilize awide range of technologies. Therefore, Toyota Industries
could become a party subject to litigation involving theintellectual property rights of a third party.

Product Defects
Principal Customers
Toyota Industries’ automobile and engine products are
sold primarily to TMC. In fiscal 2006, net sales to TMC
accounted for 35.0% of consolidated net sales. Therefore,
TMC’s vehicle sales could have an impact on Toyota
Industries’ business results. As of March 31, 2006, TMC held
24.02% of the Company’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 sophisticatedand diversifying needs of the market and ensure thesatisfaction of its customers. R&D activities are focused
mainly on developing and upgrading products incurrent business fields and peripheral sectors. Toyota
Industries expects that revenues derived from thesefields will continue to account for a significant portionof total revenues and anticipates that future growth will
be contingent on the development and sales of 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 and business results.
Such a situation could result from risks that include noassurance Toyota Industries can allocate sufficient future
funds necessary for the development of appealing
new products; no assurance that product sales will be

Guided by the basic philosophy of “offering products
and services that are clean, safe and of high quality,”
Toyota Industries makes its utmost efforts to enhancequality. However, Toyota Industries cannot guarantee allits products will be defect-free and that product recalls
will not be made in 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 cost burdens and have asignificant negative impact on the evaluation of Toyota
Industries. It could also have an adverse effect on Toyota
Industries’ financial condition and business results due
to a decrease in sales, deterioration of profitability anddecrease in share prices of Toyota Industries.

Price Competition
Toyota Industries faces extremely harsh competitionin each of 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 products that are
unrivalled in terms of technology, quality and cost. Amidan environment characterized by intensifying pricecompetition, however, Toyota Industries may be unable
to maintain or increase market share against low-costcompetitors or to maintain profitability. This could have an
adverse impact on Toyota Industries’ financial condition
and business results.

Toyota Industries Corporation

Annual Report 2006

71

Reliance on Suppliers of Raw Materials andComponents
Toyota Industries’ products rely on various raw materials
and components from suppliers outside the Toyota
Industries Group. Toyota Industries has concluded basic
business contracts with these external suppliers andassumes it can carry out stable transactions for raw
materials and components. However, Toyota Industries has
no assurances against future shortages of raw materials
and components, which arise from a global shortagedue to tight supply or an unforeseen accident involving
a supplier. Such shortages could have a negative effecton Toyota Industries’ product production and cause anincrease in costs, which could have an adverse impact
on Toyota Industries’ financial condition and businessresults.

Environmental Regulations
In view of its social responsibilities as a company,
Toyota Industries strives to reduce any burden on theenvironment resulting from its production processes, aswell as strictly adheres to applicable environmental
laws and regulations. However, various environmental
regulations could also be revised and strengthenedin the future. Accordingly, any expenses necessary forcontinuous strict adherence to these environmental
regulations could result in increased business costs andhave an adverse impact on Toyota Industries’ financial
condition and business results.

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

Exchange Rate Fluctuations
Toyota Industries’ businesses encompass the production
and sales 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 portionof Toyota Industries’ sales) has an adverse impact on
Toyota Industries’ business, while a weakening of theyen has a favorable impact. An increase in the value ofcurrencies in countries or regions where Toyota Industries
carries out production could lead to an increase in local
production, procurement and distribution costs. Suchan increase in costs could reduce Toyota Industries’
price competitiveness. Additionally, because export
sales of several businesses are denominated mainly in72

Toyota Industries Corporation

Annual Report 2006

yen, exchange rate fluctuations could have an adverse
impact on Toyota Industries’ financial condition andbusiness results due to a change in market prices.

Share Price Fluctuations
Toyota Industries holds marketable securities, andtherefore bears the risk of price fluctuation of theseshares. Based on fair market value of these shares atthe end of the fiscal year under review, Toyota Industries
had unrealized gains. However, unrealized gains onmarketable securities could worsen depending on future
share price movements. Additionally, a fall in share prices
could reduce the value of pension assets, leading to anincrease in the pension shortfall.

Effects of Disasters, Power Blackouts andOther Incidents
Toyota Industries carries out regular checks andinspections of its production facilities to minimize theeffect of production breakdown. However, there is no
assurance Toyota Industries can completely preventor lessen the impact of man-made or 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 suchas the Tokai Earthquake, or an incident that affects otheroperations, 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.

Latent Risks Associated with
International Activities
Toyota Industries manufactures and sells products andprovides services in various countries. Such unforeseen
factors as social chaos, including political disruptions,terrorism and wars, as well as changes in economic
conditions, could have an adverse impact on Toyota
Industries’ financial condition and business results.

Retirement Benefit Liabilities
Toyota Industries’ employee retirement benefit expenses
and liabilities are calculated based on expected rates
of return on pension assets as well as assumptions uponmaking actuarial calculations that incorporate discountrates and other factors. Therefore, differences between
actual results and assumptions as well as changes in
the assumptions could have a significant impact onrecognized expenses and calculated liabilities in futureaccounting periods.

Significant Accounting Policies andEstimates

Toyota Industries’ Relationship to
Toyota Motor Corporation

Toyota Industries’ financial statements are prepared inconformity with accounting principles and practices
generally accepted in Japan. In preparing financial
statements, management must make estimates,
judgments and assumptions that affect reported amountsof assets and liabilities at fiscal year-end as well as
revenues and expenses during each fiscal year. Among
Toyota Industries’ significant accounting policies, thefollowing categories require a considerable degree of
judgment and estimation and are highly complex.

Due to historical reasons, Toyota Industries maintains close
relationships with TMC and Toyota Group companies interms of capital and business dealings.

Allowance for Doubtful Accounts
To prepare for the risk of receivables becoming
uncollectible, Toyota Industries estimates its allowancefor doubtful accounts by utilizing the percentage
of historical experiences in credit losses for ordinary
receivables and individually examining the feasibility ofcollection for receivables that seem to be uncollectible.
Evaluating the allowance for doubtful accounts involves
judgments made in accordance with the nature of thesituation, and this allowance represents an essential andcrucial estimate—including future estimates of cash flow
amounts and timing—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.

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 discountrates, amount of benefits, interest expenses, expected
rates of return on pension assets and mortality rates.
The difference in amounts between these assumptions
and actual results is calculated cumulatively andamortized over future accounting periods, and thus
becomes an expense and is recognized as a liability
in future accounting periods. Toyota Industries believes
its assumptions are reasonable. However, differences
between actual results or changes in the assumptions
could have an impact on retirement benefits andretirement benefit expenses and liabilities after employee
retirement.

Historical BackgroundIn 1933, Kiichiro Toyoda, the eldest son of founder Sakichi
Toyoda and then Managing Director of Toyota Industries(then Toyoda Automatic Loom Works, Ltd.), establishedthe Automobile Division within the Company based on his
resolve to manufacture Japanese-made automobiles. In
1937, the Automobile Division was spun off and became
an independent company, Toyota Motor Co., Ltd. (thepresent Toyota Motor Corporation).

Capital RelationshipIn light of this historical background, Toyota Industries and
TMC have maintained a close capital relationship. Asof March 31, 2006, Toyota Industries held 5.54% (200,025
thousand shares) of TMC’s total shares issued. Likewise,
as of the same date, TMC held 24.02% (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.

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 our other components and products directly or
indirectly to other Toyota Group companies. In fiscal 2006,
our net sales to TMC and DENSO accounted for 35.0%
and 7.6% of our consolidated net sales, respectively.

Contributions to the Toyota GroupAs a member of the Toyota Group, Toyota Industries aims
to contribute to strengthening the competitiveness of
TMC and other Toyota Group companies in such areas asquality, cost, delivery and technologies. Toyota Industries isconfident that raising the Toyota Group’s competitivenesswill lead to increases in our sales to and profits from the
Toyota Group, thereby contributing to raising Toyota
Industries’ corporate value.

Toyota Industries Corporation

Annual Report 2006

73

Consolidated Balance Sheets
Toyota Industries Corporation and Consolidated Subsidiaries
As of March 31, 2006 and 2005
Thousands of
U.S. dollars (Note 1)

Millions of yen

ASSETS

2006

2005

2006

Current assets:
Cash and cash equivalents¥ 112,597¥ 100,536

200,690

173,459

1,708,436

76

199

647

Inventories (Note 5)

104,534

94,024

889,878

Deferred tax assets (Note 15)

18,096

20,379154,048

Other current assets

75,93876,729646,446

Less — allowance for doubtful accounts(2,665)(2,352)(22,686)

509,266

462,974

4,335,286

Buildings and structures (Note 7)

155,169

132,419

1,320,925

Machinery, equipment and vehicles

240,467

185,425

2,047,050

Tools, furniture and fixtures

22,311

18,834

189,929

Land (Note 7)

87,21478,659742,436

Construction in progress

20,994

41,742

178,718

Total property, plant and equipment

526,155

457,079

4,479,058

Software

12,484

12,411

106,274

Goodwill

97,485

104,561

829,871

Total intangible assets

109,969

116,972

936,145

1,975,793

1,198,337

16,819,554

Investments in affiliated companies

60,97731,063519,086

Long-term loans

8,592

9,804

73,142Long-term prepaid expenses

11,35913,21996,697

Deferred tax assets (Note 15)

6,842

7,234

58,245

Other investments and other assets

36,62630,473

311,790

(238)

(331)

(2,026)2,099,951

1,289,799

17,876,488

2,736,075

1,863,850

23,291,691¥3,245,341¥2,326,824$27,626,977

Trade notes and accounts receivable (Note 7)
Short-term investments

Total current assets$

958,517

Fixed assets:
Property, plant and equipment:

Intangible assets:

Investments and other assets:
Investments in securities (Notes 4 and 7)

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.

74

Toyota Industries Corporation

Annual Report 2006

Thousands of
U.S. dollars (Note 1)

Millions of yen

LIABILITIES, MINORITY INTERESTS AND SHAREHOLDERS’ EQUITY

2006

2005

2006

Current liabilities:
Trade notes and accounts payable¥ 182,595 ¥ 160,231$ 1,554,397

Short-term bank loans (Note 7)

38,92959,945331,395

Commercial paper

29,680–252,660

Current portion of bonds (Note 7)

15,00020,300127,692

Other payables

30,62045,462

260,662

Accrued expenses

67,67459,357576,096

Accrued income taxes

13,625

15,297

115,987

Deposits received from employees

20,91520,055

178,046

Deferred tax liabilities (Note 15)

3,858

4,067

32,842Other current liabilities (Note 7)

43,22236,826367,941

Total current liabilities

446,118

421,540

3,797,718

Bonds (Note 6)

283,832

230,000

2,416,208

Long-term bank loans (Notes 6 and 7)

106,268

73,492904,640

Deferred tax liabilities (Note 15)

681,504

381,787

5,801,515

Allowance for retirement benefits (Note 14)

46,53544,463396,144

Other long-term liabilities

20,586

18,891

175,245

Total long-term liabilities

1,138,725

748,633

9,693,752

1,584,843

1,170,173

13,491,470

49,27140,904419,435

80,46380,463684,966

Capital surplus

105,665

105,601

899,506

Retained earnings

358,386

325,3313,050,873

Net unrealized gains on other securities

1,047,191

591,218

8,914,540

Foreign currency translation adjustments

33,88629,861

288,465

Treasury stock at cost

(14,364)(16,727)(122,278)

Total shareholders’ equity

1,611,227

1,115,747

13,716,072

Total liabilities, minority interests and shareholders’ equity¥3,245,341 ¥2,326,824$27,626,977

Long-term liabilities:

Total liabilities
Minority interests in consolidated subsidiaries
Shareholders’ equity (Note 10):
Common stock:
Authorized — 1,091,245,000 shares
Issued—325,840,640 shares as of March 31, 2006 and 2005

6,520,194 shares as of March 31, 2006
7,603,825 shares as of March 31, 2005

Toyota Industries Corporation

Annual Report 2006

75

Consolidated Statements of Income
Toyota Industries Corporation and Consolidated Subsidiaries
For the years ended March 31, 2006, 2005 and 2004
Thousands of
U.S. dollars (Note 1)

Millions of yen

2006

2005

2004

2006

Net sales¥1,505,956 ¥1,241,538 ¥1,164,379$12,819,920

Cost of sales (Note 11)

1,276,499

1,041,780

978,459

10,866,596

229,457

199,758

185,920

1,953,324

165,417

146,638

133,289

1,408,164

64,04053,12052,631

545,160

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

9,114

8,160

8,175

77,586

Dividends income

20,091

13,761

10,998171,031

Equity in net earnings of unconsolidated subsidiaries and

3,594

6,805

1,842

30,595

11,056

9,558

9,169

94,118Interest expenses(11,956)(9,735)(9,756)(101,779)

Other non-operating expenses (Note 12)(15,304)(10,756)(14,088)(130,280)

80,63570,91358,971

686,431

–

–

621

–

Impairment loss of fixed assets (Note 9)

–

(559)

–

–

Provision for retirement and severance benefits––(1,851)–

80,63570,35457,741

686,431

Income taxes — current (Note 15)30,44626,80923,967259,181

Income taxes — deferred (Note 15)(2,138)(4,557)(3,220)(18,200)

Minority interests in consolidated subsidiaries

5,250

4,744

3,371

44,69247,077 ¥43,358 ¥33,623affiliated companies
Other non-operating income (Note 12)
Non-operating expenses:

Ordinary income
Extraordinary gains:
Gain on transfer to a defined contribution pension plan
Extraordinary losses:

for directors and corporate auditors
Income before income taxes and minority interests

Net income¥

Yen400,758

U.S. dollars (Note 1)

Net income per share — basic (Note 20)¥146.16¥135.09¥108.04$1.24

Net income per share — diluted (Note 20)

146.02135.03101.97

1.24

Cash dividends per share

38.00

32.00

24.00

0.32

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

76$

Toyota Industries Corporation

Annual Report 2006

Consolidated Statements of Shareholders’ Equity
Toyota Industries Corporation and Consolidated Subsidiaries
For the years ended March 31, 2006, 2005 and 2004
Millions of yen

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
Effect of adoption of a new accounting standard
for retirement benefits by foreign subsidiaries
Balance at March 31, 2005
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
Decrease due to increase in affiliates accounted
for under the equity method
Balance at March 31, 2006

Numberof shares(Thousands)

Commonstock

CapitalsurplusRetainedearnings

Net unrealized
gains onother securities

Foreign currencytranslation
adjustments

Treasurystock
at cost313,324–––––
12,517–––
325,841
–
–
–
–
–
–
–
–

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

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

¥269,381
33,623(7,417)
(290)
–
–
–
–
–
(625)
294,672
43,358(7,949)
(331)
–
–
–
–
(4,419)¥ 331,668–––
202,411–––––534,079–––
57,139––––¥16,890
–
–
–
–
2,893
–
–
–
–
19,783––––
10,078–––¥(36,483)–––––
35,601(17,094)––(17,976)
–
–
–
–
–
(53)
1,302
–

325,841
–
–
–
–
–
–
–
–

80,463
–
–
–
–
–
–
–
–

105,601
–
–
–
–
–
–
64
–

325,33147,077(11,794)
(406)
–
–
–
–
(1,822)591,218–––455,973––––

29,861
–
–
–
–
4,025
–
–
–

(16,727)
–
–
–
–
–
(52)
2,415
–

325,841¥80,463¥105,665¥358,386¥1,047,191¥33,886¥(14,364)

Net unrealized
gains on othersecurities

Foreign currencytranslation
adjustments

Treasurystock
at costThousands of U.S. dollars (Note 1)
Commonstock

Balance at March 31, 2005
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
Decrease due to increase in affiliates accounted
for under the equity method
Balance at March 31, 2006

CapitalsurplusRetainedearnings$684,966
–
–
–
–
–
–
–
–

$898,961
–
–
–
–
–
–
545
–

$2,769,482 $5,032,928
400,758–(100,400)–(3,456)–– 3,881,612
–
–
–
–
–
–
(15,511)–$254,201––––
34,264–––$(142,394)
–
–
–
–
–
(443)
20,559–$684,966$899,506$3,050,873 $8,914,540$288,465$(122,278)

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

Toyota Industries Corporation

Annual Report 2006

77

Consolidated Statements of Cash Flows
Toyota Industries Corporation and Consolidated Subsidiaries
For the years ended March 31, 2006, 2005 and 2004
Thousands of
U.S. dollars (Note 1)

Millions of yen

Cash flows from operating activities:
Income before income taxes and minority interests
Adjustments to reconcile income before income taxes andminority interests to net cash provided by operating activities:
Depreciation and amortization
Impairment loss of fixed assets
Increase (decrease) in allowance for doubtful accounts
Interest and dividends income
Interest expenses
Equity in net earnings of affiliated companies(Increase) decrease in receivables(Increase) decrease in inventories
Increase (decrease) 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
Payments for acquisition of subsidiaries’ stock resulting inchange in scope of consolidation
Proceeds from 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:
Increase (decrease) in short-term loans
Increase (decrease) 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.

78

Toyota Industries Corporation

Annual Report 2006

2006

2005

2004

2006

¥ 80,635¥ 70,354¥ 57,741$ 686,431

87,288–101(29,205)
11,956(3,594)(27,435)(9,228)21,377
12,161
144,056
29,236(11,009)(30,498)
131,785

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)
92,406743,066–
860(248,617)
101,779(30,595)(233,549)(78,556)
181,979
103,524
1,226,322
248,881(93,718)(259,624)
1,121,861–
1(161,505)
8,415(47,727)
2,046
–

–
–
(110,112)
10,043(9,563)3,300(16,943)

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

–
9
(1,374,862)
71,635(406,291)
17,417
–

–

–

1,216

–

(2,256)
3,264–(7,252)(205,014)(2,371)
2,784–(5,369)(128,231)(4,978)5,448(961)(10,413)(92,668)(19,205)
27,786–(61,735)(1,745,246)(22,902)
29,52038,824(3,366)
68,730(20,300)––(52)(11,785)
(854)
7,358
85,173
117
12,061
100,536–¥112,597(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(194,960)
251,298
330,501(28,654)585,086(172,810)––(443)(100,323)(7,270)62,637725,062996
102,673855,844–$ 958,517

Notes to Consolidated Financial Statements
1. Basis of presenting consolidated financial statements
The accompanying consolidated financial statements
have been prepared based on the accounts maintainedby Toyota Industries Corporation (the “Company”),
and its consolidated subsidiaries (together, hereinafterreferred to as “Toyota Industries”) in accordance with theprovisions set forth in the Commercial Code of Japanand the Securities and Exchange Law, and in conformity
with accounting principles generally accepted inJapan, which are different in certain respects as to theapplication and disclosure requirements of International
Financial Reporting Standards.
Certain items presented in the consolidated financial

statements submitted to the Director of the Kanto Finance
Bureau in Japan have been reclassified in these accounts
for the convenience of readers outside Japan.
Amounts in U.S. dollars are included solely for theconvenience of readers outside Japan. The rate of¥117.47=US$1, the rate of exchange prevailing at March
31, 2006, 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, equivalent amounts in U.S. dollars at this rate or any
other rates.

2. Summary of significant accounting policies(1) Consolidation
The consolidated financial statements include theaccounts of the Company and its 153 subsidiaries (43domestic subsidiaries and 110 overseas subsidiaries, which
are listed on pages 58 and 59) in 2006, 146 subsidiaries(43 domestic subsidiaries and 103 overseas subsidiaries) in2005 and 140 subsidiaries (42 domestic subsidiaries and 98
overseas subsidiaries) in 2004.
For the year ended March 31, 2006, nine subsidiaries
were newly added to the scope of consolidation andtwo companies were excluded from the scope of
consolidation because of mergers and acquisitions.
For the year ended March 31, 2005, 11 subsidiaries
were newly added to the scope of consolidationand six companies were excluded from the scope of
consolidation because of mergers and acquisitions.
For the year ended March 31, 2004, 22 subsidiaries
were newly added to the scope of consolidation. One
unconsolidated subsidiary was excluded from the scopeof consolidation due to temporary investments.
The fiscal years of certain subsidiaries are different fromthe fiscal year of the Company. Since the difference is
not more than three months, the Company is using thosesubsidiaries’ statements for those fiscal years, making
adjustments for significant transactions that materiallyaffect the financial position or results of operations.
All significant intercompany transactions, balances
and unrealized 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 ofacquisition of control.

(2) Investments in unconsolidated subsidiaries
and affiliates
Investments in 22 major affiliates in 2006, 20 major affiliates
in 2005 and one unconsolidated subsidiary and 19 majoraffiliates in 2004 are accounted for by the equity methodof accounting. Investments in unconsolidated subsidiaries
and affiliates not accounted for by 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 are listed on page 59.

(3) Translation of foreign currencies
Foreign currency denominated receivables and payables
are translated into Japanese yen at the year-end
exchange rates and the resulting transaction gains orlosses are included in income statements.
All asset and liability accounts of foreign subsidiaries
and affiliates 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 threemonths or less, that are readily convertible to known
amounts of cash and are so near maturity that theypresent insignificant risk of changes in value because ofchanges in interest rates.

Toyota Industries Corporation

Annual Report 2006

79

(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 inunconsolidated subsidiaries and affiliates. Toyota Industries
did not have trading securities or held-to-maturity
securities as of March 31, 2006 and 2005.
Other securities with readily determinable fair values
are stated at fair value based on market prices at theend 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 suchsecurities is determined by the moving-average method.
Other securities without readily determinable fair values
are stated at cost, as determined by the moving-averagemethod.
Investments in unconsolidated subsidiaries and affiliates
are accounted for by the equity method (see Note 2 (2)).

Calculation of the impairment of fixed assets is based onreasonable and supportable assumptions and projectionof the grouping of assets and recoverable value, withdue consideration for the specific conditions of eachcompany.
The recoverable amount of assets is calculated basedon net selling price. The change in accounting policy is
described in Note 3.

(10) Allowances for doubtful accounts
Toyota Industries adopted the policy of providing anallowance for doubtful accounts in an amount sufficient
to cover possible losses on collection by estimating
individually uncollectible amounts and applying to theremaining accounts a percentage determined by certain
factors such as historical collection experiences.

(11) Deferred charges(6) Inventories

Stock issuance costs and bond issuance costs are
expensed as incurred.

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

(12) Allowance for retirement benefits(7) Property, plant and equipment, anddepreciation
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 and Japanese subsidiaries and by thestraight-line method for foreign subsidiaries.
Significant renewals and additions are capitalized atcost. Repairs and maintenance are charged to income
as incurred.
Accumulated depreciation as of March 31, 2006 and2005 was ¥585,996 million (US$4,988,474 thousand) and¥541,383 million, respectively.

80(9) Impairment of fixed assets

Toyota Industries accrues an amount which is considered
to be incurred in the period based on the estimatedprojected benefit obligations and estimated pension
assets at the end of the year. To provide for the retirement
benefits for directors and corporate auditors, an amountwhich is calculated at the end of the year as required byan internal policy describing the retirement benefits for
directors and corporate auditors is accrued.

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

(8) Intangible assets and amortization(14) Consumption tax

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 lessthan 20 years on a straight-line basis, while immaterial
goodwill is charged to income as incurred.
Accumulated amortization of intangibles and goodwill
as of March 31, 2006 and 2005 was ¥53,553 million(US$455,887 thousand) and ¥42,637 million, respectively.

The consumption tax under the Japanese Consumption
Tax Law withheld by Toyota Industries on sales ofgoods is not included in the amount of net sales in theaccompanying consolidated statements of income, andthe consumption tax paid by Toyota Industries under thelaw on purchases of goods and services, and expenses is
not included in the related amount.

Toyota Industries Corporation

Annual Report 2006

(15) Hedge accounting(16) Appropriation of retained earnings(a) Method of hedge accounting
Mainly the deferral method of hedge accounting isapplied. In the case 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, andforecasted transactions)(c) Hedging policy
Hedging transactions are executed and controlled basedon Toyota Industries’ internal policy, 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.
(d) Method used to measure hedge effectivenessHedge effectiveness is measured by comparing
accumulated changes 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 isconsidered that there are high correlations between
them.
(e) Others
Due to the fact that counterparties to Toyota Industries
represent major financial institutions which have highcreditworthiness, Toyota Industries believes that the overall
credit risk related to its financial instruments is insignificant.

In the accompanying consolidated statements ofshareholders’ equity, the approved amount during therelevant fiscal year is reflected for the appropriation ofretained earnings of consolidated subsidiaries. In Japan,
the payment of bonuses to directors and corporate
auditors is made out of retained earnings through anappropriation, instead of being charged to income forthe year.

(17) Income taxes
The provision for income taxes is computed basedon the pretax income included in the consolidated
statements of income. The asset and liability approachis used to recognize deferred tax liabilities and assets forthe 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.

(18) Net income per share
The computation of basic net income per share is basedon the weighted-average number of outstanding sharesof common stock. The calculation of diluted net income
per share is similar to the calculation of basic net income
per share, except that the weighted-average number ofshares outstanding includes the additional dilution frompotential common stock equivalents such as convertible
bonds. Cash dividends per share shown in the statements
of income are the amounts applicable to the respective
years.

3. Change in accounting policy and adoption of new accounting standards
For the year ended March 31, 2005
Impairment of fixed assets
Toyota Industries has applied Accounting Standards for
Impairment of Fixed Assets (Opinions Concerning
Establishment of Accounting Standards for Impairmentof Fixed Assets) issued on August 9, 2002 by the BusinessAccounting Council in Japan, and the application
guideline for Accounting Standards for Impairmentof 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 are effective for fiscal years beginning on andafter April 1, 2005, was permitted for the consolidated
accounting for the fiscal year ended March 31, 2005.

Toyota Industries Corporation

Annual Report 2006

81

4. Marketable securities:(1) As of and for the year ended March 31, 2006:(a) Other securities with readily determinable fair value as of March 31, 2006 are as follows:
Millions of yen

Acquisition
cost

Carrying
amountThousands of U.S. dollars

Acquisition
cost

Difference

Carrying
amountDifference

Securities with carrying amountexceeding acquisition cost:
Stocks¥212,297 ¥1,956,654 ¥1,744,357$1,807,245 $16,656,627 $14,849,382

Subtotal

212,297

1,956,654

1,744,357

1,807,245 16,656,627 14,849,382

Stocks

1,808

1,339

(469)

15,391

11,399(3,992)

Subtotal

1,808

1,339

(469)

15,391

11,399(3,992)

Securities with carrying amountnot exceeding acquisition cost:

Total¥214,105 ¥1,957,993 ¥1,743,888$1,822,636 $16,668,026 $14,845,390

In this year, Toyota Industries recorded ¥1,487 million (US$12,659 thousand) of impairment on an equity security included insecurities with carrying amount not exceeding the cost lines.
(b) Other securities sold during the year ended March 31, 2006 are as follows:
Millions of yen

Proceeds

Realized gains¥2,517¥1,280Thousands of U.S. dollars

Realized losses¥2

Proceeds

Realized gains$21,427$10,896

Realized losses$17(c) The carrying amount of securities (excluding held-to-maturity bonds which are included within securities with fairvalue) without readily determinable fair values as of March 31, 2006 are as follows:
Carrying amountMillions of yen

Thousands of
U.S. dollars

Domestic unlisted stocks excluding over-the-counter stocks¥17,800$151,528

Money management funds

45,003

383,102

Other securities(d) Redemption schedule of securities which have maturities within other securities as of March 31, 2006 is as follows:
Millions of yen

Within1 yearOver 1 year
within5 years

Thousands of U.S. dollars

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

Over 5 years
within
10 yearsOver
10 years

Bonds
Government bonds
Total

82

Toyota Industries Corporation

Annual Report 2006

¥0

¥–

¥–

¥–

$0

$–

$–

$–

¥0

¥–

¥–

¥–

$0

$–

$–

$–

(2) 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

Carrying
amountDifference

Stocks¥191,932¥1,177,188¥985,256

Subtotal

191,932

1,177,188985,256

3,348

2,911

(437)

Government and municipal bonds, etc.

0

0

0

Other bonds

1

1

0

Securities with carrying amount exceeding acquisition cost:

Securities with carrying amount not exceeding acquisition cost:
Stocks
Bonds

Subtotal
Total

3,349

2,912

(437)

¥195,281¥1,180,100¥984,819

In this year, Toyota Industries recorded ¥35 million of impairment on an equity security included in securities with carrying
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

Realized losses¥3,189¥1,789¥32(c) The carrying amount of securities (excluding held-to-maturity bonds which are included within securities with fairvalue) without readily determinable fair values as of March 31, 2005 are as follows:
Carrying amountMillions of yen

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

Money management funds

40,006(d) Redemption schedule of securities which have maturities within other securities as of March 31, 2005 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

1

–

–

–

¥1

¥–

¥0

¥–

Total

Toyota Industries Corporation

Annual Report 200683

5. Inventories
Inventories as of March 31, 2006 and 2005 consist of the following:Thousands of
U.S. dollars

Millions of yen

2006

2005

2006

Finished goods¥ 40,703¥35,616$346,497

Raw materials

16,097

15,331137,031Work in process

37,08934,587315,731

Supplies

10,645

8,490

90,619¥104,534¥94,024$889,878

Total

6. Long-term debt
(1) Long-term debt as of March 31, 2006 and 2005 consists of the following:Thousands of
U.S. dollars

Millions of yen

2006

2005

2006

2.70% bonds due 2008 without collateral¥ 30,000¥ 30,000$ 255,384

2.15% bonds due 2008 without collateral

20,00020,000170,256

1.50% bonds due 2006 without collateral

15,00015,000127,693

1.94% bonds due 2009 without collateral

15,00015,000127,693

The Company:

1.25% bonds due 2005 without collateral–

20,000

–1.91% bonds due 2010 without collateral

20,00020,000170,256

0.41% bonds due 2007 without collateral

30,00030,000255,384

1.13% bonds due 2012 without collateral

50,00050,000425,641

1.03% bonds due 2012 without collateral

30,00030,000255,384

1.46% bonds due 2014 without collateral

20,00020,000170,256

1.01% bonds due 2010 without collateral

20,000–170,256

1.66% bonds due 2015 without collateral

30,000–255,384–

300–

Consolidated subsidiaries:
1.80% bonds due 2005

18,832–

160,314Long-term bank loans

0.49-0.87% medium-term notes due 2009-2010

109,268

77,522

930,178

Less: current portion of long-term debt

(18,000)(24,330)(153,231)¥390,100¥303,492$3,320,848

Total(2) Annual maturities of long-term debt as of March 31, 2006 are as follows:Year ending March 31

Millions of yen

2007

84

Thousands of
U.S. dollars¥ 18,000 $ 153,231

2008

66,827568,8862009

22,118188,2862010

32,291

274,887

2011

51,188435,754

2012 and thereafter

217,676

1,853,035

Total¥408,100 $3,474,079

Toyota Industries Corporation

Annual Report 2006

7. Assets pledged as collateral(1) Assets pledged as collateral as of March 31, 2006 and 2005 are as follows:
Thousands of
U.S. dollars

Millions of yen

Investments in securities

2006

2005

2006

¥57,035¥33,345$485,528

Buildings and structures

1,798

3,155

15,306

Land

2,953

3,798

25,138

245

1,033

2,086

Trade notes and accounts receivable
Other

–

41

–

Total

¥62,031¥41,372$528,058(2) Secured liabilities as of March 31, 2006 and 2005 are as follows:
Thousands of
U.S. dollars

Millions of yen

2006

2005

2006

Other current liabilities¥20,806¥19,966$177,118

Short-term bank loans

363

3,158

3,090

Current portion of bonds

–

300

–

Long-term bank loans

156

2,685

1,328

¥21,325¥26,109$181,536

Total

8. Contingent liabilities
Toyota Industries is contingently liable for guarantees as of March 31, 2006 and 2005 as follows:
Thousands of
U.S. dollars

Millions of yen

2006

2005

2006

Guarantees given by the Company¥1,000¥25,401$ 8,513

Guarantees given by consolidated subsidiaries

1,180

700

10,045

Guarantee forwards given by the Company

544

2,954

4,631

9. Impairment loss of fixed assets
Millions of yen

RegionItems

Details of Fixed assets

Hyogo

One idle property

Building

¥ 28

Land

338

2005

Tochigi

One idle property

Land

86

NaganoOne idle property

Land

59

KagawaOne idle property

Land

48

Total

¥559

Toyota Industries Corporation

Annual Report 200685

10. Shareholders’ equity
Under the Japanese Commercial Code, amounts equal
to at 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 reduce a deficit or may be transferred tocommon stock by taking appropriate corporate action.
In consolidation, the legal reserves of the Company andits domestic subsidiaries are accounted for as retained
earnings.
A year-end cash dividend is approved at the Ordinary
General Meeting of Shareholders of the Company held

after the close of the fiscal year to which the dividend isapplicable. In addition, interim cash dividends may be
paid upon resolution of the Board of Directors, subject tolimitations imposed by the Japanese Commercial Code.
Proceeds from the conversion of convertible bonds
have been accounted for in approximately equalamounts as common stock and capital surplus. At least
50% of the proceeds have been accounted for ascommon stock, in accordance with the provisions of theJapanese Commercial Code.

11. Research and development expenses
Research and development expenses, which areincluded in selling, general and administrative expenses
and manufacturing costs, amounted to ¥31,166 million(US$265,310 thousand), ¥30,051 million and ¥29,562 million
for the years ended March 31, 2006, 2005 and 2004,
respectively.

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

Millions of yen

2006

2005

2004

2006

¥ 1,280¥ 1,659¥819$ 10,896

Rental income of fixed assets

2,110

1,932

1,833

17,962

Exchange gain

1,197

500

836

10,190

838

957

808

7,134

Other non-operating income:Gain on sales of marketable securities

Gain on sales of fixed assets
Sundries
Total

5,631

4,510

4,873

47,936¥11,056¥ 9,558¥ 9,169$ 94,118¥ 1,469¥¥251$ 12,505

Other non-operating expenses:
Loss on impairment of securities
Depreciation

1,716

2,381

2,342

14,608Loss on disposal of fixed assets

4,488

2,381

3,523

38,206

Exchange loss

1,745

610

1,283

14,855

Bond issuance costs
Sundries
Total

86

56

Toyota Industries Corporation

Annual Report 2006

201

205

502

1,711

5,685

5,123

6,187

48,395¥15,304¥10,756¥14,088$130,280

13. Derivative instruments(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 andpayables 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 offluctuations in interest rates and in foreign currency

exchange rates. 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.
(c) Controls in place over transactions handling derivative
instruments:
Hedging transactions are executed and controlled
based on Toyota Industries’ internal policy andToyota Industries’ hedging activities are reported
periodically to a director responsible for accounting.

(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 maintaintax qualified pension plans and lump-sum indemnities
plans, both of which are non-contributory 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, 2006, its tax qualified pension plan
covers 50% of total plans. Also, the Company establishedan employee retirement benefit trust.

(2) Components of allowance for retirement benefits as of March 31, 2006 and 2005 are as follows:
Thousands of
U.S. dollars

Millions of yen

Benefit obligation

2006

2005

2006

¥138,348¥124,570$1,177,730

Plan assets(86,362)(77,121)(735,183)

Unfunded benefit obligation

51,98647,449442,547

Unrecognized actuarial gains or losses(16,286)(14,564)(138,640)

(615)

(350)

(5,235)

Net amount recognized on the balance sheets

Unrecognized loss in prior service obligation

35,08532,535

298,672

Prepaid pension expenses(6,007)(6,694)(51,137)¥ 41,092¥ 39,229$ 349,809

Allowance for retirement benefits

Certain subsidiaries use the simplified method to determine benefit obligations. Prepaid pension expenses are included
in other investments and other assets. Allowance for retirement benefits on the balance sheets includes ¥5,443 million(US$46,335 thousand) and ¥5,234 million of allowance for retirement and severance benefits for directors and corporate
auditors as of March 31, 2006 and 2005, respectively.

Toyota Industries Corporation

Annual Report 200687

(3) Components of retirement benefit expenses for the years ended March 31, 2006, 2005 and 2004 are as follows:
Thousands of
U.S. dollars

Millions of yen

2006

2005

2004

2006

Service cost

¥ 7,921¥ 7,446¥ 7,424$ 67,430Interest cost

4,079

3,987

4,559

34,724

Expected return on plan assets(2,436)(2,196)(822)(20,737)

Amortization of prior service obligation

95

85

79

809

Amortization of unrecognized actuarial gains or losses

779

1,030

1,854

6,631

¥10,438¥10,352¥13,094$ 88,857

Retirement benefit expenses

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, 2006, 2005 and 2004 are as follows:
2006

2005

2004

Discount rate

2.00%

2.00%

2.00%

Expected return on plan assets

3.00%

3.00%

3.00%

6–11 years

6–11 years

Method of attribution of estimated retirement benefits
to periods of employee service: Straight-line method

Amortization period of prior service obligation

6–11 years — Straight-line method over
the remaining service
period of employees
starting from the year
incurred

Amortization 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 subsidiaryare ¥11,214 million (US$95,463 thousand) and ¥8,226 million as of March 31, 2006 and 2005, respectively.

88

Toyota Industries Corporation

Annual Report 2006

15. Income taxes(1) The significant components of deferred tax assets and liabilities as of March 31, 2006 and 2005 are as follows:
Thousands of
U.S. dollars

Millions of yen

2006

2005

2006

¥ 15,561¥ 12,842

Trade receivables

2,867

5,270

24,406

Accrued expenses

6,739

6,049

57,368Net operating loss carry-forwards for tax purposes

2,012

1,979

17,128Depreciation

4,538

5,222

38,631

Securities

2,529

2,195

21,529Deferred tax assets:
Allowance for retirement benefits$

132,468

Enterprise tax payable

1,045

1,059

8,896

Other

14,11915,962

120,192

Subtotal

49,41050,578420,618

Less — valuation allowance(2,705)(2,689)(23,027)

46,70547,889397,591

Total deferred tax assets
Deferred tax liabilities:
Other securities

695,355

392,618

5,919,426

Depreciation

6,004

5,355

51,111

Land

1,112

1,110

9,466

520

537

4,426

Reserve for advanced depreciation
Reserve for special depreciation
Other

678

529

5,772

3,460

5,981

29,454

Total deferred tax liabilities

707,129

406,130

6,019,655

Net deferred tax liabilities¥(660,424)¥(358,241)$(5,622,064)

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
Investments and other assets — deferred tax assets

2006

2005

2006

¥ 18,096¥ 20,379

6,842

7,234

$

154,048
58,245Current liabilities — deferred tax liabilities(3,858)(4,067)(32,842)

Long-term liabilities — deferred tax liabilities(681,504)(381,787)(5,801,515)

Net deferred tax liabilities¥(660,424)¥(358,241)$(5,622,064)(2) Reconciliations of differences between the statutory rate of income taxes and the effective rate of income taxes forthe years ended March 31, 2006, 2005 and 2004 are as follows:
2006

Statutory rate of income taxes

2005

2004

39.9%

39.9%

41.2%

(5.0)

(3.8)

(3.4)

–

(3.8)

–

Addition (reduction) in taxes resulting from:
Dividends income and others permanently not recognized as taxable income
Equity in earnings of affiliates
Other
Effective rate of income taxes

0.2

(0.7)

(1.9)

35.1%

31.6%

35.9%

Toyota Industries Corporation

Annual Report 200689

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 not reflected in the accompanying consolidated balance sheets under finance leases as of March 31, 2006 and2005, is as follows:
Thousands of
U.S. dollars

Millions of yen

2006

2005

2006

¥14,894¥13,791$126,790

Machinery and equipment:
Acquisition cost equivalents
Accumulated depreciation equivalents

7,838

7,050

66,724

7,056

6,741

60,066

Acquisition cost equivalents

13,603

12,146

115,800

Accumulated depreciation equivalents

6,866

6,232

58,449

6,737

5,914

57,351

123

128

1,047

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

Tools, furniture and fixtures net balance equivalents
Software:Acquisition cost equivalents
Accumulated depreciation equivalents

73

59

621

50

69

426

¥13,843¥12,724$117,843

Software net balance equivalents
Total net leased properties

Acquisition cost equivalents include the imputed interest expense portion because the percentage which is computedby 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, 2006 and 2005 is as follows:
Thousands of
U.S. dollars

Millions of yen

2006

2005

2006

Due within 1 year

¥ 4,254¥ 4,061$ 36,214

Due after 1 year

9,589

8,663

81,629¥13,843¥12,724$117,843

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 totalbalance of property, plant and equipment at year-end is immaterial.
(c) Total lease payments for the years ended March 31, 2006, 2005 and 2004 are as follows:
Millions of yen

Thousands of
U.S. dollars

2006¥5,236$44,573

2005

4,927

–

2004

3,614

–

Pro forma depreciation expenses, which are not reflected in the accompanying consolidated statements of income, arecomputed mainly by the straight-line method, which assumes zero residual value and leasing term to be useful lives forthe years ended 2006, 2005 and 2004, and are equivalent to the amount of total lease payments of the above.

90

Toyota Industries Corporation

Annual Report 2006

(2) Operating leases (as a lessee)
Pro forma future lease payments under operating leases as of March 31, 2006 and 2005 are as follows:
Millions of yen

Due within 1 year

Thousands of U.S. dollars

2006

2005

2006

¥ 4,367¥ 4,165$ 37,175

Due after 1 year

12,273

17,392

104,478

Total¥16,640¥21,557$141,653(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, 2006 and 2005 is as follows:
Millions of yen

Thousands of U.S. dollars

2006

2005

2006

¥7,356¥8,928$62,620

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

4,030

5,221

34,307¥3,326¥3,707$28,313(b) Pro forma information regarding future minimum lease income as of March 31, 2006 and 2005 is as follows:
Thousands of U.S. dollars

Millions of yen

2006

2005

2006

Due within 1 year

¥1,256¥1,750$10,692

Due after 1 year

3,308

3,167

28,160Total¥4,564¥4,917$38,852

The amount equivalent to future minimum lease income includes the imputed interest income portion because thepercentage which is computed by dividing future minimum lease income by total balance of property, plant andequipment at year-end is immaterial.
(c) Total lease receipts and depreciation expenses for the years ended March 31, 2006 and 2005 are as follows:
Millions of yen

Thousands of U.S. dollars

2006

2005

2006

Total lease payments to be received¥1,703¥2,351$14,497

Depreciation expenses

1,603

1,830

13,646(4) Operating leases (as a lessor)
Pro forma information regarding future minimum rentals under operating leases as of March 31, 2006 and 2005 is as follows:
Millions of yen

Due within 1 year

Thousands of U.S. dollars

2006

2005

2006

¥10,722¥10,040$ 91,274

Due after 1 year

21,612

16,382

183,979

Total¥32,334¥26,422$275,253

17. Subsequent event
On June 22, 2006, the shareholders of the Company
authorized payment of a year-end cash dividend toshareholders of record as of March 31, 2006 of ¥20(US$0.17) per share, or a total of ¥6,386 million (US$54,363

thousand), and bonuses to directors and corporate
auditors of ¥301 million (US$2,562 thousand). Cashdividends for the year totaled ¥38 (US$0.32) per share,including a semi-annual dividend of ¥18 (US$0.15).

Toyota Industries Corporation

Annual Report 200691

18. Segment information(1) Business segments
As of and for the years ended March 31, 2006, 2005 and 2004:
Thousands of
U.S. dollars

Millions of yen

2006

2005

2004

2006

¥ 746,796¥ 616,200¥ 603,863$ 6,357,334

20,76818,223

15,698

176,794

767,564

634,423

619,561

6,534,128

595,237

503,990

443,444

5,067,141

Sales:
Automobile
Outside customer sales
Intersegment transactions

Materials Handling Equipment
Outside customer sales
Intersegment transactions

482

149

138

4,103

595,719504,139443,582

5,071,244

65,145––554,567

Logistics
Outside customer sales
Intersegment transactions

6,356

–

–

54,10771,501––

608,674

49,78943,90245,969423,844

23

25

16

196

49,812

43,92745,985424,040

Outside customer sales

48,98977,446

71,103417,034

Intersegment transactions

20,851

21,57914,132

177,501

69,84099,02585,235594,535

1,554,436

1,281,514

1,194,363

13,232,621(48,480)(39,976)(29,984)(412,701)¥1,505,956¥1,241,538¥1,164,379$12,819,920

Textile Machinery
Outside customer sales
Intersegment transactions

OthersSubtotal
Elimination of intersegment transactions
Total
Operating costs and expenses:¥ 747,469¥ 611,660¥ 592,031$ 6,363,063

Materials Handling Equipment

Automobile

556,950

478,054424,233

4,741,211

Logistics

69,914––595,165

Textile Machinery

49,883

44,69845,885

424,645

Others

66,107

93,782

79,485562,756

Elimination of intersegment transactions(48,407)(39,776)(29,886)(412,080)¥1,441,916¥1,188,418¥1,111,748$12,274,760

¥

¥

¥

$

Total
Operating income (loss):
Automobile
Materials Handling Equipment

38,769Logistics

1,587
(71)
3,733
(73)

Textile Machinery
OthersElimination of intersegment transactions
Total

92

20,095

Toyota Industries Corporation¥

Annual Report 2006

64,04022,76326,085¥27,530171,065

19,349330,033––

13,509

(771)

100

(605)

5,243

5,750

31,779

(200)

(98)

(621)

53,120¥52,631$

545,160

Thousands of
U.S. dollars

Millions of yen

2006

2005

2004

2006

Assets:¥ 420,205¥ 407,436¥ 338,247$ 3,577,126

Materials Handling Equipment

Automobile509,366

465,832

406,384

4,336,137

Logistics

106,356––

905,389

Textile Machinery

16,51725,622

24,744

140,606

Others103,083

148,712

100,626

877,526

2,089,814

1,279,222

1,141,994

17,790,193¥3,245,341¥2,326,824¥2,011,995$27,626,977

¥

¥

¥

$

Corporate assets or elimination
Total
Depreciation and amortization:
Automobile

48,37037,07535,793411,765

Materials Handling Equipment

30,04427,01623,538

255,759

Logistics

3,310

–

–

28,177

Textile Machinery

1,011

898

931

8,606

Others

4,544

5,215

5,443

38,682

9

9

(353)

77

Corporate or elimination of intersegment transactions
Total

¥

87,288¥70,213¥65,352$743,066¥ 101,897¥

92,692¥

48,793$

867,430

Capital expenditures:
Automobile
Materials Handling Equipment

43,521

33,97332,205

370,486

Logistics

4,046

–

–

34,443

Textile Machinery
OthersCorporate or elimination of intersegment transactions
Total

731

1,613

1,204

6,223

8,620

8,223

7,749

73,380

21

5

(442)

179

¥ 158,836¥ 136,506

89,509$ 1,352,141¥

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, 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 ofsales proceeds
Textile machinery ..................................Ring spinning frames, air-jet looms, water-jet looms
Others .....................................................Semiconductor package substrates

Corporate assets included in corporate assets or elimination consist mainly of cash and cash equivalents, short-term
investments and investments in securities held by the Company.
Changes in business segment
The logistics-related business, which was included in the Others Segment until the previous fiscal year, has been
separated and declared independently as the Logistics Segment starting from this fiscal year. In fiscal 2005, the Logistics
Segment posted net sales of ¥37,913 million, an operating loss of ¥650 million, assets of ¥78,951 million, depreciation andamortization of ¥1,323 million and capital expenditures of ¥2,930 million.

Toyota Industries Corporation

Annual Report 200693

(2) Geographical segments
As of and for the years ended March 31, 2006, 2005 and 2004:
Thousands of
U.S. dollars

Millions of yen

2006

2005

2004

2006

Outside customer sales¥1,009,369¥ 815,039¥ 785,253$ 8,592,568

Intersegment transactions

112,543

99,46487,271

958,057

1,121,912

914,503872,524

9,550,625

Outside customer sales

246,129

212,253

198,753

2,095,250

Intersegment transactions

2,057

1,126

1,113

17,511

248,186

213,379

199,866

2,112,761

216,231

188,669

167,5121,840,734

Sales:
Japan

North America

EuropeOutside customer sales
Intersegment transactions

5,689

7,222

5,896

48,429221,920

195,891

173,408

1,889,163

34,22725,577

12,861

291,368

Others
Outside customer sales
Intersegment transactions

Subtotal
Elimination of intersegment transactions
Total

3,999

2,776

1,630

34,04338,22628,353

14,491

325,411

1,630,244

1,352,126

1,260,289

13,877,960(124,288)(110,588)(95,910)(1,058,040)¥1,505,956¥1,241,538¥1,164,379$12,819,920

Operating costs and expenses:¥1,069,137¥ 870,928¥ 826,696$ 9,101,362

North AmericaJapan

241,468

207,068

193,745

2,055,572

Europe217,371

191,202170,263

1,850,438

Others36,74427,713

14,623

312,795

Elimination of intersegment transactions
Total(122,804)(108,493)(93,579)(1,045,407)¥1,441,916¥1,188,418¥1,111,748$12,274,760

¥

¥

¥

$

Operating income (loss):Japan

43,57545,828449,263

6,718

6,311

6,121

57,189Europe

4,549

4,689

3,145

38,725

Others

1,482

640

(132)

12,616

Elimination of intersegment transactions(1,484)(2,095)(2,331)(12,633)

Total

94

52,775

North America

Toyota Industries Corporation¥

Annual Report 2006

64,040¥53,120¥52,631$

545,160

Thousands of
U.S. dollars

Millions of yen

2006

2005

2004

2006

Assets:¥ 834,717¥ 788,828¥ 643,180$ 7,105,788

North AmericaJapan

179,116

151,048

136,830

1,524,781

Europe278,825

264,274

238,388

2,373,585

Others48,20733,64022,082

410,377

Corporate assets or elimination
Total

1,904,476

1,089,034

971,515

16,212,446¥3,245,341¥2,326,824¥2,011,995$27,626,977

Significant countries or areas belonging to each segment as of March 31, 2006 are as follows:
North America ...................................U.S.A., Canada
Europe ................................................Sweden, France, Germany
Others .................................................Australia, China, India

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

(3) Overseas sales
For the years ended March 31, 2006, 2005 and 2004:
Thousands of
U.S. dollars

Millions of yen

2006

2005

2004

2006

¥ 247,958¥ 208,676¥ 196,861$ 2,110,820

Overseas sales:
North America
Europe249,237

225,409

211,081

2,121,707

Others123,751

104,918

89,415

1,053,469

Total¥ 620,946¥ 539,003¥ 497,357$ 5,285,996

Total sales¥1,505,956¥1,241,538¥1,164,379$12,819,920

North America

16.5%

16.8%

16.9%

Europe

16.5

18.2

18.1

Ratio of overseas sales to total sales (%):

Others
Total

8.2

8.4

7.7

41.2%

43.4%

42.7%

Significant countries or areas belonging to each segment as of March 31, 2006 are as follows:
North America ...................................U.S.A., Canada
Europe ................................................Germany, France, Italy
Others .................................................Australia, China, India

Toyota Industries Corporation

Annual Report 200695

19. Related party transactions
The following trasactions were carried out with related parties:(1) Sales of goods and services for the years ended March 31, 2006, 2005 and 2004 were as follows:
Thousands of
U.S. dollars

Millions of yen

Toyota Motor Corporation

2006

2005

2004

2006

¥527,020¥414,235¥406,267$4,486,422

Toyota Motor Corporation held 24.02% of the Company’s voting rights as of March 31, 2006. The above transactions werecarried out on commercial terms and conditions.
(2) Purchase of goods and services for the years ended March 31, 2006, 2005 and 2004 were as follows:
Purchase of goods:
Thousands of
U.S. dollars

Millions of yen

Toyota Motor Corporation

2006

2005

2004

2006

¥370,566¥285,019¥285,412$3,154,559

Purchase of services:
Thousands of
U.S. dollars

Millions of yen

2006

2005

2004

2006

Toyota Industries Health Insurance Society

¥62

¥60

¥66

$528

Toyota Medical Corporation

46

46

37

392

Toyota Technological Institute

50

50

50

426

Toyota Industries Health Insurance Society’s chairman as of March 31, 2006, 2005 and 2004 is Shiro Endo, who is a directorof the Company and holds 0.01% of the Company’s shares. Toyota Medical Corporation’s chairman as of March 31, 2006,
2005 and 2004 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, 2006, 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, 2006 and 2005 are as follows:
Receivables from a related party:
Millions of yen

Toyota Motor Corporation

Thousands of
U.S. dollars

2006

2005

2006

¥32,600¥31,594$277,518

Payable to a related party:
Millions of yen

Toyota Motor Corporation

96

Toyota Industries Corporation

Annual Report 2006

Thousands of
U.S. dollars

2006

2005

2006

¥46,965¥35,780$399,80420. Net income per share (EPS)
Basis of calculation for net income per share basic and net income per share diluted are as follows:
Thousands of
U.S. dollars

Millions of yen

2006

2005

2006

¥ 47,077¥ 43,358$400,758

432

390

3,678

Net income attributable to common shareholders

46,64542,968397,080

Weighted-average shares (thousand)

319,125

318,079–

Net income per share basic (exact yen amounts)¥ 146.16¥ 135.09

315

139¥ 146.02¥ 135.03

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

$

1.24

Net income per share diluted:
Weighted-average shares for diluted computation (thousand)Net income per share diluted (exact yen amounts)

Toyota Industries Corporation

–
$

1.24

Annual Report 2006

97

Report of Independent Auditors

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
Corporation and its consolidated subsidiaries as of March 31, 2005 and 2006, and the related
consolidated statements of income, shareholders’ equity, and cash flows for each of the three
years in the period ended March 31, 2006, all expressed in 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 inJapan. Those standards require that we plan and perform the audit to obtain reasonableassurance 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 and significant 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 allmaterial respects, the consolidated financial position of Toyota Industries Corporation and its
consolidated subsidiaries as of March 31, 2005 and 2006, and the consolidated results of theiroperations and their cash flows for each of the three years in the period ended March 31,
2006 in conformity with accounting principles generally accepted in Japan.
The amounts expressed in U.S. dollars, which are provided solely for the convenience ofthe reader, have been translated on the basis set forth in Note 1 to the accompanying
consolidated financial statements.

ChuoAoyama PricewaterhouseCoopers
Nagoya, Japan
June 22, 200698

Toyota Industries Corporation

Annual Report 2006

Toyota Industries
in Numbers

Toyota Industries Corporation

Annual Report 200699

Toyota Industries in Numbers
Net Sales, Ordinary Income andOrdinary Income Ratio

Millions of yen(¥ Billion)
200(¥ Billion)
2,000
4.9%

4.8%

5.1%

5.7%

5.4%

Ordinary income

1,500

150

1,000

100

500

50

0
FY

02

03

04

05

06

Net sales

0

2002

2003

2004

¥980,163¥1,069,219¥1,164,379

47,866

51,37558,971

70,91380,635

4.9

4.8

5.1

5.7

5.4

Ordinary income ratio (%)

Net sales (left)

Ordinary income (right)

Millions of yen(¥ Billion)
100

2002

2003

2004

2005

2006

¥55,174¥59,154¥65,352¥70,213¥87,288

Automobile Segment

33,40334,15735,79337,07548,370Materials Handling Equipment Segment

18,88220,801

23,53827,01630,044

–

–

–

–

3,310

797

1,006

931

898

1,011

2,092

3,190

5,090

5,224

4,553

Materials Handling Equipment

Logistics

Textile Machinery

OthersDepreciation and amortization:

75

Logistics Segment
Textile Machinery Segment

50

Others Segment (including corporate
or elimination)

25

FY

2006

Ordinary income ratio

Depreciation and Amortization

0

2005

¥1,241,538 ¥1,505,956

02

03

04

05

06

Automobile

Capital Expenditures

Millions of yen(¥ Billion)
200

Capital expenditures:

150

2002

2003

2004

2005

2006

¥88,320¥87,559¥89,509¥136,506¥158,836

Automobile Segment

61,02349,38048,793

92,692

101,897

Materials Handling Equipment Segment

26,337

24,35032,20533,973

43,521

–

–

–

–

4,046

Textile Machinery Segment

523

2,164

1,204

1,613

731

Others Segment (including corporate

437

11,665

7,307

8,228

8,641

Materials Handling Equipment

Logistics

Textile Machinery

Others

Logistics Segment
100

or elimination)

50

0
FY

02

03

04

05

06

Automobile

R&D Expenses andR&D Expenses to Net Sales Ratio

Millions of yen(%)
4(¥ Billion)
40

30

3

2002

2003

2004

2005

2006

¥29,985¥29,705¥29,562¥30,051¥31,166

Automobile Segment

18,06018,74815,755

17,214

16,578Materials Handling Equipment Segment

9,246

9,298

10,651

10,976

12,855R&D expenses:

Logistics Segment
20

2

–

–

–

–

–

Textile Machinery Segment

1,335

1,053

1,164

1,030

732

Others Segment (including corporate

1,344

606

1,992

831

1,001

3.1

2.8

2.5

2.4

2.1

or elimination)
10

0
FY

100

1

02

03

04

Toyota Industries Corporation

05

06

0

Annual Report 2006

R&D expenses to net sales ratio (%)

Automobile
Materials Handling Equipment
R&D expenses to net sales ratio (right)

Textile Machinery

Others (left)

(Years ended March 31)

Net Sales and Operating Income ofAutomobile Segment(¥ Billion)
750

Millions of yen(¥ Billion)
75

500

50

250

25

0
FY

02

03

04

05

2002

2003

2004

2005

2006

Net sales of Automobile Segment¥563,599¥595,460¥603,863¥616,200¥746,796

Operating income of Automobile

28,96030,10827,53022,76320,095

Segment

006

Net sales (left)

Operating income (right)

Net Sales and Operating Income ofMaterials Handling Equipment Segment(¥ Billion)
600

Millions of yen(¥ Billion)
60

Net sales of Materials Handling40

Operating income of Materials

2002

2003

2004

2005

2006

¥353,043¥373,008¥443,444¥503,990¥595,237

13,366

16,175

19,34926,08538,7692005

2006

Equipment Segment
400

Handling Equipment Segment
200

0
FY

20

02

03

04

05

06

0

Net sales (left)

Operating income (right)

Net Sales and Operating Income of
Logistics Segment

Millions of yen(¥ Billion)3(¥ Billion)
75

50

2

25

1

2002

2003

2004

Net sales of Logistics Segment

–

–

–

–

¥65,145

Operating income of Logistics

–

–

–

–

1,587

Segment
The Logistics Segment was newly created in fiscal 2006.

0
FY

02

03

04

05

06

0

Net sales (left)

Operating income (right)

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

Millions of yen(¥ Billion)
6

40

4

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

2002

2003

2004

2005

2006

¥30,705¥48,740¥45,969¥43,902¥49,789

(391)

2,309

100

(771)

(71)

Machinery Segment
20

2

0

0

(20)
FY

(2)

02

03

04

05

Net sales (left)

06

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

02

03

04

05

06

0

Net sales of Others Segment
Operating income of Others Segment

Net sales (left)

2002

2003

2004

2005

2006

¥32,816¥52,011¥71,103¥77,446¥48,989

4,482

3,912

5,750

5,243

3,733

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 2006

101

Toyota Industries in Numbers
ROE and ROA

%

2002

(%)
6

2003

2004

2005

2006

Return on equity (ROE)

3.0

2.7

3.8

4.1

3.5

Return on assets (ROA)

1.5

1.3

1.8

2.0

1.7

4

2

0
FY

02

03

04

05

ROE

06

ROA

Net Income per Share

Yen

(¥)
150

2002

2003

2004

2005

2006

Net income per share — basic¥87.28¥70.19¥108.04¥135.09¥146.16

Net income per share — diluted

78.26

62.90

101.97135.03146.02

2005

2006

100

50

0
FY

02

03

04

05

06

Basic

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

Millions of yen(¥ Billion)
2,000

(%)
100

1,500

75

1,000

50

500

25

0
FY

02

03

04

05

06

0

2002

2003

2004

Interest-bearing debt

¥315,354¥410,622¥ 320,967¥ 383,737 ¥ 473,709

Shareholders’ equity

878,812738,868

1,016,764

1,115,747

1,611,227

Debt/equity ratio (%)

35.9

55.6

31.6

34.4

29.4

Interest-bearing debt (left)

Shareholders’ equity (left)

Shareholders’ Equity per Share

Yen

(¥)
6,000

Shareholders’ equity per share

4,000

2,000

0
FY

102

02

03

04

Toyota Industries Corporation

05

Debt/equity ratio (right)

06

Annual Report 2006

2002

2003

2004

2005

2006

¥2,809.54¥2,522.52¥3,199.69¥3,504.80¥5,044.5

(Years ended March 31)

Cash Dividends per Share andConsolidated Payout Ratio

Yen

(¥)
50

(%)
50

Cash dividends per share
Payout ratio (%)

40

40

30

30

20

20

10

10

0
FY

02

03

04

05

06

0

Cash dividends per share (left)

2002

2003

2004

2005

2006

¥19.00¥22.00¥24.00¥32.00¥38.00

21.8

31.3

22.2

23.7

26.0

Payout ratio (right)

Market Capitalization

Millions of yen(¥ Billion)
2,000

Market capitalization

2002

2003

2004

2005

¥649,052¥513,824¥786,223¥961,075 ¥1,535,931

2006

1,500

1,000

500

0
FY

02

03

04

05

06

PER and PBR

Times(Times)1.0(Times)
40

30

0.75

20

0.5

10

0.25

0
FY

2002

2003

2004

2005

2006

Price/earnings ratio (PER)

23.8

25.0

22.9

22.4

32.9

Price/book value ratio (PBR)

0.7

0.7

0.8

0.9

1.0

0

02

03

04

05

06

PER (left)

PBR (right)

Number of Employees

Persons(Thousands)
40

Number of employees

2002

2003

2004

2005

2006

23,05625,03027,43130,99032,977

30

20

10

0
FY

02

03

04

05

06

Toyota Industries Corporation

Annual Report 2006

103

Investor Information(As of March 31, 2006)

Corporate Head OfficeTransfer Agent

TOYOTA INDUSTRIES CORPORATION

Mitsubishi UFJ Trust and Banking Corporation

2-1, Toyoda-cho, Kariya-shi, Aichi-ken,

1-4-5, Marunouchi, Chiyoda-ku, Tokyo-to, 100-8212, Japan

448-8671, Japan

Telephone: +81-(0)3-3212-1211

Telephone: +81-(0)566-22-2511
Facsimile: +81-(0)566-27-5650

Major Shareholders% ofVoting rights

Date of Establishment
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)

Toyota Motor Corporation

24.02

DENSO Corporation

9.29

The Master Trust Bank of Japan, Ltd.

6.14

Towa Real Estate Co., Ltd.

4.92

Third Avenue Fund-Custodial Trust Company

4.35

Bank of Bermuda Limited, Hamilton

2.71

Toyota Tsusho Corporation

2.31

State Street Bank and Trust Company

2.28

Nippon Life Insurance Company

2.11

Aisin Seiki Co., Ltd.

2.06

Number of Shareholders
18,762

Common Stock Price and Trading Volume(Tokyo Stock Exchange)
High
High
Closing
Opening White: Closing Price > Opening Price
Opening Closing Black: Opening Price > Closing Price
Low
Low

(yen)

(Thousand shares)

5,000

50,0004,000

40,0003,000

30,000Common stock price (left scale)

2,000

Trading volume (right scale)

1,000

0

104

20,00010,0004/01

7

10 1/02

Toyota Industries Corporation

4

7

Annual Report 2006

10 1/034

7

10 1/04

4

7

10

1/05

4

7

10 1/060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

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