Notes to Consolidated Financial Statements

1. Basis of presenting consolidated financial statements:
The accompanying interim consolidated financial statements
have been prepared based on the accounts maintainedby Toyota Industries Corporation (the “Company”), and its
consolidated subsidiaries (together, hereinafter referred to as“Toyota Industries”) in accordance with the provisions set forthin the Commercial Code of Japan and the Securities andExchange Law, and in conformity with accounting principles
generally accepted in Japan, which are different in certain
respects from the application and disclosure requirements ofInternational Financial Reporting Standards.
Certain items presented in the interim consolidated

financial statements submitted to the Director of Kanto
Finance Bureau in Japan have been reclassified in theseaccounts for the convenience of readers outside Japan.
Amounts in U.S. dollars are included solely for theconvenience of readers outside Japan. The rate of¥113.19 = US$1, the rate of exchange prevailing at September
30, 2005, has been used in translation. The inclusion of suchamounts are not intended to imply that the Japanese yen
actually represent, or have been or could be converted into,
equivalent amounts in U.S. dollars at this rate or any otherrates.

2. Summary of significant accounting policies:(1) Consolidation
The interim consolidated financial statements include
the accounts of the Company and its 149 subsidiaries (43domestic subsidiaries and 106 overseas subsidiaries, which
are listed on pages 24 and 25) as of September 30, 2005 and142 subsidiaries (41 domestic subsidiaries and 101 overseas
subsidiaries) as of September 30, 2004.
For the six-month period ended September 30, 2005, four
subsidiaries were newly added to the scope of consolidationand one company was excluded from the scope of
consolidation because of merger and acquisition.
For the six-month period ended September 30, 2004, four
subsidiaries were newly added to the scope of consolidationand two companies were excluded from the scope of
consolidation because of merger and acquisition.
The interim periods of certain subsidiaries are different fromthe interim period of the Company. Since the difference is
not more than three months, the Company is using thosesubsidiaries’ statements for their interim periods, making
adjustments for significant transactions that materially affectthe 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 of acquisitionof control.

(2) Investments in unconsolidated subsidiaries andaffiliates
Investments in 21 affiliates as of September 30, 2005 andinvestments in one unconsolidated subsidiary and 19 affiliates
as of September 30, 2004 are accounted for by the equity
method of 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 25.

(3) Translation of foreign currencies
Foreign currency denominated receivables and payables aretranslated into Japanese yen at the year-end exchange rates
and the resulting transaction gains or losses are included inincome 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 aretranslated at prevailing fiscal average rates.

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

(5) Marketable securities and investment in securities
Toyota Industries classifies securities into four categories
by purpose of holding: trading securities, held-to-maturity
securities, other securities and investments in unconsolidated
subsidiaries and affiliates. Toyota Industries did not havetrading securities or held-to-maturity securities as of
September 30, 2005 and 2004.
Other securities with readily determinable fair values
are stated at fair value based on market prices at the endof 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

TOYOTA INDUSTRIES CORPORATIONSEMIANNUAL REPORT 200615

Notes to Consolidated Financial Statements

are stated at cost, as determined by the moving-averagemethod.
Investments in unconsolidated subsidiaries and affiliates areaccounted for by the equity method (see Note 2 (2)).

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

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

(7) Property, plant and equipment, and depreciation
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 overseas subsidiaries.
Significant renewals and additions are capitalized at cost.
Repair and maintenance are charged to income as incurred.
Accumulated depreciation as of September 30, 2005
and 2004 was ¥561,736 million (US$4,962,771 thousand) and¥527,408 million, respectively.

(8) Intangible assets and amortization
Amortization of intangible assets is computed using thestraight-line method. Software costs for internal use areamortized by the straight-line method over their expected
useful lives (mainly five years).
Goodwill, if material, is amortized principally over less than
20 years on a straight-line basis, while immaterial goodwill ischarged to income as incurred.

(9) Impairment loss of fixed assets
Calculation of the impairment of fixed assets is based onreasonable and supportable assumptions and projectionof the grouping of assets and recoverable value, with due
consideration for the specific condition of each company.
The recoverable amount of assets is calculated based on net
selling price.

(10) Allowances for doubtful accounts
Toyota Industries adopted the policy of providing anallowance for doubtful accounts in an amount sufficient tocover possible losses on collection by estimating individuallyuncollectible amounts and applying to the remaining
accounts a percentage determined by certain factors suchas historical collection experiences.

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

16

TOYOTA INDUSTRIES CORPORATIONSEMIANNUAL REPORT 2006(13) Lease transactions
Finance leases other than those that are deemed to transfer
the ownership of the leased assets to lessees are accounted
for mainly by a method similar to that applicable to ordinary
operating leases.

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

(15) Hedge accounting(a) Method of hedge accounting
Mainly the deferral method of hedge accounting is applied.
In the case of foreign currency forward contracts and foreign
currency option contracts, the hedged items are translated
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 rateon transactions denominated in foreign
currencies (assets and liabilities, andforecasted transactions)(c) Hedging policy
Hedging transactions are executed and controlled based on
Toyota Industries’ internal rule and Toyota Industries is hedging
interest rate risks and foreign currency risks. Toyota Industries’
hedging activities are reported periodically to a director
responsible for accounting.

(d) Method used to measure hedge effectivenessHedge effectiveness is measured by comparing
accumulated changes in market prices of hedged items andhedging instruments or accumulated changes in estimatedcash flows from the inception of the hedge to the date ofmeasurements performed. Currently it is considered that there
are high correlations between them.
(e) Others
Due to the fact that counterparties to Toyota Industries
represent major financial institutions which have highcreditworthiness, Toyota Industries believes that the overall
credit risk related to its financial instruments is insignificant.

(16) Appropriation of retained earnings
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, thepayment of bonuses to directors and corporate auditors ismade out of retained earnings through an appropriation,
instead of being charged to income for the year.

3. Assets pledged as collateral(1) Assets pledged as collateral as of September 30, 2005 and 2004 are as follows:
Thousands of
U.S. dollars

Millions of yen

2005

2004

2005

¥41,655¥35,860$368,009

Land

2,840

7,461

25,091

Buildings and structures

2,133

4,678

18,844

Trade notes and accounts receivable

467

365

4,126

Machinery, equipment and vehicles

438

651

3,870

Other

–

233

–

Total

¥47,533¥49,248$419,940

Investments in securities(2) Secured liabilities as of September 30, 2005 and 2004 are as follows:
Thousands of
U.S. dollars

Millions of yen

2005

2004

2005

Other current liabilities¥20,707¥19,795$182,940

Short-term bank loans

390

4,879

3,446

1,195

2,395

10,557Long-term debt
Current portion of bonds
Total

–

300

–

¥22,292¥27,369$196,943

4. Contingent liabilities
Toyota Industries is contingently liable for guarantees as of September 30, 2005 and 2004 as follows:
Thousands of
U.S. dollars

Millions of yen

2005
Guarantees given by the Company

¥ 400

2004
¥

2005
–

$ 3,534

Guarantees given by consolidated subsidiaries

845

9,417

7,465

Guarantee forwards given by the Company

2,759

3,149

24,375TOYOTA INDUSTRIES CORPORATIONSEMIANNUAL REPORT 200617

Notes to Consolidated Financial Statements

5. Impairment loss of fixed assets
Thousands of
U.S. dollars

Millions of yen

RegionItems

Details of fixed assets

Hyogo

One idle property

Building

¥–

¥ 28

$–

Land

–

338

–

KagawaOne idle property

2005

2004

Land

Total

2005

–

48

–

¥–

¥414

$–

6. Leases(1) Finance leases (as a lessee) which do not transfer ownership of leased properties to lessees(a) Pro forma information regarding the leased properties such as acquisition cost and accumulated depreciation, which are notreflected in the accompanying consolidated balance sheets under finance leases as of September 30, 2005 and 2004 is as follows:
Thousands of
U.S. dollars

Millions of yen

2005

2004

2005

Buildings and structures:
Acquisition cost equivalents¥–

Accumulated depreciation equivalents

¥

5

$

–

–

5

–

–

0

–

Acquisition cost equivalents

13,313

9,495

117,617

Accumulated depreciation equivalents

6,548

4,693

57,850

6,765

4,802

59,767

Acquisition cost equivalents

11,823

4,895

104,452

Accumulated depreciation equivalents

6,122

3,213

54,086

Buildings and structures net balance equivalents
Machinery and equipment:

Machinery and equipment net balance equivalents
Others:Others net balance equivalents
Total net leased properties

5,701

1,682

50,366¥12,466¥6,484$110,133

Acquisition cost equivalents include the imputed interest expense portion because the percentage which is computed by
dividing future minimum lease payments by total balance of property, plant and equipment at interim period ends is immaterial.
(b) Pro forma information regarding future minimum lease payments as of September 30, 2005 and 2004 is as follows:
Thousands of
U.S. dollars

Millions of yen

2005

2004

2005

Due within 1 year

¥ 3,986¥1,559Due after 1 year

8,744

4,925

77,251¥12,730¥6,484$112,466

Total$ 35,215

Future minimum lease payments under finance leases include the imputed interest expense portion.
(c) Total lease payments for the six-month periods ended September 30, 2005 and 2004 are as follows:
Millions of yen

Thousands of
U.S. dollars

2005¥2,345$20,717

2004

1,493

–

Pro forma depreciation expenses, which are not reflected in the accompanying interim consolidated statements of income,are computed mainly by the straight-line method, which assumes zero residual value and leasing term to be useful lives for thesix-month periods ended September 30, 2005 and 2004, and are equivalent to the amount of total lease payments of the above.

18

TOYOTA INDUSTRIES CORPORATIONSEMIANNUAL REPORT 2006

(2) Finance leases (as a lessor) which do not transfer ownership of leased properties to lessees(a) Information regarding leased properties such as acquisition cost and accumulated depreciation under finance leases as of
September 30, 2005 and 2004 is as follows:
Thousands of
U.S. dollars

Millions of yen

2005

2004

2005

Machinery and equipment:
Acquisition cost

¥9,256¥8,288

Accumulated depreciation

5,069

4,643

44,783¥4,187¥3,645$36,991

Total net leased properties$81,774(b) Pro forma information regarding future minimum lease income as of September 30, 2005 and 2004 is as follows:
Thousands of
U.S. dollars

Millions of yen

2005

2004

2005

Due within 1 year

¥1,756¥1,831

Due after 1 year

3,213

2,584

$15,514
28,386

Total¥4,969¥4,415$43,900

Future minimum lease payments under finance leases include the imputed interest expense portion.
(c) Total lease receipts and depreciation for the six-month periods ended September 30, 2005 and 2004 are as follows:
Thousands of
U.S. dollars

Millions of yen

2005
Total lease payments to be received

2004

2005

¥1,227¥1,177$10,840

901

827

7,960

Depreciation expenses(3) Operating leases (as a lessee)
Pro forma future lease payments under operating leases as of September 30, 2005 and 2004 are as follows:
Thousands of
U.S. dollars

Millions of yen

2005

2004

2005

Due within 1 year

¥ 4,835¥ 3,190$ 42,716

Due after 1 year

16,35912,936

144,527

Total¥21,194¥16,126$187,243(4) Operating leases (as a lessor)
Pro forma information regarding future minimum rentals under operating leases as of September 30, 2005 and 2004 is as follows:
Thousands of
U.S. dollars

Millions of yen

2005

2004

2005

Due within 1 year

¥ 8,457¥ 4,510$ 74,715

Due after 1 year

14,7708,510

130,489

Total¥23,227¥13,020$205,204

TOYOTA INDUSTRIES CORPORATIONSEMIANNUAL REPORT 2006

19

Notes to Consolidated Financial Statements

7. Marketable securities(1) As of September 30, 2005(a) Other securities with readily determinable fair value are as follows:
Thousands of U.S. dollars

Millions of yen
Acquisition cost Carrying amount

Stocks¥211,010¥1,524,647

Difference

Acquisition cost Carrying amount¥1,313,637$1,864,211$13,469,803

Difference$11,605,592

Bonds
Government and municipal bonds, etc.
Total

0

0

–

0

0

–

¥211,010¥1,524,647¥1,313,637$1,864,211$13,469,803$11,605,592(b) Significant contents and carrying amount of securities (excluding held-to-maturity bonds within securities with fair value)
without readily determinable fair value are as follows:
Carrying amountThousands of
U.S. dollars

Millions of yen

Other securities:
Domestic unlisted stocks excluding over-the-counter stocks¥18,897$166,949

Money management funds

10,00088,347(2) As of September 30, 2004(a) Other securities with readily determinable fair value are as follows:
Millions of yen
Acquisition cost Carrying amount

StocksDifference¥187,422¥1,184,676¥997,254

Government and municipal bonds, etc.

0

0

–

Other bonds

1

1

–

¥187,423¥1,184,677¥997,254

Bonds

Total

(b) Significant contents and carrying amount of securities (excluding held-to-maturity bonds within securities with fair value)
without readily determinable fair value are as follows:
Carrying amountMillions of yen

Other securities:
Domestic unlisted stocks excluding over-the-counter stocks¥26,492

Money management funds

20,0208. Derivative instruments
Notes relating to derivative instruments are omitted, since Toyota Industries has not used derivative instruments for other thanhedging.

20

TOYOTA INDUSTRIES CORPORATIONSEMIANNUAL REPORT 2006

9. Segment information(1) Business segments

Sales:
Automobile
Outside customer sales
Intersegment transactions
Materials handling equipment
Outside customer sales
Intersegment transactions
Logistics
Outside customer sales
Intersegment transactions
Textile machinery
Outside customer sales
Intersegment transactions
Others
Outside customer sales
Intersegment transactions
Subtotal
Elimination of intersegment transactions
Total
Operating costs and expenses:
Automobile
Materials handling equipment
Logistics
Textile machinery
OthersElimination of intersegment transactions
Total
Operating income (loss):
Automobile
Materials handling equipment
Logistics
Textile machinery
OthersElimination of intersegment transactions
Total

Millions of yen

Thousands of
U.S. dollars

For the six months
ended September 30

For the six months
ended September 30

2005

2005

2004

¥337,752
10,195347,947¥308,667
8,814
317,481$2,983,939
90,0703,074,009

281,598137
281,735

239,91064
239,974

2,487,835
1,210
2,489,045

30,616
2,786
33,402–––

270,483
24,614
295,097

24,094
11
24,10522,273
10
22,283

212,86397
212,960

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

36,214
9,684
45,898625,636(18,572)¥607,064

220,585
77,957
298,542
6,369,653(193,948)$6,175,705¥336,528
263,416
32,87423,914
31,674(21,429)¥666,977¥302,291
227,932–
22,42442,559(18,241)¥576,965$2,973,125
2,327,202
290,432
211,273
279,831(189,319)$5,892,544¥ 11,419
18,319
528
191
2,118
(524)
¥ 32,051¥ 15,190
12,042
–
(141)
3,339
(331)
¥ 30,099$ 100,884
161,843
4,665
1,687
18,711(4,629)$ 283,161

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 equipment, automated storage and retrieval systems, aerial work platforms
Logistics............................................... Transportation services, logistics planning, operation of distribution centers, collection and delivery of cash and management of sales proceeds
Textile machinery............................... Ring spinning frames, air-jet looms, water-jet looms
Others.................................................. Semiconductor package substrates

Changes in business segments
The logistics-related business, which was included in the Others Segment until the previous fiscal year, has been separated anddeclared independently as the Logistics Segment starting from this fiscal year. Sales of the Logistics Segment for the six months
ended September 30, 2004 were ¥17,540 million, and an operating loss of ¥75 million was recorded.

TOYOTA INDUSTRIES CORPORATIONSEMIANNUAL REPORT 200621

Notes to Consolidated Financial Statements(2) Geographical segments

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

Millions of yen

Thousands of
U.S. dollars

For the six months
ended September 30

For the six months
ended September 30

2005

2004

2005

¥461,877
53,537515,414¥398,524
48,300446,824$4,080,546
472,983
4,553,529

119,484743
120,227

105,517467
105,984

1,055,606
6,564
1,062,170

102,181
4,184
106,365

90,067
3,619
93,686

902,739
36,964
939,703

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

12,956
1,390
14,346
660,840(53,776)¥607,064

136,814
15,461
152,275
6,707,677(531,972)$6,175,705¥490,894
116,134
103,236
16,631(59,918)¥666,977¥421,829
102,216
91,173
14,410(52,663)¥576,965$4,336,903
1,026,009
912,059
146,930(529,357)$5,892,544¥ 24,520
4,093
3,129
605
(296)
¥ 32,051¥ 24,995
3,768
2,513
(64)
(1,113)¥ 30,099$ 216,626
36,161
27,644
5,345(2,615)$ 283,161

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

10. Subsequent event
On November 21, 2005, the Company issued bonds without collateral in the principle amount of ¥50.0 billion. The Company
intends to use the proceeds from the bond issue for the redemption of matured corporate bonds as well as for capital investment.

22

14th series of bonds without collateral

15th series of bonds without collateral

Total amount of issue
Maturity date
Interest rate

Total amount of issue
Maturity date
Interest rate

¥20.0 billion
December 20, 2010
1.01%

TOYOTA INDUSTRIES CORPORATIONSEMIANNUAL REPORT 2006

¥30.0 billion
September 18, 2015
1.66%