NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Basis of presenting interim consolidated financial statements
The accompanying interim consolidated financial statements
have been prepared based on the accounts maintained by
Toyota Industries Corporation (the “Company”) and its
consolidated subsidiaries (together, hereinafter referred to as“Toyota Industries”) in accordance with the provisions set
forth in the Japanese Commercial Code and the Securities
and Exchange Law, and in conformity with accounting
principles and practices generally accepted in Japan, which
are different in certain respects from the application anddisclosure requirements of International AccountingStandards.
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.
The interim consolidated financial statements are notintended to present the consolidated financial position,
results of operations and cash flows in accordance withaccounting principles and practices generally accepted incountries and jurisdictions other than Japan.
Amounts in U.S. dollars are included solely for theconvenience of readers outside Japan. The rate of ¥122.60 =US$1, the approximate rate of exchange prevailing at
September 30, 2002, has been used in translation. The
inclusion of such amounts is not intended to imply that theJapanese yen have been or could be readily converted,
realized or settled in U.S. dollars at this rate or any otherrates.

2. Summary of significant accounting policies(2) Investments in unconsolidated subsidiaries
and affiliates(1) Consolidation
The interim consolidated financial statements include theaccounts of the Company and its 118 subsidiaries(32 domestic subsidiaries and 86 overseas subsidiaries, which
are listed on pages 24 and 25) as of September 30, 2002
and 109 subsidiaries (26 domestic subsidiaries and 83
overseas subsidiaries) as of September 30, 2001. The
unconsolidated subsidiaries are excluded from consolidation
because such subsidiaries would have no material effect on
the consolidated financial statements of Toyota Industries, orToyota Industries’ owning a majority of such subsidiaries’
shares would be temporary.
For the six-month period ended September 30, 2002,
seven subsidiaries were newly added to the scope of
consolidation, and two unconsolidated subsidiaries are
excluded from the scope of consolidation because majority
ownership of those two subsidiaries is temporary.
For the six-month period ended September 30, 2001,
12 subsidiaries were newly added to the scope of
consolidation and three BT Industries group companies havebeen excluded from the scope of consolidation. Since fivesubsidiaries out of 12 subsidiaries were deemed as being
acquired by the Company as of the interim period end, they
were consolidated only in the balance sheets. Twounconsolidated subsidiaries are excluded from the scope of
consolidation because majority ownership of those two
subsidiaries is temporary.
The interim periods of certain subsidiaries are different
from the interim period of the Company. Since thedifference is not more than three months, the Company isusing those subsidiaries’ statements for their interim periods,
making adjustments for significant transactions thatmaterially affect the financial position or results ofoperations.
All significant intercompany transactions, balances andunrealized profits among 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.

Investments in two unconsolidated subsidiaries and
18 affiliates as of September 30, 2002 and investments in
two unconsolidated subsidiaries and 17 affiliates as of
September 30, 2001 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 25.

(3) 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 they present
insignificant risk of changes in value because of changes ininterest rates.

(4) Marketable securities and investments
in securities
Toyota Industries classifies securities into four categories bypurpose 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 September 30, 2002 and 2001, respectively. Other
securities with fair values are stated at fair value based onmarket prices at interim period end. Unrealized gains andlosses are included in net unrealized gains on other securities
as a separate component of shareholders’ equity. Cost of
sales of such securities is determined by the moving averagemethod. Other securities without fair values are stated atcost, as determined by the moving average method.
Investments in unconsolidated subsidiaries and affiliates
are accounted for by the equity method (see Note 2 (2)above).

15

(5) Inventories(12) Consumption tax

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

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
interim consolidated statements of income, and theconsumption tax paid by Toyota Industries under the law onpurchases of goods and services, and expenses are notincluded in the related amount.

(6) 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 the straightline method for foreign subsidiaries. Significant renewals andadditions are capitalized at cost. Repair and maintenance arecharged to income as incurred.
Accumulated depreciation as of September 30, 2002 and2001 was ¥462,196 million ($3,769,951 thousand) and¥434,792 million, respectively.

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

(b) Hedging instruments and hedged items
Hedging
instruments:(7) 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 lessthan 20 years on a straight-line basis, while immaterial
goodwill is charged to income as incurred.

Hedged items:(8) Allowances for doubtful accounts

Derivative instruments (interest rate swaps,
foreign currency forwards and foreign
currency options)
Risk of change in interest rate on
borrowings and risk of change in forward
exchange rate on transactions
denominated in foreign currencies(monetary assets and liabilities, marketablesecurities and forecasted transactions)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 such as
historical collection experiences.

(c) Hedging policy(9) Deferred charges(d) The method used to measure hedge effectiveness

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

Hedge effectiveness is measured by comparing accumulatedchanges in market price of hedged items and hedging
instruments or accumulated changes in estimated cash flows
from the inception of the hedge to the date of measurements
performed. Currently it is considered that there are highcorrelations between them.

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

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

(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.

(14) Appropriation of retained earnings
In the accompanying interim 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 the income for the period.

(11) 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 the method similar to that applicable toordinary operating leases.

16

3. Assets pledged as collateral(1) Assets pledged as collateral as of September 30, 2002 and 2001 are as follows:
Millions of yen

Thousands of
U.S. dollars

2002

2001

2002

Investments in securities
Property, plant and equipment (other)
Machinery, equipment and vehicles
Trade notes and accounts receivable
Cash and bank deposits¥25,080
8,874
560
482
42

¥17,467
9,727
–
200
29

$204,568
72,382
4,568
3,931
342

Total

¥35,038¥27,423$285,791(2) Secured liabilities as of September 30, 2002 and 2001 are as follows:
Millions of yen

Thousands of
U.S. dollars

2002

2001

2002

Other current liabilities
Short-term loans
Long-term debt
Bonds

¥18,735
8,930
3,924
300

¥17,984
11,8593,273
300$152,814
72,83832,007
2,447

Total

¥31,889¥33,416$260,106

4. Contingent liabilities
Toyota Industries is contingently liable for guarantees as of September 30, 2002 and 2001 as follows:
Millions of yen

Guarantees given by the Company
Guarantees given by consolidated subsidiaries
Guarantee forwards given by the Company
Acts similar to guarantees given by consolidated subsidiaries
Guarantees given by consolidated subsidiaries as of
September 30, 2002 and 2001 consist of 455,290 thousandof Swedish krona and 250,538 thousand of Swedish krona,

Thousands of
U.S. dollars

2002

2001

2002

¥28,356
5,923
3,761
–

¥

$231,289
48,31230,677
–

283
2,869
3,251
14,522

respectively. Acts similar to guarantees given by consolidated
subsidiaries as of September 30, 2001 consist of 1,268,283
thousand of Swedish krona.

17

5. Leases(1) Finance leases (as a lessee) which do not transfer ownership of leased properties to lessees(a) Pro forma information regarding leased properties such as acquisition cost equivalents and accumulated depreciationequivalents under finance leases as of September 30, 2002 and 2001 is as follows:
Thousands of
U.S. dollars

Millions of yen

2002

2001

2002

Machinery and equipment:
Acquisition cost equivalents
Accumulated depreciation equivalents¥7,721
2,409¥1,635
777$62,977
19,649Machinery and equipment interim period end balance equivalents

5,312

858

43,328Tools, furniture and fixtures :Acquisition cost equivalents
Accumulated depreciation equivalents

5,410
2,608

4,922
2,222

44,127
21,272Tools, furniture and fixtures interim period end balance equivalents

2,802

2,700

22,855

Total net leased properties¥8,114¥3,558$66,183

Acquisition cost equivalents include the imputed interest
expense portion because the percentage which is computedby dividing future minimum lease payments by total balanceof property, plant and equipment, etc., at interim period
ends is immaterial.

(b) Pro forma information regarding future minimum lease payments as of September 30, 2002 and 2001 is as follows:
Millions of yen

Thousands of
U.S. dollars

2002

2001

2002

Due within 1 year
Due after 1 year

¥2,2705,844¥1,3992,159$18,516
47,667

Total¥8,114¥3,558$66,183

Millions of yen

Thousands of
U.S. dollars¥1,272
772$10,375–

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, 2002 and 2001 are as follows:

2002
2001

useful lives for the six-month periods ended September 30,
2002 and 2001, and are equivalent to the amount of totallease payments of the above.

Pro forma depreciation expenses, which are not reflected in
the accompanying interim consolidated statements ofincome, are computed mainly by the straight-line method
which assumes zero residual value and leasing term to be(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, 2002 and 2001 is as follows:
Millions of yen

Thousands of
U.S. dollars

2002

2001

2002

Machinery and equipment:
Acquisition cost
Accumulated depreciation¥7,238
4,088¥7,333
4,061$59,037
33,344

Total net leased properties¥3,150¥3,272$25,69318

(b) Pro forma information regarding future minimum lease payments as of September 30, 2002 and 2001 is as follows:
Thousands of
U.S. dollars

Millions of yen

2002

2001

2002

Due within 1 year
Due after 1 year

¥1,9152,709¥1,893
2,681$15,620
22,096

Total¥4,624¥4,574$37,716

Millions of yen

Thousands of
U.S. dollars¥1,0181,210$8,303–

Millions of yen

Thousands of
U.S. dollars

¥751
709

$6,126–

Future minimum lease payments under finance leases include the imputed interest income portion.
(c) Total lease receipts for the six-month periods ended September 30, 2002 and 2001 are as follows:

2002
2001
(d) Depreciation for the six-month periods ended September 30, 2002 and 2001 is as follows:

2002
2001

(3) Operating leases (as a lessee)
Pro forma future lease payments under operating leases as of September 30, 2002 and 2001 are as follows:
Millions of yen

Thousands of
U.S. dollars

2002

2001

2002

Due within 1 year
Due after 1 year

¥ 2,271
8,904¥ 1,803
4,973$18,524
72,626

Total¥11,175¥ 6,776$91,150(4) Operating leases (as a lessor)
Pro forma future minimum rentals under operating leases as of September 30, 2002 and 2001 are as follows:
Millions of yen

Thousands of
U.S. dollars

2002

2001

2002

Due within 1 year
Due after 1 year

¥ 4,186
7,631¥ 3,114
7,017$34,144
62,243

Total¥11,817¥10,131$96,38719

6. Marketable securities(1) As of September 30, 2002(a) Other securities with readily determinable fair value are as follows:
Millions of yen
Acquisition
cost

Carrying
amountDifference

Stocks
Bonds
Government and municipal bonds, etc.
Corporate bonds
Other bonds
Other¥174,418¥842,825¥668,407

0
7,644
3
470

0
7,640
3
650

–
(4)
–
180

Total

¥182,535¥851,118¥668,583

Thousands of U.S. dollars
Acquisition
cost

Carrying
amountDifference

Stocks
Bonds
Government and municipal bonds, etc.
Corporate bonds
Other bonds
Other$1,422,659 $6,874,592 $5,451,933

Total$1,488,866 $6,942,235 $5,453,369

062,34924
3,834

062,317
24
5,302

–
(32)
–
1,468

(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:
Millions of yen

Held-to-maturity securities
Other securities
Domestic unlisted stocks excluding over-the-counter stocks
Money management fundForeign unlisted bonds¥–

15,137
20,072–Thousands of
U.S. dollars$–

123,467
163,719–(2) As of September 30, 2001(a) Other securities with readily determinable fair value are as follows:
Millions of yen
Acquisition
cost

Carrying
amountDifference

Stocks
Bonds
Government and municipal bonds, etc.
Corporate bonds
Other bonds
Other¥171,235¥819,825¥648,590

013,2113120

013,225
3
120

–
14
–
–

Total

¥184,569¥833,173¥648,604

20

(b) Significant contents and carrying amount of securities (excluding held-to-maturity bonds within securities with fair value) notpracticable to be stated at fair value as of September 30, 2001, are as follows:
Millions of yen

Held-to-maturity securities
Other securities
Domestic unlisted stocks excluding over-the-counter stocks
Money management fundForeign unlisted bonds¥–

12,9785,924
406

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

8. Segment information(1) Business segments
Millions of yen

Thousands of
U.S. dollars

For the six months
ended September 30

For the six months
ended September 30

2002

2001

2002

¥291,218
7,505
298,723¥266,143
6,637
272,780$2,375,351
61,2152,436,566

181,02156
181,077

180,526
27
180,553

1,476,517
457
1,476,974

22,801
5
22,806

16,195223
16,418

185,979
41
186,020

25,4495,518
30,967

16,101
6,586
22,687

207,577
45,008
252,585

Subtotal
Elimination of intersegment transactions
Total

533,573(13,084)¥520,489

492,438(13,473)¥478,965

4,352,145(106,721)$4,245,424

Operating costs and expenses:
Automobile
Materials handling equipment
Textile machinery
OthersElimination of intersegment transactions
Total¥283,441
173,500
22,10329,383(13,152)¥495,275¥259,236
172,546
16,217
19,847(13,291)¥454,555$2,311,917
1,415,171
180,286
239,665(107,276)$4,039,763

Operating income (loss):
Automobile
Materials handling equipment
Textile machinery
OthersElimination of intersegment transactions
Total¥ 15,282
7,577
703
1,584
68
¥ 25,214¥ 13,544
8,007
201
2,840
(182)
¥ 24,410$ 124,649
61,803
5,734
12,920555$ 205,661

Sales:
Automobile
Outside customer sales
Intersegment transactions
Materials handling equipment
Outside customer sales
Intersegment transactions
Textile machinery
Outside customer sales
Intersegment transactions
Others
Outside customer sales
Intersegment transactions

Main products of each segment
Automobile ………………………………… Passenger vehicles, diesel and gasoline engines, car air-conditioning compressors
Materials handling equipment …………… Counterbalanced forklift trucks, warehouse trucks, skid steer loaders, automated storage and retrieval systems, automatic guided vehicles
Textile machinery ………………………… Ring spinning frames, air-jet looms, water-jet looms
Others ……………………………………… Ball grid array plastic package substrates for IC chipsets, casting machines21

(2) Geographical segments
Millions of yen

Thousands of
U.S. dollars

For the six months
ended September 30

For the six months
ended September 30

2002

2001

2002

¥ 356,600
39,074
395,674¥324,118
29,723353,841$2,908,646
318,7113,227,357

94,762725
95,487

94,547704
95,251

772,936
5,914
778,850

67,7392,137
69,87658,506
2,118
60,624

552,520
17,431569,951

1,388
615

1,794
98

11,322
5,016

Subtotal
Elimination of intersegment transactions
Total

2,003
563,040(42,551)¥520,489

1,892
511,608(32,643)¥478,965

16,3384,592,496(347,072)$4,245,424

Operating costs and expenses:
Japan
North America
EuropeOthersElimination of intersegment transactions
Total¥374,084
92,58069,0492,139(42,577)¥495,275¥332,783
92,93259,450
1,951(32,561)¥454,555$3,051,256
755,139563,205
17,447(347,284)$4,039,763

Operating income (loss):Japan
North America
EuropeOthersElimination of intersegment transactions
Total¥ 21,590
2,907
827
(136)
26
¥ 25,214¥ 21,058
2,319
1,174
(59)
(82)
¥ 24,410$ 176,101
23,711
6,746(1,109)212$ 205,661

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

Significant countries belonging to each segment
North America …………………………….. U.S.A., Canada
Europe ……………………………………… Sweden, France, Germany
Other ………………………………………. India, China

9. Subsequent event
On December 17, 2002, the Company issued bonds without
collateral in the principle amount of ¥80.0 billion. The
Company intends to use the proceeds from the bond issue

for the redemption of matured corporate bonds as well as forcapital investment.

10th series of bonds without collateral

11th series of bonds without collateral

Total amount of issue
Maturity date
Interest rate

Total amount of issue
Maturity date
Interest rate

¥30 billion
December 20, 2007
0.41%

22

¥50 billion
December 20, 20121.13%