Management’s Discussion and Analysis of Financial Condition
and Results of Operations

The following Management’s Discussion and Analysis ofFinancial Condition and Results of Operations is based on
information known to management as of November 30,
2005. It includes forward-looking statements concerning
the expected future performance of Toyota Industries.
Please refer to “Cautionary Statement with Respect toForward-Looking Statements” at the beginning of thissemiannual report, which pertains to the report as awhole. All numbers are unaudited.

Results of Operations
Net Sales
During the six months ended September 30, 2005 (the“term”), the Japanese economy achieved a mild
recovery, reflecting growth in private-sector capital
investment spurred by improved corporate earnings aswell as a pickup in consumer spending. Overseas, theoverall economy moved onto a recovery track, as theU.S. economy continued its expansion and the European
economy strengthened further, while in Asia the Chinese
economy maintained a high growth rate.
Amid this operating environment, Toyota Industries
posted interim consolidated net sales of ¥699.0 billion, anincrease of ¥92.0 billion, or 15%, compared with the sixmonths ended September 30, 2004 (the “previous term”).
At the profit level, despite price increases for raw materials
and rises in depreciation and personnel expenses, Toyota
Industries recorded an increase in ordinary income of¥2.7 billion, or 7%, over the previous term to ¥41.6 billion.
This increase was achieved due largely to an increase in
net sales, the promotion of Group-wide cost-reduction
activities and growth in non-operating income. Interim
net income amounted to ¥25.0 billion, an increase of ¥1.1billion, or 4%, from the previous term.
Business results by geographical segment were asfollows.
Note: Net sales for each geographical segment do not include
intersegment transactions.

JapanNet sales amounted to ¥461.9 billion, an increase of ¥63.4
billion, or 16%, over the previous term. Operating income
totaled ¥24.5 billion, a decrease of ¥0.5 billion, or 2%. The
increase in net sales was due mainly to higher unit salesof vehicles and materials handling equipment. Operating
income decreased as a result of increases in prices for
raw materials and higher depreciation and personnel
expenses.

8TOYOTA INDUSTRIES CORPORATIONSEMIANNUAL REPORT 2006

North America
Net sales totaled ¥119.5 billion, an increase of ¥14.0billion, or 13%, over the previous term. Operating income
was ¥4.1 billion, an increase of ¥0.3 billion, or 9%. These
increases were due to higher unit sales by materials
handling equipment-manufacturing subsidiaries.

EuropeNet sales amounted to ¥102.2 billion, an increase of ¥12.1billion, or 13%, over the previous term. Operating income
totaled ¥3.1 billion, an increase of ¥0.6 billion, or 25%. These
increases reflected higher unit sales by materials handlingequipment-manufacturing subsidiaries.

Others
Net sales totaled ¥15.5 billion, an increase of ¥2.5 billion, or20%, over the previous term. Operating income was ¥0.6billion, an increase of ¥0.7 billion over the previous term.
Note: Please refer to “Letter to Shareholders” for results by businesssegment.

Cost of Sales and Selling, General andAdministrative Expenses
Cost of sales for the term totaled ¥586.8 billion, an
increase of ¥80.9 billion, or 16.0%, over the previous term.
Selling, general and administrative expenses totaled¥80.2 billion, an increase of ¥9.2 billion, or 12.9%, over theprevious term.

Non-Operating Income and Expenses
Non-operating income was ¥21.8 billion, an increase of¥2.9 billion, or 15.3%, over the previous term. This increase
resulted mainly from an increase in dividends from Toyota
Motor Corporation (TMC).
Non-operating expenses increased ¥2.2 billion, or21.4%, to ¥12.3 billion.

Income Taxes
Net of current and deferred income taxes for the term
totaled ¥14.0 billion, an increase of ¥1.8 billion, or 14.5%,
over the previous term.

Minority Interests in ConsolidatedSubsidiaries
Minority interests in consolidated subsidiaries increased¥0.3 billion, or 11.2% over the previous term, to ¥2.5 billion,
reflecting the increase in net income of consolidated
subsidiaries.

Net Income
Net income for the term was ¥25.0 billion, an increase of¥1.1 billion, or 4.4%, over the previous term. Net income
per share (EPS) was ¥78.41, compared with ¥75.31 for theprevious term, and diluted net income per share was¥78.38, compared with ¥75.28 for the previous term.

Financial Position
Total assets at the end of the term stood at ¥2,682.7 billion,
an increase of ¥355.8 billion, or 15.3%, over the previous
fiscal year ended March 31, 2005 (“fiscal 2005”).
Current assets were ¥438.7 billion, a decrease of ¥24.3billion, or 5.2%, from fiscal 2005, due mainly to a decreasein cash and cash equivalents.
Net property, plant and equipment was ¥496.8 billion,
an increase of ¥39.8 billion, or 8.7%, over fiscal 2005.
Intangible assets decreased ¥8.8 billion, or 7.5%, to ¥108.1
billion, due to a decrease in goodwill.
Investments and other assets increased ¥349.2 billion,
or 27.1%, to ¥1,639.0 billion. This increase was primarily
the result of a rise in the market prices of shares ofToyota Group companies, including TMC, held by Toyota
Industries.
Current liabilities stood at ¥419.7 billion, a decrease of¥1.9 billion, or 0.4%, over fiscal 2005.
Long-term liabilities were ¥893.0 billion, an increaseof ¥144.4 billion, or 19.3%, over fiscal 2005. Deferred tax
liabilities increased ¥129.7 billion as a result of the increasein the market value of investment securities.
Minority interests in consolidated subsidiaries increased¥2.9 billion, or 7.2%, over fiscal 2005 to ¥43.8 billion.
Shareholders’ equity stood at ¥1,326.1 billion, anincrease of ¥210.4 billion, or 18.9%, over fiscal 2005. Net
unrealized gains on other securities increased ¥197.6billion.
The ratio of shareholders’ equity to total assets was49.4%.

¥59.8 billion from ¥55.0 billion in the previous term. Cashflows from financing activities resulted in a ¥30.2 billion
increase, due primarily to an increase in commercial
paper of ¥52.3 billion. Net cash provided by financing
activities increased ¥20.8 billion from ¥9.4 billion in theprevious term. After translation adjustments, cash andcash equivalents as of September 30, 2005 amounted to¥73.8 billion, a decrease of ¥3.0 billion, or 4%, from the endof the first half of fiscal 2005.

Dividend Policy
The Company regards the benefit of shareholders as oneof 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 aims to meet theexpectations of shareholders while giving fullconsideration to business performance, capital demand,the dividend payout ratio on a consolidated basis andother factors. The Company intends to use retained
earnings to improve the competitiveness of its products,
augment production capacity in Japan and overseas, aswell as expand into new fields of business and strengthen
its corporate constitution in order to secure future profits
for its shareholders. It will also use retained earnings torepurchase treasury stock.
The Board of Directors of the Company voted todistribute an interim cash dividend of ¥18.0 per share, anincrease of ¥5.0 per share over fiscal 2005.

Cash Flows
Cash flows from operating activities increased ¥58.8
billion during the term, due mainly to income before
income taxes and minority interests of ¥41.6 billion.
Net cash provided by operating activities increased¥13.6 billion from ¥45.2 billion in the previous term. Cashflows from investing activities resulted in a ¥114.8 billion
decrease in cash during the term, due mainly to ¥95.5billion in payments for purchases of property, plant andequipment. Net cash used in investing activities increased

TOYOTA INDUSTRIES CORPORATIONSEMIANNUAL REPORT 20069