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 andExchange Law, and in conformity with accounting principles
and practices generally accepted in Japan, which are different
in certain respects from the application and disclosure
requirements of International Accounting 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.
The interim consolidated financial statements are notintended to present the consolidated financial position, resultsof operations and cash flows in accordance with accounting
principles and practices generally accepted in countries andjurisdictions other than Japan.
Amounts in U.S. dollars are included solely for theconvenience of readers outside Japan. The rate of ¥111.25=
US$1, the approximate rate of exchange prevailing at
September 30, 2003, has been used in translation. The
inclusion of such amounts are 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 other rates.

2. Summary of significant accounting policies(1) Consolidation
The interim consolidated financial statements include theaccounts of the Company and its 132 subsidiaries(40 domestic subsidiaries and 92 overseas subsidiaries, which
are listed on pages 24 and 25) as of September 30, 2003 and118 subsidiaries (32 domestic subsidiaries and 86 overseas
subsidiaries) as of September 30, 2002. The unconsolidated
subsidiaries are excluded from consolidation because such
subsidiaries would have no material effect on the consolidated
financial statements of Toyota Industries, or Toyota Industries’
owning a majority of such subsidiaries’ shares is temporary.
For the six-month period ended September 30, 2003,
14 subsidiaries were newly added to the scope of
consolidation. One unconsolidated subsidiary is excluded fromthe scope of consolidation because majority ownership of thissubsidiary is temporary.
For the six-month period ended September 30, 2002,

seven subsidiaries were newly added to the scope of
consolidation. Two unconsolidated 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 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 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.

(2) Investments in unconsolidated subsidiaries and affiliates
Investments in one unconsolidated subsidiary and 18 affiliates
as of September 30, 2003 and Investments in two
unconsolidated subsidiaries and 18 affiliates as of September
30, 2002 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 arelisted on page 25.

(3) Cash and cash equivalents
Cash and cash equivalents include all highly liquid investments,
generally with original maturities of three months or less, thatare readily convertible to known amounts of cash and are sonear maturity that they present insignificant risk of changes invalue because of changes in interest 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 in unconsolidated
subsidiaries and affiliates. Toyota Industries did not havetrading securities or held-to-maturity securities as of
September 30, 2003 and 2002, respectively. Other securities
with fair values are stated at fair value based on market prices
at interim period end. 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 fair values are stated at cost, as determinedby the moving average method.
Investments in unconsolidated subsidiaries and affiliates
are accounted for by the equity method (see Note 2 (2) above).

TOYOTA INDUSTRIES CORPORATIONSEMIANNUAL REPORT 200415

(5) Inventories
Inventories are stated mainly at cost determined by the moving average method.

(6) 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 andJapanese subsidiaries and by the straight-line method forforeign subsidiaries. Significant renewals and additions arecapitalized at cost. Repair and maintenance are charged toincome as incurred. Accumulated depreciation as of
September 30, 2003 and 2002 was ¥498,227 million($4,478,445 thousand) and ¥462,196 million, respectively.

(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 less than
20 years on a straight-line basis, while immaterial goodwill ischarged to income as incurred.

(8) Allowances for doubtful accounts
Toyota Industries adopted the policy of providing an allowancefor doubtful accounts in an amount sufficient to cover possible
losses on collection by estimating individually uncollectible

amounts and applying to the remaining accounts a percentage
determined by certain factors such as historical collection
experiences.

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

(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 the period.
To provide for the retirement benefits for directors andcorporate auditors, an amount which is calculated at the end of
the period as required by an internal rule describing theretirement benefits for directors and corporate auditors is
accrued.

(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 a method similar to that applicable to ordinary
operating leases.

(12) 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
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.

(13) Hedge accounting(a) Method of hedge accounting(c) Hedging policy

Mainly the deferral method of hedge accounting is applied. Incase of foreign currency forward contracts and foreign
currency option contracts, the hedged items are translated atcontracted forward rates if certain conditions are met.

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.

(b) Hedging instruments and hedged items
Hedging
instruments:

Hedged items:

16(d) Method used to measure hedge effectiveness
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 rateon transactions denominated in foreign
currencies (monetary assets and liabilities,
marketable securities and forecasted
transactions)

TOYOTA INDUSTRIES CORPORATIONSEMIANNUAL REPORT 2004

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.

(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 the relevant
fiscal year is reflected for the appropriation of retained earningsof consolidated subsidiaries. In Japan, the payment of bonuses

to directors and corporate auditors is made out of retained
earnings through an appropriation, instead of being charged tothe income for the period.

3. Assets pledged as collateral(1) Assets pledged as collateral as of September 30, 2003 and 2002 are as follows:
Thousands of
U.S. dollars

Millions of yen

2003

2002

2003

Investments in securities
Property, plant and equipment (other)
Machinery, equipment and vehicles
Trade notes and accounts receivable
Other¥29,804
12,099560
211
439¥25,080
8,874
560
482
42

$267,901
108,755
5,034
1,897
3,946

Total

¥43,113¥35,038$387,533(2) Secured liabilities as of September 30, 2003 and 2002 are as follows:
Thousands of
U.S. dollars

Millions of yen

2003

2002

2003

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

¥19,209
8,159
2,249
300

¥18,735
7,266
5,588
300

$172,665
73,33920,216
2,697

Total

¥29,917¥31,889$268,917

4. Contingent liabilities
Toyota Industries is contingently liable for guarantees as of September 30, 2003 and 2002 as follows:
Thousands of
U.S. dollars

Millions of yen

Guarantees given by the Company
Guarantees given by consolidated subsidiaries
Guarantee forwards given by the Company
Guarantees given by consolidated subsidiaries as of
September 30, 2003 and 2002 consist of 463,416 thousand of

2003

2002

2003

¥25,500
9,086
3,479

¥28,356
5,923
3,761

$229,213
81,672
31,272

Swedish krona and 455,290 thousand of Swedish krona,
respectively.

TOYOTA INDUSTRIES CORPORATIONSEMIANNUAL REPORT 2004

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 depreciation equivalents
under finance leases as of September 30, 2003 and 2002 is as follows:
Thousands of
U.S. dollars

Millions of yen

2003

2002

2003

Machinery and equipment:
Acquisition cost equivalents
Accumulated depreciation equivalents¥9,347
4,184¥7,721
2,409$84,018
37,609Machinery and equipment interim period end balance equivalents

5,163

5,312

46,409Tools, furniture and fixtures:
Acquisition cost equivalents
Accumulated depreciation equivalents

5,910
3,299

5,410
2,608

53,12429,654Tools, furniture and fixtures interim period end balance equivalents

2,611

2,802

23,470Total net leased properties¥7,774¥8,114$69,879

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

(b) Pro forma information regarding future minimum lease payments as of September 30, 2003 and 2002 is as follows:
Thousands of
U.S. dollars

Millions of yen

2003

2002

2003

Due within 1 year
Due after 1 year

¥2,6445,130¥2,2705,844$23,766
46,113

Total¥7,774¥8,114$69,879

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, 2003 and 2002 are as follows:
Millions of yen

2003
2002

¥1,536
1,272

Pro forma depreciation expenses, which are not reflected in
the accompanying interim consolidated statements of income,are computed mainly by the straight-line method whichassumes zero residual value and leasing term to be useful lives

Thousands of
U.S. dollars$13,807–

for the six-month periods ended September 30, 2003 and2002, and are equivalent to the amount of total lease
payments of the above.

(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, 2003 and 2002 is as follows:
Thousands of
U.S. dollars

Millions of yen

18

2003

2002

2003

Machinery and equipment:
Acquisition cost
Accumulated depreciation¥7,5504,561¥7,238
4,088$67,865
40,998

Total net leased properties¥2,989¥3,150$26,867

TOYOTA INDUSTRIES CORPORATIONSEMIANNUAL REPORT 2004

(b) Pro forma information regarding future minimum lease payments as of September 30, 2003 and 2002 is as follows:
Thousands of
U.S. dollars

Millions of yen

2003

2002

2003

Due within 1 year
Due after 1 year

¥1,8992,686¥1,9152,709$17,069
24,144Total¥4,585¥4,624$41,213

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, 2003 and 2002 are as follows:
Millions of yen

2003
2002

¥1,087
1,018

Thousands of
U.S. dollars$9,771–(d) Depreciation for the six-month periods ended September 30, 2003 and 2002 are as follows:
Millions of yen

2003
2002

¥846
751

Thousands of
U.S. dollars$7,604–(3) Operating leases (as a lessee)
Pro forma future lease payments under operating leases as of September 30, 2003 and 2002 are as follows:
Thousands of
U.S. dollars

Millions of yen

2003

2002

2003

Due within 1 year
Due after 1 year

¥ 3,050
14,322¥ 2,271
8,904$ 27,416
128,737

Total¥17,372¥11,175$156,153(4) Operating leases (as a lessor)
Pro forma future minimum rentals under operating leases as of September 30, 2003 and 2002 are as follows:
Thousands of
U.S. dollars

Millions of yen

2003

2002

2003

Due within 1 year
Due after 1 year

¥ 6,156
10,979¥ 4,186
7,631$ 55,335
98,687

Total¥17,135¥11,817$154,022

TOYOTA INDUSTRIES CORPORATIONSEMIANNUAL REPORT 2004

19

6. Marketable securities(1) As of September 30, 2003(a) Other securities with readily determinable fair value are as follows:
Millions of yen
Acquisition cost

Carrying amount

Stocks
Bonds
Government and municipal bonds, etc.
Other bonds¥187,291¥930,939

Difference¥743,648

0
1

0
1

–
–

Total

¥187,292¥930,940¥743,648

Thousands of U.S. dollars
Acquisition cost

Carrying amount

Difference

Stocks
Bonds
Government and municipal bonds, etc.
Other bonds$1,683,515$8,367,991$6,684,476

0
9

0
9

–
–

Total

$1,683,524$8,368,000$6,684,476(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 fund¥–
17,476
67

Thousands of
U.S. dollars$–
157,088602(2) As of September 30, 2002(a) Other securities with readily determinable fair value are as follows:
Millions of yen
Acquisition cost

Carrying amount

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

Difference¥668,407

0
7,644
3
470

0
7,640
3
650

–
(4)
–
180

Total

¥182,535¥851,118¥668,583(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, 2002 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

20

TOYOTA INDUSTRIES CORPORATIONSEMIANNUAL REPORT 2004¥–

15,137
20,072–

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

2003

2002

2003

¥296,184
7,435¥291,218
7,505$2,662,329
66,831

303,619

298,723

2,729,160

216,331192

181,02156

1,944,548
1,726

216,523

181,077

1,946,274

23,824
7

22,801
5

214,148
63

23,83122,806214,21133,2496,803

25,4495,518

298,867
61,15140,05230,967360,018584,025(14,437)

533,573(13,084)

5,249,663(129,771)

Total¥569,588¥520,489$5,119,892

Operating costs and expenses:
Automobile
Materials handling equipment
Textile machinery
OthersElimination of intersegment transactions¥288,902
207,671
23,42736,936(14,367)¥283,441
173,500
22,10329,383(13,152)$2,596,872
1,866,706
210,580
332,009(129,142)

Total¥542,569¥495,275$4,877,025

Operating income (loss):
Automobile
Materials handling equipment
Textile machinery
OthersElimination of intersegment transactions¥ 14,717
8,852
404
3,116
(70)

¥ 15,282
7,577
703
1,584
68

$ 132,288
79,5683,631
28,009
(629)

Total

¥ 27,019¥ 25,214$ 242,867

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

Subtotal
Elimination of intersegment transactions

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

TOYOTA INDUSTRIES CORPORATIONSEMIANNUAL REPORT 200421

(2) Geographical segments
Thousands of
U.S. dollars

For the six months
ended September 30

For the six months
ended September 30

2003

2002

2003

¥383,452
40,706¥356,600
39,074$3,446,759
365,897424,158

395,674

3,812,656

100,333
569

94,762725

901,870
5,115

100,902

95,487

906,985

81,526
3,031

67,7392,137

732,818
27,24584,557

69,876760,063

4,277
736

1,388
615

38,445
6,616

5,013

2,003

45,061

614,630(45,042)563,040(42,551)

5,524,765(404,873)

Total¥569,588¥520,489$5,119,892

Operating costs and expenses:
Japan
North America
EuropeOthersElimination of intersegment transactions¥399,972
97,523
83,076
4,919(42,921)¥374,084
92,58069,0492,139(42,577)$3,595,254
876,611746,751
44,216(385,807)

Total¥542,569¥495,275$4,877,025

Operating income (loss):Japan
North America
EuropeOthersElimination of intersegment transactions¥ 24,186
3,379
1,481
94
(2,121)¥ 21,590
2,907
827
(136)
26

$ 217,402
30,374
13,312845(19,066)

Total¥ 27,019¥ 25,214$ 242,867

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

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

22

Millions of yen

TOYOTA INDUSTRIES CORPORATIONSEMIANNUAL REPORT 2004