Financial Section

66 Consolidated Eleven-Year Summary
68 Management’s Discussion and Analysis ofFinancial Condition and Results of Operations
78 Consolidated Balance Sheets
80 Consolidated Statements of Income
81 Consolidated Statements of Shareholders’ Equity
82 Consolidated Statements of Cash Flows
83 Notes to Consolidated Financial Statements
102 Report of Independent Accountants

TOYOTA INDUSTRIES CORPORATION Annual Report 2005

65

Consolidated Eleven-Year Summary
Consolidated Eleven-Year Summary

Toyota Industries Corporation
Years ended March 31
The figures in this table are unaudited.
Millions of yen

2005

2004

2003

2002

For The Year
¥1,241,538¥1,164,379¥1,069,219¥ 980,163

Operating income

53,12052,63152,47846,330Ordinary income

70,91358,971

51,37547,866

Income before income taxes

70,35457,741

43,67047,866

Net income

43,35833,623

21,93427,311¥ 539,003¥ 497,357¥ 451,594¥ 396,470

Depreciation and amortization

70,21365,35259,15455,174

Capital expenditures

136,506

89,50987,55988,320Research and development expenses

30,051

29,562

29,70529,985Net sales

Overseas sales

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

135.09¥108.04

¥

70.19

¥

87.28

Net income — diluted

135.03101.97

62.90

78.26

Shareholders’ equity

3,504.80

3,199.69

2,522.52

2,809.54

32.00

24.00

22.00

19.00

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

Shareholders’ equity

1,115,747

1,016,764

738,868

878,812

Cash dividends
At Year-End

Common stock

80,46380,46368,04768,022

Number of shares outstanding (excluding treasury stock) (thousands)

318,237

317,666

292,777

312,796

Cash FlowsNet cash provided by operating activities¥ 100,095

92,406¥ 103,183(128,231)(92,668)(95,121)

Net cash provided by (used in) financing activities

50,021(56,015)

57,776

1,225

Cash and cash equivalents at end of year

100,536

77,212

136,929

71,120Return on equity (ROE) (%)

4.1

3.8

2.7

3.0

Return on assets (ROA) (%)

2.0

1.8

1.3

1.5

Net cash used in investing activities¥¥

81,078(106,711)

Indices

Return on sales (ROS) (%)

3.5

2.9

2.1

2.8

Debt/equity ratio (%)

34.4

31.6

55.6

35.9

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

7.7

7.4

¥ 128,381¥ 113,676

30,99027,431

6.7¥

95,47225,0305.8¥

97,54023,056

Notes: 1. U.S. dollar amounts have been translated from yen, for convenience only, at the rate of ¥107.39 = US$1, the exchange rate on March 31, 2005.
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 on fixed assets have been applied. Details are described in Notes to Consolidated Financial
Statements.
(2) Effective beginning the year ended March 31, 2003, the new accounting standards for net income per share have been applied. Details are described in Notes to Consolidated Financial Statements.
(3) Effective beginning the year ended March 31, 2001, the new accounting standards for retirement benefits, financial instrument and foreign currency transactions have been 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 and long-term liabilities.

66

TOYOTA INDUSTRIES CORPORATION Annual Report 2005

2001

2000

1999

1998

1997

1996

1995

2005

¥ 767,383¥625,773¥558,876¥572,698¥530,851¥476,084¥457,565$11,561,021

47,304

28,867

24,81432,72932,67519,926

16,796494,646

44,525

27,162

23,172

33,202

31,157

21,56016,775660,332

38,22027,162

23,172

33,202

31,157

21,56016,775655,126

22,637

13,686

10,391

20,491

17,931

13,54910,638403,743¥ 298,794¥191,992¥178,737¥150,417¥116,738¥119,358¥ 99,835$ 5,019,117¥

46,45442,752

34,38027,95828,04327,24026,359653,813

127,273

44,74660,46862,00735,40829,62927,583

1,271,124

26,19624,062

23,231

23,112

19,691

18,77017,633279,831

75.90

¥

48.32

¥

36.30

¥

72.33

¥

63.55

¥

48.03

¥

37.72

$

1.26

67.77

43.18

32.62

63.48

55.20

47.13

37.10

1.26

3,036.77

1,116.62

1,063.05

1,056.81

996.18947.04905.89

32.64

17.00

16.00

16.00

16.00

16.00

13.00

13.00

0.30

¥1,869,642¥685,914¥617,071¥593,004¥556,291¥454,503¥427,206$21,667,045

951,298

316,293

301,158

304,097

281,154

267,145

255,536

10,389,673
749,260¥¥

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

31,321

313,260

283,260

283,296287,752

282,233

282,083

282,082$

932,070

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

N/A

N/A(155,871)(67,187)(96,222)(26,897)(74,968)

N/A

N/A(1,194,068)

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

69,081

N/A

N/A

465,788

95,297

77,332

49,95574,30362,322

N/A

N/A

936,177

3.6

4.4

3.4

7.0

6.5

5.2

4.2

1.8

2.1

1.7

3.6

3.6

3.1

2.5

2.9

2.2

1.9

3.6

3.4

2.8

2.3

30.7

60.5

51.6

37.5

46.0

20.4

20.2

9.1

14.5

16.4

17.6

13.0

8.7

6.4

79,921¥ 64,681¥ 51,033¥ 55,212¥ 55,548¥ 44,830¥ 41,502

21,11813,132

12,797

11,23910,73810,806

10,452

Consolidated Eleven-Year Summary

Thousands of
U.S. dollars

Millions of yen$ 1,195,465(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, general and administrative expenses.
Equity in earnings/losses of affiliates, which had been added to or deducted from income before income taxes until the previous years, has been 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 2005

67

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

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 2005.
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 Corporation and its consolidated
subsidiaries to differ materially from any projections or forward-looking statements. These risks and uncertainties include, but are notlimited to, those listed under “Risk Information” and elsewhere in this annual report.
The fiscal year ended March 31, 2005 is referred to as fiscal 2005 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” herein are to theCompany and its 146 consolidated subsidiaries.

Results of Operations
Operating Performance
In fiscal 2005, consumer spending did not fully recover due
to unstable employment conditions. However, the Japanese
economy continued on its slow path to recovery as private-sector
capital investment increased on the back of improved corporate
earnings. Overseas, the overall economic outlook was brighter,with an expanding U.S. economy and the European economy
maintaining its underlying strengths.
In this operating environment, Toyota Industries made efforts
to strengthen its corporate structure by attempting to ensure
customer trust through a dedication to quality, the developmentof appealing new products, aggressive sales promotions andexecution of a Group-wide effort to reduce costs. As a result,
total consolidated net sales of Toyota Industries amounted

Net Sales, Overseas Sales andOverseas Sales Ratio

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

1,400

70

80

8

1,200

60

1,000

50

60

6

800

40
40

4

600

30

400

20

20

2

200

10

0
FY

01

02

03

04

05

0

Net sales (left)
Overseas sales (left)
Overseas sales ratio (right)68

to ¥1,241.5 billion, an increase of ¥77.2 billion (6.6%) overfiscal 2004. (For a breakdown of operating results by businesssegment, refer to Operating Performance Highlights by Business
Segment.)
At the profit level, ordinary income amounted to ¥70.9
billion, an increase of ¥11.9 billion (20.3%) over fiscal 2004.
Despite the effects of a steep rise in crude oil and steel prices,increases in labor and pre-production expenses and unfavorable
exchange rate fluctuations, this increase was largely achieved
due to an increase in global sales centered on the Materials
Handling Equipment Segment, improvements in productivity
and Group-wide cost-reduction activities, as well as a strong
performance by ST Liquid Crystal Display Corp. (STLCD), a
joint venture with Sony Corporation (Sony) that is accounted forby the equity method. Net income amounted to ¥43.4 billion, an
increase of ¥9.7 billion (29.0%) over fiscal 2004.

TOYOTA INDUSTRIES CORPORATION Annual Report 2005

0
FY

01

(%)

02

03

Ordinary Income
Ordinary Income Ratio

04

05

0

Operating Income andOperating Income Ratio

Net Sales ofAutomobile Segment

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

60

12

800

40

50

10
600

30

40

8

30

6

400

20

20

4
200

10

10

2

0
FY

01

02

03

04

05

0

0

FY 01

02 03 04 05

0
FY

01 02 03 04 05

Operating income (left)
Operating income ratio (right)

Cost of Sales and Selling,
General and Administrative Expenses
Cost of sales for fiscal 2005 increased ¥63.3 billion (6.5%) overfiscal 2004 to ¥1,041.8 billion, due mainly to an increase in net
sales.
Selling, general and administrative expenses increased ¥13.3
billion (10.0%) to ¥146.6 billion, due mainly to an increase in
selling expenses accompanied by an increase in net sales, aswell as the introduction of pro forma standard taxation.

Operating Income
Operating income for fiscal 2005 increased ¥0.5 billion (0.9%)
over fiscal 2004 to ¥53.1 billion. Despite a decrease in operating
income by the Company, overall operating income increased
due primarily to the brisk performance of Toyota Industries’
subsidiaries.

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

for Europe increased. Sales of the fully remodeled Vitz, which
was re-launched in Japan in February 2005, also contributed tooverall results.
Net sales of the Engine Business totaled ¥113.3 billion,
an increase of ¥5.9 billion (5.5%) over fiscal 2004. Despite
decreases in sales of the UZ gasoline engine, which is mounted
on the Land Cruiser, and the AZ gasoline engine, which isinstalled in the Estima, sales of the CD diesel engine, which
is mounted on TOYOTA-brand cars for Europe, such as theRAV4 and Avensis, increased. Toyota Industry Automotive Parts(Kunshan) Co., Ltd. in Jiangsu Province, China, which wasestablished as a joint venture with Toyota Tsusho Corporationand Lioho Machine Works, Ltd. to produce and sell automotive
foundry parts, began operations in April 2005. Also, Toyota

Management’s Discussion and Analysis of Financial Condition and Results of Operations(¥ Billion)

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

15

Automobile Segment
Net sales of the Automobile Segment totaled ¥616.2 billion,
an increase of ¥12.3 billion (2.0%) over fiscal 2004. However,operating income decreased ¥4.8 billion (17.3%) to ¥22.8
billion.
In the automobile industry as a whole, domestic sales were
almost the same as in fiscal 2004. Domestic production, on theother hand, increased over the same period.
Within this segment, net sales of the Vehicle Businesstotaled ¥278.8 billion, almost the same as in fiscal 2004.
While sales of the Corolla Sedan for North America and Yaris(European version of the Vitz) decreased, sales of the RAV4

10

5

0
FY

01

02

03

04

05

Japan
North America
EuropeAsia and Oceania

TOYOTA INDUSTRIES CORPORATION Annual Report 2005

69

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

Net Sales of
Textile Machinery
Segment

Operating Income (Loss) of
Textile Machinery
Segment(¥ Billion)(¥ Billion)(¥ Billion)

30

50

3

40

2

30

1

20

0

10

(1)

Net Sales ofMaterials Handling
Equipment Segment

Operating Income ofMaterials Handling
Equipment Segment(¥ Billion)
600
500

25

400

20

300

15

200

10

100

5

0

FY 01

02 03 04 05

0

FY 01

02 03 04 05

Motor Industries Poland Sp.zo.o., jointly established with Toyota
Motor Corporation (TMC) in October 2002, started production of
the latest AD diesel engine to be mounted on the Avensis, whichis assembled in England by TMC.
Net sales of the Car Air-Conditioning Compressor Businesstotaled ¥198.0 billion, approximately the same level as for fiscal
2004. While sales in the domestic market increased as a resultof an increase in models incorporating our car air-conditioning
compressors, sales overseas suffered due mainly to sluggish salesof some automobiles fitted with our products. In July 2004, theCompany and DENSO Corporation (DENSO) jointly established
TD Automotive Compressor Georgia, LLC (TACG) in Georgia,
the United States, as a plant manufacturing variable-displacement
compressors. TACG is slated to start plant operations in
December 2005. In April 2004, our cumulative productionof car air-conditioning compressors in Japan, North America
and Europe reached 200 million units since we commenced
production in 1960.

Materials Handling Equipment Segment
Net sales of the Materials Handling Equipment Segment
increased ¥60.5 billion (13.7%) over fiscal 2004 to ¥504.0 billion.
Operating income increased ¥6.7 billion (34.8%) to ¥26.1 billion.
In the materials handling equipment industry as a whole,sales increased substantially over fiscal 2004. Sales were strong
in the Japanese market thanks to an improvement in private-sector
capital investment, while the global economic recovery
contributed to brisk sales in overseas markets.
Toyota Material Handling Company (TMHC), our in-housecompany, sold more than 103,000 TOYOTA-brand lift trucks andother materials handling equipment in calendar year 2004, anincrease of 21% over the same period in 2003. This increase wasdue largely to the implementation of a variety of sales measures,such as proposal-based sales, in Japan, as well as the enhancement

70

TOYOTA INDUSTRIES CORPORATION Annual Report 2005

0

FY 01

02 03 04 05

(2)

FY 01

02 03 04 05

of the global sales network, especially in North America, Europe,
Asia and South America, and vigorous sales promotion activities
targeting major clients. This marked a world first for a single
brand to sell more than 100,000 units in a single year. TMHC
achieved a 42.6% share in the Japanese lift truck market in 2004,
the same percentage as in 2003. In August 2004, we enhanced our
product lineup with the re-introduction of all 14 models of large
lift trucks (10-ton to 24-ton) after a full model change.
During the same period, BT Industries AB, one of our
subsidiaries and a major manufacturer of warehouse trucks,
achieved a substantial increase in sales on the back of vigorous
sales activities and strong sales in North American and European
markets.

Textile Machinery Segment
Net sales of the Textile Machinery Segment decreased ¥2.1
billion (4.5%) from fiscal 2004 to ¥43.9 billion. This segment
posted an operating loss of ¥0.8 billion, a decrease of ¥0.9 billion(871.0%).
In the textile machinery industry, the mainstay Chinese
market showed signs of recovery. However, the lingering effects
of monetary tightening and other factors contributed to a lack in
dynamism in terms of capital investment.
Although orders for spinning frames from Pakistan increased,a decrease in orders for air-jet looms from China, as well asa decrease in orders for water-jet looms due to high prices ofsynthetic yarns arising from a drastic hike in crude oil prices
worldwide, were incurred.

Others Segment
Net sales of the Others Segment increased ¥6.3 billion (8.9%)
over fiscal 2004 to ¥77.4 billion. Operating income decreased¥0.5 billion (8.8%) to ¥5.2 billion.
TIBC Corporation, a joint venture with Ibiden Co., Ltd.

Operating Income of
Others Segment

Net Income per Share

(Including Elimination ofIntersegment Transactions)(¥ Billion)(¥ Billion)

(¥)

80

6

140
120

5
60

100
4
80

40

3
60
2

40

20

0
FY

01 02 03 04 05

1

20

0

0

FY

01 02 03 04 05(Ibiden) that manufactures and sells semiconductor plastic
package substrates, underwent strong demand for plastic package
substrates for personal computers.
As one core business for driving future growth, Toyota
Industries entered the Logistics Solutions Business, which
undertakes all phases of logistics from logistics planning to theoperation of distribution centers for the purpose of reducing
logistics costs for customers. Sales of this business are steadily
expanding. To expand the scope of services available in thisbusiness, Toyota Industries made Asahi Security Co., Ltd.
(Asahi Security) into one of its subsidiaries in March 2005. The
company provides comprehensive cash management outsourcing
services, including cash collection and delivery, sales proceeds
management and electronic security, to retailers, service
businesses and transportation operators.

Basic
Diluted

FY

01

02

03

04

05

EuropeNet sales increased ¥21.2 billion (12.6%) over fiscal 2004 to¥188.7 billion. Operating income was ¥4.7 billion, an increase of¥1.5 billion (49.1%). Both increases resulted from an increase insales volumes by lift truck-manufacturing subsidiaries.

Others
Net sales were ¥25.6 billion, an increase of ¥12.7 billion (98.9%)
over fiscal 2004. Operating income amounted to ¥0.6 billion,
a turnaround of ¥0.8 billion (584.8%) from an operating loss
recorded in the previous fiscal year.

Non-Operating Income and Expenses

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

Non-operating income for fiscal 2005 totaled ¥38.3 billion, an
increase of ¥8.1 billion (26.8%) over fiscal 2004. This increase
resulted mainly from an increase in dividends income from TMC
and higher equity in earnings of STLCD.
Non-operating expenses decreased ¥3.4 billion (14.1%) fromfiscal 2004 to ¥20.5 billion, due mainly to decreases arising froman exchange loss and a loss on disposal of fixed assets.

Japan

Income before Income Taxes

Net sales totaled ¥815.0 billion, an increase of ¥29.8 billion (3.8%)
over fiscal 2004, due largely to an increase in sales volume ofmaterials handling equipment. On the other hand, operating
income decreased ¥2.3 billion (4.9%) to ¥43.6 billion as a resultof an increase in prices of raw materials.

Income before income taxes increased ¥12.6 billion (21.8%) overfiscal 2004 to ¥70.4 billion, attributable primarily to an increasein ordinary income and a decrease in provision for retirement andseverance benefits for directors and corporate auditors posted infiscal 2004.

North America

Income Taxes

Net sales amounted to ¥212.3 billion, an increase of ¥13.5 billion(6.8%) over fiscal 2004. Operating income increased ¥0.2 billion(3.1%) to ¥6.3 billion. These increases were due primarily tohigher sales volumes by lift truck-manufacturing subsidiaries.

Income taxes totaled ¥22.3 billion, an increase of ¥1.5 billion(7.3%) over fiscal 2004. An increase in income taxes at
subsidiaries offset a decrease in income taxes at the Company.

Sales by Geographical Segment

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

Net Sales of
Others Segment

TOYOTA INDUSTRIES CORPORATION Annual Report 2005

71

Minority Interest in Consolidated Subsidiaries
Management’s Discussion and Analysis of Financial Condition and Results of Operations

Minority interest in consolidated subsidiaries increased ¥1.4
billion (40.7%) over fiscal 2004 to ¥4.7 billion, due primarily torobust business performance of subsidiaries.

Net Income
Net income totaled ¥43.4 billion, an increase of ¥9.7 billion(29.0%) over fiscal 2004. Net income per share was ¥135.09,
compared with ¥108.04 in fiscal 2004. Diluted net income pershare increased from ¥101.97 in fiscal 2004 to ¥135.03.

Liquidity and Capital Resources
Toyota Industries’ financial policy is to ensure sufficientfinancing and liquidity for its business activities and to maintainstrong balance sheets. Currently, funds for capital investments
and other long-term capital needs are provided from retained
earnings and long-term debt, and working capital needs are met
through short-term loans. Long-term debt financing is carriedout 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 as ofMarch 31, 2005.
Toyota Industries continues to maintain its solid financial
condition. Through the use of such current assets as cash andcash equivalents and securities, as well as free cash flows andfunds procured from financial institutions, Toyota Industries
believes that it will be able to provide sufficient funds for theworking capital necessary to expand existing businesses anddevelop new projects, and for future investments.
Regarding fund management, the Company undertakes
integrated fund management of its subsidiaries in Japan, while
Toyota Industries North America, Inc. (TINA) and Toyota
Industries Finance International AB (TIFI) centrally manage thefunds of subsidiaries 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.

Assets, Liabilities and Shareholders’ Equity
Total assets at the end of fiscal 2005 amounted to ¥2,326.8
billion, an increase of ¥314.8 billion (15.6%) over the end of
fiscal 2004. This increase was attributable mainly to an increase
in investments and other assets as well as the inclusion of Asahi
Security into consolidation.
Current assets increased ¥113.1 billion (32.3%) fromthe previous fiscal year-end to ¥463.0 billion. This increase

72

TOYOTA INDUSTRIES CORPORATION Annual Report 2005

Total Assets, Shareholders’ Equity
and Shareholders’ Equity Ratio(¥ Billion)

(%)

2,500

100

2,000

80

1,500

60

1,000

40

500

20

0
FY

01

02

03

04

05

0

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

primarily reflected an increase in trade notes and accounts
receivable as well as the inclusion of Asahi Security into
consolidation.
Property, plant and equipment increased ¥67.7 billion(17.4%) to ¥457.1 billion. Intangible assets increased ¥17.1
billion (17.1%) to ¥117.0 billion due to an increase in goodwill.
Investments and other assets increased ¥117.0 billion(10.0%) to ¥1,289.8 billion. This increase was mainly the resultof an increase in the market prices of shares of Toyota Group
companies, including TMC, held by Toyota Industries.
On the liabilities side, current liabilities increased ¥95.2
billion (29.2%) from the previous fiscal year-end to ¥421.5
billion. This increase was due mainly to an increase in tradenotes and accounts payable as well as the inclusion of Asahi
Security into consolidation.
Long-term liabilities amounted to ¥748.6 billion, an increaseof ¥114.7 billion (18.1%) over the previous fiscal year-end. Thiswas due chiefly to an increase in deferred tax liabilities as aresult of an increase in the market value of investment securities.
Minority interest in consolidated subsidiaries increased ¥6.0
billion (17.1%) to ¥40.9 billion.
Shareholders’ equity increased ¥99.0 billion (9.7%) to¥1,115.7 billion. This was mainly because of an increase of¥57.1 billion in net unrealized gains on other securities in
response to an increase in the market value of investment
securities. The ratio of shareholders’ equity to total assets
decreased to 48.0% from 50.5% at the end of the previous fiscal
year, while shareholders’ equity per share at year-end increasedto ¥3,504.80 from ¥3,199.69.

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

150

140

100

120

50

100

0

80

(50)

60

(100)

40

(150)

20

(200)
FY

01

02

03

04

05

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

Cash Flows
Cash flows from operating activities amounted to ¥100.1 billion
in fiscal 2005, due largely to income before income taxes
amounting to ¥70.4 billion. Net cash provided by operating
activities increased ¥7.7 billion from ¥92.4 billion in fiscal 2004.
Cash flows from investing activities resulted in a decrease in cashof ¥128.2 billion in fiscal 2005, attributable primarily to paymentsfor purchases of property, plant and equipment amounting to¥110.1 billion. Net cash used in investing activities increased¥35.6 billion from ¥92.7 billion for fiscal 2004. Cash flows fromfinancing activities resulted in an increase in cash of ¥50.0 billion
in fiscal 2005, due mainly to proceeds from issuances of bonds
in an amount of ¥50.0 billion. Net cash provided by financing
activities increased ¥106.0 billion from ¥56.0 billion in net cashused in financing activities for fiscal 2004.
After translation adjustments, cash and cash equivalents asof March 31, 2005 stood at ¥100.5 billion, an increase of ¥23.3
billion (30.2%) over fiscal 2004.

Investment in Property, Plant and Equipment
During fiscal 2005, Toyota Industries invested in property, plantand equipment in the amount of ¥131,296 million (including¥19,974 million in vehicles and materials handling equipment
for lease) for the primary purposes of new product launches,
streamlining and renewal of production equipment, andaugmentation of R&D facilities. Necessary funds were provided
by a portion of bonds, treasury stock and bank loans.
By segment, investments in property, plant and equipment
totaled ¥81,554 million in the Automobile Segment, ¥31,860

0
FY

01

02

03

04

05

Automobile
Materials Handling Equipment
Textile Machinery
Othersmillion in the Materials Handling Equipment Segment, ¥1,236
million in the Textile Machinery Segment and ¥16,646 million
in the Others Segment.

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

Cash Flows

Strategies and Outlook
Business Strategies
Since its establishment as a specialized textile machinery
manufacturer in 1926, Toyota Industries has steadily expanded
the scope of its businesses. Its operations are divided into
three strategic categories based on the characteristics of these
operations and the mission assigned to each.

First Category: Vehicle Business and Engine Business<Mission>
As a member of the Toyota Group, to contribute to the highquality and technological advances of TOYOTA cars, thus
expanding our market presence.

Second Category: Car Air-Conditioning Compressor
Business, Materials Handling Equipment Business andTextile Machinery Business<Mission>
To aggressively cultivate and expand global markets through thedesign and development of products using Toyota Industries’
unique technologies. The Car Air-Conditioning Compressor
Business and Materials Handling Equipment Business, inparticular, serve as core businesses driving the growth of ouroperations.

TOYOTA INDUSTRIES CORPORATION Annual Report 2005

73

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

74

Third Category: Electronics Business, Logistics Solutions
Business and Other Businesses, etc.
<Mission>
To be a key source of Toyota Industries’ future growth.
The first category, the Vehicle Business and the Engine Business,handles mainly the production of vehicles consigned by TMC
and the production of engines for TOYOTA cars. Determined
to play a more important role in the Toyota Group, Toyota
Industries is making ongoing efforts to improve its production
technologies and strengthen quality control. While contributing
to the further development of the Toyota Group, these twobusinesses also serve as the foundation intrinsic to Toyota
Industries’ growth.
Toyota Industries remains committed to strengthening its
R&D capability and improving productivity as it strives to takea more proactive approach to the development and productionof TOYOTA cars and engines. Toyota Industries will also
make proposals to TMC for the design and launch of auto partsand small cars, and actively work to ensure such proposals
are adopted. In the Engine Business, Toyota Industries willcontribute to TMC’s global strategy, especially in Europe, by
supplying its diesel engines to TMC. Through such strategies
and actions, Toyota Industries fully expects to expand its market
presence.
The second category comprises the Car Air-Conditioning
Compressor Business, the Materials Handling Equipment
Business and the Textile Machinery Business. In thesebusinesses, Toyota Industries will aim to cultivate global markets
by accurately pinpointing customer needs and applying our
proprietary technologies to develop and sell products tailored tothese needs. Recognizing that technological improvement is the
key to competitiveness, Toyota Industries strives to strengthen
its technological development capabilities by nurturing superior
engineers. Because our Car Air-Conditioning Compressor
Business and the Materials Handling Equipment Business are
positioned as core businesses, Toyota Industries intends toconcentrate its allocation of management resources toward thesebusinesses. In the Materials Handling Equipment Business, wewill move toward the further integration of TOYOTA Material
Handling Company and the BT Industries Group, as we strive tocreate additional synergies.
The third category primarily consists of the Electronics
Business and the Logistics Solutions Business. Toyota Industries
will give these businesses priority in allocating management
resources, with the aim of cultivating these into future
core businesses. Electronics-related businesses, principally
involving power electronics parts for automobiles, consumer
electronics and LCDs, are characterized by rapid advances intechnological innovation that require a stronger R&D capability
and ongoing capital investment to maintain competitiveness.
The key to success in this field is to get production on track

TOYOTA INDUSTRIES CORPORATION Annual Report 2005

quickly, improve the product rejection rate and achieve aquick return on investment. To participate in the Electronics
Business and expand operations within a short period of timealong with diversifying the risks of entering new areas of thisbusiness, Toyota Industries has carried out independent productdevelopment, while also establishing successful joint ventureswith Sony and Ibiden. In relation with conducting R&D on
power electronics parts for automobiles, radio tuners and organic
light-emitting diodes, we envision the Electronics Business as a
key source of future corporate growth.
In recent years, Japanese industries have been increasingly
moving toward outsourcing of product distribution and storage
functions to reduce logistics costs. Viewing this trend as anopportunity, Toyota Industries launched the Logistics Solutions
Business in Japan. Backed by our extensive materials handlingknow-how accumulated through the production and sales oflift trucks and other materials handling equipment, we strive tooffer customer-oriented proposals for optimized logistics andcost reduction. Toyota Industries intends to proactively allocate
management resources to the Logistics Solutions Business tobuild it into a new source of stable revenues in the years ahead.

Outlook for Results for Fiscal 2006
Toyota Industries expects the Japanese economy to continue
along a steady path toward recovery. However, the pace ofrecovery will likely remain slow, and temporary economic
stagnation is anticipated due to a correction phase. Conversely,
uncertainties persist regarding the fluctuations of exchange rates
and the rising prices of raw materials such as crude oil and steel
in Japan and abroad. Overseas, concerns over the deceleration of
the U.S., European and Chinese economies preclude optimism.
For fiscal 2006, ending March 31, 2006, Toyota Industries
forecasts consolidated net sales of ¥1,450.0 billion, ordinary
income of ¥75.0 billion and net income of ¥45.0 billion. We aredetermined to heighten the comprehensive capabilities of Toyota
Industries as a whole through the development of appealing new
products with an unwavering emphasis on quality, as well as
the enhancement of sales, service and cost-reduction activities
Group-wide.
Our projections are based on an exchange rate of¥105.0=US$1.

Dividend Policy
The Company regards the benefits of shareholders as one ofits most important management policies. Based on this stance,
we will strive to strengthen Toyota Industries’ corporate
constitution, promote proactive business development and raise
its corporate value.
The Company’s dividend policy is to meet the expectationsof shareholders while giving full consideration to businessRisk Information
The following represent risks that could have a material impact
on Toyota Industries’ financial condition, business results andshare prices. The risks mentioned in this annual report represent
only a portion of the risks that could have an impact on Toyota
Industries’ financial condition and business results, and do notnecessarily cover all possible risks. There is also a possibility
that Toyota Industries could be affected in the future by risks
currently unknown or not considered noteworthy or significant.

Principal Customers
Toyota Industries’ automobile and engine products are soldprimarily to TMC. In fiscal 2005, net sales to TMC accounted
for 33.4% of consolidated net sales. Therefore, TMC’s vehicle
sales could have an impact on Toyota Industries’ businessresults. As of March 31, 2005, TMC held 24.1% of theCompany’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 sophisticated and diversifying needs of the market
and ensure the satisfaction of its customers. R&D activities arefocused mainly on developing and upgrading products in current
business fields and peripheral sectors. Toyota Industries expects
that revenues derived from these fields will continue to accountfor a significant portion of total revenues and anticipates that
future growth will be contingent on the development and salesof 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 andbusiness results. Such a situation could result from risks that
include no assurance Toyota Industries can allocate sufficient
future funds necessary for the development of appealing new
products; no assurance that product sales will be successful, as
forecasts of products supported by the market may not always be
accurate; and no assurance that newly developed products andtechnologies 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 allpatents submitted will necessarily be registered as rights, andthese patents could thus be rejected by patent authorities orinvalidated by third parties. Also, a third party could circumventa patent of Toyota Industries and introduce a competing productinto the market. Moreover, Toyota Industries’ products utilize awide range of technologies. Therefore, Toyota Industries could
become a party subject to litigation involving the intellectual
property rights of a third party.

Product Defects
Guided by the basic philosophy of “offering products andservices that are clean, safe and of high quality,” Toyota
Industries makes its utmost efforts to enhance quality.
However, Toyota Industries cannot guarantee all its products
will be defect-free and that product recalls will not be madein 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 costburdens and have a significant negative impact on the evaluationof Toyota Industries. It could also have an adverse effect on
Toyota Industries’ financial condition and business results due toa decrease in sales, deterioration of profitability and decrease inshare prices of Toyota Industries.

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

performance, capital demand, the dividend payout ratio on aconsolidated basis and other factors. Toyota Industries’ Ordinary
General Meeting of Shareholders, held on June 22, 2005,
approved a year-end cash dividend of ¥19.0 per share. Including
the interim cash dividend of ¥13.0 per share, cash dividends forthe year totaled ¥32.0 per share, an increase of ¥8.0 per shareover fiscal 2004.
The dividend payout ratio was 39.1%. On a consolidated
basis, it was 23.7%.
The Company intends to use retained earnings to improvethe competitiveness of its products, augment production capacity
in Japan and overseas, as well as expand into new fields ofbusiness and strengthen its corporate constitution in securing
future profits for its shareholders. It will also use retained
earnings to repurchase treasury stock.

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

TOYOTA INDUSTRIES CORPORATION Annual Report 200575

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

76

Reliance on Suppliers of Raw Materials andComponents
Toyota Industries’ products rely on various raw materials andcomponents from suppliers outside the Toyota Industries Group.
Toyota Industries has concluded basic business contracts withthese external suppliers and assumes it can carry out stabletransactions for raw materials and components. However,Toyota Industries has no assurances against future shortagesof raw materials and components, which arise from a global
shortage due to tight supply or an unforeseen accident involving
a supplier. Such shortages could have a negative effect on
Toyota Industries’ product production and cause an increase incosts, which could have an adverse impact on Toyota Industries’
financial condition and business results.

Environmental Regulations
In view of its social responsibilities as a company, Toyota
Industries strives to reduce any burden on the environment
resulting from its production processes, as well as strictly
adheres to applicable environmental laws and regulations.
However, various environment-related regulations could also
be revised and strengthened in the future. Accordingly, any
expenses necessary for continuous strict adherence to theseenvironmental regulations could result in increased businesscosts and have an adverse impact on Toyota Industries’ financial
condition and business results.

Share Price Fluctuations
At the end of fiscal 2005, Toyota Industries held marketablesecurities, and therefore bears the risk of price fluctuationof these shares. Based on fair market value of these sharesat the end of this period, Toyota Industries had unrealized
gains. However, unrealized gains on marketable securities
could worsen depending on future share price movements.
Additionally, a fall in share prices could reduce the value ofpension assets, leading to an increase in the pension shortfall.

Effects of Disasters, Power Blackouts and Other
Incidents
Toyota Industries carries out regular checks and inspections of
its production facilities to minimize the effect of production
disruptions. However, there is no assurance Toyota Industries
can completely prevent or lessen the impact of man-madeor 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 such as the Tokai
Earthquake, or an incident that affects other operations, 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.

Alliances with Other Companies

Latent Risks Associated with International
Activities

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

Toyota Industries manufactures and sells products and provides
services in various countries. Such unforeseen factors as social
chaos, including political disruptions, terrorism and wars, aswell as changes in economic conditions, could have an adverse
impact on Toyota Industries’ financial condition and businessresults.

Exchange Rate Fluctuations

Retirement Benefit Liabilities

Toyota Industries’ businesses encompass the production andsales 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 portion of Toyota Industries’ sales)
has an adverse impact on Toyota Industries’ business, while aweakening of the yen has a favorable impact. An increase in
the value of currencies in countries or regions where Toyota
Industries carries out production could lead to an increase inlocal production, procurement and distribution costs. Suchan increase in costs could reduce Toyota Industries’ pricecompetitiveness. Additionally, because export sales of several
businesses are denominated mainly in yen, exchange rate
fluctuations could have an adverse impact on Toyota Industries’
financial condition and business results due to a change inmarket prices.

Toyota Industries’ employee retirement benefit expenses andliabilities are calculated based on expected rates of return on
pension assets as well as assumptions upon making actuarial
calculations that incorporate discount rates and other factors.
Therefore, differences between actual results and assumptions
as well as changes in the assumptions could have a significant
impact on recognized expenses and calculated liabilities infuture accounting periods.

TOYOTA INDUSTRIES CORPORATION Annual Report 2005

Significant Accounting Policies andEstimates
Toyota Industries’ financial statements are prepared inconformity with accounting principles and practices generally
accepted in Japan. In preparing financial statements,(then Toyoda Automatic Loom Works, Ltd.), established theAutomobile Division within the Company based on his resolve
to manufacture Japanese-made automobiles. In 1937, theAutomobile Division was spun off and became an independentcompany, Toyota Motor Co., Ltd. (the present Toyota Motor
Corporation).

Allowance for Doubtful Accounts

Capital RelationshipTo prepare for the risk of receivables becoming uncollectible,
Toyota Industries estimates its allowance for doubtful accounts
by utilizing the percentage of historical experiences in credit
losses for ordinary receivables and individually examining
the feasibility of collection for receivables that seem to beuncollectible. Evaluating the allowance for doubtful accounts
involves judgments made in accordance with the nature of thesituation, and this allowance represents an essential and crucial
estimate—including future estimates of cash flow amounts andtiming—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.

In light of this historical background, Toyota Industries and
TMC have maintained a close capital relationship. As of March
31, 2005, Toyota Industries held 5.45% (196,725 thousand
shares) of TMC’s total shares issued. Likewise, as of the samedate, TMC held 24.10% (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.

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

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 ourother components and products directly or indirectly to otherToyota Group companies. In fiscal 2005, our net sales to TMC
and DENSO accounted for 33.4% and 8.5% of our consolidated
net sales, respectively.

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

management must make estimates, judgments and assumptions
that affect reported amounts of assets and liabilities at fiscal
year-end as well as revenues and expenses during each fiscal
year. Among Toyota Industries’ significant accounting policies,
the following categories require a considerable degree of
judgment and estimation and are highly complex.

Contributions to the Toyota GroupAs a member of the Toyota Group, Toyota Industries aims tocontribute to strengthening the competitiveness of TMC andother Toyota Group companies in such areas as quality, cost,delivery and technologies. Toyota Industries is confident thatraising the Toyota Group’s competitiveness will lead to increases
in our sales to and profits from the Toyota Group, thereby
contributing to raising Toyota Industries’ corporate value.

Toyota Industries’ Relationship to Toyota
Motor Corporation
Due to historical reasons, Toyota Industries maintains close
relationships with TMC and Toyota Group companies in termsof capital and business dealings.

Historical BackgroundIn 1933, Kiichiro Toyoda, the eldest son of founder Sakichi
Toyoda and then Managing Director of Toyota Industries

TOYOTA INDUSTRIES CORPORATION Annual Report 2005

77

Consolidated Balance Sheets
Consolidated Balance Sheets

Toyota Industries Corporation
As of March 31, 2005 and 2004
Thousands of
U.S. dollars (Note 1)

Millions of yen

ASSETS

2005

2005

2004

Current assets:
Cash and cash equivalents
Trade notes and accounts receivable (Note 7)¥ 100,536 ¥

77,212

173,459

144,575$

936,177
1,615,225

Short-term investments

199

228

1,853

Inventories (Note 5)

94,02477,574875,538

Deferred tax assets (Note 15)

20,37917,534

189,766

Other current assets

76,72935,128714,488

Less — allowance for doubtful accounts(2,352)(2,337)(21,901)

Total current assets

462,974

349,914

4,311,146

Buildings and structures (Note 7)

132,419

124,423

1,233,066

Machinery, equipment and vehicles (Note 7)

185,425

160,787

1,726,651

Tools, furniture and fixtures

18,834

15,565

175,380

Land (Note 7)

78,65971,787732,461

Construction in progress

41,742

16,835

388,695

Total property, plant and equipment

457,079

389,397

4,256,253

Software

12,411

11,993

115,569

Goodwill

104,561

87,863

973,657

Total intangible assets

116,972

99,856

1,089,226

1,198,337

1,095,031

11,158,739

31,06323,208289,254

Fixed assets:
Property, plant and equipment:

Intangible assets:

Investments and other assets:
Investments in securities (Notes 4 and 7)
Investments in unconsolidated subsidiaries and affiliated companies
Long-term loans

9,804

9,756

91,294Long-term prepaid expenses

13,21913,554

123,093

Deferred tax assets (Note 15)

7,234

3,538

67,362Other investments and other assets

30,47327,991

283,760

(331)

(250)

(3,082)

1,289,799

1,172,828

12,010,420

1,863,850

1,662,081

17,355,899¥2,326,824 ¥2,011,995$21,667,045

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.

78

TOYOTA INDUSTRIES CORPORATION Annual Report 2005

LIABILITIES, MINORITY INTERESTS AND SHAREHOLDERS’ EQUITY

2005

2004

2005

¥ 160,231¥ 129,822$ 1,492,048

59,94570,442

558,199–

15,000–Current portion of bonds (Note 7)

20,300–

189,031

Other payables

45,462

19,067423,336

Accrued expenses

59,35751,587552,724

Accrued income taxes

15,297

8,845

142,443

Deposits received from employees

20,055

19,497

186,749

Deferred tax liabilities (Note 15)

4,067

2,743

37,871Other current liabilities (Note 7)

36,8269,334

342,918

Total current liabilities

421,540

326,337

3,925,319

Bonds (Note 6)

230,000

200,300

2,141,726

Long-term debt (Notes 6 and 7)

73,49235,225684,347

Deferred tax liabilities (Note 15)

381,787

346,336

3,555,145

Allowance for retirement benefits (Note 14)

44,46334,264

414,033

Other long-term liabilities

18,891

17,843

175,910

Total long-term liabilities

748,633

633,968

6,971,161

1,170,173

960,305

10,896,480

40,90434,926

380,892

749,260

Current liabilities:
Trade notes and accounts payable
Short-term bank loans (Note 7)
Commercial paper

Consolidated Balance Sheets

Thousands of
U.S. dollars (Note 1)

Millions of yen

Long-term liabilities:

Total liabilities
Minority interests in consolidated subsidiaries
Shareholders’ equity (Note 10):
Common stock:
Authorized — 1,091,245,000 shares

80,46380,463

Capital surplus

105,601

105,743

983,341

Retained earnings

325,331294,6723,029,435

Net unrealized gains on other securities

591,218534,079

5,505,335

Foreign currency translation adjustments

29,861

19,783

278,061

Treasury stock at cost — 7,603,825 shares in 2005 and 8,174,958 shares in 2004

(16,727)(17,976)(155,759)

Total shareholders’ equity

1,115,747

1,016,764

10,389,673

Total liabilities, minority interests and shareholders’ equity¥2,326,824¥2,011,995$21,667,045

Issued—325,840,640 shares in 2005 and 325,840,640 shares in 2004

TOYOTA INDUSTRIES CORPORATION Annual Report 2005

79

Consolidated Statements of Income
Consolidated Statements of Income

Toyota Industries Corporation
For the years ended March 31, 2005, 2004 and 2003
Thousands of
U.S. dollars (Note 1)

Millions of yen

2005

2004

2003

2005

Net sales¥1,241,538¥1,164,379¥1,069,219$11,561,021

Cost of sales (Note 11)

1,041,780

978,459

899,7029,700,903

Gross profit

199,758

185,920

169,517

1,860,118

146,638

133,289

117,039

1,365,472

53,12052,63152,478494,646

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

8,160

8,175

8,985

75,985

Dividends income

13,761

10,998

8,888

128,140

Equity in net earnings of unconsolidated subsidiaries and

6,805

1,842

–

63,367

9,558

9,169

8,461

89,003(9,735)(9,756)(10,522)(90,651)––(4,634)–(10,756)(14,088)(12,281)(100,158)

70,91358,971

51,375660,332

–

621

–

–

(559)

–

–

(5,206)–(1,851)––

Revalued loss of investment securities––(4,298)–Loss on disposal of property, plant and equipment––(3,407)–70,35457,741

43,670655,126

Income taxes — current (Note 15)

26,80923,96728,121

249,641

Income taxes — deferred (Note 15)(4,557)(3,220)(7,304)(42,434)

Minority interests in consolidated subsidiaries

4,744

3,371

919

44,176affiliated companies
Other non-operating income (Note 12)
Non-operating expenses:
Interest expenses
Equity in net loss of unconsolidated subsidiaries andaffiliated companies
Other non-operating expenses (Note 12)
Ordinary income
Extraordinary gains:
Gain on transfer to a defined contribution pension plan
Extraordinary losses:
Impairment loss of fixed assets (Note 9)
Provision for retirement and severance benefits for directors andcorporate auditors

Income before income taxes and minority interests

Net income¥

43,358¥33,623¥

21,934

Yen

403,743

U.S. dollars

Net income per share — basic (Note 20)¥135.09¥108.04¥70.19$1.26

Net income per share — diluted (Note 20)

135.03101.97

62.90

1.26

Cash dividends per share

32.00

24.00

22.00

0.30

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

80$

TOYOTA INDUSTRIES CORPORATION Annual Report 2005

Consolidated Statements of Shareholders’ Equity
Millions of yen

Balance at March 31, 2002
Net income
Cash dividends
Bonuses to directors and corporate auditors
Net unrealized losses on other securities
Foreign currency translation adjustments
Conversions of convertible bonds
Repurchase of treasury stock
Gain on disposal of treasury stock
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
Loss on disposal of treasury stock
Effect of adoption of a new accounting standards
for retirement benefits by foreign subsidiaries
Balance at March 31, 2005

Numberof shares(Thousands)

Commonstock

CapitalsurplusRetainedearnings

Net unrealized
gains (losses) onother securities

Translation
adjustments

Treasurystock
at cost313,299
–
–
–
–
–
25
–
–
313,324–––––
12,517–––
325,841
–
–
–
–
–
–
–
–
–

¥68,022
–
–
–
–
–
25
–
–
68,047–––––
12,416–––80,463
–
–
–
–
–
–
–
–
–

¥ 89,327
–
–
–
–
–
25
–
13
89,365–––––
12,416–
3,962–
105,743
–
–
–
–
–
–
–
(142)
–

¥253,975
21,934(6,246)
(282)
–
–
–
–
–
269,381
33,623(7,417)
(290)
–
–
–
–
–
(625)
294,672
43,358(7,949)
(331)
–
–
–
–
–
(4,419)¥456,415–––(124,747)––––
331,668–––
202,411–––––534,079–––
57,139–––––¥12,361
–
–
–
–
4,529
–
–
–
16,890
–
–
–
–
2,893
–
–
–
–
19,783––––
10,078––––¥ (1,288)
–
–
–
–
–
–
(35,195)–(36,483)–––––
35,601(17,094)––(17,976)
–
–
–
–
–
(53)
1,302
–
–

325,841¥80,463¥105,601¥325,331¥591,218¥29,861¥(16,727)

Net unrealized
gains on othersecurities

Translation
adjustments

Treasurystock
at cost$749,260
–
–
–
–
–
–
–
–
–

$984,663 $2,743,943 $4,973,266–
403,743––(74,020)––(3,082)–––532,069
–
–
–
–
–
–
–
–
–
(1,322)–––(41,149)–$184,216––––
93,845––––$(167,390)
–
–
–
–
–
(494)
12,125––$749,260$983,341 $3,029,435 $5,505,335$278,061$(155,759)

Consolidated Statements of Shareholders’ Equity

Toyota Industries Corporation
For the years ended March 31, 2005, 2004 and 2003

Thousands of U.S. dollars (Note 1)
Commonstock

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
Loss on disposal of treasury stock
Effect of adoption of a new accounting standards
for retirement benefits by foreign subsidiaries
Balance at March 31, 2005

CapitalsurplusRetainedearnings

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

TOYOTA INDUSTRIES CORPORATION Annual Report 2005

81

Consolidated Statements of Cash Flows
Consolidated Statements of Cash Flows

Toyota Industries Corporation
For the years ended March 31, 2005, 2004 and 2003

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

82

Thousands of
U.S. dollars (Note 1)

Millions of yen

TOYOTA INDUSTRIES CORPORATION Annual Report 2005

2005

2004

2003

2005

¥ 70,354¥ 57,741¥ 43,670$ 655,126

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)
92,40659,154–220(17,874)
10,522
4,634(7,406)
1,253
5,431
20,416
120,020
17,983(10,945)(23,875)
103,183

653,8135,206
3,455(204,125)
90,651(63,367)(213,456)(119,667)
250,423(37,834)
1,020,225
204,600(81,115)(211,640)
932,070––(110,112)
10,043(9,563)
3,300
–

(101)
3,874
(78,268)3,201(14,301)
2,615
1,216

(1,664)
8,447(86,703)749(21,896)
9,792
944

–
–
(1,025,347)
93,519(89,049)
30,729–(16,943)––(157,771)(2,371)
2,784–(5,369)(128,231)(4,978)5,448(961)(10,413)(92,668)(1,664)
2,931–(6,057)(95,121)(22,078)
25,924–(49,995)(1,194,068)(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

5,886–
21,797(9,808)79,690–––(35,195)(6,244)(195)
1,845
57,776(29)
65,80971,120–¥136,929(127,451)(139,678)
379,793(64,848)465,593–––(494)(74,020)(6,211)
33,104
465,788
13,400217,190
718,987–$ 936,177

Notes to Consolidated Financial Statements
The accompanying consolidated financial statements havebeen 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 theCommercial Code of Japan and the Securities and Exchange
Law, and in conformity with accounting principles generally
accepted in Japan, which are different in certain respects as tothe application and disclosure requirements of International
Financial Reporting Standards.

Certain items presented in the consolidated financial
statements submitted to the Director of Kanto Finance Bureau
in Japan have been reclassified in these accounts for theconvenience of readers outside Japan.
Amounts in U.S. dollars are included solely forthe convenience of readers outside Japan. The rate of¥107.39=US$1, the rate of exchange prevailing at March
31, 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, equivalentamounts in U.S. dollars at this rate or any other rates.

Notes to Consolidated Financial Statements

1. Basis of presenting consolidated financial statements

2. Summary of significant accounting policies(1) Consolidation
The consolidated financial statements include the accounts of
the Company and its 146 subsidiaries (43 domestic subsidiaries
and 103 overseas subsidiaries, which are listed on pages 62 and63) in 2005, 140 subsidiaries (42 domestic subsidiaries and 98
overseas subsidiaries) in 2004 and 118 subsidiaries (33 domestic
subsidiaries and 85 overseas subsidiaries) in 2003.
For the year ended March 31, 2005, 11 subsidiaries were
newly added to the scope of consolidation and six companies
were excluded from the scope of consolidation because ofmerger and acquisition.
For the year ended March 31, 2004, 22 subsidiaries were
newly added to the scope of consolidation. One unconsolidated
subsidiary is excluded from the scope of consolidation due totemporary investments.
For the year ended March 31, 2003, eight subsidiaries were
newly added to the scope of consolidation and one company
was excluded from the scope of the consolidation. Twounconsolidated subsidiaries were excluded from the scope of
consolidation due to temporary investments.
The fiscal years of certain subsidiaries are different from thefiscal year of the Company. Since the difference is not morethan three months, the Company is using those subsidiaries’
statements for those fiscal years, making adjustments for
significant transactions that materially affect the financial
position or results of operations.
All significant intercompany transactions, balances andunrealized 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 20 major affiliates in 2005, one unconsolidated
subsidiary and 19 major affiliates in 2004 and two
unconsolidated subsidiaries and 16 major affiliates in 2003 are
accounted for by the equity method of accounting. Investments
in unconsolidated subsidiaries and affiliates not accounted forby 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 63.

(3) Translation of foreign currencies
Foreign currency denominated receivables and payables aretranslated into Japanese yen at the year-end exchange rates andthe resulting transaction gains or losses are included in income
statements.
All asset and liability accounts of foreign subsidiaries andaffiliates 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 three months or less, thatare readily convertible to known amounts of cash and are so near
maturity that they present insignificant risk of changes in value
because of changes in interest rates.

(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 in unconsolidated

TOYOTA INDUSTRIES CORPORATION Annual Report 2005

83

Notes to Consolidated Financial Statements

subsidiaries and affiliates. Toyota Industries did not have trading
securities or held-to-maturity securities as of March 31, 2005
and 2004.
Other securities with readily determinable fair values
are stated at fair value based on market prices at the end of
the year. Unrealized gains and losses are included in “Netunrealized gains on other securities” as a separate componentof shareholders’ equity. Cost of sales of such securities isdetermined by the moving-average method. Other securities
without readily determinable fair values are stated at cost, as
determined by the moving-average method.
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.

(7) Property, plant and equipment, and depreciation
Property, plant and equipment are stated at cost. Depreciation
expenses of property, plant and equipment are computed mainlyby the declining-balance method for the Company and Japanesesubsidiaries and by the straight-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 March 31, 2005 and 2004
was ¥541,383 million (US$5,041,279 thousand) and ¥509,379
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. Goodwill incurred before April 1,
2000 has been amortized over five years on a straight-line basis.
Accumulated amortization of intangibles and goodwill as ofMarch 31, 2005 and 2004 was ¥42,637 million (US$397,030
thousand) and ¥30,743 million, respectively.

(9) Impairment of fixed assets
Calculation of the impairment of fixed assets is based onreasonable and supportable assumptions and projection of thegrouping of assets and recoverable value, with due consideration
for the specific condition of each company.
The recoverable amount of assets is calculated based on the
net selling price. The change in accounting policy is describedin Note 3.

84

TOYOTA INDUSTRIES CORPORATION Annual Report 2005(10) Allowance 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.

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

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

(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 not includedin the amount of net sales in the accompanying consolidated
statements of income, and the consumption tax paid by Toyota
Industries under the law on purchases of goods and services, andexpenses is not included in the related 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 atcontracted forward rates if certain conditions are met.

(b) Hedging instruments and hedged items
Hedging instruments: Derivatives instruments (interest rate
swaps, foreign currency forwards andforeign currency option contracts)
Hedged items:
Risk of change in interest rate on
borrowings and risk of change inforward exchange rate on transactions
denominated in foreign currencies (assets
and liabilities, and forecasted transactions)(17) Income taxes

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.

The provision for income taxes is computed based on the pretax
income included in the consolidated statements of income. The
asset and liability approach is used to recognize deferred tax
liabilities and assets for the 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.

(d) Method used to measure hedge effectivenessHedge effectiveness is measured by comparing accumulatedchanges 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 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 high creditworthiness,
Toyota Industries believes that the overall credit risk related toits financial instruments is insignificant.

(16) Appropriation of retained earnings
In the accompanying consolidated statements of shareholders’equity, the approved amount during the relevant fiscal year
is reflected for the appropriation of retained earnings ofconsolidated subsidiaries. In Japan, the payment of bonuses todirectors and corporate auditors is made out of retained earnings
through an appropriation, instead of being charged to income forthe year.

(18) Net income per share
The computation of basic net income per share is based on theweighted-average number of outstanding shares of common
stock. The calculation of diluted net income per share is similar
to the calculation of basic net income per share, except that theweighted-average number of shares outstanding includes the
additional dilution from potential common stock equivalents
such as convertible bonds. Cash dividends per share shownin the statements of income are the amounts applicable to therespective years. The change in accounting policy is describedin Note 3.

Notes to Consolidated Financial Statements(c) Hedging policy

3. Changes in accounting policies and adoption of new accounting standards(1) For the year ended March 31, 2003

(2) For the year ended March 31, 2005

Accounting Standard for Earnings Per Share

Impairment of Fixed Assets

Effective beginning the year ended March 31, 2003, Financial
Accounting Standard No. 2 “Accounting Standard for Earnings
Per Share” and Financial Accounting Standards Implementation
Guidance No. 4 “Implementation Guidance for AccountingStandards for Earnings Per Share” issued by the AccountingStandards Board of Japan have been applied. The impact of
adoption for new accounting standards is described in “Note 20.
Net income per share.”Toyota Industries applied Accounting Standards for Impairmentof Fixed Assets (Opinions Concerning Establishment of
Accounting Standards for Impairment of Fixed Assets) issued on
August 9, 2002 by the Business Accounting Council in Japan,
and the application guideline for Accounting Standards for
Impairment of 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 shall beeffective for fiscal years beginning on and after April 1, 2005,
is permitted for the consolidated accounting for the fiscal year
ended March 31, 2005.

TOYOTA INDUSTRIES CORPORATION Annual Report 200585

Notes to Consolidated Financial Statements

4. Marketable securities(1) 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

Thousands of U.S. dollars

Carrying
amountDifference

Acquisition
cost

Carrying
amountDifference

Securities with carrying amountexceeding acquisition cost:
Stocks¥191,932¥1,177,188¥985,256$1,787,243 $10,961,803$9,174,560

Subtotal

191,932

1,177,188985,256

1,787,243

10,961,803

9,174,560

3,348

2,911

(437)

31,17627,107(4,069)Government and municipal bonds, etc.

0

0

0

0

0

0

Other bonds

1

1

0

9

9

0

31,185

27,116(4,069)$1,818,428 $10,988,919$9,170,491

Securities with carrying amountnot exceeding acquisition cost:
Stocks
Bonds

3,349

2,912

(437)

¥195,281¥1,180,100¥984,819

SubtotalTotal

In this year, Toyota Industries recorded ¥35 million (US$326 thousand) of impairment on an equity security included in securities withcarrying 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¥3,189¥1,789Thousands of U.S. dollars

Realized losses¥32

Proceeds

Realized gains$29,696$16,659

Realized losses$298(c) Contents and carrying amount of securities (excluding held-to-maturity bonds within securities with fair value) without readily
determinable for practicable to fair value as of March 31, 2005 are as follows:
Carrying amountThousands of
U.S. dollars

Millions of yen

Other securities
Domestic unlisted stocks excluding over-the-counter stocks¥18,288$170,295

Money management funds

40,006

372,530(d) Redemption schedule of securities which have maturities within other securities as of March 31, 2005 is as follows:
Millions of yen

Within1 yearThousands of U.S. dollars

Over 1 year
within5 years

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

Over 5 years
within
10 yearsOver
10 years

Bonds
Government bonds

¥–

¥–

¥0

¥–

$–

$–

$0

$–

Other bonds

1

–

–

–

9

–

–

–

¥1

¥–

¥0

¥–

$9

$–

$0

$–

Total

86

TOYOTA INDUSTRIES CORPORATION Annual Report 2005

(a) Other securities with readily determinable fair value as of March 31, 2004 are as follows:
Millions of yen

Acquisition
cost

Carrying
amountDifference

Securities with carrying amount exceeding acquisition cost:
Stocks¥185,252¥1,075,222¥889,970

Subtotal

185,252

1,075,222

889,970

2,097

1,653

(444)

Government and municipal bonds, etc.

0

0

0

Other bonds

1

1

0

Securities with carrying amount not exceeding acquisition cost:
Stocks
Bonds

Subtotal
Total

2,098

1,654

(444)

¥187,350¥1,076,876¥889,526

Notes to Consolidated Financial Statements(2) As of and for the year ended March 31, 2004

In this year, Toyota Industries recorded ¥184 million of impairment on an equity security included in securities with carrying amountnot exceeding the cost lines.
(b) Other securities sold during the year ended March 31, 2004 are as follows:
Millions of yen

Proceeds

Realized gains

Realized losses

¥803

¥11

¥2,181(c) Contents and carrying amount of securities (excluding held-to-maturity bonds within securities with fair value) without readily
determinable for practicable to fair value as of March 31, 2004 are as follows:
Carrying amountMillions of yen

Other securities
Domestic unlisted stocks excluding over-the-counter stocks¥18,200

Money management funds

20,019(d) Redemption schedule of securities which have maturities within other securities as of March 31, 2004 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

46

0

–

–

¥46

¥0

¥0

¥–

Total

TOYOTA INDUSTRIES CORPORATION Annual Report 2005

87

Notes to Consolidated Financial Statements

5. Inventories
Inventories as of March 31, 2005 and 2004 consist of the following:Thousands of
U.S. dollars

Millions of yen

2005

2004

2005

Finished goods¥35,616¥31,265$331,651

Raw materials

15,331

11,722

142,760

Work in process

34,587

26,893322,069

Supplies

8,490

7,694

79,058¥94,024¥77,574$875,538

Total

6. Long-term debt
(1)Long-term debt as of March 31, 2005 and 2004 consists of the following:Thousands of
U.S. dollars

Millions of yen

2005

2004

2005

2.70% bonds due 2008 without collateral¥ 30,000¥ 30,000$ 279,356

2.15% bonds due 2008 without collateral

20,00020,000186,237

1.50% bonds due 2006 without collateral

15,00015,000139,677

1.94% bonds due 2009 without collateral

15,00015,000139,677

1.25% bonds due 2005 without collateral

20,00020,000186,237

1.91% bonds due 2010 without collateral

20,00020,000186,237

0.41% bonds due 2007 without collateral

30,00030,000279,356

1.13% bonds due 2012 without collateral

50,00050,000465,593

1.03% bonds due 2012 without collateral

30,000–279,356

1.46% bonds due 2014 without collateral

20,000–186,237

300

300

2,794

Long-term bank loans

77,522

38,263721,874

Less: current portion of long-term debt

(24,330)(3,038)(226,558)

Total¥303,492¥235,525$2,826,073

The Company:

Consolidated subsidiaries:
1.80% bonds due 2005

(2) Annual maturities of long-term debt as of March 31, 2005 are as follows:

88

Year ending March 31

Millions of yen

Thousands of
U.S. dollars

2005¥ 24,330$ 226,558

2006

21,079196,285

2007

33,803314,769

2008

51,653

480,985

2009

18,375

171,105

2010 and thereafter

178,582

1,662,929

Total¥327,822$3,052,631

TOYOTA INDUSTRIES CORPORATION Annual Report 2005

(1) Assets pledged as collateral as of March 31, 2005 and 2004 are as follows:
Thousands of
U.S. dollars

Millions of yen

2005

2004

2005

Investments in securities¥33,345¥33,126$310,504

Buildings and structures

3,155

3,837

29,379

Land

3,798

8,466

35,366

Machinery, equipment and vehicles

–

2

–

Trade notes and accounts receivable

1,033

431

9,619

Other

41

232

382

Total

¥41,372¥46,094$385,250

Notes to Consolidated Financial Statements

7. Assets pledged as collateral(2) Secured liabilities as of March 31, 2005 and 2004 are as follows:
Thousands of
U.S. dollars

Millions of yen

2005

2004

2005

Other current liabilities¥19,966¥19,422$185,920

Short-term bank loans

3,158

5,059

29,407

Current portion of bonds

300

–

2,794

2,685

2,435

25,002¥26,109¥26,916$243,123

Long-term debt
Total

8. Contingent liabilities
Toyota Industries is contingently liable for guarantees as of March 31, 2005 and 2004 as follows:
Thousands of
U.S. dollars

Millions of yen

2005

2004

2005

¥25,401¥11,250$236,530

Guarantees given by consolidated subsidiaries

700

10,030

6,518

Guarantee forwards given by the Company

2,954

3,314

27,507

Guarantees given by the Company

9. Impairment loss of fixed assets
Millions of yen

Thousands of
U.S. dollars

2005

2005

RegionItems

Details of Fixed assets

Hyogo

One idle property

Building

¥ 28

$ 261

Land

338

3,148

Tochigi

One idle property

Land

86

801

NaganoOne idle property

Land

59

549

KagawaOne idle property

Land

Total

48

447

¥559

$5,206TOYOTA INDUSTRIES CORPORATION Annual Report 200589

Notes to Consolidated Financial Statements

10. Shareholders’ equity
Under the Japanese Commercial Code, amounts equal toat 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 reducea deficit or may be transferred to common stock by taking
appropriate corporate action. In consolidation, the legal reservesof the Company and its domestic subsidiaries are accounted foras retained earnings.
A year-end cash dividend is approved at the Ordinary

General Meeting of Shareholders of the Company held after theclose of the fiscal year to which the dividend is applicable. In
addition, an interim cash dividend may be paid upon resolutionof the Board of Directors, subject to limitations imposed by theJapanese Commercial Code.
Proceeds from the conversion of convertible bonds havebeen accounted for in approximately equal amounts as common
stock and capital surplus. At least 50% of the proceeds havebeen accounted for as common stock, in accordance with theprovisions of the Japanese Commercial Code.

11. Research and development expenses
Research and development expenses, which are included inselling, general and administrative expenses and manufacturingcosts, amounted to ¥30,051 million (US$279,831 thousand),¥29,562 million and ¥29,705 million for the years ended March
31, 2005, 2004 and 2003, respectively.

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

Millions of yen

2005

2004

2003

2005

Gain on sales of securities¥ 1,659¥819¥ 1,851$ 15,448

Rental income of fixed assets

Other non-operating income:
1,932

1,833

2,036

17,991

Exchange gain

500

836

1,709

4,656

Gain on sales of fixed assets

957

808

332

8,911

4,510

4,873

2,533

41,997¥ 9,558¥ 9,169¥ 8,461$ 89,003

¥

¥

¥

$

Sundries
Total
Other non-operating expenses:
Loss on impairment of securities

251

–

521

Depreciation

2,381

2,342

2,202

22,172

Loss on disposal of fixed assets

2,381

3,523

3,101

22,172

610

1,283

1,224

5,680

Exchange loss
Bond issue costs
Sundries
Total

90

56

TOYOTA INDUSTRIES CORPORATION Annual Report 2005

205

502

329

1,909

5,123

6,187

5,425

47,704¥10,756¥14,088¥12,281$100,158

(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 and payables 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 of fluctuations ininterest rates and in foreign currency exchange rates.

Due to the fact that counterparties to Toyota Industries
represent major financial institutions which have highcreditworthiness, Toyota Industries believes that theoverall credit risk related to its financial instruments is
insignificant.
(c) Controls in place over transactions handling derivative
instruments:
Hedging transactions are executed and controlled basedon Toyota Industries’ internal rule and Toyota Industries’
hedging activities are reported periodically to a director
responsible for accounting.

Notes to Consolidated Financial Statements

13. Derivative instruments(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 maintain tax
qualified pension plans and lump-sum indemnities plans, bothof which are 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, 2005, its tax qualified pension plan covers 50% of total
plans.
Also, the Company established an employee retirement
benefit trust.

(2) Components of allowance for retirement benefits as of March 31, 2005 and 2004 are as follows:
Thousands of
U.S. dollars

Millions of yen

2005

2004

2005

Benefit obligation¥124,570¥ 96,344$1,159,978

Plan assets(77,121)(57,929)(718,140)

Unfunded benefit obligation

47,44938,415441,838

Unrecognized actuarial gain or loss

(14,564)(15,372)(135,618)

Unrecognized loss in prior service obligation

(350)

(597)

(3,259)Net amount recognized on the balance sheets

32,53522,446302,961

Prepaid pension expenses(6,694)(7,218)(62,334)¥ 39,229¥ 29,664$ 365,295

Allowance for retirement benefits

Certain subsidiaries use the simplified method to determine benefit obligations. Prepaid pension expenses are included in otherinvestments and other assets. Allowance for retirement benefits on the balance sheets includes ¥5,234 million (US$48,738 thousand)and ¥4,600 million of allowance for retirement and severance benefits for directors and corporate auditors as of March 31, 2005 and2004, respectively.

TOYOTA INDUSTRIES CORPORATION Annual Report 2005

91

(3) Components of retirement benefit expenses for the years ended March 31, 2005, 2004 and 2003 are as follows:
Notes to Consolidated Financial Statements

Thousands of
U.S. dollars

Millions of yen

2005

2004

2003

2005

Service cost

¥ 7,446¥ 7,424¥6,615$ 69,336Interest cost

3,987

4,559

2,036

37,126

Expected return on plan assets(2,196)

(822)

(797)

(20,449)

Amortization of prior service obligation
Amortization of unrecognized actuarial gain or loss
Retirement benefit expenses

85

79

12

792

1,030

1,854

484

9,591

¥10,352¥13,094¥8,350$ 96,396

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, 2005, 2004 and 2003 are as follows:
2005

2004

2003

2.00%

2.00%

2.00%

Method of attribution of estimated retirement benefits
to periods of employee service: Straight-line method
Discount rate
Expected return on plan assets
Amortization period of prior service obligation

3.00%

3.00%

6–11 years

6–11 years

3.00%
6–11 years — Straight-line method over
the remaining service
period of employees
starting from the year
incuredAmortization 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 subsidiary are ¥8,226 million(US$76,599 thousand) as of March 31, 2005 and ¥3,200 million as of March 31, 2004, respectively.

92

TOYOTA INDUSTRIES CORPORATION Annual Report 2005

(1) The significant components of deferred tax assets and liabilities as of March 31, 2005 and 2004 are as follows:
Thousands of
U.S. dollars

Millions of yen

2005

2005

2004

Deferred tax assets:
8,927$ 119,583

Trade receivables

5,270

5,026

49,073

Accrued expenses

6,049

5,458

56,327

Net operating loss carry-forwards for tax purposes

1,979

4,985

18,428Depreciation

5,222

3,732

48,627

Securities

2,195

2,238

20,440Allowance for retirement benefits¥ 12,842¥

Enterprise tax payable

1,059

1,566

9,861

Other

15,96214,800148,636

Subtotal

50,57846,732

470,975

Less — valuation allowance(2,689)(6,556)(25,040)

47,88940,176445,935

Other securities

392,618

354,600

3,656,001

Depreciation

5,355

4,298

49,865

Land

1,110

1,110

10,336

537

468

5,000

Total deferred tax assets

Notes to Consolidated Financial Statements

15. Income taxes

Deferred tax liabilities:

Reserve for advanced depreciation

529

589

4,926

5,981

7,118

55,695Reserve for special depreciation
Other
Total deferred tax liabilities

406,130

368,183

3,781,823

Net deferred tax liabilities¥(358,241)¥(328,007)$(3,335,888)

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

2005

2004

2005

¥ 20,379¥ 17,534$ 189,766

Investments and other assets — deferred tax assets

7,234

3,538

67,362Current liabilities — deferred tax liabilities(4,067)(2,743)(37,871)

Long-term liabilities — deferred tax liabilities(381,787)(346,336)(3,555,145)

Net deferred tax liabilities¥(358,241)¥(328,007)$(3,335,888)(2) Reconciliations of differences between the statutory rate of income taxes and the effective rate of income taxes for the years ended
March 31, 2005, 2004 and 2003 are as follows:
2005

2004

2003

39.9%

41.2%

41.2%

Dividends income and others permanently not recognized as taxable income

(3.8)

(3.4)

(3.5)

Equity in earnings of affiliates

(3.8)

–

–

(0.7)

(1.9)

10.0

31.6%

35.9%

47.7%

Statutory rate of income taxes
Addition (reduction) in taxes resulting from:

Other
Effective rate of income taxes

TOYOTA INDUSTRIES CORPORATION Annual Report 2005

93

Notes to Consolidated Financial Statements

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 notreflected in the accompanying consolidated balance sheets under finance leases as of March 31, 2005 and 2004 is as follows:
Thousands of
U.S. dollars

Millions of yen

2005

2005

2004

Buildings and structures:
Acquisition cost equivalents

¥

–

¥

13

$

–

–

11

–

–

2

–

Acquisition cost equivalents

13,791

10,095

128,420

Accumulated depreciation equivalents

7,050

5,203

65,649

6,741

4,892

62,771

Acquisition cost equivalents

12,146

5,340

113,102

Accumulated depreciation equivalents

6,232

3,279

58,032

5,914

2,061

55,070Acquisition cost equivalents

128

147

1,192

Accumulated depreciation equivalents

59

63

549

69

84

643

¥12,724¥ 7,039$118,484

Accumulated depreciation equivalents
Buildings and structures net balance equivalents
Machinery and equipment:

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

Tools, furniture and fixtures net balance equivalents
Software:

Software net balance equivalents
Total net leased properties

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 year-end is immaterial.
(b) Pro forma information regarding future minimum lease payments as of March 31, 2005 and 2004 is as follows:
Thousands of
U.S. dollars

Millions of yen

2005

2004

2005

Due within 1 year

¥ 4,061¥2,696$ 37,815

Due after 1 year

8,663

4,343

80,669¥12,724¥7,039$118,484

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 total balance of property, plant andequipment at year-end is immaterial.
(c) Total lease payments for the years ended March 31, 2005, 2004 and 2003 are as follows:
Millions of yen

Thousands of
U.S. dollars

2005¥4,927$45,880

2004

3,614

–

2003

2,566

–

Pro forma depreciation expenses, which are not reflected in the accompanying consolidated statements of income, are computed mainlyby the straight-line method, which assumes zero residual value and leasing term to be useful lives for the years ended 2005, 2004 and2003, and are equivalent to the amount of total lease payments of the above.

94

TOYOTA INDUSTRIES CORPORATION Annual Report 2005

Pro forma future lease payments under operating leases as of March 31, 2005 and 2004 are as follows:
Millions of yen

Thousands of U.S. dollars

2005

2004

2005

Due within 1 year

¥ 4,165¥ 3,091$ 38,784

Due after 1 year

17,392

13,584

161,952

Total¥21,557¥16,675$200,736(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,
2005 and 2004 is as follows:
Thousands of U.S. dollars

Millions of yen

2005

2004

2005

Acquisition cost

¥8,928¥8,061$83,136

Accumulated depreciation

5,221

4,686

48,617¥3,707¥3,375$34,519

Notes to Consolidated Financial Statements(2) Operating leases (as a lessee)

Machinery and equipment:

Total net leased property(b) Pro forma information regarding future minimum lease income as of March 31, 2005 and 2004 is as follows:
Thousands of U.S. dollars

Millions of yen

Due within 1 year

2005

2004

2005

¥1,763¥1,673$16,417

Due after 1 year

3,202

2,842

29,816

Total¥4,965¥4,515$46,233

The amount equivalent to future minimum lease income includes the imputed interest income portion because the percentage which iscomputed by dividing future minimum lease income by total balance of property, plant and equipment at year-end is immaterial.
(c) Total lease receipts and depreciation expenses for the years ended March 31, 2005 and 2004 are as follows:
Millions of yen

Thousands of U.S. dollars

2005

2004

2005

Total lease payments to be received¥2,358¥2,179$21,957

Depreciation expenses

1,830

1,847

17,041(4) Operating leases (as a lessor)
Pro forma information regarding future minimum rentals under operating leases as of March 31, 2005 and 2004 is as follows:
Millions of yen

Thousands of U.S. dollars

2005

2004

2005

Due within 1 year

¥10,040¥ 7,217$ 93,491

Due after 1 year

16,382

10,741

152,547

Total¥26,422¥17,958$246,038

17. Subsequent event
On June 22, 2005, the shareholders of the Company authorized
payment of a year-end cash dividend to shareholders of record
as of March 31, 2005 of ¥19 (US$0.177) per share, or a total of¥6,046 million (US$56,299 thousand), and bonuses to directors

and corporate auditors of ¥279 million (US$2,598 thousand).
Cash dividends for the year totaled ¥32 (US$0.298) per share,including an interim dividend of ¥13 (US$0.121).

TOYOTA INDUSTRIES CORPORATION Annual Report 200595

Notes to Consolidated Financial Statements

18. Segment information(1) Business segments
As of and for the years ended March 31, 2005, 2004 and 2003:
Thousands of
U.S. dollars

Millions of yen

2005

2004

2003

2005

¥ 616,200¥ 603,863¥ 595,460$ 5,737,964

Sales:
Automobile
Outside customer sales

18,223

15,69815,523

169,690

634,423

619,561

610,983

5,907,654

503,990

443,444

373,008

4,693,081

149

138

90

1,387

504,139443,582373,098

4,694,468

43,90245,96948,740408,809

25

16

6

233

43,92745,98548,746

409,042

Outside customer sales

77,446

71,10352,011

721,167Intersegment transactions

21,57914,132

13,078200,940

Intersegment transactions
Materials Handling Equipment
Outside customer sales
Intersegment transactions
Textile Machinery
Outside customer sales
Intersegment transactions
OthersSubtotal

99,02585,23565,089922,107

1,281,514

1,194,363

1,097,916

11,933,271(39,976)(29,984)(28,697)(372,250)¥1,241,538¥1,164,379¥1,069,219$11,561,021

Elimination of intersegment transactions
Total
Operating costs and expenses:¥ 611,660¥ 592,031¥ 580,875$ 5,695,688

Materials Handling Equipment

478,054424,233

356,923

4,451,568

Textile Machinery

44,69845,88546,437416,221

Automobile

Others93,782

79,48561,177873,285

Elimination of intersegment transactions(39,776)(29,886)(28,671)(370,387)¥1,188,418¥1,111,748¥1,016,741$11,066,375

¥

¥

¥

$

Total
Operating income (loss):
Automobile

27,53030,108211,966

26,085

19,34916,175242,900

Textile Machinery

(771)

100

2,309

(7,179)Others

5,243

5,750

3,912

48,822Elimination of intersegment transactions

(200)

(98)

(26)

(1,863)

Materials Handling Equipment

Total

96

22,763

TOYOTA INDUSTRIES CORPORATION Annual Report 2005¥

53,120¥52,631¥52,478$494,646

2005

2004

2003

2005

¥ 407,436¥ 338,247¥ 328,370$ 3,793,985

465,832

406,384

337,453

4,337,760

Assets:Automobile
Materials Handling Equipment
Textile Machinery

25,622

24,74430,922

238,588

Others148,712

100,626

51,8391,384,784

1,279,222

1,141,994

901,807

11,911,928¥2,326,824¥2,011,995¥1,650,391$21,667,045

¥

¥

¥

$

Corporate assets or elimination
Total

Notes to Consolidated Financial Statements

Thousands of
U.S. dollars

Millions of yen

Depreciation and amortization:
Automobile
Materials Handling Equipment
Textile Machinery
OthersCorporate or elimination of intersegment transactions
Total

¥

37,07535,79334,157345,237

27,01623,53820,801

251,569

898

931

1,006

8,362

5,215

5,443

3,487

48,561

9

(353)

(297)

84

70,213¥

92,692¥65,352¥

48,793¥59,154$

653,813

49,380$863,134

Capital expenditures:
Automobile¥

Materials Handling Equipment

33,97332,20524,350316,352

Textile Machinery

1,613

1,204

2,164

15,020

Others

8,223

7,749

12,06876,571

5

(442)

(403)

47

87,559$ 1,271,124

Corporate or elimination of intersegment transactions
Total¥ 136,506¥

89,509¥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, skid steer loaders, aerial work platforms
Textile machinery ...........................................Ring spinning frames, air-jet looms, water-jet looms
Others.............................................................Semiconductor package substrates, transportation services

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

TOYOTA INDUSTRIES CORPORATION Annual Report 2005

97

(2) Geographical segments
Notes to Consolidated Financial Statements

As of and for the years ended March 31, 2005, 2004 and 2003:
Thousands of
U.S. dollars

Millions of yen

2005

2004

2003

2005

¥ 815,039¥ 785,253¥ 733,869$ 7,589,524

99,46487,271

78,518926,194

914,503872,524

812,387

8,515,718

212,253

198,753

192,385

1,976,469

Sales:
Japan
Outside customer sales
Intersegment transactions
North America
Outside customer sales

1,126

1,113

1,411

10,485

213,379

199,866

193,796

1,986,954

Outside customer sales

188,669

167,512

139,515

1,756,858

Intersegment transactions

7,222

5,896

4,899

67,250195,891

173,408

144,414

1,824,108

Outside customer sales

25,577

12,861

3,450

238,170

Intersegment transactions

2,776

1,630

1,034

25,85028,353

14,491

4,484

264,020

Subtotal

1,352,126

1,260,289

1,155,081

12,590,800

Elimination of intersegment transactions(110,588)(95,910)(85,862)(1,029,779)¥1,241,538¥1,164,379¥1,069,219$11,561,021¥ 870,928¥ 826,696¥ 767,342$ 8,109,954

North America

207,068

193,745

187,596

1,928,187

Europe191,202170,263

142,469

1,780,445

Intersegment transactions
EuropeOthers

Total
Operating costs and expenses:
Japan

27,713

14,6234,560

258,060(108,493)(93,579)(85,226)(1,010,271)¥1,188,418¥1,111,748¥1,016,741$11,066,375

¥

¥

¥

$

OthersElimination of intersegment transactions
Total
Operating income (loss):Japan

45,82845,045405,764

North America

6,311

6,121

6,200

58,767

Europe

4,689

3,145

1,945

43,663

Others

640

(132)

(76)

5,960

(2,095)(2,331)(636)(19,508)

Elimination of intersegment transactions
Total

98

43,575TOYOTA INDUSTRIES CORPORATION Annual Report 2005¥

53,120¥52,631¥52,478$494,646

2005

2004

2003

2005

¥ 788,828¥ 643,180¥ 554,034$ 7,345,451

North America

151,048

136,830

144,739

1,406,537

Europe264,274

238,388

223,4462,460,881

Others33,64022,082

9,759

313,251

1,089,034

971,515

718,413

10,140,925¥2,326,824¥2,011,995¥1,650,391$21,667,045

Assets:Japan

Corporate assets or elimination
Total

Notes to Consolidated Financial Statements

Thousands of
U.S. dollars

Millions of yen

Significant countries or areas belonging to each segment as of March 31, 2005 are as follows:
North America ........................................... U.S.A., Canada
Europe ....................................................... Sweden, France, Germany
Others ........................................................ Australia, China

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

(3) Overseas sales
For the years ended March 31, 2005, 2004 and 2003:
Thousands of
U.S. dollars

Millions of yen

2005

2004

2003

2005

Overseas sales:¥ 208,676¥ 196,861¥ 192,422$ 1,943,160

Europe225,409

211,081

181,347

2,098,976

Others104,918

89,41577,825976,981

North America

Total¥ 539,003¥ 497,357¥ 451,594$ 5,019,117

Total sales¥1,241,538¥1,164,379¥1,069,219$11,561,021

North America

16.8%

16.9%

18.0%

Europe

18.2

18.1

17.0

Others

8.4

7.7

7.2

43.4%

42.7%

42.2%

Ratio of overseas sales to total sales (%):

Total
Significant countries or areas belonging to each segment as of March 31, 2005 are as follows:
North America ........................................... U.S.A., Canada
Europe ....................................................... Germany, France, Italy
Others ........................................................ China, Pakistan, Australia

TOYOTA INDUSTRIES CORPORATION Annual Report 200599

Notes to Consolidated Financial Statements

19. Related party transactions
The following transactions were carried out with related parties:(1) Sales of goods and services for the years ended March 31, 2005, 2004 and 2003 were as follows:
Thousands of
U.S. dollars

Millions of yen

Toyota Motor Corporation

2005

2004

2003

2005

¥414,235¥406,267¥417,058$3,857,296

Toyota Motor Corporation held 24.1% of the Company’s voting rights as of March 31, 2005. The above transactions were carried out
on commercial terms and conditions.
(2) Purchase of goods and services for the years ended March 31, 2005, 2004 and 2003 was as follows:
Purchase of goods:
Thousands of
U.S. dollars

Millions of yen

Toyota Motor Corporation

2005

2004

2003

2005

¥285,019¥285,412¥293,853$2,654,055

Purchase of services:
Thousands of
U.S. dollars

Millions of yen

2005

Toyota Industries Health Insurance Society
Toyota Medical Corporation
Toyota Technological InstituteToyota Motor Corporation

2004

2005

2003

¥ 60

¥ 66

¥ 69

$ 559

46

37

39

428

50

50

–

466

¥156

¥153

¥108

$1,453

Toyota Industries Health Insurance Society’s chairman as of March 31, 2005, 2004 and 2003 is Shiro Endo, who is a director of theCompany and holds 0.01% of the Company’s shares. Toyota Medical Corporation’s chairman as of March 31, 2005, 2004 and 2003
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, 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, 2005 and 2004 are as follows:
Receivables from a related party:
Millions of yen

Toyota Motor Corporation

Thousands of
U.S. dollars

2005

2004

2005

¥31,594¥23,421$294,199

Payable to a related party:
Millions of yen

Toyota Motor Corporation

100

TOYOTA INDUSTRIES CORPORATION Annual Report 2005

Thousands of
U.S. dollars

2005

2004

2005

¥35,780¥29,247$333,178

Basis of calculation for net income per share and net income per share diluted are as follows:
Thousands of
U.S. dollars

Millions of yen

2005

2004

2005

¥ 43,358¥ 33,623$403,743

390

330

3,631

Net income attributable to common shareholders

42,96833,293400,112Weighted-average shares (thousand)

318,079

308,144–

Net income per share (exact yen amounts)¥ 135.09¥ 108.04

$

¥

¥

$

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

Notes to Consolidated Financial Statements

20. Net income per share (EPS)

1.26

Net income per share diluted:
Adjustment for effect of dilutive securities (interest expenses of convertible bonds)
Weighted-average shares for diluted computation (thousand)Net income per share diluted (exact yen amounts)

–

12

139

18,468¥ 135.03¥ 101.97

–
–

$

1.26

TOYOTA INDUSTRIES CORPORATION Annual Report 2005

101

Report of Independent Accountants
Report of Independent Accountants

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 Corporationand its consolidated subsidiaries as of March 31, 2005 and 2004, and the related consolidated
statements of income, shareholders’ equity, and cash flows for the years then ended, all expressedin 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 in Japan.
Those standards require that we plan and perform the audit to obtain reasonable assurance 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 andsignificant 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 all material
respects, the consolidated financial position of Toyota Industries Corporation and its consolidated
subsidiaries as of March 31, 2005 and 2004, and the consolidated results of their operations andtheir cash flows for the years then ended in conformity with accounting principles generally
accepted in Japan.
The amounts expressed in U.S. dollars, which are provided solely for the convenience of thereader, have been translated on the basis set forth in Note 1 to the accompanying consolidated
financial statements.

ChuoAoyama PricewaterhouseCoopers
Nagoya, Japan
June 22, 2005

102

TOYOTA INDUSTRIES CORPORATION Annual Report 2005