Toyota Industries Report

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Financial Review for the Year Ended March 31, 2016

Consolidated Eleven-Year Summary

P1Management’s Discussion and Analysis ofFinancial Condition and Results of Operations

P2−7

Consolidated Balance Sheets

P8−9

Consolidated Statements of Income

P10

Consolidated Statements of Comprehensive Income

P11

Consolidated Statements of Changes in Net Assets

P12−13

Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements
Report of Independent Auditors

P14
P15−43
P44

Consolidated Eleven-Year Summary

Toyota Industries Corporation
Years ended March 31

Millions of yen

2016

2015

2014

2013

2012

2011

2010

2009

2008

2007

2006

¥2,228,944¥2,166,661¥2,007,856¥1,615,244¥1,543,352¥1,479,839¥1,377,769¥1,584,252¥2,000,536¥1,878,398¥1,505,955

For The YearNet sales
Operating profit (loss)

127,970

117,574

107,691

77,09870,092

68,79822,002(6,621)

96,853

89,95464,040Ordinary profit

185,398

170,827

138,133

86,83680,86673,911

31,756

14,343

126,488

108,484

80,635

Profit (loss) attributable to owners of the parent

183,036

115,263

91,705

53,11958,59447,205(26,273)(32,767)

80,46059,46847,07775,438¥126,395¥109,479¥89,459¥58,404

26,963¥ 104,495¥ 104,205¥ 129,023¥130,121

Depreciation

77,36670,78264,153

57,954

59,83062,372

73,23887,21983,74474,44964,423

Research and development expenses

65,44047,78546,32639,05732,07027,78826,826

33,64636,75034,54831,166582.58¥367.06¥292.76¥170.36¥188.02(84.33)¥ (105.16)

582.57366.99292.57170.35188.02151.51(84.33)(105.16)257.43189.66146.02

Total net assets per share

6,481.97

7,500.16

5,640.08

4,719.66

3,662.26

3,300.17

3,390.02

2,987.16

4,483.32

5,612.11

5,044.45

		Cash dividends per share

120.00110.00

85.00

55.00

50.00

50.00

30.00

40.00

60.00

50.00

38.00

Total assets¥4,199,196¥4,650,896¥3,799,010¥3,243,779¥2,656,984¥2,481,452¥2,589,246¥2,327,432¥2,965,585¥3,585,857¥3,245,341

Investment in tangible assets¥¥

38,254¥Per share of common stock (yen):		

Earnings (net loss) per share—basic

		Earnings per share—diluted
		

¥

¥

151.51¥¥

257.50¥

189.88¥

146.16

At Year-End
Total net assets

2,113,948

2,425,929

1,829,326

1,524,933

1,197,841

1,075,939

1,104,929

977,670

1,453,996

1,810,483

1,611,227

Common stock

80,46280,46280,46280,46280,46280,46280,46280,46280,46280,46280,462

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

314,226

314,155

313,730

312,207311,687

311,564

311,570

311,577

311,589

312,075

319,320¥ 234,957¥182,191¥155,059¥151,299¥101,718¥ 153,661¥ 203,452

65,768¥ 188,805¥ 177,467¥ 131,784

Net cash used in investing activities(526,349)(160,769)(118,483)(274,210)(9,403)(187,574)(36,855)(114,217)(138,789)(164,446)(205,013)

Net cash provided by (used in) financing activities

130,923(8,918)

6,183

7,050

10,279(85,728)(38,230)

120,971(33,992)(19,749)

85,172

Cash and cash equivalents at end of year

92,399248,706

226,406

179,359

296,811

195,566

317,590

188,011

121,284

108,569

112,596

5.7

5.4

5.4

4.8

4.5

4.6

1.6

(0.4)

4.8

4.8

4.3

Cash FlowsNet cash provided by operating activities¥Indices
Operating profit margin (%)¥ 361,893¥ 248,854¥ 216,175¥ 155,234¥ 161,876¥ 150,481

71,608¥ 222,125¥ 191,007¥ 150,674

Return on equity (ROE) (%)

8.3

5.6

5.7

4.1

5.4

4.5

(2.6)

(2.8)

5.1

3.5

3.5

Return on assets (ROA) (%)

4.1

2.7

2.6

1.8

2.3

1.9

(1.1)

(1.2)

2.5

1.7

1.7

EBITDA (millions of yen)¥90,521¥

D/E ratio (%)

43.7

32.0

39.9

45.4

53.8

56.8

60.3

68.6

37.4

29.9

29.4

Equity ratio (%)

48.5

50.7

46.6

45.4

43.0

41.4

40.8

40.0

47.1

48.8

49.7

51,45852,52349,33347,41243,51640,82538,90339,91639,52836,09632,977

Number of employees (persons)

1. Investment in tangible assets and depreciation apply to property, plant and equipment. They do not include materials handling equipment leased underoperating leases.
2. Earnings (net loss) per share is computed on the average number of shares for each year.
3. Operating profit margin = Operating profit (loss) / Net sales
4. EBITDA = Income before income taxes + Interest expenses - Interest and dividends income + Depreciation and amortization (including intangible assets
such as materials handling equipment for leasing and goodwill)
5. ROE and ROA are computed based on the average total net assets and total assets, respectively, for each year.
Investment securities are stated at market value.
6. D/E ratio = Interest-bearing debt / (Total net assets – Subscription rights to shares – Non-controlling interests)
7. Equity ratio = (Total net assets - Subscription rights to shares - Non-controlling interests) / Total assets

1

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 are
based on information known to management as of June 2016.
This section contains projections and forward-looking statements that involve risks, uncertainties andassumptions. You should be aware that certain risks and uncertainties could cause the actual results ofToyota Industries Corporation and its consolidated subsidiaries to differ materially from any projections or
forward-looking statements. These risks and uncertainties include, but are not limited to, those listed under“Risk Information” and elsewhere in this annual report.
The fiscal year ended March 31, 2016 is referred to as fiscal 2016 and other fiscal years are referred toin a corresponding manner. All references to the “Company” herein are to Toyota Industries Corporation
and references to “Toyota Industries” herein are to the Company and its 214 consolidated subsidiaries.

2015 despite an increase in sales of the cargo transportbusiness of automotive-related parts. Operating profit
amounted to ¥5.2 billion, a decrease of ¥1.0 billion (16%) fromfiscal 2015.

Result of Operations

Operating Profit

Operating Performance
In fiscal 2016, the global economy registered a mild recovery
overall due primarily to the solid performance of the U.S.
economy despite China’s slowing growth. Generally, theeconomic outlook remains uncertain. In addition, there was asense of stagnation in the Japanese economy as evident incautious consumer spending and capital investment.
In this operating environment, Toyota Industries undertook
efforts to ensure customer trust through a dedication toquality as well as to expand sales by responding flexibly tomarket trends.
As a result, total consolidated net sales amounted to¥2,228.9 billion, an increase of ¥62.3 billion (3%) from fiscal
2015.

Operating Performance Highlights by Business
Segment
Operating results by business segment are as follows.
Net sales for each segment do not include inter-segment
transactions.
Automobile
The automobile market continued to expand overseas on theback of strong sales in the North American market despite adecline in sales in the Japanese market and emerging markets
such as Latin America. Amid such operating conditions, net
sales of the Automobile Segment totaled ¥1,045.7 billion, on
par with fiscal 2015. Operating profit amounted to ¥33.3
billion, a decrease of ¥2.6 billion (7%) from fiscal 2015.
Within this segment, net sales of the Vehicle Businessamounted to ¥480.0 billion, an increase of ¥21.0 billion (5%).
This is attributable primarily to the start of production of thehybrid version of the RAV4 despite a decrease in production
volume of the Vitz (Yaris outside Japan) and RAV4.
Net sales of the Engine Business totaled ¥158.2 billion,a decrease of ¥33.8 billion (18%). This is due primarily todecreases in sales of KD diesel engines and AR gasoline

2

Toyota Industries Report 2016engines, although production of GD diesel engines
commenced.
Net sales of the Car Air-Conditioning Compressor
Business totaled ¥342.6 billion, an increase of ¥18.0 billion(6%), resulting from an increase in sales in North American,
European and Chinese markets.
Net sales of the Electronics Parts, Foundry and Others
Business totaled ¥64.8 billion, a decrease of ¥10.1 billion(13%), due to decreases in sales of electronics parts andfoundry parts.
Materials Handling Equipment
The materials handling equipment market as a wholecontinued to expand globally, as the European, North
American and Japanese markets expanded, although the
Chinese market contracted. Amid this operating climate,
Toyota Industries strengthened production and sales
structures and rolled out new products matched to respective
markets. In August 2015, Toyota Industries acquired the lift
truck business of Tailift Co., Ltd., a Taiwan-based
manufacturer with noted strengths in undertaking
development, production and sales of products closely
tailored to the needs in emerging countries, thereby enhancing
its product offerings. In addition, Toyota Industries worked to
expand its business domain by acquiring the materials
handling equipment sales financing business of Toyota Motor
Corporation (TMC) in the United States in October 2015.
As a result, sales of lift trucks, a mainstay product of thissegment, increased worldwide. These activities led to anincrease in net sales of the Materials Handling Equipment
Segment of ¥79.2 billion (9%) to ¥1,004.1 billion. Operating
profit amounted to ¥79.7 billion, an increase of ¥10.9 billion(16%) from fiscal 2015.
Logistics
Net sales of the Logistics Segment amounted to ¥86.9 billion,a decrease of ¥11.1 billion (11%). This is due to sales of allshares of Asahi Securities Co., Ltd. and Wanbishi Archives
Co., Ltd., which were consolidated subsidiaries, in December

Textile Machinery
The textile machinery market underperformed due mainly toan economic slowdown in the primary markets of China andother emerging countries in Asia. Sales of air-jet looms andyarn quality measurement instruments decreased despite anincrease in sales of weaving machinery. As a result, net salesof the Textile Machinery Segment totaled ¥65.6 billion, adecrease of ¥2.5 billion (4%). Operating profit amounted to¥4.1 billion, an increase of ¥1.5 billion (52%) from fiscal 2015.

Operating profit for fiscal 2016 was ¥127.9 billion, an increaseof ¥10.4 billion (9%) from fiscal 2015. This was due to cost
reduction efforts throughout the Toyota Industries Group, anincrease in net sales and exchange rate fluctuations despite
an increase in labor costs and depreciation costs.

Ordinary Profit
Ordinary profit amounted to ¥185.3 billion, an increase of¥14.5 billion (9%) from fiscal 2015. This was due mainly to
dividends income of ¥65.0 billion, an increase of ¥12.1 billion(23%) from fiscal 2015.

Profit before Income Taxes
Profit before income taxes amounted to ¥275.2 billion, an
increase of ¥104.4 billion (61%) from fiscal 2015. This wasdue mainly to posting an extraordinary profit of ¥89.8 billion
arising from a gain on sales of shares of subsidiaries.

Profit attributable to owners of the parent
Profit attributable to owners of the parent totaled ¥183.0
billion, an increase of ¥67.8 billion (59%) from fiscal 2015.
Earnings per share—basic was ¥582.58 compared with
¥367.06 in fiscal 2015.

Consolidated Financial Condition
Total assets decreased ¥451.7 billion from the end of theprevious fiscal year to ¥4,199.1 billion due mainly toa decrease in market value of investment securities. Liabilities
amounted to ¥2,085.2 billion, a decrease of ¥139.7 billion
from the end of the previous fiscal year due mainly toa decrease in deferred tax liabilities. Net assets amounted to¥2,113.9 billion, a decrease of ¥312.0 billion from the end of
the previous fiscal year.

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 iscarried out mainly through issuance of corporate bonds andloans from financial institutions.
Toyota Industries continues to maintain its solid financial
condition. Through the use of such current assets as cash
and cash equivalents and short-term investments, as well as
free cash flows and funds procured from financial institutions,Toyota Industries believes that it will be able to provide
sufficient funds for the working capital necessary to expand
existing businesses and develop new projects, as well as 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 ona global consolidated basis.

Cash Flows
Cash flows from operating activities increased by ¥234.9
billion in fiscal 2016, due mainly to posting profit before
income taxes and non-controlling interests of ¥275.2 billion.
Net cash provided by operating activities increased by ¥52.8
billion compared with an increase of ¥182.1 billion in fiscal
2015.
Cash flows from investing activities resulted in a decreasein cash of ¥526.3 billion in fiscal 2016, attributable primarily to
payments for transfer of business amounting to ¥277.6 billion.
Net cash used in investing activities increased by ¥365.6
billion compared with a decrease of ¥160.7 billion in fiscal
2015.
Cash flows from financing activities resulted in an increasein cash of ¥130.9 billion in fiscal 2016, due mainly to proceedsfrom long-term loans payable of ¥153.9 billion.
After adding translation adjustments and cash and cash
equivalents at beginning of period, cash and cash equivalents
as of March 31, 2016 stood at ¥92.3 billion, a decrease of¥156.3 billion (63%) over fiscal 2015.

3

Investment in Property, Plant and Equipment
During fiscal 2016, Toyota Industries made a total investmentof ¥154.2 billion in property, plant and equipment (including
vehicles and materials handling equipment for lease) in orderto launch new products, streamline and upgrade production
equipment.
In the Automobile Segment, investment in property, plantand equipment totaled ¥36.1 billion. A primary breakdown of
this amount included ¥18.4 billion for the Company, ¥3.5
billion for Toyota Industries Engine India Private Limited, ¥2.8
billion for Michigan Automotive Compressor, Inc., ¥2.3 billion
for Toyota Industries Compressor Parts America, Co., ¥2.1
billion for Tokaiseiki Co., Ltd., ¥1.2 billion for TD AutomotiveCompressor Georgia, LLC and ¥1.1 billion for P.T. TD
Automotive Compressor Indonesia.
The Materials Handling Equipment Segment made aninvestment in property, plant and equipment in the total
amount of ¥109.4 billion. The primary breakdown comprised¥3.3 billion for the Company, ¥36.5 billion for Toyota Material
Handling Europe AB Group, ¥28.9 billion for Toyota Industries
Commercial Finance, Inc., ¥17.5 billion for The RaymondCorporation Group, ¥7.8 billion for Aichi Corporation, ¥2.4
billion for Toyota Industrial Equipment Mfg., Inc., ¥2.3 billion
for Cascade Corporation, ¥1.6 billion for Toyota Material
Handling Mercosur Indústria e Comércio de Equipamentos
Ltda, ¥1.2 billion for Atlas Toyota Material Handling, ¥1.1
billion for TOYOTA L&F Tokyo Co., Ltd. and ¥1.0 billion for
Toyota Material Handling Midwest, Inc.
Investment in property, plant and equipment in the
Logistics Segment totaled ¥6.1 billion, including ¥3.7 billion
for Asahi Security Co., Ltd. and ¥1.4 billion for Taikoh
Transportation Co., Ltd.
The Textile Machinery Segment made an investment inproperty, plant and equipment in the total amount of ¥1.7
billion, including ¥0.8 billion for the Company.
The Others Segment made an investment in property,
plant and equipment in the total amount of ¥0.6 billion.
Necessary funds were provided by a portion of bonds aswell as cash on hand and bank loans.

Strategies and Outlook
Outlook for Results for Fiscal 2017
With regard to the future economic outlook, despite
international cooperation it appears uncertainties surrounding
the business climate will continue as a further deceleration of
the Chinese economy is expected, while financial policies inJapan and the United States as well as the effects of Brexit
from the EU require close monitoring.
Amid these circumstances, the Toyota Industries Group isbuilding a stronger business foundation and addressing key
management issues by leveraging the Group’s comprehensive

4

Toyota Industries Report 2016

strengths to further raise corporate value.
As immediate tasks, we will work to bolster ourmanagement platform to respond quickly to rapid changes inthe business environment. Specifically, based on our quality
first approach, we aim to build a stronger production
foundation by maintaining and improving productivity on a
global basis. We will also pursue waste-free business
management and strive to improve profitability by reducing
product development lead time throughout the supply chain
and carrying out operations improvement activities inadministrative and back-office sections. Moreover, we will
strengthen risk management in order to quickly and accurately
respond to changes in world affairs. To support thisconsolidated management on a global scale, Toyota Industries
will aim to improve workplace capabilities and emphasize
diversity in the allocation of personnel while developing
human resources who can play active roles in countries
around the world.
In addition to these measures, we will work to not only
develop technologies based on the keyword of the 3Es, which
we define as “energy,” “environmental protection” and“ecological thinking,” but also innovate our business model bydifferentiating our products through production engineering
technologies and utilizing the Internet of Things (IoT) in ourefforts to offer attractive products to customers in the global
market in a timely manner. Also, we will nurture buds of new
growth from the perspectives of markets and customers andstrive to commercialize them as soon as possible. Throughthese measures, we aim for sustainable growth of businesses
in respective markets, including automobiles and materials
handling equipment for which expansion is expected in themedium to long term, thereby supporting industries and social
foundations around the world to contribute to a comfortablesociety and enriched lifestyles as specified in Vision 2020.
In other areas, Toyota Industries will create a workplace
climate that places top priority on safety; thoroughly enforce
compliance, including observance of laws and regulations;and proactively participate in social contribution activities. By
carrying out these initiatives, we aim to meet the trust ofsociety and grow harmoniously with society. With regard toprotection of the global environment, we will undertake
Group-wide initiatives toward realization of “a zero CO2emission society in 2050” based on our Sixth Environmental
Action Plan developed in March 2016.

Dividend Policy
Toyota Industries regards the benefits of shareholders as oneof its most important management policies. Based on thisstance, Toyota Industries will strive to strengthen its corporate
constitution, promote proactive business development andraise its corporate value.

Toyota Industries’ dividend policy is to meet the
expectations of shareholders for continuous dividends while
giving full consideration to business performance, funding
requirements, the dividend payout ratio and other factors.
Toyota Industries’ Ordinary General Meeting of Shareholders,
held on June 10, 2016, approved a year-end cash dividend of¥60.0 per share. Including the interim cash dividend of ¥60.0
per share, cash dividends for the year totaled ¥120.0 per
share.
Toyota Industries will use retained earnings to improve thecompetitiveness of its products, augment production capacity
in and outside Japan and expand into new fields of businessin securing future profits for its shareholders as well as toobtain treasury stock to return profits to shareholders.
The Company’s Articles of Incorporation stipulate that it
may pay interim cash dividends as prescribed in Article 454-5of the Companies Act and it is the Company’s basic policy to
pay dividends from retained earnings twice a year (interim andyear-end).
The Company’s Articles of Incorporation also stipulate thatwhat is prescribed in Article 459-1 of the Companies Act canbe added to the Articles of Incorporation. As the Company’s
policy, discretion to pay interim cash dividends is determinedby the Board of Directors while payment of year-end cash
dividends is subject to approval at the Ordinary General
Meeting of Shareholders.

Risk Information
The following represent risks that could have a material impact
on Toyota Industries’ financial condition, business results andshare prices. Toyota Industries judged the following as futurerisks as of March 31, 2016.

Principal Customers
Toyota Industries’ automobile and engine products are soldprimarily to TMC. In fiscal 2016, net sales to TMC accounted
for 30.6% of consolidated net sales. Therefore, TMC’s vehicle
sales could have an impact on Toyota Industries’ businessresults. As of March 31, 2016, TMC holds 24.39% 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 needsof the market and ensure the satisfaction of its customers.
R&D activities are focused mainly on developing andupgrading products in current business fields and peripheral
sectors. Toyota Industries expects that revenues derived fromthese fields will continue to account for a significant portion of
total revenues and anticipates that future growth will be

contingent on the development and sales of new products inthese fields. Toyota Industries believes that it can continue todevelop appealing new products. However, Toyota Industries
may not be able to forecast market needs and develop andintroduce appealing new products in a timely manner. This
could result in lower future growth and have an adverse
impact on Toyota Industries’ financial condition and businessresults.
Such a situation could result from risks that include noassurance 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 notalways be accurate; and no assurance that newly developed
products and technologies will always be protected as
intellectual property.

Intellectual Property Rights
In undertaking its business activities, Toyota Industries has
acquired numerous intellectual property rights, including thoseacquired 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
circumvent a patent of Toyota Industries and introduce
a competing product into the market. Moreover, Toyota
Industries’ products utilize a wide range of technologies.
Therefore, Toyota Industries could become a party subject tolitigation 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 made in
the future. Product defects that could lead to large-scale
recalls and product liability indemnities could result in large
cost burdens and have a significant negative impact on theevaluation of Toyota Industries. It could also have an adverse
effect on Toyota Industries’ financial condition and businessresults due to a decrease in sales, deterioration of profitability
and decrease in share prices of Toyota Industries.

Price Competition
Toyota Industries faces extremely harsh competition in each of
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.

5

Amid an environment characterized by intensifying pricecompetition, however, Toyota Industries may be unable tomaintain or increase market share against low-costcompetitors or to maintain profitability. This could have an
adverse impact on Toyota Industries’ financial condition andbusiness results.

Reliance on Suppliers of Raw Materials andComponents
Toyota Industries’ products rely on various raw materials andcomponents from suppliers outside Toyota Industries. Toyota
Industries has concluded basic business contracts with theseexternal 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’ production and cause an increasein costs, 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 environmental 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.

Alliances with Other Companies
Aiming to expand its businesses, Toyota Industries engages injoint activities with other companies through alliances and joint
ventures. However, a wildly fluctuating market trend ora disagreement 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.

Exchange Rate Fluctuations
Toyota Industries’ businesses encompass the production andsales of products and the provision of services worldwide.
Generally, the strengthening of the yen against othercurrencies (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 a weakening of the yen has a favorable impact. As such,in the businesses in which the Toyota Industries Group
manufactures products in Japan and exports them, thestrengthening of the yen could reduce Toyota Industries’6

Toyota Industries Report 2016

relative price competitiveness on a global basis and have an
adverse impact on Toyota Industries’ financial condition andbusiness results.

Share Price Fluctuations
Toyota Industries holds marketable securities, and therefore
bears the risk of price fluctuations of these shares. Based onfair market value of these shares at the end of the fiscal year
under review, 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
breakdown. However, there is no assurance Toyota Industries
can completely prevent or lessen the impact of man-made or
natural disasters and power blackouts occurring at Toyota
Industries’ and its suppliers’ production facilities. Specifically,
the majority of Toyota Industries’ domestic production facilities
and most of its business partners are situated in the Chubu
region. Therefore, major disasters in this region could delay orstop production or shipment activities. Such prolonged delays
and stoppages could have an adverse impact on Toyota
Industries’ financial condition and business results.

Latent Risks Associated with International
Activities
Toyota Industries manufactures and sells products andprovides services in various countries. Such unforeseen
factors as social chaos, including political disruptions,terrorism and wars, as well as changes in economic
conditions, could have an adverse impact on Toyota
Industries’ financial condition and business results.

Retirement Benefit Liabilities
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 andassumptions as well as changes in the assumptions could
have a significant impact on recognized expenses andcalculated liabilities in future accounting periods.

Significant Accounting Policies andEstimates

Toyota Industries’ Relationship to Toyota
Motor Corporation

Toyota Industries’ financial statements are prepared inconformity with accounting principles generally accepted inJapan. In preparing financial statements, management must
make estimates, judgments and assumptions that affect theamounts of assets and liabilities on the consolidated balance
sheets as well as income and expenses on the consolidated
statements of income. Among Toyota Industries’ significant
accounting policies, the following categories require
a considerable degree of judgment, estimation andassumption.

Due to historical reasons, Toyota Industries maintains close
relationships with Toyota Motor Corporation (TMC) and Toyota
Group companies in terms of capital and business dealings.

Allowance for Doubtful Accounts
To prepare for the risk of receivables becoming uncollectible,
Toyota Industries estimates its allowance for doubtful
accounts by utilizing the percentage of historical experiencesin credit losses for ordinary receivables and individually
examining the feasibility of collection for receivables that seemto be uncollectible. Evaluating the allowance for doubtful
accounts involves judgments made in accordance with thenature of the situation, and this allowance represents anessential and crucial estimate including future estimates ofcash flow amounts and timing 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’ businessresults.

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 andamortized over future accounting periods, and thus becomes
an expense. Toyota Industries believes its assumptions arereasonable. However, differences between actual results orchanges in the assumptions could have an impact onretirement benefits and retirement benefit expenses andliabilities after employee retirement.

Historical BackgroundIn 1933, Kiichiro Toyoda, the eldest son of founder Sakichi
Toyoda and then Managing Director of Toyota Industries (thenToyoda Automatic Loom Works, Ltd.), established theAutomobile Department within the Company based on his
resolve to manufacture Japanese-made automobiles. In 1937,
the Automobile Department was spun off and became an
independent company, Toyota Motor Co., Ltd. (the present
Toyota Motor Corporation).

Capital RelationshipIn light of this historical background, Toyota Industries and
TMC have maintained a close capital relationship. As of March
31, 2016, Toyota Industries holds 7.28% (224,515 thousand
shares) of TMC’s total shares in issue. Likewise, as of thesame date, TMC holds 24.39% of Toyota Industries’ total
voting rights. Toyota Industries is a TMC affiliate accounted forby the equity method.

Business RelationshipToyota Industries assembles certain cars and produces
automobile engines under consignment from TMC.
Additionally, Toyota Industries sells a portion of its othercomponents and products directly or indirectly to other Toyota
Group companies. In fiscal 2016, our net sales to TMC
accounted for 30.6% of our consolidated net sales.

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 toincreases in sales to and profits from the Toyota Group,
thereby contributing to raising Toyota Industries’ corporate
value.

Significant Contracts Agreements
There were no newly made significant contracts agreements
for the year ended March 31, 2016.

7

Consolidated Balance Sheets

Toyota Industries Corporation
As of March 31, 2016 and 2015
Millions of yen

2016

Millions of yen

2016

2015

¥ 214,162
170,844
19,99941,41125,75447,473
149
644
153,195¥205,816
99,73647,05345,66529,245
13,686
636
626
210,721

		Total current liabilities

673,636

653,187

Long-term liabilities:
		Bonds payable
		 Long-term loans payable (Note 9)
		 Lease obligations (Note 9)
		 Deferred tax liabilities
		 Net defined benefit liabilities (Note 10)
		 Other long-term liabilities

191,555
508,593
98,771500,077
90,92021,692

185,998
421,154
117,185
737,268
86,766
23,404

1,411,611
2,085,248

1,571,779
2,224,967

80,46280,462

105,562
789,502(41,266)

105,592
644,165(41,509)934,260

788,711

Accumulated other comprehensive income:		 Valuation difference on available-for-sale securities
		 Deferred gains or losses on hedges
		 Foreign currency translation adjustment
		 Defined benefit plan adjustments

1,105,544
360
22,813(26,169)

1,523,393(19)
55,598(11,463)

		Total accumulated other comprehensive income
Subscription rights to shares
Non-controlling interests
Total net assets
Total liabilities and net assets

1,102,547
6
77,133
2,113,948¥4,199,196

1,567,509
72
69,6362,425,929¥4,650,896

2015

AssetsCurrent assets:
		 Cash and deposits
		 Cash deposits for cash collection and deposit services
		 Trade notes and accounts receivable (Note 9)
		 Lease investment assets
		Short-term investments
		 Merchandise and finished goods (Note 9)
		 Work in process
		 Raw materials and supplies
		 Deferred tax assets
		 Other current assets
		 Allowance for doubtful accounts¥ 352,302—
280,80770,964
10,871
92,29841,86863,03525,185111,306(3,796)¥247,273
58,250265,504
55,86834,08586,86543,32064,651
24,23468,603(3,756)

		Total current assets

1,044,843

944,901

Fixed assets:
		Property, plant and equipment:
			 Buildings and structures (Notes 6 and 9)
				Accumulated depreciation
				Buildings and structures, net
			 Machinery, equipment and vehicles (Notes 6 and 9)
				Accumulated depreciation				 Machinery, equipment and vehicles, net
			 Tools, furniture and fixtures (Note 6)
				Accumulated depreciation				 Tools, furniture and fixtures, net
			Land (Note 9)			Construction in progress

409,545(249,496)
160,048
1,224,541(773,207)
451,334
130,840(103,390)
27,449
119,897
22,521

423,670(250,488)
173,181
1,068,628(747,732)
320,895
159,660(120,309)
39,351
120,652
53,451

			Total property, plant and equipment

781,251

707,532

		Intangible assets:
			Goodwill
			Other intangible assets

76,98093,234

95,98596,716

			Total intangible assets

170,214

192,702

Liabilities
Current liabilities:
		 Trade notes and accounts payable
		 Short-term loans payable (Note 9)
		 Current portion of bonds
		 Lease obligations (Note 9)
		Accounts payable—other		 Accrued income taxes
		 Deferred tax liabilities
		 Allowance for bonuses to directors
		 Other current obligations (Note 9)

		Total long-term liabilities
Total liabilities
Net Assets
Shareholders’ equity:
		Capital stock			Authorized — 1,100,000,000 shares
			 Issued— 325,840,640 shares as of March 31, 2016					 325,840,640 shares as of March 31, 2015
		Capital surplus
		Retained earnings
		Treasury stock			 11,613,812 shares as of March 31, 2016
			 11,684,749 shares as of March 31, 2015
		Total shareholders’ equity

		Investments and other assets:
			 Investment securities (Notes 8 and 9)
			Long-term loans receivable
			Deferred tax assets
			Lease investment assets
			 Net defined benefit assets
			 Other investments and other assets (Note 8)
			 Allowance for doubtful accounts

1,945,123
51,911
14,109164,775
8,215
20,154(1,403)

2,593,522
4,693
18,228135,958
28,28925,929(860)

			Total investments and other assets
		Total fixed assets
Total assets

2,202,886
3,154,352¥4,199,196

2,805,760
3,705,995¥4,650,896

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

8

Toyota Industries Report 20169

Consolidated Statements of Income

Consolidated Statements of Comprehensive Income

Toyota Industries Corporation
For the years ended March 31, 2016 and 2015

Toyota Industries Corporation
For the years ended March 31, 2016 and 2015
Millions of yen

Millions of yen

2016

2015

Net sales¥2,228,944¥2,166,661

ProfitCost of sales (Note 14)

1,804,759

1,765,861

Other comprehensive income:

424,184

400,799

Gross profit
Selling, general and administrative expenses (Note 14):

Valuation difference on available-for-sale securities
Deferred gains or losses on hedges

2016

2015

¥191,772¥121,674(417,966)

501,084379

120

Sales commissions

16,944

16,291

Foreign currency translation adjustment(35,659)

13,362

Salaries and allowances

100,775

97,038Retirement benefit expenses

5,232

4,176

Defined benefit plan adjustments(14,872)(6,725)

Depreciation

14,76913,968

Research and development expenses

43,054

41,930

Others

115,436

109,819

Total selling, general and administrative expenses

296,214283,224

127,970

117,574

Interest income

15,661

12,357

Dividends income

65,01552,955242

735

Operating profit
Non-operating profit:

Gain on sales of marketable securities

641

1,790

Other non-operating profit

11,355

10,878

Total non-operating profit

92,91778,717

17,341

15,876

Loss on disposal of fixed assets

1,675

1,665

Other non-operating expenses

16,471

7,922

Total non-operating expenses

35,48825,465

185,398

170,827

89,819—Equity in net earnings of affiliated companies

(707)

109

(468,826)

507,952(277,053)

629,626

Owners of the parent(281,925)

620,368

Non-controlling interests

4,871

9,258

Share of other comprehensive income of associates accounted for using equity method
Total other comprehensive income (Note 16)
Comprehensive income
Profit attributable to:

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

Non-operating expenses:
Interest expenses

Ordinary profit
Extraordinary profit (Note 15):
Gain on sales of shares of subsidiaries

89,819—Profit before income taxes

Total extraordinary profit

275,218

170,827
41,181

Income taxes—current

79,514

Income taxes—deferred

3,931

7,971

Total income taxes

83,445

49,153

191,772

121,674

8,735

6,410

¥ 183,036¥115,263

ProfitProfit attributable to non-controlling interests
Profit attributable to owners of the parent

Yen
Earnings per share—basic¥  582.58

Earnings per share–diluted

582.57366.996,481.97

7,500.16

120.00110.00Net assets per share
Cash dividends per share¥  367.06

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

10

Toyota Industries Report 201611

Consolidated Statements of Changes in Net Assets

Toyota Industries Corporation
For the year ended March 31, 2016

Balance at March 31, 2015

Toyota Industries Corporation
For the year ended March 31, 2015
Millions of yen

Millions of yen

Shareholders’ equity

Shareholders’ equity

Capital stock

Capital surplus

Retainedearnings

Treasury stock

Total
shareholders’equity¥80,462¥105,592¥644,165¥(41,509)¥788,711

Balance at March 31, 2014

Cumulative effects of changes in accounting
policies
Restated balance

80,462

105,592

Retainedearnings

Treasury stock

Total
shareholders’equity¥80,462¥105,654¥563,957¥(43,012)¥707,062

644,165(41,509)788,711

Restated balance(3,668)80,462

105,654560,28800

Dividends from surplus(37,699)

Profit attributable to owners of the parent

183,036

Repurchase of treasury stock(30)

Disposal of treasury stock

(20)

263

232

(31,386)
115,263(30)

145,337

242

145,549¥80,462¥105,562¥789,502¥(41,266)¥934,260

Valuation
Deferred gains
difference onor losses onavailable-forhedges
sale securities¥1,523,393¥ (19)

Foreigncurrencytranslation
adjustment¥55,598

Definedbenefit planadjustments

Total changes of items during the period

—

(61)

83,876

1,502

85,317¥80,462¥105,592¥644,165¥(41,509)¥788,711

Millions of yen

Total
Subscription
Nonaccumulated
rights tocontrollingothersharesinterests
comprehensive
income¥(11,463) ¥1,567,509¥ 72¥69,636

Valuation
Deferred gains
difference onor losses onavailable-forhedges
sale securities

Total net
assets¥2,425,929

Balance at March 31, 2014

¥1,022,525¥(139)

Foreigncurrencytranslation
adjustment¥44,649

Definedbenefit planadjustments

Total
Subscription
Nonaccumulated
rights tocontrollingothersharesinterests
comprehensive
income¥ (4,629) ¥1,062,404¥ 330

Cumulative effects of changes in accounting
policies
1,523,393(19)

55,598(11,463)

1,567,509

72

69,6362,425,929

Changes of items during the period

Restated balance

1,022,525(139)

44,649(4,629)1,062,404

330

Total net
assets¥59,528¥1,829,326

256(3,412)

59,784

1,825,914

Changes of items during the period

Change in ownership interest of parent
related to transactions with non-controllinginterests

0

Dividends from surplus(37,699)

Profit attributable to owners of the parent

183,036

Repurchase of treasury stock(20)

Disposal of treasury stock232

Balance at March 31, 2016

(20)
1,461

Accumulated other comprehensive income

Cumulative effects of changes in accounting
policies

Total changes of items during the period

(20)
1,523

Net changes of items other thanshareholders’ equity
Balance at March 31, 2015

—

(61)

Disposal of treasury stock

183,036(20)(31,386)
115,263

Millions of yen

Net changes of items other thanshareholders’ equity

703,393

Profit attributable to owners of the parent

Accumulated other comprehensive income

Restated balance(43,012)Dividends from surplus
Repurchase of treasury stock(37,699)

Net changes of items other thanshareholders’ equity

Balance at March 31, 2015

(3,668)Changes of items during the period

Change in ownership interest of parent
related to transactions with non-controllinginterests

Balance at March 31, 2016

Capital surplus

Cumulative effects of changes in accounting
policies

Changes of items during the period

Total changes of items during the period

Capital stock(417,849)

379(32,785)(14,706)(464,962)

(65)

7,496

(457,531)(417,849)

379(32,785)(14,706)(464,962)

(65)

7,496

(311,981)¥1,105,544¥360¥22,813¥(26,169) ¥1,102,547¥ 6¥77,133¥2,113,948

Dividends from surplus(31,386)

Profit attributable to owners of the parent

115,263

Repurchase of treasury stock(20)

Disposal of treasury stock

1,461

Net changes of items other thanshareholders’ equity
Total changes of items during the period
Balance at March 31, 2015

500,868

120

10,949(6,833)505,105

(258)

9,852

514,698

500,868

120

10,949(6,833)505,105

(258)

9,852

600,015¥1,523,393¥ (19)¥55,598¥(11,463) ¥1,567,509¥ 72¥69,636¥2,425,929

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

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

12

Toyota Industries Report 201613

Consolidated Statements of Cash Flows

Notes to Consolidated Financial Statements

1. Basis of presenting consolidated financial statements:

Toyota Industries Corporation
For the years ended March 31, 2016 and 2015
Millions of yen

2016

Cash flows from operating activities:
Profit before income taxes and non-controlling interests¥ 275,218
		Depreciation and amortization
150,011
		Increase (decrease) in allowance for doubtful accounts
788
		Interest and dividends income(80,677)
		Interest expenses
17,341		Equity in net (earnings) losses of affiliates(641)
		(Increase) decrease in receivables—trade(27,464)
		(Increase) decrease in inventories(6,932)
		Increase (decrease) in payables—trade
10,773		Others, net(123,752)
		Subtotal
214,665
		 Interest and dividends income received
80,674
		 Interest expenses paid
(17,154)
		 Income taxes (paid) refunded(43,227)
Net cash provided by operating activities
234,957
Cash flows from investing activities:
Payments for purchases of property, plant and equipment(152,943)
Proceeds from sales of property, plant and equipment
14,702
Payments for purchases of investment securities(716)
Proceeds from sales of investment securities
375
Payments for acquisition of subsidiaries’ stock resulting in change in scope of consolidation(9,717)
Proceeds from acquisition of subsidiaries’ stock resulting in change in scope of consolidation (Note 30) 140,097
Payments for loans made
(4,775)
Proceeds from collections of loans
5,732
Net (increase) decrease in time deposits(237,898)
Payments for transfer of business (Note 30)(277,643)
Others, net(3,561)
Net cash used in investing activities(526,349)
Cash flows from financing activities:
Payments for acquisition of subsidiaries’ stock not resulting in change in scope of consolidation(155)
Proceeds from sales of subsidiaries’ stock not resulting in change in scope of consolidation
524
Increase (decrease) in short-term loans payable
83,408Proceeds from long-term loans payable
153,980
Repayments of long-term loans payable(38,574)
Proceeds from issuance of bonds
25,555
Repayments of bonds(46,966)
Payments for repurchase of treasury stocks(20)
Cash dividends paid
(37,699)
Cash dividends paid to non-controlling interests(1,860)
Proceeds from payment by non-controlling interests
102
Others, net(7,370)Net cash provided by (used in) financing activities
130,923
Translation adjustments of cash and cash equivalents
4,161
Net increase (decrease) in cash and cash equivalents(156,307)
Cash and cash equivalents at beginning of period
248,706
Cash and cash equivalents at end of period (Note 30)¥ 92,399

2015¥170,827
127,463663(65,312)
15,876(1,790)(16,129)(20,142)
5,100(30,048)
186,507
65,077(15,622)(53,770)
182,191(169,842)
11,244(6,713)
1,158
(947)
—
(783)
711
12,896—(8,495)(160,769)——(24,861)
119,053(40,478)
20,000(29,284)(20)(31,386)(516)
36(21,460)(8,918)9,797
22,300226,406¥248,706

The accompanying consolidated financial statements have been
prepared based on the accounts maintained by Toyota Industries
Corporation (the “Company”) and its consolidated subsidiaries(together, hereinafter referred to as “Toyota Industries”) in accordancewith the provisions set forth in the Companies Act and the Financial

Instruments and Exchange Law, and in conformity withaccounting principles generally accepted in Japan, which are different
in certain respects from the application and disclosure requirements ofInternational Financial Reporting Standards.

2. Summary of significant accounting policies:(1) Consolidation(4) Cash and cash equivalents

The consolidated financial statements include the accounts of theCompany and its 214 subsidiaries (36 subsidiaries in Japan and 178
subsidiaries outside Japan) as of March 31, 2016.
For the year ended March 31, 2016, seven subsidiaries were
newly added to the scope of consolidation and seven companies
were excluded from the scope of consolidation because of sales ofshares of subsidiaries and liquidation and mergers as a result of
reorganization. Changes in the number of consolidated subsidiaries
for the year ended March 31, 2016 are listed below.

Cash and cash equivalents are cash on hand, readily available
deposits and short-term highly liquid and low risk investments withmaturities not exceeding three months at the time of purchase.

(increase)Toyota Industries Engine India Private Limited
Toyota Industries Singapore Pte. Ltd.
Tailift Co., Ltd. Group (4 companies)
The Raymond Corporation Group (1 company)(decrease)
Asahi Security Co., Ltd.
Wanbishi Archives Co., Ltd. (2 companies)
Toyota Industries Europe AB Group (4 companies)
Among the consolidated subsidiaries, the fiscal year-end dates ofthe following subsidiaries are different from the consolidated fiscal
year-end date (March 31): Toyota Industries (Kunshan) Co., Ltd.
(December 31), TD Automotive Compressor Kunshan Co., Ltd.
(December 31), Yantai Shougan Toyota Industries Co., Ltd.
(December 31) and seven other subsidiaries. These subsidiaries use
financial statements based on the provisional settlement of accounts
performed on March 31, which is the consolidated fiscal year-end date.

(2) Equity method
Investments in 12 major affiliates in 2016 are accounted for by theequity method of accounting.
Some of the affiliates are not accounted for under the equity
method since their net income/losses, retained earnings and otherfinancial amounts are immaterial.
The fiscal years of certain affiliates are different from theCompany. The Company is using those affiliates’ statements for
those fiscal years.

(3) Translation of foreign currencies
Foreign currency denominated receivables and payables aretranslated into Japanese yen at the year-end exchange rates and theresulting transaction gains or losses are included in the consolidated
statements of income.
All asset and liability accounts of foreign subsidiaries and affiliates
are translated into Japanese yen at year-end exchange rates and allrevenue and expense accounts are translated at prevailing fiscal
average rates.

(5) Short-term investments and investment securities
Toyota Industries classifies securities into four categories by purposeof holding: trading securities, held-to-maturity securities, othersecurities and investments in affiliates. Toyota Industries did not havetrading securities or held-to-maturity securities as of March 31, 2016.
Other securities with readily determinable fair values are stated atfair value based on market prices at the end of the year. Unrealized
gains and losses are included in “Valuation difference on available-forsale securities” as a separate line item of net assets. Cost of sales ofsuch securities is determined by the moving-average method.
Other securities without readily determinable fair values are statedat cost, as determined by the moving-average method.
Investments in affiliates are accounted for by the equity method(see Note 2 (2)).
Investments in affiliates not accounted for by the equity method
are stated at cost due to their insignificant effect on the consolidated
financial statements.

(6) Inventories
Inventories are stated mainly at cost determined by the movingaverage method (the values on the consolidated balance sheets arecalculated through the write-down method based on the deteriorationof profitability).

(7) Property, plant and equipment, and depreciation(Except for lease assets)
Property, plant and equipment are stated at cost. Depreciation
expenses of property, plant and equipment are computed mainly by
the declining-balance method for the Company and subsidiaries.
Significant renewals and additions are capitalized at cost. Repairs
and maintenance are charged to income as incurred.

(8) Intangible assets and amortization (Except for leaseassets)Amortization of intangible assets is computed using the straight-line
method.

(9) Lease assets
The depreciation method of leased properties on finance leases thatare deemed to transfer the ownership of the leased properties tolessees is the same as those applied to properties owned by
Toyota Industries.

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

14

Toyota Industries Report 201615

The depreciation method of leased properties on finance leases
other than those deemed to transfer the ownership of leased
properties to lessees is computed mainly by the straight-line method,which assumes zero residual value and the leasing term to be for theuseful life of the asset.
As for the finance leases other than finance leases deemed totransfer the ownership of leased properties to lessees, those thatcame into effect before March 31, 2008 (inclusive) will continue to beaccounted for by the former method (similar to the method applicableto ordinary operating leases).

(10) Method of accounting for deferred assets
As for bond issuance cost, the full amount is treated as expenses at
the time of payout.

(11) Allowances for doubtful accounts
Toyota Industries adopted the policy of providing an allowance for
doubtful accounts in an amount sufficient to cover possible losses oncollection by estimating individually uncollectible amounts andapplying to the remaining accounts a percentage determined bycertain factors such as historical collection experiences.

(12) Allowance for bonuses to directors
Bonuses to directors and managing officers are recorded on theaccrual basis.

(13) Allowance for retirement benefits for directors andmanaging officers
For expenditures to provide for the retirement benefits for directors
and managing officers, an amount to be paid as of the end of the
fiscal year in accordance with an internal policy of retirement benefits
for directors and managing officers is accrued.

(14) Accounting treatment of retirement benefits(a) Method of attributing expected benefit to periods
	Retirement benefit obligations are measured by actuarial
calculations based on the benefit formula as the attribution
method.
(b) Treatment of actuarial gains and losses and past service costs	Unrecognized past service costs are amortized by the straight-line
method over the remaining average service period of employees.
Unrecognized actuarial gain or loss at the end of the prior year isamortized by the straight-line method over the remaining average
service period of employees.

(15) Accounting standards for finance leasetransactions
As for the accounting standards for finance lease transactions, net
sales and cost of sales are recognized when the lease payments arereceived or when the lease transactions are started.

(16) Hedge accounting(a) Method of hedge accounting	Mainly the deferral method of hedge accounting is applied. In thecase of foreign currency forward contracts, foreign currency option
contracts and foreign currency swaps, the hedged items aretranslated at contracted forward rates if certain conditions are met.
		 As for the interest rate swap contracts, which meet therequirements of the preferential accounting method, thepreferential accounting method is applied.

16

Toyota Industries Report 2016(b) Hedging instruments and hedged items
Hedging instruments: 	Derivative instruments (foreign currency
forward contracts, foreign currency option
contracts, foreign currency swaps andinterest rate swaps)
Hedged items:	Risk of changes in foreign exchange rates
on transactions denominated in loans
payable, bonds payable, receivables andpayables, and forecasted transactions, andrisk of changes in interest rates on loans
payable, receivables and payables, andbonds payable(c) Hedging policy	Hedging transactions are executed and controlled based on
Toyota Industries’ internal policy and Toyota Industries is hedging
interest rate risks and foreign currency risks. Toyota Industries’
hedging activities are reported periodically to a director responsible
for accounting.
(d) Method used to measure hedge effectiveness	Hedge effectiveness is measured by comparing accumulatedchanges in market prices of hedged items and hedging
instruments or accumulated changes in estimated cash flows fromthe inception of the hedge to the date of measurements
performed. Currently it is considered that there are highcorrelations between them.

(17) Goodwill and amortization
Goodwill, if material, is amortized principally over less than 20 years
on a straight-line basis, while immaterial goodwill is charged to gain orloss as incurred.

(18) Consumption tax
The consumption tax under the Japanese Consumption Tax Law
withheld by Toyota Industries on sales of goods is not included in theamount of net sales in the accompanying consolidated statements ofincome, and the consumption tax paid by Toyota Industries under thelaw on purchases of goods and services and expenses is not includedin the related amount.

(19) Income taxes
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 andassets for the expected future tax consequences of temporary
differences between the carrying amounts and the tax bases of assets
and liabilities.

(20) Earnings per share
The computation of earnings per share—basic is based on theweighted-average number of outstanding shares of common stock.
The calculation of earnings per share—diluted is similar to thecalculation of earnings per share—basic, except that the weightedaverage number of shares outstanding includes the additional dilution
from potential common stock equivalents such as subscription rights
to shares. Cash dividends per share shown in the statements ofincome are the amounts applicable to the respective years.

3. Accounting changes:
Changes in accounting policies
Effective from the fiscal year beginning April 1, 2015, the Company
adopted the Accounting Standard for Business Combinations(Accounting Standards Board of Japan (ASBJ) Statement No. 21,
September 13, 2013), Accounting Standard for Consolidated
Financial Statements (ASBJ Statement No. 22, September 13, 2013),
Accounting Standard for Business Divestitures and others.
Accordingly, the Company posted as capital surplus the difference
arising from changes in the Company’s ownership interest in
subsidiaries for which the Company retains control, as well as changed
to an accounting method that treats acquisition-related costs as costs
incurred in the consolidated fiscal year. As for business combinations
implemented after the beginning of the fiscal year, the Company willchange to a method that settles the acquisition cost calculated basedon a provisional accounting treatment and reflects the reviewed
allocation amount on the consolidated financial statements of the
fiscal year that a business combination is carried out. In addition, theCompany has changed the presentation of net income and thepresentation of minority interests to non-controlling interests. To reflect
these changes, line items of the prior year financial statements havebeen reclassified to conform to current year presentation.
These accounting standards and others were prospectively
applied in accordance with transitional measures set forth inParagraph 58-2 (4) of the Accounting Standard for Business
Combinations, Paragraph 44-5 (4) of the Accounting Standard forConsolidated Financial Statements and Paragraph 57-4 (4) of the
Accounting Standard for Business Divestitures from the beginning of
the fiscal year ended March 31, 2016.
The impact on the consolidated financial statements wasestimated to be immaterial in the fiscal year.
In the consolidated statements of cash flows for the fiscal year
ended March 31, 2016, cash flows arising from payments for orproceeds from acquisition of subsidiaries’ stock not resulting inchange in scope of consolidation are classified under “Cash flows
from financing activities,” while cash flows related to expenses arisingfrom payments for acquisition of subsidiaries’ stock resulting inchange in scope of consolidation or expenses arising from paymentsfor or proceeds from acquisition of subsidiaries’ stock not resulting inchange in scope of consolidation are classified under “Cash flows
from operating activities.”

4. Accounting standards issued but not yet effective:
Toyota Industries Corporation and its consolidated subsidiaries inJapan have not yet adopted the following implementation guidance asof March 31, 2016.

(2) Date of adoption·R evised Implementation Guidance on Recoverability of Deferred Tax
Assets (ASBJ Guidance No. 26, March 28, 2016)(3) Impact of adopting the implementation guidance(1) Overview
With regards to the treatment of the recoverability of deferred tax
assets, the revised guidance adheres fundamentally to the framework
stated in “Audit Treatment of Judgments with Regard to Recoverabilityof Deferred Tax Assets (Report No. 66 of the Audit Committee of theJapanese Institute of Certified Public Accountants), under which
companies are classified into five categories. The amount of deferred
tax assets to be recorded is estimated according to these categories,
with necessary revisions to the treatment made as follows.

The amended implementation guidance is effective from the beginningof the fiscal year ending March 31, 2017.

Toyota Industries Corporation and its consolidated subsidiaries inJapan are currently in the process of determining the effects of the
new implementation guidance on the consolidated financial
statements.

(1) Treatment of companies that do not meet the requirements for
categories 1 to 5
(2) Requirements for categories 2 and 3(3) Treatment regarding future deductible temporary differences forwhich scheduling is impossible for companies classified in
category 2(4) Treatment regarding the rational estimate period for future taxable
income prior to temporary adjustments for companies classified in
category 3(5) Treatment of companies that meet the requirements for category 4
and are also applicable to categories 2 or 3

5. Changes in presentation:(Consolidated Balance Sheets)“Long-term loans receivable,” which was included in “Other investments and other assets” under “Investments and other assets” in the priorconsolidated balance sheets, was reclassified and presented as a separate line item in the current consolidated balance sheets due to its materiality.

176. Property, plant and equipment:(4) Annual maturities of other debts as of March 31, 2016 are as follows:
Millions of yen

Accumulated impairment losses are included in accumulated depreciation on the consolidated balance sheets.

7. Long-term debt:(1) Bonds payable as of March 31, 2016 and 2015 consist of the following:
Millions of yen

2016
¥

—
—
19,99926,00050,00030,000—10,00010,00010,00010,00010,00010,00010,00010,0005,555¥ 211,555(19,999)

1.66% bonds due 2015 without collateral
0.45–0.74% medium-term notes due 2015 without collateral
1.95% bonds due 2016 without collateral
1.72% bonds due 2018 without collateral
2.109% bonds due 2019 without collateral
1.109% bonds due 2021 without collateral
0.181% bonds due 2015 without collateral
0.265% bonds due 2017 without collateral
0.821% bonds due 2022 without collateral
0.554% bonds due 2020 without collateral
0.797% bonds due 2023 without collateral
0.234% bonds due 2019 without collateral
0.361% bonds due 2021 without collateral
0.207% bonds due 2020 without collateral
0.318% bonds due 2022 without collateral
0.075% medium-term notes due 2022 without collateral
Total

2015
¥30,000
7,053
19,99826,00050,00030,00010,00010,00010,00010,00010,00010,00010,000———¥233,051

The amount shown in parentheses in total for 2016 is that redeemed within one year.

(2) Annual maturities of bonds payable as of March 31, 2016 are as follows:
Millions of yen

Year ending March 31
2017
2018
2019
2020
2021
2022 and thereafter
Total

Total

¥

19,99910,00076,00010,00020,00075,555¥ 211,555(3) Other debts as of March 31, 2016 and 2015 consist of the following:
Millions of yen

Short-term loans payable
Long-term loans payable:
Current portion
Non-current portion
Lease obligations:
Current portion
Non-current portion
Total

Weighted-averageinterest rate (%)

2016¥ 121,572

2015¥55,369

49,271
508,59344,367421,154

1.43
0.82

41,411
98,771¥ 819,621

45,665
117,185¥683,742———

The interest rate is the weighted-average interest rate for the ending balances of those debts. The interest rate of lease obligations is omitted since the amount shown on the
consolidated balance sheets does not exclude interest receivable, which is included in total lease payment receivable.

Year ending March 31
2018
2019
2020
2021
2022 and thereafter
Total

Long-termloans payableLease
obligations

Total¥172,769
190,880
72,68430,25642,001¥508,593¥37,664
28,60819,212
10,112
3,173¥98,771¥210,433
219,489
91,89740,36945,174¥607,364

8. Investments in affiliated companies:
Investments in affiliated companies as of March 31, 2016 and 2015 are as follows:
Millions of yen

Investment securities (stock)
Other investments and other assets (others)

2016
¥
8,951
4,621

2015
¥8,7855,526

9. Assets pledged as collateral:(1) Assets pledged as collateral as of March 31, 2016 and 2015 are as follows:
Millions of yen

Investment securities
Merchandise and finished goods
Trade notes and accounts receivable
Machinery, equipment and vehicles
Buildings and structures
Land
Total

2016
¥ 114,288
1,227
835
485
111
16
¥ 116,963

2015¥143,192
1,591
1,566
1,112
118
17
¥147,596(2) Secured liabilities as of March 31, 2016 and 2015 are as follows:
Millions of yen

Other current obligations
Short-term loans payable
Lease obligations (long-term liabilities)
Lease obligations (current liabilities)
Long-term loans payable
Total

2016
¥ 28,169
2,096
198
185
68
¥ 30,718

2015¥27,284
3,554
—
—
715
¥31,554

0.45

10. Allowance for retirement benefits to directors and managing officers:
The amount of allowance for retirement benefits to directors and managing officers included in net defined benefit liabilities for the years ended
March 31, 2016 and 2015 is as follows:
Millions of yen

Allowance for retirement benefits to directors and managing officers

2016¥1,4642015¥1,605

11. Asset retirement obligations:
The amount of asset retirement obligations as of March 31, 2016 and 2015, which is less than 1% of total liabilities and net assets, is omitted
pursuant to Article 92, paragraph (2) of the Regulation for Terminology, Forms and Preparation of Consolidated Financial Statements.

18

Toyota Industries Report 201619

12. Export discount bills:

17. Financial instruments:(1) Matters concerning financial instruments:

Export discount bills as of March 31, 2016 and 2015 are as follows:
Millions of yen

Export discount bills

2016
¥126

2015
¥233

13. Net assets:
Under the Companies Act, amounts equal to at least 10% of the sum of the cash dividends and other external appropriations paid by the Company
and its subsidiaries in Japan must be set aside as a legal reserve until it equals 25% of capital stock. The legal reserve may be used to reduce a
deficit or may be transferred to capital stock taking appropriate corporate action. In consolidation, the legal reserves of the Company and its
subsidiaries in Japan are accounted for as retained earnings. The year-end cash dividend is approved at the Ordinary General Meeting of
Shareholders of the Company held after the close of the fiscal year to which the dividend is applicable. In addition, interim cash dividends may be
paid upon resolution of the Board of Directors, subject to limitations imposed by the Companies Act.

14. Research and development expenses:
Research and development expenses, which are included in selling, general and administrative expenses and manufacturing costs, amounted to¥54,970 million and ¥47,785 million for the years ended March 31, 2016 and 2015, respectively.

15. Extraordinary profit:
Toyota Industries recorded an extraordinary profit due to sales of all shares of Asahi Securities Co., Ltd. and Wanbishi Archives Co., Ltd., which wereconsolidated subsidiaries, in December 2015.

16. Comprehensive income:
Recycling and tax effect relating to other comprehensive income for the years ended March 31, 2016 and 2015 are as follows:
Millions of yen

Valuation difference on available-for-sale securities
Amount arising during the period
Recycling		 Before tax effect adjustment
		Tax effect		 Valuation difference on available-for-sale securities
Deferred gains or losses on hedges
Amount arising during the period
Recycling		 Before tax effect adjustment
		Tax effect		 Deferred gains or losses on hedges
Foreign currency translation adjustment
Amount arising during the period
Recycling		 Foreign currency translation adjustment
Defined benefit plan adjustments
Amount arising during the period
Recycling		 Before tax effect adjustment
		Tax effect		 Defined benefit plan adjustments
Share of other comprehensive income of associates accounted for using equity method
Amount arising during the period
		 Other comprehensive income

20

Toyota Industries Report 2016

2016

2015

¥(648,684)(356)(649,041)
231,075(417,966)¥ 660,681(734)
659,946(158,862)
501,084

1,558(1,124)
433
(54)
379

(2,835)
3,010
175
(54)
120

(35,506)(152)(35,659)

13,431(68)
13,362(23,766)873(22,892)
8,019(14,872)(8,565)398(8,166)
1,441(6,725)(707)(468,826)

109
507,952(A) Policy for financial instruments	Toyota Industries borrows funds from financial institutions and issues corporate bonds to procure funds to meet its needs for long-term funding.
Toyota Industries also borrows funds from financial institutions and issues commercial paper to procure funds to meet its needs for short-termworking capital. Toyota Industries manages its cash reserves as highly safe financial assets. The purpose of using derivative instruments is to
reduce risk, not to obtain earnings from exchanges or for speculative purposes.
(B) Contents and risk of financial instruments
	Cash and deposits are subject to credit risk of financial institutions and foreign currency risk. Trade notes and accounts receivable are subject tocounterparty credit risk and foreign currency risk. Lease investment assets are subject to counterparty credit risk, foreign currency risk andinterest rate risk.
		 Short-term investments and investment securities are subject to market risk and foreign currency risk.
		 Trade notes and accounts payable include those denominated in foreign currencies and are thus subject to foreign currency risk. All of them
are due within one year. Loans payable, bonds payable and lease obligations are subject to foreign currency risk and interest rate risk.
		 Toyota Industries uses derivative instruments (foreign currency forward contracts, foreign currency option contracts, foreign currency swaps
and interest rate swaps) to cover such kinds of risks, and these transactions are subject to credit risk of financial institutions.
		 With regard to foreign currency risk, Toyota Industries uses derivative instruments (foreign currency forward contracts and foreign currency
option contracts) for the amount of foreign currency trade assets (trade notes and accounts receivable) offset by foreign currency trade liabilities(trade notes and accounts payable). Foreign currency swaps and interest rate swaps are used for hedging the foreign currency risk and interest
rate risk of loans, bonds and others.
		 As for hedge accounting, the method, items, policy and evaluation method of measuring effectiveness are referred to in Note 2 “(16) Hedge
accounting.”(C) Risk management of financial instrumentsa) Management of credit risk (risk of non-execution of contract by counterparty)		In accordance with its treasury policy, Toyota Industries carries out regular monitoring of principal counterparties and strives to quickly
ascertain and minimize concerns about collecting credits due to worsening financial and other conditions of counterparties. In using
derivatives, to reduce credit risk of financial institutions, Toyota Industries engages in transactions only with those financial institutions thathave high credit ratings.
b) Management of market risk (foreign currency risk, interest rate risk, others)		In accordance with its treasury policy, in principle, Toyota Industries uses foreign currency forward contracts, foreign currency option contracts
and foreign currency swaps to hedge foreign currency risk for each currency for its monetary credits and liabilities denominated in foreign
currencies. Toyota Industries uses interest rate swaps to hedge interest rate risk on monetary liabilities. Toyota Industries monitors the financial
condition and reviews the valuations of short-term investments and investment securities.
c) Management of financing-related liquidity risk (risk that payments cannot be made on due date)		 In accordance with its treasury policy, Toyota Industries manages liquidity risk with cash reserves and commitment lines.
(D) Supplemental explanation of financial instruments
	The fair value of financial instruments includes values based on market values as well as rationally calculated values when market values cannot
be determined. These calculated values could also conceivably change along with the adoption of different premises.

21

(2) Matters concerning the fair value of financial instruments:
For the year ended March 31, 2016
The amounts in the consolidated balance sheets, fair values and the differences between those as of March 31, 2016 are as follows. Financial
instruments for which ascertaining fair value is extremely difficult are not included in the following chart. Refer to Note 2 regarding these financial
instruments.
Millions of yen(1) Cash and deposits(2) Trade notes and accounts receivable(3) Lease investment assets (current assets)(4) Short-term investments and investment securities
Other securities(5) Long-term loans receivable(6) Lease investment assets (fixed assets)
Total assets(1) Trade notes and accounts payable(2) Short-term loans payable(3) Current portion of bonds(4) Lease obligations (current liabilities)(5) Bonds payable(6) Long-term loans payable(7) Lease obligations (long-term liabilities)
Total liabilities
Derivative transactions*3
Derivative instruments for which hedge accounting is not applied
Derivative instruments for which hedge accounting is applied
Total derivative transactions

Carrying
amount*1,*2

Fair value

Difference¥352,302
277,01170,964
1,916,879¥352,302
277,01170,964
1,916,879

¥—
(0)
—
—

51,911
164,775¥2,833,844¥(214,162)(170,844)(19,999)(41,411)(191,555)(508,593)(98,771)¥(1,245,339)

49,323
159,904¥2,826,385¥(214,162)(170,844)(19,999)(41,411)(198,740)(519,279)(98,863)¥(1,263,302)(2,588)(4,870)¥(7,459)¥0———(7,184)(10,686)(92)¥(17,962)

¥775
491
¥1,266¥775
491¥1,266¥——¥—*1: Allowance for doubtful accounts is excluded from total assets.
*2: The figures for liabilities are indicated in parentheses.
*3: Stated values are the net amounts of assets and liabilities arising from derivative transactions. Net liabilities are represented in parentheses.

1. Methods for calculating fair value of financial instruments and matters concerning marketable securities and derivatives(Assets)(1) Cash and deposits		All deposits are short term and fair value approximates the carrying amount. Therefore, fair value for deposits is calculated at the carrying
amount.
(2) Trade notes and accounts receivable		These items are categorized into a specified time period, and are stated at present value calculated by the discount rate, which takes into
account the respective period.
(3) Lease investment assets (current assets)		Lease investment assets (current assets) are short term and fair value approximates the carrying amount. Therefore, fair value for these items
is calculated at the carrying amount.
(4) Short-term investments and investment securities
		Fair value of stock is calculated based on prices listed on stock exchanges. Fair value of negotiable certificates of deposit approximates the
carrying amount. Details regarding other securities are referred to in Note 18 “Marketable securities.”(5) Long-term loans receivable		 Fair value is calculated by discounting to net present value the total of principal and interest using incremental borrowing rates.
(6) Lease investment assets (fixed assets)		Fair value is calculated by discounting to net present value the total amount of lease receipts using an expected interest rate when newly
undertaking the same lease transaction.

22

Toyota Industries Report 2016

(Liabilities)(1) Trade notes and accounts payable		All notes and accounts payable are short term and fair value approximates the carrying amount. Therefore, fair value for notes and accounts
payable is calculated at the carrying amount.
	(2) Short-term loans payable, (3) Current portion of bonds, (4) Lease obligations (current liabilities)		These items payable are short term and fair value approximates the carrying amount. Therefore, fair value for these items is calculated at thecarrying amount.
(5) Bonds payable		Fair value is calculated by discounting to net present value the total of principal and interest using incremental borrowing rates. Interest rate
swaps that meet the requirement for the preferential accounting method and interest rate and currency swaps that meet the requirement for
the integral accounting method are handled together with the aforementioned long-term loans payable. The fair value of interest rate swaps isincluded in the fair value of the aforementioned long-term loans payable. The fair value is calculated by discounting expected future cash flows
using incremental borrowing rates.
(6) Long-term loans payable		Fair value is calculated by discounting future cash outflow from repayment of principal and interest to net present value using the current
interest rate.
			 Fair value of long-term loans payable with which the interest rate swap transactions are accounted under the preferential accounting
method and with which the interest rate and currency swap transactions are accounted under the integral accounting method is calculated bydiscounting future cash outflow from repayment of principal and interest paid under the interest rate swap transactions to net present value
using the current interest rate.
(7) Lease obligations (long-term liabilities)
		Fair value is calculated by discounting to net present value the total amount of lease payments using an expected interest rate when newly
undertaking the same lease transaction.
(Derivative transactions)
Details regarding derivative transactions are referred to in Note 19 “Derivative instruments.”
2. Financial instruments for which ascertaining fair value is extremely difficult
Millions of yen
Carrying
amountNon-listed stocks¥8,951
30,164¥39,115

Investments in affiliated companies
Other securities
Total

Non-listed stocks are not included in “Short-term investments and investment securities” because there are no market prices and ascertaining fair value is extremely difficult.

3. Amounts of projected future redemptions after March 31, 2016 for monetary credits and liabilities as well as marketable securities with maturities
Millions of yen
Year ending March 31

Cash and deposits
Trade notes and accounts receivable
Long-term loans receivable
Lease investment assets (fixed assets)
Total

2017

2018-2021

2022-2026

2027 and
thereafter¥352,302
276,749——¥629,052¥—
261
48,610160,399¥209,271

¥—
—
3,045
4,376
¥7,422

¥—
—
254
—
¥254

4. Scheduled repayments of bonds payable, long-term loans payable and lease obligations (long-term liabilities) after the consolidated settlement dateMillions of yen
Year ending March 31

Bonds payable
Long-term loans payable
Lease obligations (long-term liabilities)
Total

2017

2018

2019

2020

2021

2022-2026

2027 and
thereafter

¥—
—
—
¥—

¥10,000
172,769
37,664¥220,433¥76,000
190,880
28,608¥295,489¥10,000
72,684
19,212¥101,897¥20,000
30,256
10,112¥60,369¥75,555
42,0012,980¥120,538

¥—
—
192
¥192

23

For the year ended March 31, 2015
The amounts in the consolidated balance sheets, fair values and the differences between those as of March 31, 2015 are as follows. Financial
instruments for which ascertaining fair value is extremely difficult are not included in the following chart. Refer to Note 2 regarding these financial
instruments.
Millions of yen(1) Cash and deposits(2) Cash deposits for cash collection and deposit services(3) Trade notes and accounts receivable(4) Lease investment assets (current assets)(5) Short-term investments and investment securities
Other securities(6) Lease investment assets (fixed assets)
Total assets(1) Trade notes and accounts payable(2) Short-term loans payable(3) Current portion of bonds(4) Lease obligations (current liabilities)(5) Bonds payable(6) Long-term loans payable(7) Lease obligations (long-term liabilities)
Total liabilities
Derivative transactions*3
Derivative instruments for which hedge accounting is not applied
Derivative instruments for which hedge accounting is applied
Total derivative transactions

Carrying
amount*1,*2

Fair value

Difference¥247,273
58,250261,757
55,868¥247,273
58,250261,756
55,868

¥—
—
(0)
—

2,588,295
135,958¥3,347,404¥ (205,816)(99,736)(47,053)(45,665)(185,998)(421,154)(117,185)¥(1,122,610)

2,588,295
133,231¥3,344,677¥ (205,816)(99,736)(47,053)(45,665)(194,364)(427,974)(118,201)¥(1,138,812)—(2,726)¥(2,727)¥0———(8,366)(6,819)(1,015)¥(16,201)¥(1,757)41¥(1,716)¥(1,757)41¥(1,716)

¥—
—
¥—

(6) Long-term loans payable		Fair value is calculated by discounting future cash outflow from repayment of principal and interest to net present value using the current
interest rate.
			 Fair value of long-term loans payable with which the interest rate swap transactions are accounted under the preferential accounting
method and with which the interest rate and currency swap transactions are accounted under the integral accounting method is calculated bydiscounting future cash outflow from repayment of principal and interest paid under the interest rate swap transactions to net present value
using the current interest rate.
(7) Lease obligations (long-term liabilities)
		Fair value is calculated by discounting to net present value the total amount of lease payments using an expected interest rate when newly
undertaking the same lease transaction.
(Derivative transactions)
Details regarding derivative transactions are referred to in Note 18 “Derivative instruments.”
2. Financial instruments for which ascertaining fair value is extremely difficult
Millions of yen
Carrying
amountNon-listed stocks
Investments in affiliated companies
Other securities
Total¥8,785
30,527¥39,312

Non-listed stocks are not included in “Short-term investments and investment securities” because there are no market prices and ascertaining fair value is extremely difficult.

3. Amounts of projected future redemptions after March 31, 2015 for monetary credits and liabilities as well as marketable securities with maturities
Millions of yen*1: Allowance for doubtful accounts is excluded from total assets.
*2: The figures for liabilities are indicated in parentheses.
*3: Stated values are the net amounts of assets and liabilities arising from derivative transactions. Net liabilities are represented in parentheses.

1. Methods for calculating fair value of financial instruments and matters concerning marketable securities and derivatives(Assets)(1) Cash and deposits, (2) Cash deposits for cash collection and deposit services
		All deposits are short term and fair value approximates the carrying amount. Therefore, fair value for deposits is calculated at the carrying
amount.
(3) Trade notes and accounts receivable		These items are categorized into a specified time period, and are stated at present value calculated by the discount rate, which takes into
account the respective period.
(4) Lease investment assets (current assets)		Lease investment assets (current assets) are short term and fair value approximates the carrying amount. Therefore, fair value for these items
is calculated at the carrying amount.
(5) Short-term investments and investment securities		Other securities refer to stocks, money management funds and negotiable certificates of deposit. Fair value of stocks is calculated based on
prices listed on stock exchanges. Fair value of money management funds and negotiable certificates of deposit is calculated at the carrying
amount since fair value of these assets approximates the carrying amount. Details regarding other securities are referred to in Note 18“Marketable securities.”(6) Lease investment assets (fixed assets)		Fair value is calculated by discounting to net present value the total amount of lease receipts using an expected interest rate when newly
undertaking the same lease transaction.
(Liabilities)(1) Trade notes and accounts payable		All notes and accounts payable are short term and fair value approximates the carrying amount. Therefore, fair value for notes and accounts
payable is calculated at the carrying amount.
(2) Short-term loans payable, (3) Current portion of bonds, (4) Lease obligations (current liabilities)		These items payable are short term and fair value approximates the carrying amount. Therefore, fair value for these items is calculated at thecarrying amount.
(5) Bonds payable		Fair value is calculated by discounting to net present value the total of principal and interest using incremental borrowing rates.

Year ending March 31

Cash and deposits
Cash deposits for cash collection and deposit services
Trade notes and accounts receivable
Lease investment assets (fixed assets)
Total

2016

2017-20202021-2025

2026 and
thereafter¥247,273
58,250261,391—¥566,915

¥—
—
365
131,994¥132,360

¥—
—
—
3,964
¥3,964

¥—
—
—
—
¥—

4. Scheduled repayments of bonds payable, long-term loans payable and lease obligations (long-term liabilities) after the consolidated settlement dateMillions of yen
Year ending March 31

Bonds payable
Long-term loans payable
Lease obligations (long-term liabilities)
Total

2016

2017

2018

2019

2020

2021-2025

2026 and
thereafter

¥—
—
—
¥—

¥19,998
52,67842,828¥115,505¥10,000
109,667
34,264¥153,931¥76,000
156,954
23,673¥256,628¥10,000
39,854
12,475¥62,329¥70,000
62,0003,813¥135,813

¥—
—
130
¥130

18. Marketable securities:(1) Other securities with readily determinable fair value
As of and for the year ended March 31, 2016
Millions of yen
Carrying
amountAcquisition
cost

Difference

StocksOthersSubtotal
Securities with carrying amount not exceeding acquisition cost:¥1,896,931
317
1,897,249¥ 311,063
305
311,368¥1,585,867
12
1,585,880

StocksOthersSubtotal
Total

8,758
10,871
19,630¥1,916,879

11,656
10,871
22,528¥ 333,896(2,897)—(2,897)¥1,582,983

Securities with carrying amount exceeding acquisition cost:Non-listed stocks (total amount is ¥30,164 million in the consolidated balance sheets) are not included in “Other securities” because there are no market prices and ascertaining fairvalue is extremely difficult. “Others” above are mainly money management funds and negotiable certificates of deposit.

24

Toyota Industries Report 201625

2) Derivative instruments for which hedge accounting is applied

As of and for the year ended March 31, 2015

Millions of yen

Millions of yen
Carrying
amountAcquisition
cost

Difference

StocksOthersSubtotal
Securities with carrying amount not exceeding acquisition cost:¥2,553,750
346
2,554,097¥321,770
310
322,081¥2,231,979
35
2,232,015

StocksOthersSubtotal
Total

113
34,08534,198¥2,588,295

117
34,08534,202¥356,284

(4)
—
(4)
¥2,232,011

Category

Securities with carrying amount exceeding acquisition cost:Non-listed stocks (total amount is ¥30,527 million in the consolidated balance sheets) are not included in “Other securities” because there are no market prices and ascertaining fairvalue is extremely difficult. “Others” above are mainly money management funds and negotiable certificates of deposit.

As of and for the years ended March 31, 2016 and 2015
Other securities sold are omitted due to their quantitative immateriality.

Sell

19. Derivative instruments:(1) Quantitative disclosure about derivatives for the year ended March 31, 2016
1) Derivative instruments for which hedge accounting is not applied(a) Foreign currency transactions as of March 31, 2016 are as follows:
Millions of yen

Transactions other thanmarket transactions

Notional amount
Maturity
Totalover 1 year

Type
Foreign currency forward contracts transactions
Buy JPY / Sell USD
Buy JPY / Sell EUR
Buy JPY / Sell other foreign currencies
Buy EUR / Sell other foreign currencies
Buy SEK / Sell EUR
Buy SEK / Sell GBP
Buy SEK / Sell other foreign currencies
Sell SEK / Buy EUR
Sell SEK / Buy GBP
Sell SEK / Buy other foreign currencies
Buy other foreign currencies
Sell other foreign currencies
Foreign currency option contracts transactions*1
Buy
Sell
Total

Foreign currency forward contracts transactions
Buy JPY / Sell USD
Buy JPY / Sell EUR
Buy JPY / Sell AUD
Buy JPY / Sell CNY
Buy SEK / Sell EUR
Buy SEK / Sell GBP
Buy SEK / Sell other foreign currencies
Sell SEK / Buy EUR
Sell SEK / Buy GBP
Sell SEK / Buy other foreign currencies
Foreign currency option contracts transactions*1
Buy(2) Other securities sold during the year

Category

Deferred hedge
methodType¥6,229
362
50
1,449
34,4272,569
41,522
10,882
142
3,567
2,145
3,391
1,765
<25>
1,765
<25>
¥110,270

Fair value*2

Net unrealized
gain/loss

¥—
—
—
—
—
—
—
—
—
—
—
—

¥569
16
(0)
7
432
201
(132)
(13)
(2)
(18)
(118)
(7)

¥569
16
(0)
7
432
201
(132)
(13)
(2)
(18)
(118)
(7)

—

45

20

—
¥—

4
¥982

20
¥974

Contentsof hedge

Notional amount
Maturity
Totalover 1 year¥5,210
3,158
472
905
Accounts
3,884
receivable
4,723
5,432
25
130
551

Accounts
receivable

3,620
<54>
3,620
<54>
31,735

Subtotal
Foreign currency forward contracts transactions
Buy JPY / Sell USD
4,069
Net valuation method
Accounts
Buy JPY / Sell EUR
1,688
using forward foreign
receivableexchange contracts
Buy JPY / Sell AUD
244
Buy JPY / Sell CNY
2,018
Subtotal
8,020
Preferential accounting Interest rate swap transactions
Longmethod of interest rate 	
term loans 60,339
Fixed rate payment /swap transactions
payableFloating rate receipt
Subtotal
60,339Integral accounting method Interest rate and currency swap transactions
Longof interest rate and currency 	Fixed rate payment /term loans 95,942
swap transactions
payableFloating rate receipt
Subtotal
95,942
Total¥196,038

Fair valueNet
unrealized
gain/loss

¥—
—
—
—
—
—
—
—
—
—

¥98
(18)
(15)
(5)
32
310
101
0
(2)
(24)

¥98
(18)
(15)
(5)
32
310
101
0
(2)
(24)

—

48

(5)

—
—

35
562

18
491

*2

*2

—

—

60,339*2*260,339——95,942

*2

*2

—
562

—
¥491

—
—
—
—
—

95,942¥156,282¥

Evaluation method

By theexchange rate
on foreign
currency
marketBy the price on
currency option
marketBy the exchange
rate on foreign
currency
marketBy the rate oninterest swap
marketBy the rate oninterest swap
market*1: The amounts indicated in brackets for foreign currency option contracts transactions refer to the option fee, and the related figures for fair value and net unrealized gain/loss arealso shown.
*2: Fair value and net unrealized gain/loss of derivative instruments for which these accounting methods are applied are inclusively reported as a portion of fair value of their hedge
instruments such as accounts receivable and long-term loans payable (see Note 17).

*1: The amounts indicated in brackets for foreign currency option contracts transactions refer to the option fee, and the related figures for fair value and net unrealized gain/loss arealso shown.
*2: The fair value calculation method is based on the index price as of March 31, 2016.

(b) Interest rate transactions as of March 31, 2016 are as follows:
Millions of yen

Category
Transactions other thanmarket transactions

Notional amount
Maturity
Totalover 1 year

Type
Interest rate swap transactions
Fixed rate payment / Floating rate receipt
Total

¥
¥

47,21647,216¥¥

29,716
29,716

Fair value

¥
¥

(199)
(199)

Net unrealized
gain/loss

¥
¥

(199)
(199)

The fair value calculation method is based on the index price as of March 31, 2016.

26

Toyota Industries Report 201627

(2) Quantitative disclosure about derivatives for the year ended March 31, 2015

2) Derivative instruments for which hedge accounting is applied

1) Derivative instruments for which hedge accounting is not applied(a) Foreign currency transactions as of March 31, 2015 are as follows:

Millions of yen

Category

Type

Millions of yen

Category

Transactions other thanmarket transactions

Type
Foreign currency forward contracts transactions
Buy JPY / Sell USD
Buy JPY / Sell EUR
Buy JPY / Sell AUD
Buy JPY / Sell other foreign currencies
Buy EUR / Sell JPY
Buy EUR / Sell other foreign currencies
Buy SEK / Sell EUR
Buy SEK / Sell GBP
Buy SEK / Sell other foreign currencies
Sell SEK / Buy EUR
Sell SEK / Buy GBP
Sell SEK / Buy other foreign currencies
Buy other foreign currencies
Sell other foreign currencies
Foreign currency option contracts transactions*1
Buy
Sell
Foreign currency swap transactions
Payment JPY / Receipt USD
Total

Notional amount
Maturity
Totalover 1 year

¥191
250
120
642
570
1,640
35,195
3,054
34,478
5,835
2,013
6,459
9,871
2,611

¥—
—
—
—
—
—
—
—
—
—
—
—
—
—

Fair value*2

Net unrealized
gain/loss¥(11)
1
0
58
(6)
(18)
139
(164)
(867)
(17)
(2)
11
(213)
14

¥(11)
1
0
58
(6)
(18)
139
(164)
(867)
(17)
(2)
11
(213)
14

2,735
<35>
2,735
<35>

—

13

(21)

—

80

(44)

1,007
¥109,413

—
¥—

(318)
¥(1,301)(318)¥(1,462)*1: The amounts indicated in brackets for foreign currency option contracts transactions refer to the option fee, and the related figures for fair value and net unrealized gain/loss arealso shown.
*2: The fair value calculation method is based on the index price as of March 31, 2015.

(b) Interest rate transactions as of March 31, 2015 are as follows:
Millions of yen

Category
Transactions other thanmarket transactions

Type
Interest rate swap transactions
Fixed rate payment / Floating rate receipt
Total

The fair value calculation method is based on the index price as of March 31, 2015.

Notional amount
Maturity
Totalover 1 year¥
57,049¥57,049¥
35,897¥35,897

Fair value

Net unrealized
gain/loss¥(294)¥(294)¥(294)¥(294)

Deferred hedge
methodForeign currency forward contracts transactions
Buy JPY / Sell USD
Buy JPY / Sell EUR
Buy JPY / Sell AUD
Buy SEK / Sell EUR
Buy SEK / Sell GBP
Buy SEK / Sell other foreign currencies
Sell JPY / Buy other foreign currencies
Sell SEK / Buy EUR
Sell SEK / Buy other foreign currencies
Buy other foreign currencies
Sell other foreign currencies
Foreign currency option contracts transactions*1
Buy
Sell

Contentsof hedge

Notional amount
Maturity
Totalover 1 year¥54,636
1,968
305
5,509
4,016
Accounts
receivable
5,701
50
423
208
25
47

Accounts
receivable

5,736
<72>
5,736
<72>
84,367

Subtotal
Foreign currency forward contracts transactions
Net valuation method
Buy JPY / Sell USD
3,180
Accounts
using forward foreign
receivable
Buy JPY / Sell EUR
1,712
exchange contracts
Buy JPY / Sell AUD
122
Subtotal
5,015
Preferential accounting Interest rate swap transactions
Longmethod of interest rate 	
term loans 60,445
Fixed rate payment /swap transactions
payableFloating rate receipt
Subtotal
60,445Integral accounting method Interest rate and currency swap transactions
Longof interest rate and currency 	Fixed rate payment /term loans 85,747
swap transactions
payableFloating rate receipt
Subtotal
85,747
Total¥235,575

Fair valueNet
unrealized
gain/loss

¥—
—
—
—
—
—
—
—
—
—
—

¥461
39
3
(23)
(169)
(265)
0
(1)
0
0
(2)

¥461
39
3
(23)
(169)
(265)
0
(1)
0
0
(2)

—

50

(22)

—
—

54
150

17
41

—
—
—
—

*2

*2

—

—

60,445*2*260,445——85,747*2*285,747¥146,192

¥

—
150

¥

Evaluation method

By theexchange rate
on foreign
currency
marketBy the price on
currency option
marketBy the exchange
rate on foreign
currency
marketBy the rate oninterest swap
marketBy the rate oninterest swap
market—41*1: The amounts indicated in brackets for foreign currency option contracts transactions refer to the option fee, and the related figures for fair value and net unrealized gain/loss arealso shown.
*2: Fair value and net unrealized gain/loss of derivative instruments for which these accounting methods are applied are inclusively reported as a portion of fair value of their hedge
instruments such as accounts receivable and long-term loans payable (see Note 17).

20. Retirement benefits:(1) Outline of retirement benefit plans:
The Company and its subsidiaries in Japan maintain defined benefit pension plans, lump-sum indemnities plans, welfare pension fund plans anddefined contribution pension plans, all of which are retirement benefit plans. Certain foreign subsidiaries maintain defined benefit pension plans. In
addition, employee retirement benefit trusts are used for defined benefit plans as plan assets.
The simplified method is used for calculating retirement benefit obligations of certain subsidiaries. Some subsidiaries in Japan apply multiemployer plans.
The Aichiken Truck Pension Fund and the aitetsuren pension fund, both of which are multi-employer welfare pension plan funds that certain
subsidiaries in Japan had joined, have been approved to dissolve as of September 25, 2015 and March 17, 2016, respectively, by the Minister of
Health, Labour and Welfare. The impact of the dissolution of these funds on the consolidated financial statements is immaterial.

28

Toyota Industries Report 201629

(2) Defined benefit plan:

6) Amounts recognized in accumulated other comprehensive income (pre-tax) as of March 31, 2016 and 2015 are as follows:

1) Reconciliation of defined benefit obligation for the years ended March 31, 2016 and 2015 is as follows:

Millions of yen
Millions of yen

Benefit obligation at beginning of period
Cumulative effects of changes in accounting policies
Restated balance
Service cost
Interest cost
Actuarial gain (loss)
Benefit payments
Prior service cost
OthersBenefit obligation at end of period

2016
249,987—
249,987
11,3895,008
14,826(6,517)3(9,035)¥ 265,662¥2015¥210,753
5,207
215,960
10,1305,140
23,294(5,844)(527)
1,832¥249,987

2) Reconciliation of plan assets for the years ended March 31, 2016 and 2015 is as follows:2016¥ 193,115
3,408(9,909)6,626(4,575)(4,245)¥ 184,419

2015¥170,188
3,833
14,1605,700(4,185)3,418¥193,115

3) Reconciliation of defined benefit obligation, plan assets at end of period and amounts recognized on the consolidated balance
sheets is as follows:
Millions of yen(a) Benefit obligation [funded](b) Plan assets(c) Funded status [ (a) + (b) ](d) Benefit obligation [unfunded](e) Net amount recognized on the consolidated balance sheets [ (c) + (d) ](f) Net defined benefit liabilities(g) Net defined benefit assets(h) Net amount recognized on the consolidated balance sheets [ (f) + (g) ]2015¥3,027(17,005)¥(13,977)

2016
35%
41%
4%
20%
100%

2015
37%
47%
4%
12%
100%

7) Plan assets:(a) Components of plan assets:
Bond
Stock
Cash and deposits
Other assets
Total

Plan assets include 20% of employee retirement benefits trust for the years ended March 31, 2016 and 22% of employee retirement benefits trust for the years ended March 31, 2015.
Millions of yen

Plan assets at beginning of period
Expected return on plan assets
Actuarial gain (loss)
Employer contributions
Benefit payments
OthersPlan assets at end of period

Prior service cost
Actuarial gain (loss)
Total

2016
¥2,850(39,720)¥(36,870)

2016¥ 250,674(184,419)
66,254
14,987
81,24289,458(8,215)¥81,2422015¥231,935(193,115)
38,82018,05156,871
85,161(28,289)¥56,871

The simplified method is included in the above.

(b) Long-term expected rate of return on plan assets:
In determining the expected long-term rate of return on plan assets, Toyota Industries considers the current and projected asset allocations as well
as expected long-term investment returns for each category of the plan assets.
8) Assumptions used for calculation of retirement benefits:
2016
0.5%
2.0%

Discount rateLong-term expected rate of return on plan assets

2015
1.5%
2.0%

(3) Defined contribution plan:
The amount recognized as expenses for defined contribution plan was ¥6,155 million for the year ended March 31, 2016 and ¥5,684 million for theyear ended March 31, 2015.

(4) Multi-employer plans:Multi-employer plans are accounted for as if they were defined contribution plans. The amount recognized as expenses for multi-employer plans was¥75 million for the year ended March 31, 2016 and ¥789 million for the year ended March 31, 2015.
As of March 31, 2016
As of March 31, 2015
Plan assets
The total of actuarial obligation and minimum actuarial reserve
Variance

The Japan Society of Industrial Machinery
Manufacturers’ welfare pension fund

Other welfare pension funds¥ 83,744 million¥ 104,880 million¥ (21,136 million)¥ 40,512 million¥ 46,017 million¥ (5,504 million)

7.06%

4.58%

The Japan Society of Industrial Machinery
Manufacturers’ welfare pension fund

Other welfare pension funds¥ 74,916 million¥ 100,891 million¥ (25,975 million)¥ 247,259 million¥ 346,901 million¥ (99,641 million)

7.39%

3.96%

As of March 31, 2016
Toyota Industries Group contribution to welfare pension plan4) Components of retirement benefit expenses for the years ended March 31, 2016 and 2015 are as follows:
Millions of yen

Service cost
Interest cost
Expected return on plan assets
Amortization of actuarial (gain) loss
Amortization of prior service cost
OthersDefined benefit expenses

2016¥11,389
5,008(3,408)
1,392
(175)
25
¥14,2322015¥10,1305,140(3,833)
1,115
(716)
28
¥11,864

As of March 31, 2015
As of March 31, 2014
Plan assets
The total of actuarial obligation and minimum actuarial reserve
Variance
As of March 31, 2015
Toyota Industries Group contribution to welfare pension plan5) Amounts recognized in other comprehensive income (pre-tax) as of March 31, 2016 and 2015 are as follows:
Millions of yen

Prior service cost
Actuarial gain (loss)
Total

30

Toyota Industries Report 20162016
¥(177)(22,714)¥(22,892)

2015¥(209)(7,956)¥(8,166)31

21. Stock options:

22. Income taxes:(1) The amount recorded as a profit because of forfeitures of stock option rights(1) The significant components of deferred tax assets and liabilities as of March 31, 2016 and 2015 are as follows:
Millions of yen

2016
¥15

Millions of yen

2015
¥28

Deferred tax assets:
Net defined benefit liabilities
Depreciation
Net operating loss carry-forwards for tax purposes
Accrued expenses
Securities
Trade receivables
Other
Subtotal
Less: valuation allowance
Total deferred tax assets
Deferred tax liabilities:
Other securities
Depreciation
Land
Reserve for advanced depreciation of non-current assets
Reserve for special depreciation
Other
Total deferred tax liabilities
Net deferred tax liabilities(2) Stock option details, number of stock options and state of fluctuation
1) Stock option details
2011

Fiscal year

2010

Company name

The Company

The Company

Position and number of grantees

Directors: 16
Managing officers and employees: 146

Directors: 14
Managing officers and employees: 153

Class and number of shares*

1,262,000 shares of common stock

1,157,000 shares of common stock

Date of issue

August 2, 2010

August 3, 2009

1. Grantee must be employed as a director, managing officer or regular Same as left
employee of the Company at the time of exercise. However, this does
not apply if no more than 18 months have elapsed after retirement or
resignation from the Company.
2. Other conditions of exercise shall be decided as prescribed by theContract for Allotment of Subscription Rights to Shares concluded by
the Company and grantee in accordance with resolutions at theGeneral Meeting of Shareholders and resolutions on the issue ofsubscription rights to shares by the Board of Directors.

Same as left

3. In the case where grantee becomes no longer applicable to theconditions of exercise, the grantee immediately loses subscription
rights to shares and must return the rights to the Company without
consideration.

Same as left

Periods that grantees must provide
service in return for stock options

From August 2, 2010 to July 31, 2012

From August 3, 2009 to July 31, 2011

Periods that stock subscription
rights are to be exercised

From August 1, 2012 to July 31, 2016

Condition of settlement of rights¥19,193
10,494
7,274
7,197
4,683
1,314
28,81778,976(12,799)
66,176¥20,317
9,718
8,808
7,581
5,219
2,904
23,083
77,632(13,861)
63,771

473,52133,630562
319
25
19,049527,109¥460,932

704,563
30,145562
261
40
23,639759,213¥695,442

Millions of yen

From August 1, 2011 to July 31, 2015

Current assets—deferred tax assets
Investments and other assets—deferred tax assets
Current liabilities—deferred tax liabilities
Long-term liabilities—deferred tax liabilities

2) Number of stock options and state of fluctuation
Stock options are those outstanding in the fiscal year and are listed as the number of shares.
(a) Number of stock options
Non-exercisable stock options

(shares)

2011

—
—
—
—
—

2016
¥25,185
14,109149
500,0772015¥24,234
18,228636
737,268(2) Reconciliations of differences between the statutory rate of income taxes and the effective rate of income taxes forthe years ended March 31, 2016 and 2015 are as follows:

2010
—
—
—
—
—

Exercisable stock options
Stock options outstanding at the end of the previous fiscal year
Conversion from non-exercisable stock options
Stock options exercised
Forfeitures
Stock options outstanding at the end of the fiscal year2015

Net deferred tax liabilities consist of the following components on the consolidated balance sheets.

* Number of options granted by class are listed as number of shares.

Stock options outstanding at the end of the previous fiscal year
Stock options granted
Forfeitures
Conversion to exercisable stock options
Stock options outstanding at the end of the fiscal year

2016

Statutory rate of income taxes
Addition (reduction) in taxes resulting from:
Dividends income and others permanently not recognized as taxable income
Valuation allowance
Other
Effective rate of income taxes

2016
32.4%

2015
34.9%

(2.6%)(0.4%)
0.9%
30.3%(5.1%)(0.2%)(0.9%)
28.8%(shares)

2011
82,400—70,800
2,000
9,600

2010
27,000—3,200
23,800—(3) Impact on changes in the statutory tax rate
On March 29, 2016, the Act for Partial Amendment of the Income Tax Act, etc. (Act No. 15 of 2016) and the Act for Partial Amendment of the Local
Tax Act, etc. (Act No. 13 of 2016) were enacted in the Diet session. Accordingly, the corporate income tax rate will be reduced from the fiscal year
beginning April 1, 2016. As a result of this change in the tax rates, deferred tax assets decreased by ¥831 million, deferred tax liabilities decreasedby ¥24,943 million, valuation difference on available-for-sale securities increased by ¥25,302 million and income taxes—deferred increased by¥1,455 million.

(b) Price of options
Exact yen amounts

Paid-in value
Average market price of the stock at the time of exercise
Fair value of options on grant date2011
¥2,449
5,936
686

2010
¥2,5707,301
581(3) Method for estimating the number of confirmed stock option rights
Specifically, because of the difficulty in rationally estimating the number of expired rights in the future, a method has been adopted that reflects actual
past expirations.

32

Toyota Industries Report 201633

23. Leases:

24. Changes in net assets:(1) Finance leases(1) Common stock outstanding for the years ended March 31, 2016 and 2015:

1) Finance leases (as a lessee)
Lease assets are mainly materials handling equipment which is leased under operating leases.
The depreciation method of leased assets is referred to in Note 2 (9).
As for finance leases other than finance leases deemed to transfer the ownership of leased properties to lessees, those that came into effectbefore March 31, 2008 (inclusive) will continue to be accounted for by the former method (similar to the method applicable to ordinary operatingleases). The pro forma information as of and for the years ended March 31, 2016 and 2015 are immaterial.
2) Finance leases (as a lessor)(a) Lease investment assets listed on the consolidated balance sheets as of March 31, 2016 and 2015 are as follows:
Millions of yen

Lease receivables
Residual value
Unearned interest income
Total

2016
¥216,710
42,786(23,756)¥235,739

2015¥175,014
42,273(25,460)¥191,827(b) Amounts of projected future recovery after March 31, 2016 and 2015 for the portion of lease payment receivables in lease investment assets are
as follows:
Millions of yen

Due within one year
Due after one year and within two years
Due after two years and within three years
Due after three years and within four years
Due after four years and within five years
Due after five years
Total

2016
¥73,690
59,55743,335
26,59010,6942,842¥216,710

2015¥59,641
47,66534,79021,3938,880
2,643¥175,014

As for finance leases other than finance leases deemed to transfer the ownership of leased properties to lessees, those that came into effect before
March 31, 2008 (inclusive) will continue to be accounted for by the former method (similar to the method applicable to ordinary operating leases).
The amounts of the fiscal years ended March 31, 2016 and 2015 are omitted due to their quantitative immateriality.

(2) Operating leases

sharesBalance at March 31, 2014
Increase
Decrease
Balance at March 31, 2015
Increase
Decrease
Balance at March 31, 2016

325,840,640——
325,840,640——
325,840,640(2) Treasury stock outstanding for the years ended March 31, 2016 and 2015:
sharesBalance at March 31, 2014
Increase due to purchase of odd stock
Decrease due to exercise of stock options
Decrease due to sale of odd stock
Balance at March 31, 2015
Increase due to purchase of odd stock
Decrease due to exercise of stock options
Decrease due to sale of odd stock
Balance at March 31, 2016(3) Subscription rights to shares outstanding for the years ended March 31, 2016 and 2015:
Millions of yen

2016
¥6

The Company

2015
¥72

(4) Dividends(a) Dividends paid for the year ended March 31, 2016
Resolutions

Ordinary General Meeting of Shareholders held on June 11, 2015

1) Operating leases (as a lessee)
Pro forma future lease payments under operating leases as of March 31, 2016 and 2015 are as follows:

12,109,864
3,654
428,70069
11,684,749
3,184
74,000121
11,613,812

Board of Directors meeting held on October 30, 2015

Class ofsharesCommonstock
Commonstock

Total
dividends
Millions ofyen

Dividends
per share¥18,849¥60

18,85060

YenRecorddate

Effective
date

March 31,2015
September
30, 2015

June 12,2015
November26, 2015

Millions of yen

Due within one year
Due after one year
Total

2016
¥9,293
27,564¥36,8582015¥9,978
36,600¥46,578

Resolutions

Ordinary General Meeting of Shareholders held on June 10, 2016

2) Operating leases (as a lessor)
Pro forma information regarding future minimum rentals under operating leases as of March 31, 2016 and 2015 is as follows:
Millions of yen

Due within one year
Due after one year
Total(b) Dividends with a record date in the fiscal year ended March 31, 2016 for which the effective date falls in the following fiscal year2016
¥61,193
104,093¥165,286

2015¥32,160
63,716¥95,876Class ofsharesTotal
dividends
Millions ofyen

Source ofdividends

Dividends
per share

Commonstock¥18,853

Retainedearnings

Class ofsharesTotal
dividends
Millions ofyen

Dividends
per share¥15,686¥50

15,700

50

Yen

¥60

Recorddate

Effective
date

March 31,2016

June 13,
2016

Recorddate

Effective
date

March 31,2014
September
30, 2014

June 16,2014
November26, 2014(c) Dividends paid for the year ended March 31, 2015
Resolutions

Ordinary General Meeting of Shareholders held on June 13, 2014
Board of Directors meeting held on October 31, 2014

Commonstock
CommonstockYen(d) Dividends with a record date in the fiscal year ended March 31, 2015 for which the effective date falls in the following fiscal year
Resolutions

Ordinary General Meeting of Shareholders held on June 11, 201534

Toyota Industries Report 2016

Class ofsharesTotal
dividends
Millions ofyen

Source ofdividends

Commonstock¥18,849

Retainedearnings

Dividends
per share
Yen¥60

Recorddate

Effective
date

March 31,2015

June 12,201535

25. Subsequent events:

Millions of yen

Assets:There were no subsequent events for the year ended March 31, 2016.

26. Segment information:(1) Outline of reporting segments
The operating segments reported below are the segments of Toyota Industries for which separate financial information is available and for which
operating profit/loss amounts are evaluated regularly by executive management in deciding how to allocate resources and in assessing performance.
The reporting segments of Toyota Industries consist of Automobile, Materials Handling Equipment, Logistics and Textile Machinery.
The similarity of products and services are taken into account for the separation. Within the Automobile Segment, vehicles, engines, car airconditioning compressors and others are included due to the similarity of their business environments. The main products and services of eachsegment are as follows.
Automobile 	�������������������������������������������������������� Vehicles, diesel and gasoline engines, car air-conditioning compressors, electronic components forautomobiles, foundry parts for engines
Materials Handling Equipment 	���������������������������� Lift trucks, warehouse trucks, automated storage and retrieval systems, aerial work platforms
Logistics 	������������������������������������������������������������ Land transportation services
Textile Machinery 	������������������������������������������������ Weaving machinery, spinning machinery, instruments for yarn testing and cotton classing(2) Calculation method of reporting segment information
The accounting method of reporting segment information is based on “Summary of significant accounting policies.”
Segment profit is based on operating profit.
Inter-segment sales and transactions are based on prices that are similar to those with third parties.

(3) Business segments
As of and for the years ended March 31, 2016 and 2015:
Millions of yen

2016

2015

¥1,045,782
25,162
1,070,945¥1,050,713
29,103
1,079,816

1,004,127
2,210
1,006,337

924,995
1,888
926,884

86,925
8,756
95,681

98,00015,366113,367

65,684224
65,90868,188230
68,41826,425
15,70942,1342,281,006(52,062)¥2,228,944

24,762
15,67040,4332,228,920(62,259)¥2,166,661¥33,348
79,745
5,229
4,115
4,887
643
¥127,970¥35,957
68,843
6,224
2,699
3,778
70
¥117,574

Sales:
Automobile
Outside customer sales
Inter-segment transactions
Materials Handling Equipment
Outside customer sales
Inter-segment transactions
Logistics
Outside customer sales
Inter-segment transactions
Textile Machinery
Outside customer sales
Inter-segment transactions
Others
Outside customer sales
Inter-segment transactions
Subtotal
Elimination of inter-segment transactions
Total
Segment profit:
Automobile
Materials Handling Equipment
Logistics
Textile Machinery
OthersElimination of inter-segment transactions
Total

36

Toyota Industries Report 2016

Automobile
Materials Handling Equipment
Logistics
Textile Machinery
OthersCorporate or elimination of inter-segment transactions
Total
Depreciation:
Automobile
Materials Handling Equipment
Logistics
Textile Machinery
OthersCorporate or elimination of inter-segment transactions
Total
Amortization of goodwill:
Automobile
Materials Handling Equipment
Logistics
Textile Machinery
OthersCorporate or elimination of inter-segment transactions
Total
Investment in equity method company:
Automobile
Materials Handling Equipment
Logistics
Textile Machinery
OthersCorporate or elimination of inter-segment transactions
Total
Increase in tangible assets and intangible assets:
Automobile
Materials Handling Equipment
Logistics
Textile Machinery
OthersCorporate or elimination of inter-segment transactions
Total

2016

2015

¥554,523
1,268,443
36,16346,357
207,315
2,086,393¥4,199,196¥558,479
951,230
188,467
62,823203,383
2,686,512¥4,650,896¥53,473
75,203
6,894
3,309
761
—
¥139,642¥48,498
55,699
8,145
3,595
683
—
¥116,621

¥—
5,648
2,489
2,230
—
—
¥10,368

¥—
4,840
3,310
2,690
—
—
¥10,841¥3,290
7,421
—
—
—
—
¥10,711¥3,979
7,462
—
—
—
—
¥11,441¥37,999
125,519
6,791
2,095
739
—
¥173,145¥94,665
80,088
8,341
3,111
1,547
—
¥187,75437

(4) Related information(c) Outstanding balances arising from sale/purchase of goods/services as of March 31, 2016 and 2015 are as follows:
Receivables from a related party:

Geographical segments
As of and for the years ended March 31, 2016 and 2015:

Millions of yen
Millions of yen

Sales:Japan
U.S.A.
OthersTotal
Tangible assets:
Japan
U.S.A.
Others
Total
Major customer:
Sales (Automobile Segment)
		 Toyota Motor Corporation
Total
Unamortized goodwill by business segment:
Automobile
Materials Handling Equipment
Logistics
Textile Machinery
OthersCorporate or elimination of inter-segment transactions
Total
Negative goodwill: Negative goodwill is omitted due to its quantitative immateriality.

2016

2015

¥1,060,233
492,930
675,781¥2,228,944¥1,081,347
433,581
651,732¥2,166,661¥311,163
268,956
201,131¥781,251¥343,396
158,758
205,378¥707,532

Toyota Motor Corporation
Accounts receivable
Trade notes receivable

2016

2015

¥39,937
4,345¥20,806
7,749

Payables to a related party:
Millions of yen

Toyota Motor Corporation

2016¥57,2202015¥48,093

The balance as of March 31, 2016 and 2015 includes consumption taxes.

(2) The following transactions were carried out with related parties (person only):(a) Exercise of stock options for the year ended March 31, 2016 is as follows:¥681,687¥681,687¥692,725¥692,725¥—64,583—
12,396——¥76,980¥—42,22038,304
15,460——¥95,985

Millions of yen

2016
¥

Norio Sasaki (Senior Managing Director of the Company)
Toshifumi Ogawa (Senior Managing Director of the Company)
Kan Otsuka (Director of the Company)
Taku Yamamoto (Director of the Company)
Kohei Nozaki (Full-time Audit & Supervisory Board Member of the Company)

19
25
37
37
25

This transaction refers to the exercise of the subscription rights to shares as stipulated in Articles 236, 238 and 239 of the Companies Act. The
exercise of the subscription rights to shares has been issued following approval of a special resolution at the Ordinary General Meeting of
Shareholders held on June 19, 2009 and June 23, 2010.
Exercise of stock options for the year ended March 31, 2015 is as follows:
Millions of yen

27. Related party transactions (non-consolidated basis):(1) The following transactions were carried out with related parties (entity only):(a) Sales of goods and services for the years ended March 31, 2016 and 2015 are as follows:
Millions of yen

Toyota Motor Corporation

2016¥680,880

2015¥691,715

Toyota Motor Corporation held 24.39% of the Company’s voting rights as of March 31, 2016. As for the sales of automobiles and engines, etc., theCompany offers prices on such products based on their overall costs and negotiates conditions for each fiscal year. The above transactions arecarried out based on terms and conditions similar to those for third parties. Transaction amounts exclude consumption taxes.
(b) Purchase of goods for the years ended March 31, 2016 and 2015 are as follows:
Purchase of goods:
Millions of yen

Toyota Motor Corporation2016¥502,834

2015¥504,373

As for the purchase of parts of automobiles and engines, etc., the Company negotiates conditions for each fiscal year based on offered prices onsuch products. The above transactions are carried out based on terms and conditions similar to those for third parties. Transaction amounts exclude
consumption taxes.

Tetsuro Toyoda (Chairman of the Company)
Akira Onishi (President of the Company)
Shinya Furukawa (Senior Managing Director of the Company)
Masaharu Suzuki (Senior Managing Director of the Company)
Norio Sasaki (Senior Managing Director of the Company)
Toshifumi Ogawa (Senior Managing Director of the Company)
Masafumi Kato (Director of the Company)
Kan Otsuka (Director of the Company)
Taku Yamamoto (Director of the Company)
Kohei Nozaki (Full-time Audit & Supervisory Board Member of the Company)

¥

2015
102
51
68
17
21
23
102
119
39
11

This transaction refers to the exercise of the subscription rights to shares as stipulated in Articles 236, 238 and 239 of the Companies Act. The
exercise of the subscription rights to shares has been issued following approval of a special resolution at the Ordinary General Meeting of
Shareholders held on June 20, 2008, June 19, 2009 and June 23, 2010.

(3) The following transactions of consolidated subsidiaries were carried out with related parties:
Transfer of business for the years ended March 31, 2016 and 2015 is as follows:
Millions of yen

Toyota Motor Credit Corporation2016¥277,643

2015
¥—

The calculation of the consideration for the transfer of business was commissioned to a third party and the payment amount was agreed upon by
Toyota Motor Credit Corporation and Toyota Industries after due deliberation.

38

Toyota Industries Report 201639

28. Earnings per share (EPS):(3) Breakdown of assets and liabilities of the companies excluded from the scope of consolidation as a result of salesof shares

The basis of calculation for earnings per share—basic and earnings per share—diluted is as follows:

The breakdown of assets and liabilities at the time of the sales of shares of Asahi Security Co., Ltd., which resulted in its exclusion from the scope of
consolidation, as well as consideration and payment for transfer of business are as follows:

Millions of yen

Earnings per share—basic:
Profit attributable to owners of the parent
Profit not attributable to common shareholders
		 (bonuses for directors that are paid through appropriation)
Profit attributable to owners of the parent on common stock
Weighted-average shares (thousands)
Earnings per share—basic (exact yen amounts)
Earnings per share—diluted:

2016

2015

¥183,036—¥ 115,263—

183,036
314,180¥582.58¥582.57

115,263314,021¥ 367.06¥ 366.99

29. Net assets per share:

Millions of yen

Current assets
Fixed assets
Goodwill
Current liabilities
Long-term liabilities
Other
Gain on sales of shares of subsidiaries
Sales value of shares
Cash and cash equivalents
Difference: proceeds from sale of shares

The breakdown of assets and liabilities at the time of the sales of shares of Wanbishi Archives Co., Ltd., which resulted in its exclusion from thescope of consolidation, as well as consideration and payment for transfer of business are as follows:

The basis of calculation for net assets per share is as follows:
Millions of yen

Net assets per share:
Total net assets
Amounts deducted from total net assets
		 (Subscription rights to shares)
		 (Non-controlling interests in consolidated subsidiaries)
		 Net assets applicable to common stock at end of year
		 Outstanding shares of common stock at end of year used for the computation
			 of net assets per share (thousands)
Net assets per share (exact yen amounts)¥ 122,039
19,165
8,047(115,793)(10,874)503
57,91281,000(18,095)
62,9042016

2015¥2,113,948¥2,425,929(6)(77,133)
2,036,808
314,226(72)(69,636)
2,356,220
314,155¥6,481.97¥7,500.16

Millions of yen

Current assets
Fixed assets
Goodwill
Current liabilities
Long-term liabilities
Other
Gain on sales of shares of subsidiaries
Sales value of shares
Cash and cash equivalents
Difference: proceeds from sale of shares¥

11,945
19,25927,767(2,885)(2,130)136
31,90686,000(8,807)
77,19230. Cash and cash flows:
31. Business combination:(1) Cash and cash equivalents
The relationship between the accounts in the consolidated balance sheets and the remaining balance of cash and cash equivalents as of March 31,
2016 and 2015 is as follows:
Millions of yen

Cash and deposits
Deposits which have a maturity of over three months to one year
Short-term investments (securities) which have an original maturity within three months
Cash and cash equivalents

2016¥352,302(270,498)
10,594¥92,399

2015¥ 247,273(32,652)
34,085¥ 248,706(2) Breakdown of assets and liabilities related to transfer of business that involves cash and cash equivalents
The breakdown of assets and liabilities that accompanied the transfer of the commercial finance business of Toyota Motor Credit Corporation to
Toyota Industries Commercial Finance, Inc., one of Toyota Industries’ subsidiaries, as well as consideration and payment for transfer of business are
as follows:
Millions of yen

Current assets
Fixed assets
Goodwill
Current liabilities
Long-term liabilities
Consideration for transfer of business
Cash and cash equivalents
Difference: payment for transfer of business¥

84,757
166,664
27,545(1,323)—
277,643—
277,643

Business combination through acquisition(1) Outline of business combination(a) Name and business of acquiree
Toyota Motor Credit Corporation (hereinafter, “TMCC”)
		 Business of the Commercial Finance Department (sales financing and other businesses for TOYOTA-brand materials handling equipment in
the United States)(b) Main purpose of business combination
	By means of acquiring TMCC’s financial assets and personnel, Toyota Industries aims to gain know-how concerning the sales financing businessfor materials handling equipment that TMCC has accumulated over the past 30 years in its efforts to strengthen the sales financing business in
the United States and promote full-fledged development of sales financing business on a global scale.
(c) Date of business combination
October 1, 2015(d) Measure of business combination
Transfer of business involving cash and cash equivalents(e) Name of acquiree after business combination
Toyota Industries Commercial Finance, Inc.
(f) Basis of determination of acquirer
Transfer of business involving cash and cash equivalents(2) Period of the acquiree’s financial results included in the consolidated financial statements
From October 1, 2015 through March 31, 2016

(3) Acquisition cost of acquiree
Millions of yen

Consideration for acquisition: Cash
Acquisition cost

40

Toyota Industries Report 2016¥ 277,643
277,643

41

(4) Content and amount of principal acquisition-related expenses(2) Outline of accounting method
Millions of yen

Advisory fees, etc.

¥1) Transfer of profits and losses

99

Millions of yen

Gain on sales of shares of subsidiaries(5) Goodwill

Millions of yen

Current assets
Fixed assets
Total assets

Millions of yen(a) Assets
Millions of yen¥84,757
166,664
251,422(b) Liabilities
Millions of yen¥1,323—
1,323

The amount of goodwill, as referred to under (5) Goodwill, is not included in assets.

(7) Pro forma impact on the consolidated statements of income based on assumption that the business combination
was completed at the beginning of the fiscal year
Millions of yen

Net sales
Operating profit
Ordinary profit
Profit attributable to owners of the parent¥122,039
19,165
141,205(b) Liabilities(6) Identified assets acquired and liabilities assumed upon business combination

Current liabilities
Fixed liabilities
Total liabilities

57,912

2) Appropriate book value of the assets and liabilities transferred and its main items(a) Assets(a) Amount of goodwill¥27,545 million(b) Basis of goodwill
Goodwill was generated due to the difference between the value of assets acquired and liabilities assumed and the acquisition cost.
(c) Method and period of amortization
Straight-line method over 20 years

Current assets
Fixed assets
Total assets¥¥16,220
34
2,037
1,244

(The basis of pro forma financial information)
The pro forma financial information is calculated by comparing actual revenues and profits in the consolidated statements of income to thoseassuming that the business combination was completed at the beginning of the fiscal year. The pro forma financial information also includes theimpact from amortization of goodwill to be recognized at the beginning of the fiscal year. Actual results on operations when the business combinationis completed at the beginning of the fiscal year is different from the pro forma financial information. The pro forma financial information mentioned
above is unaudited.

Current liabilities
Fixed liabilities
Total liabilities¥115,793
10,874
126,668

3) Accounting method
The difference between the carrying amount of Asahi Security Co., Ltd. on the consolidated financial statements and the sales value of shares isposted as “Gain on sales of shares of subsidiaries” under “Extraordinary profit.”(3) The name of reportable segment in which transferred business was included
Logistics Segment(4) Estimated amount of profit and loss regarding divested business, which was recorded in consolidated statements
of income for the year ended March 31, 2016
Millions of yen

Net sales
Operating profit¥29,341
1,373

Wanbishi Archives Co., Ltd.
(1) Outline of business divestiture(a) Name of parties who succeed the divested business
NIPPON EXPRESS CO., LTD.
(b) Nature of divested businessInformation asset management and insurance agency business(c) Main purpose of business divestiture	Toyota Industries intends to focus on the main businesses such as Materials Handling Equipment and Automotive-related and promote further
growth.
(d) Date of business divestiture
December 15, 2015(e)	Other items with regard to outline of transactions which include description of legal form
Share transfer involving only assets such as cash and cash equivalents as consideration

32. Business divestitures
Asahi Security Co., LTD.
(1) Outline of business divestiture(a) Name of parties who succeed the divested business
SECOM CO., LTD.
(b) Nature of divested business
Cash collection and delivery and online security systems(c) Main purpose of business divestiture	Toyota Industries intends to focus on the main businesses such as Materials Handling Equipment and Automotive-related and promote further
growth.
(d) Date of business divestiture
December 1, 2015(e) Other items with regard to outline of transactions which include description of legal form
Share transfer involving only assets such as cash and cash equivalents as consideration

42

Toyota Industries Report 201643

Report of Independent Auditors(2) Outline of accounting method
1) Transfer of profits and losses
Millions of yen

Gain on sales of shares of subsidiaries¥31,906

2) Appropriate book value of the assets and liabilities transferred and its main items(a) Assets
Millions of yen

Current assets
Fixed assets
Total assets¥11,945
19,25931,205(b) Liabilities
Millions of yen

Current liabilities
Fixed liabilities
Total liabilities¥2,885
2,130
5,015

3) Accounting method
The difference between the carrying amount of Wanbishi Archives Co., Ltd. on the consolidated financial statements and the sales value of shares isposted as “Gain on sales of shares of subsidiaries” under “Extraordinary profit.”(3) The name of reportable segment in which transferred business was included
Logistics Segment(4) Estimated amount of profits and losses regarding divested business, which was recorded in consolidated
statements of income for the year ended March 31, 2016
Millions of yen

Net sales
Operating profit

44

Toyota Industries Report 2016

¥15,784
1,600

45

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