Management’s Discussion and Analysis of Financial Condition andResults of Operations
The following Management’s Discussion and Analysis ofFinancial Condition and Results of Operations is based on
information known to management as of November 30,
2001. It includes forward-looking statements concerning
the expected future performance of Toyota Industries
Corporation. Please refer to “Cautionary Statement with
Respect to Forward-Looking Statements” at the beginningof this semiannual report, which pertains to the report asa whole.

Results of Operations
Net Sales
For the six months ended September 30, 2001 (the “term”),
consolidated net sales of Toyota Industries Corporation andits consolidated subsidiaries (“Toyota Industries”) totaled¥479.0 billion, an increase of ¥134.7 billion (39.1%) over thesix months ended September 30, 2000 (the “previousterm”). This increase was due mainly to the consolidation of
the accounts of BT Industries AB (“BT Industries”) and theintegration of the Industrial Equipment Sales Division ofToyota Motor Corporation (“TMC”) into Toyota Industries’
Materials Handling Equipment operations. During the term,
TMC started charging Toyota Industries’ Vehicle Business forengines and other parts which had previously been supplied
free of charge, and Toyota Industries increased its prices forvehicles to TMC. Below are Toyota Industries’ sales for theterm by geographic segment, before elimination ofintersegment transactions.

■ JapanSales totaled ¥353.8 billion, an increase of ¥52.9 billion(17.6%) over the previous term. This was due mainly toincreased sales by the Automobile and Materials Handling
Equipment Segments.

■ North America
Sales totaled ¥95.3 billion, an increase of ¥48.0 billion(101.5%) over the previous term. This was due mainly to theconsolidation of BT Industries and the integration of TMC’sIndustrial Equipment Sales Division.

■ EuropeSales totaled ¥60.6 billion, an increase of ¥51.7 billion(583.1%) over the previous term. This reflects theconsolidation of BT Industries and TMC’s IndustrialEquipment Sales Division, and increased sales of car airconditioning compressors.

■ Others
Sales totaled ¥1.9 billion, an increase of ¥0.8 billion (77.2%)
over the previous term. The increase reflects theconsolidation of BT Industries.
* Please refer to “To Our Shareholders” for results by business segment.

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Cost of Sales and Selling, General andAdministrative Expenses
Cost of sales for the term totaled ¥402.6 billion, an increaseof ¥99.8 billion (32.9%) over the previous term. Thisincrease was due mainly to the consolidation of BT Industries
and TMC’s Industrial Equipment Sales Division. TMC’scharging the Automobile Segment for parts which had
previously been supplied free of charge accounted for ¥29.7billion.
Selling, general and administrative expenses totaled¥51.9 billion, an increase of ¥32.0 billion (161.0%) over theprevious term. Selling expenses of the Materials Handling
Equipment Segment increased as a result of theconsolidation of BT Industries and TMC’s Industrial
Equipment Sales Division.

Non-Operating Income and Expenses
Interest and dividend income was ¥8.5 billion, an increase of¥4.4 billion (107.2%) over the previous term. This increase
was largely the result of ¥3.9 billion in interest income
arising from the consolidation of BT Industries.
Interest expenses were ¥5.5 billion, an increase of ¥4.0billion (277.7%) over the previous term. This increase wasdue mainly to interest payment of ¥3.6 billion arising fromthe consolidation of BT Industries.
Other non-operating income was ¥3.4 billion and othernon-operating expenses were ¥4.1 billion. Other nonoperating net loss decreased ¥3.2 billion, reflecting mainly
an increase of ¥1.9 billion in equity in earnings of affiliates.

Extraordinary Gains and Losses
Extraordinary gains decreased ¥15.1 billion from theprevious term. This was because there was an extraordinary
gain of ¥15.1 billion in the previous term due to acontribution of certain investment securities held by the thenToyoda Automatic Loom Works, Ltd. to an employee
retirement benefit trust.
Extraordinary losses decreased ¥21.4 billion from theprevious term. This was due to the effect in the previous
term of a change in the accounting standards for retirement
benefits in an accrued amount of ¥19.1 billion and theprovision of ¥2.3 billion in retirement and severance benefits
for directors and corporate auditors.

Income Taxes
Net of current and deferred income taxes, income taxes forthe term totaled ¥10.8 billion, an increase of ¥5.3 billion(97.2%) over the previous term. The effective income tax
rate increased from 39.6% to 40.5%.
Minority interest in consolidated subsidiaries increased by¥0.4 billion to ¥0.7 billion, reflecting the increase in net
income of consolidated subsidiaries.

Cash FlowsNet IncomeNet income for the term was ¥15.1 billion, an increase of¥7.2 billion (90.3%) over the previous term. Net income pershare (EPS) was ¥48.35, compared with ¥28.07 for theprevious term, and diluted net income per share was ¥43.55,
compared with ¥25.29 for the previous term.

Financial Position
Total assets at the end of the term stood at ¥1,613.3 billion,a decrease of ¥256.3 billion (13.7%) from the prior fiscal
year ended March 31, 2001 (the “prior year”). This was due
largely to a decrease of ¥299.2 billion in investments insecurities.
Current assets were ¥301.2 billion, a decrease of ¥0.1
billion from the prior year. Increases in trade notes andaccounts receivable, up ¥10.1 billion, and in inventories, up¥14.3 billion, related to the consolidation of TMC’s Industrial
Equipment Sales Division, were offset by decreases in cash
and cash equivalents, down ¥17.0 billion, and in short-term
investments, down ¥9.1 billion.
Net property, plant and equipment was ¥323.9 billion,
an increase of ¥29.2 billion (9.9%) over the prior year. This
increase was due to an expansion of car air-conditioning
compressor production facilities and the consolidation of
TMC’s Industrial Equipment Sales Division.
Investments and other assets stood at ¥900.1 billion, adecrease of ¥285.5 billion (24.1%) from the prior year. This
reflected a decrease in investments in securities in an amountof ¥299.2 billion. However, this does not affect thestatements of income significantly, as most of the decreasewill be adjusted for in net unrealized gains on othersecurities.
Current liabilities stood at ¥234.8 billion, an increase of¥21.2 billion (9.9%) over the prior year. This was due mainly
to an increase in short-term bank loans of ¥15.5 billion that
accompanied the consolidation of TMC’s Industrial
Equipment Sales Division, and an increase in accrued
expenses of ¥4.9 billion.
Long-term liabilities were ¥577.2 billion, a decrease of¥109.4 billion (15.9%) from the prior year. Deferred tax
liabilities decreased ¥125.0 billion as a result of the decreasein the market value of investment securities.
Shareholders’ equity stood at ¥784.5 billion, a decreaseof ¥166.8 billion (17.5%) from the prior year. Net unrealized
gains on other securities decreased ¥177.6 billion,
outweighing an increase in retained earnings of ¥12.1billion. The ratio of shareholders’ equity to total assets
decreased from 50.9% to 48.6%.

Net cash provided by operating activities was ¥31.6 billion, adecrease of ¥4.5 billion (12.6%) from the previous term.
Increases in income before income taxes and depreciation
and amortization were offset by a decrease in payables and anincrease in income taxes paid.
Net cash used in investing activities was ¥57.3 billion, adecrease of ¥40.1 billion (41.1%) from the previous term.
This was because the figure for the previous term included anamount for the acquisition of BT Industries, while TMC’s
Industrial Equipment Sales Division was acquired during theterm.
Net cash provided by financing activities was ¥8.6 billion,a decrease of ¥48.1 billion (84.8%) from the previous term.
This was because the previous term’s figure included proceedsfrom issuance of commercial paper in an amount of ¥80.0billion, redemption of commercial paper in an amount of¥60.0 billion and ¥39.8 billion from issuance of bonds.
During the term, Toyota Industries purchased treasury stock in
an amount of ¥1.4 billion for its stock option plan.
Cash and cash equivalents at the end of the term stood at¥78.3 billion, a decrease of ¥17.0 billion (17.9%) from theend of the prior year.

Dividend Policy
Toyota Industries Corporation’s dividend policy is based on
the underlying goals of strengthening competitiveness,
augmenting corporate value and maintaining stabledividends. Toyota Industries Corporation gives fullconsideration to business performance, its dividend payout
ratio and other factors as it makes every effort to meet theexpectations of shareholders. Toyota Industries Corporation
views retained earnings as an important resource for securing
future profits for its shareholders, and it intends tostrategically invest portions of those earnings in research anddevelopment and future growth, and to aggressively pursue
business expansion and strengthen its corporate constitution.
On November 7, 2001, the Board of Directors of Toyota
Industries Corporation voted to distribute an interim cash
dividend of ¥9.0 per share to shareholders of record as ofSeptember 30, 2001. The interim cash dividend was payableon November 26, 2001.

Change in Share Trading Unit
To broaden the range of investors in Toyota Industries
Corporation’s stock and to promote the trading of its shares,
effective August 1, 2001, Toyota Industries Corporation
lowered the minimum trading unit of its shares from 1,000 to100. This change was made in accordance with a partial
revision of Toyota Industries Corporation’s Articles ofIncorporation approved at the Ordinary General Meeting ofShareholders held on June 28, 2001. Toyota Industries
Corporation’s shares listed on the Tokyo Stock Exchange,
Nagoya Stock Exchange and Osaka Securities Exchange havebeen traded in units of 100 shares.
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