Management’s Discussion and Analysis of Financial Condition
and Results of Operations
The following Management’s Discussion and Analysis of Financial Condition and Results of Operations is based on information
known to management as of November 30, 2006. It includes forward-looking statements concerning the expected future
performance of Toyota Industries. Please refer to “Cautionary Statement with Respect to Forward-Looking Statements” at thebeginning of this semiannual report, which pertains to the report as a whole.

Results of Operations
Net Sales
During the first half of fiscal 2007 (the six months ended
September 30, 2006), the Japanese economy achieved a steadyrecovery as private-sector capital investment increased amid solid
corporate earnings, while consumer spending showed a modest
improvement. Overseas economies sustained robust growth, with
the U.S. and European economies continuing to expand and theChinese economy maintaining a high rate of growth.
In this operating environment, Toyota Industries recorded
consolidated net sales of ¥913.1 billion, an increase of ¥214.1
billion, or 31%, compared with the first half of fiscal 2006 (thesix months ended September 30, 2005).
At the profit level, despite price increases for raw materials
and higher depreciation and personnel expenses, Toyota Industries
recorded an increase in ordinary income of ¥11.9 billion, or 29%,
over the previous term to ¥53.5 billion, due to an increase in net
sales in addition to the promotion of Group-wide cost-reduction
activities and higher non-operating income. Interim net income
totaled ¥30.3 billion, an increase of ¥5.3 billion, or 21%, fromthe previous term.
The following is a review of operations by geographicalsegments.
Note: Net sales for each geographical segment do not include intersegment transactions.

JapanNet sales amounted to ¥579.2 billion, an increase of ¥117.3billion, or 25%, over the previous term. Operating income
amounted to ¥30.1 billion, an increase of ¥5.6 billion, or 23%.
The increases in net sales and operating income were due to suchfactors as higher unit sales of vehicles and engines.

EuropeNet sales amounted to ¥157.7 billion, an increase of ¥55.6billion, or 54%, over the previous term. Operating income was¥4.1 billion, an increase of ¥1.0 billion, or 30%. The increase innet sales was due to such factors as a change in the fiscal year-endof the BT Industries Group.

Others
Net sales totaled ¥21.4 billion, an increase of ¥5.9 billion, or38%, over the previous term. Operating income amountedto ¥1.4 billion, an increase of ¥0.8 billion, or 137%, over theprevious term.
Note: Please refer to “Letter to Shareholders” for results by business segment.

Cost of Sales and Selling, General andAdministrative Expenses
Cost of sales for the term totaled ¥770.5 billion, an increase of¥183.7 billion, or 31.3%, over the previous term.
Selling, general and administrative expenses totaled ¥102.5billion, an increase of ¥22.3 billion, or 27.8%, over the previousterm.

Non-Operating Income and Expenses
Non-operating income was ¥29.0 billion, an increase of ¥7.2billion, or 32.7%, over the previous term. This increase wasdue primarily to an increase in interest income arising from achange in the fiscal year-end of the BT Industries Group, as wellas an increase in dividends income received from Toyota Motor
Corporation (TMC).
Non-operating expenses increased ¥3.2 billion, or 26.2%, to¥15.5 billion.

Income Taxes
North AmericaNet sales amounted to ¥154.8 billion, an increase of ¥35.3billion, or 30%, over the previous term. Operating income
totaled ¥4.3 billion, an increase of ¥0.2 billion, or 4%. The
increase in net sales was due to higher unit sales of materials
handling equipment and a change in the fiscal year-end of the BT
Industries Group comprising Toyota Industries subsidiaries.

8TOYOTA INDUSTRIES CORPORATIONNet of current and deferred income taxes for the term totaled¥20.3 billion, an increase of ¥6.3 billion, or 44.9%, over theprevious term.

Minority Interests in Consolidated Subsidiaries
Minority interests in consolidated subsidiaries increased ¥0.4billion, or 13.7%, to ¥2.9 billion, reflecting an increase in net

income of consolidated subsidiaries.

Net IncomeNet income for the term was ¥30.3 billion, an increase of ¥5.3billion, or 21.0%, over the previous term. Net income per share(EPS) was ¥96.30, compared with ¥78.41 for the previous term,and diluted net income per share was ¥96.21, compared with
¥78.38 for the previous term.

Financial Position
Total assets at the end of the term stood at ¥3,242.4 billion, adecrease of ¥2.9 billion, or 0.1%, over the previous fiscal year
ended March 31, 2006 (fiscal 2006).
Current assets were ¥508.2 billion, a decrease of ¥1.1 billion,or 0.2%, from fiscal 2006, due mainly to a decline in cash andcash equivalents.
Net property, plant and equipment was ¥581.8 billion, anincrease of ¥55.6 billion, or 10.6%, over fiscal 2006.
Intangible assets increased ¥3.2 billion, or 2.9%, to ¥113.2billion, due to an increase in goodwill.
Investments and other assets decreased ¥60.7 billion, or2.9%, to ¥2,039.3 billion. This decrease was mainly the result ofa drop in the market prices of shares of Toyota Group companies,including TMC, held by Toyota Industries.
Current liabilities stood at ¥466.9 billion, an increase of¥20.8 billion, or 4.7%, over fiscal 2006.
Long-term liabilities were ¥1,150.7 billion, an increase of¥12.0 billion, or 1.0%, over fiscal 2006. Deferred tax liabilities
decreased ¥27.1 billion as a result of the fall in market value ofinvestment securities.
Net assets stood at ¥1,624.8 billion, an increase of ¥13.6
billion, or 0.8%, over fiscal 2006. Net unrealized gains on othersecurities decreased ¥40.9 billion.
The equity ratio was 50.1%.

Cash Flows
Cash flows from operating activities amounted to ¥84.9 billion
during the first half of fiscal 2007, due mainly to income before
income taxes in an amount of ¥53.5 billion. Net cash provided
by operating activities thus increased by ¥26.1 billion from ¥58.8
billion in the first half of fiscal 2006. Cash flows from investing
activities resulted in a cash outflow of ¥97.4 billion during thefirst half of fiscal 2007, due mainly to payments for purchases ofproperty, plant and equipment totaling ¥87.7 billion. Net cashused in investing activities decreased by ¥17.4 billion from ¥114.8

billion in the first half of fiscal 2006. Cash flows from financing
activities resulted in a cash outflow of ¥18.4 billion during thefirst half of fiscal 2007, due mainly to payments for purchase oftreasury stock in an amount of ¥35.5 billion. Net cash used infinancing activities decreased by ¥48.6 billion compared with net
cash provided by financing activities of ¥30.2 billion in the firsthalf of fiscal 2006. After translation adjustments, cash and cash
equivalents as of September 30, 2006 amounted to ¥82.7 billion,
an increase of ¥8.9 billion, or 12%, from the end of the first halfof fiscal 2006.

Dividend Policy
The Company regards the benefits of shareholders as one of its
most important management policies. Based on this stance, wewill strive to strengthen Toyota Industries’ corporate constitution,
promote proactive business development and raise its corporatevalue.
The Company’s dividend policy is to meet the expectationsof shareholders while giving full consideration to businessperformance, capital demand, the dividend payout ratio on aconsolidated basis and other factors. The Company intends to use
retained earnings to improve the competitiveness of its products,
augment production capacity in Japan and overseas, as well as
expand into new fields of business and strengthen its corporate
constitution in securing future profits for its shareholders. It will
also use retained earnings to repurchase treasury stock.
The Board of Directors of the Company voted to distributean interim cash dividend of ¥22.0 per share, an increase of ¥4.0per share over the first half of fiscal 2006.

Cash Dividends per Share andConsolidated Payout Ratio
(¥)
60(%)
305025402030

1520101050

FY04

First Half0506

Full Year

070(Forecast)

Payout Ratio (right)

SEMIANNUAL REPORT 20079