Car Air-Conditioning Compressor

A PASSIONFOR
CREATION
Annual Report 2004
Year ended March 31, 2004

About the Cover

Car Air-Conditioning Compressor

A PASSIONFOR
CREATION
Annual Report 2004
Year ended March 31, 2004

The cover of our Annual Report 2004 shows the motif of a car air-conditioning compressor, symbolizing Toyota Industries’
passion for “creating things.”
The car air-conditioning compressor functions as the “heart” of the air conditioner, enhancing passenger comfort by
regulating the interior temperature of the vehicle. Toyota Industries became a leader in global markets by successively
introducing revolutionary new products, such as continuous variable displacement compressors, compressors that use
CO2 as a refrigerant for fuel-cell hybrid vehicles and electrically driven compressors for hybrid cars.
Our car air-conditioning compressors integrate leading-edge technologies with superb quality and reliability, earninghigh acclaim not only from Toyota Motor Corporation but also from other major automakers. We began manufacturing car
air-conditioning compressors in 1960; in April 2004, our cumulative production total reached 200 million units.
Our air-conditioning compressors symbolize Toyota Industries’ unique passion. The growth of Toyota Industries’ entire
range of businesses has been driven by “passion for creation,” “passion for marketing and “passion for manufacturing.”

Profile

ProfileToyota Industries Corporation was founded in 1926 by Sakichi Toyoda, a renowned
master of invention in Japan, to manufacture automatic looms. His ambitions andpassion have been inherited not only by Toyota Industries but also by the entire
Toyota Group, and are driving the Toyota Group’s current growth. Toyota Industries
proceeded over the years to diversify into such fields as automobiles, materials
handling equipment, electronics and logistics solutions. In line with its strategy ofglobalization, Toyota Industries has production facilities and sales networks not onlyin Japan but also in Europe, North America, China and other regions.
The business universe of Toyota Industries consists of four segments:
Automobile, which comprises the vehicle (automobile assembly), engine and car
air-conditioning compressor businesses; Materials Handling Equipment, which
specializes in forklift trucks and other materials handling equipment; Textile
Machinery, which covers the spinning and weaving machinery businesses; andOthers, which includes electronics, logistics solutions and other businesses. Eachof these segments already has or is building a secure footing in its particular fields.
As it carries out its activities in a diverse range of business domains, Toyota
Industries is preserving the passion inherited from Sakichi Toyoda. Developing
technological and market synergies among our various businesses to produce
added value, we aim to achieve a conglomerate premium so that the worth of
Toyota Industries as a whole adds up to more than the sum of its parts.

Definition of Terms“Fiscal 2004” refers to the fiscal year ended March 31, 2004, and other fiscal years are referred to in a corresponding manner. All references to the “Company” herein are to Toyota Industries
Corporation, and references to “Toyota Industries” or “Toyota Industries Group” herein are to the Company and its 140 consolidated subsidiaries.

Cautionary Statement with Respect to Forward-Looking Statements
This annual report contains projections and other forward-looking statements that involve risks and uncertainties. Our use of the words “expect,” “anticipate,” “estimate,” “forecast,” “plan” and similar
expressions is intended to identify such forward-looking statements. Projections and forward-looking statements are based on the current expectations and estimates of Toyota Industries Corporationand its Group companies regarding their plans, outlook, strategies and results for the future. All such projections and forward-looking statements are based on management’s assumptions and beliefs
derived from the information available to it at the time of producing this report and are not guarantees of future performance. Toyota Industries Corporation and its Group companies undertake no
obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Therefore, it is advised that you should not rely solely uponthese projections and forward-looking statements in making your investment decisions. You should also be aware that certain risks and uncertainties could cause the actual results of Toyota Industries
Corporation and its Group companies to differ materially from any projections or forward-looking statements appearing in this report. These risks and uncertainties include, but are not limited to, thefollowing: 1) economic trends, 2) principal customers, 3) product development capabilities, 4) new businesses, 5) product defects, 6) price competition, 7) reliance on suppliers of raw materials andcomponents, 8) alliances with other companies, 9) exchange rate fluctuations, 10) effects of disasters, power blackouts and other incidents, 11) latent risks associated with international activities, 12)
official restrictions, 13) share price fluctuations and 14) retirement benefit liabilities.

ANNUAL REPORT 2004 — TOYOTA INDUSTRIES CORPORATION

1Contents
page

3
4- 9

Financial Highlights

Letter to Shareholders

10-11

At a Glance

12-36

Toyota Industries in Focus

12-15
16-23
24-26

Passion for Future Growth —Medium-Term Management Vision—
FOCUS 2 Passion for Globalizing —Materials Handling Equipment Segment—
FOCUS 3 Passion for Cutting-Edge Technologies
FOCUS 1

—Car Air-Conditioning Compressor Business—

27-29
30-31
32-33
34-36

37-76

Financial Section

77-85

Toyota Industries Close-up

86-87

Major Developments in Toyota Industries’ History

88

Corporate Organization89

Directors and Corporate Auditors

90-91
92
2

Passion for Nurturing New Businesses
FOCUS 5 Research and Development
FOCUS 6 Corporate Governance
FOCUS 7 Harmonious Coexistence with
the Environment and Local Communities
FOCUS 4

Corporate Data
Investor Information

ANNUAL REPORT 2004 — TOYOTA INDUSTRIES CORPORATION

Toyota Industries Corporation
Years ended March 31, 2004 and 2003

Thousands of
U.S. dollars

Millions of yen

2004

2003

% change

Financial Highlights

Financial Highlights
2004

For The YearNet sales¥1,164,379 ¥1,069,219

8.9%$11,016,927

Operating income

52,63152,4780.3

497,975

Ordinary income

58,971

51,37514.8

557,962

Income before income taxes

57,741

43,67032.2

546,325

Net income

33,623

21,93453.3

318,128

Depreciation and amortization

65,35259,154

10.5

618,337

Capital expenditures

89,50987,5592.2

846,901

Research and development expenses

29,562

29,705(0.5)

279,705

Net income — basic

108.04

70.19

53.9

1.02

Net income — diluted

101.97

62.90

62.1

0.96

Cash dividends

24.00

22.00

9.1

0.23

Per share of common stock (yen, U.S. dollars):At Year-End
Total assets¥2,011,995 ¥1,650,391

21.9%$19,036,758

Shareholders’ equity

1,016,764

738,86837.6

9,620,248

Number of employees

27,431

25,0309.6

Note: U.S. dollar amounts have been translated from yen, for convenience only, at the rate of 105.69 yen = US$1, the approximate exchange rate on March 31, 2004.

Net Sales

Net Income

Total Assets

Shareholders’ Equity(¥ Billion)(¥ Billion)(¥ Billion)(¥ Billion)

1,200

40

2,500

1,200

1,000

1,000

2,000
30

800

800
1,500
20

600

600
1,000

400

400
10
500

200

0
FY

00 01 02 03 04

0
FY

00 01 02 03 04

0
FY

200

00 01 02 03 04

0
FY

00 01 02 03 04

Note: The fiscal year ended March 31, 2004 is referred to as fiscal 2004 and other fiscal years are referred to in a corresponding manner.

ANNUAL REPORT 2004 — TOYOTA INDUSTRIES CORPORATION

3

Akira Yokoi

Tadashi Ishikawa

ChairmanPresident

Dear Shareholders:
The year ended March 31, 2004 (“fiscal 2004”) was an encouraging year for us not
only in terms of our business results, for which we believe there is room for
improvement in several areas. Rather, fiscal 2004 was a year in which we confirmedthat the measures and strategies we have been implementing are steadily yielding
their intended results.
Our business strategies are based on our thorough focus on “creating things.”
Since our establishment, our approach to creating things has been characterized bydeep-rooted passion and a sense of mission. This passion and sense of mission —nurtured by generations of employees throughout our history — are the source of ourcompetitive strengths and one of our driving forces. We believe that we must passdown this “passion for creation” to the next generations of employees. Toyota
Industries’ “passion for creation” will remain unchanged in the years ahead even as
the composition of our business evolves along with changes in the times.

4

ANNUAL REPORT 2004 — TOYOTA INDUSTRIES CORPORATIONThe economic climate during fiscal 2004 was generally favorable. Despite the sharp appreciation of the yen
against the dollar as well as weak public investment, the Japanese economy achieved a mild recovery, thanks
to growth in private-sector capital investment and exports. The world economy recorded robust growth
overall, propelled by healthy expansion of the U.S. and Chinese economies, despite concerns about turmoil in
Iraq in the aftermath of the war.
Under these economic conditions, Toyota Industries achieved excellent results, posting all-time highs inboth consolidated net sales and profits. Consolidated net sales increased 8.9% to ¥1,164.4 billion.
Consolidated operating income increased 0.3% to ¥52.6 billion, and consolidated ordinary income amounted
to ¥59.0 billion, up 14.8%. Consolidated net income increased 53.3% to ¥33.6 billion. It is noteworthy that
we have now achieved record-high net sales and ordinary income for five consecutive years amid sometimes
less-than-favorable domestic economic conditions. Because we always aim for high objectives, we are notcompletely satisfied with some business results. However, we are confident our overall performance provides
solid evidence that our strategies are sound and that management is navigating the company on the rightcourse.

Letter to Shareholders

Satisfactory Performance Overall

All Segments Maintain Favorable Results
Although the level of net sales and operating income varied by business segment, they were at a high level
overall. A summary of business results by segment follows.
Note: Segment net sales figures do not include intersegment transactions. However, segment operating income figures do include operating income
arising from intersegment transactions.

Automobile Segment
The Automobile Segment, comprising vehicles, engines, car air-conditioning compressors and otherbusinesses (including foundry parts for engines and electronic components for automobiles), accounted for
51.9% of consolidated net sales in fiscal 2004.
Net sales increased 1.4% over the previous fiscal year to ¥603.9 billion. Operating income decreased
8.6% to ¥27.5 billion. The increase in net sales mirrored ongoing favorable performance in sales of car airconditioning compressors, the core business of the Automobile Segment. The decrease in operating income
resulted from a drop in sales of the Engine Business and other factors.

Materials Handling Equipment Segment
The Materials Handling Equipment Segment manufactures and markets mainly forklift trucks, warehousetrucks, automated storage and retrieval systems, and automatic guided vehicle systems, together withspecial-purpose vehicles, including aerial work platforms.
Net sales of the Materials Handling Equipment Segment for fiscal 2004 increased 18.9% over theprevious fiscal year to ¥443.4 billion. The increase was due mainly to the inclusion of sales by Aichi
Corporation (“Aichi”), a former affiliate that became a consolidated subsidiary in May 2003. Operating income
amounted to ¥19.3 billion, up 19.6%.

Textile Machinery Segment
The Textile Machinery Segment engages mainly in the manufacture and sales of spinning machinery, primarily
ring spinning frames, as well as such weaving machinery as air-jet looms. The Textile Machinery Segment
dates back to the founding of Toyota Industries. Toyota Industries is one of the world’s leading
manufacturers of air-jet looms and spinning machinery.
Net sales of the Textile Machinery Segment decreased 5.7% to ¥46.0 billion, due chiefly to a decrease insales of air-jet looms in China, our principal market. Operating income decreased 95.7% to ¥0.1 billion.

ANNUAL REPORT 2004 — TOYOTA INDUSTRIES CORPORATION

5

Letter to Shareholders

Others Segment
The Others Segment comprises electronics, logistics solutions and other businesses. This segment consistsof businesses that we entered comparatively recently and that are thus small in scale. Nonetheless, we view
these as strategic businesses that will serve as future pillars of growth.
Net sales increased 36.7% to ¥71.1 billion, reflecting the favorable results of TIBC Corporation, a joint
venture with Ibiden Co., Ltd. that engages in the production of plastic package substrates, and Taikoh
Transportation Group, which engages in transportation and other logistics businesses. Operating income
increased 47.0% to ¥5.8 billion.

Principal Achievements in Fiscal 2004
During fiscal 2004, we implemented a host of strategies incorporating long-term perspectives. Several of themore noteworthy warrant particular mention.

Consolidation of Aichi Corporation
In May 2003, Toyota Industries increased its stake in Aichi from 34% of outstanding shares to 51% andincorporated Aichi into its network of consolidated subsidiaries. Aichi is Japan’s top manufacturer of specialpurpose vehicles, with a 66% share of the aerial work platform market in fiscal 2004. In fiscal 2004, Aichi
achieved a dramatic improvement in results, thanks to fundamental structural reforms designed to enhance
profits. It also benefited from higher demand for replacing special-purpose vehicles not meeting tighter
exhaust emission standards for diesel trucks in Japan. Toyota Industries intends to continue providing Aichi
with support in various areas such as production technology, procurement and personnel.

Entry into the Operations in Logistics Solutions BusinessAs one core business for driving future growth, Toyota Industries entered the Logistics Solutions Business.
The business involves providing companies with logistics solutions that cover all phases of logistics, fromlogistics planning to the operation of distribution centers.
During fiscal 2004, we steadily secured orders for the operation of distribution centers and implemented anumber of measures to expand our Logistics Solutions Business. These measures included the establishmentof joint ventures with customers to carry out their logistics operations as well as the formation of alliances withlogistics companies. As a prime example of such alliances, in March 2004 we signed a basic agreement with
Fuji Logistics Co., Ltd. (“Fuji Logistics”) and Fuji Electric Holdings Co., Ltd. to form a business and capitalalliance covering all aspects of logistics services. In accordance with this agreement, Toyota Industries andFuji Logistics established a joint venture that will serve as the nucleus of this alliance. The new company will
undertake outsourced logistics from companies and offer new value-added logistics services.
Toyota Industries will seize various opportunities to strategically expand its Logistics Solutions Business.

Reinforced Overseas Production and Sales Networks for Forklift Trucks
Foreseeing further growth in the Chinese market, Toyota Industry (Kunshan) Co., Ltd., which produces
foundry parts in Kunshan, Jiangsu Province, began local production of TOYOTA-brand 1-3 ton internal
combustion counterbalanced forklift trucks — a mainstay product in China — in April 2003. Together with
Toyota Tsusho Corporation, in May 2003, we established Toyota Material Handling (Shanghai) Co., Ltd. as a
distributor of TOYOTA-brand forklift trucks in China. Primarily through this new company, which began
operations in June 2003, we will establish an even stronger sales and after-sales structure as we build a solid
dealer network in China.
In June 2003, Toyota Industries established Toyota Industries Corporation Australia Pty Limited (“TICA”) in
Sydney as a new distributor. TICA started operations in July 2003.

6

ANNUAL REPORT 2004 — TOYOTA INDUSTRIES CORPORATION

Letter to Shareholders

In January 2004, we established Toyota Industries Mercosur Ltda. in Brazil. This company started
operations in April 2004 as a distributor for the two vital South American markets of Brazil and Argentina.
Toyota Industries is making notable headway in establishing overseas sales networks that will underpin
growth in sales of forklift trucks and other materials handling equipment.

Ongoing Commitment to Improved Quality
Toyota Industries continually makes efforts to improve the quality of its products and services, both of which
are crucial to ensuring customer satisfaction. Keenly aware that quality-related problems could jeopardize its
future existence, Toyota Industries regards “thorough quality assurance” and “maintenance and improvementof quality” as supremely important management policies, and carries out group-wide quality-improvement
activities. Extending beyond education in quality-control methods, these activities include the setting of
ambitious quality targets in each division. Not only the director in charge of product quality and division
managers (or an in-house company president), but also President Ishikawa and other top executives makeon-site inspections to check the quality-improvement activities and confirm progress in reaching quality
targets.

Personnel Development
On April 1, 2004, Toyota Industries opened its new Technical Training Center. Through this Center, we aim tostrengthen education for workers who support Toyota Industries’ production activities and raise the skill levelsof employees — the key source of our strong competitiveness. Consisting of a wing for in-service training andanother wing for practical training, the Center is four times larger than our previous training facility.
At the new Center, a one-year skills training course targeted at designated high-school graduate
employees is taught by highly specialized instructors to cultivate future leaders for our manufacturing sites.
Other courses aim to nurture highly advanced skills for work-site leaders (employees who have worked foraround 10 years), as well as provide training in basic and specialized skills for general workers. We intend theCenter to be the source for skilled workers not only for the Company, but also for the entire Toyota Industries
Group. Initially, the Center will provide training for employees of domestic Group companies and then expand
training to employees of overseas subsidiaries.

Aiming for Sustained Growth
Through growth in areas such as materials handling equipment, car air-conditioning compressors, vehicles,
logistics solutions and electronics, Toyota Industries will do its utmost to achieve consolidated net sales ofmore than ¥1.2 trillion for fiscal 2006, ending March 31, 2006. We strive to achieve sustained businessexpansion by implementing management strategies from medium- to long-term perspectives.
Basically, we intend to further bolster the technologies and cost competitiveness of the Materials Handling
Equipment Segment and Car Air-Conditioning Compressor Business. We are working on establishing a diesel
engine production site in Poland to contribute to Toyota Motor Corporation’s (“TMC”) European strategy. We
are making an entry into the Logistics Solutions Business in Japan, an expected growth sector where we canapply our extensive know-how and strengths. We also plan to promote new technologies and businesses,
centering on the Electronics Business, that show potential for solid future growth. Other key measures include
further developing our global operations, emphasizing thorough quality control, accelerating cost-reduction
activities and cultivating highly motivated personnel who have a sense of mission and specialized knowledgeof TPS.
Toyota Industries operates a diverse range of businesses. By strategically and organicallycombining know-how, key technologies and markets cultivated in each business, we believe we can create
new value, so that the worth of Toyota Industries as a whole adds up to more than the sum of its parts.

ANNUAL REPORT 2004 — TOYOTA INDUSTRIES CORPORATION

7

Letter to Shareholders

Business Outlook for Fiscal 2005
We expect the business environment in fiscal 2005, ending March 2005, to be characterized by ongoing
uncertainty. The Japanese economy appears to have finally moved onto a mild recovery track, but thedirection of the U.S. and global economies remains unclear. This is further aggravated by exchange rate
uncertainties, as well as concerns about rising prices for such raw and processed materials as crude oil andsteel products.
In this management environment, we expect the Materials Handling Equipment Segment and Car AirConditioning Compressor Business to continue expanding their sales. In contrast, we anticipate that the
Vehicle Business will see a decrease in production volume due to intensifying competition in the small car
market and other factors. We also forecast lower sales for the Engine Business due to expected decreases insales of 2UZ-type gasoline engines and C-type diesel engines. We expect sales in the Textile Machinery
Segment to be hampered by tighter monetary policy in China.
In view of these factors, for fiscal 2005 we forecast consolidated net sales of ¥1.15 trillion, down 1.2%
from fiscal 2004. However, we anticipate that cost-reduction measures and strategies to improve profits will
result in consolidated ordinary income of ¥60.0 billion and consolidated net income of ¥34.0 billion, increasesof 1.7% and 1.1%, respectively.
In striving to reach these targets, Toyota Industries will develop and market products that accuratelyreflect the needs of customers, raise the efficiency of business operations and management, and fortify its
management structure to respond flexibly to changes in the business environment while maintaining its
profitability. Toyota Industries has been successfully diversifying its operations and has established a structurethat allows declines in earnings by one business to be absorbed by favorable performances in otherbusinesses. This structure underlies Toyota Industries’ ability to secure stable and long-term growth, evenwhen there are some fluctuations in the business environment.
Note: The financial projections set forth above are based upon a number of assumptions and estimates that, while presented with numerical specificity
and considered reasonable by us when taken as a whole, are inherently subject to significant economic, business, competitive, regulatory andoperational uncertainties, contingencies and risks, many of which are beyond our control. Financial projections are necessarily speculative innature, and it can be expected that one or more of the assumptions underlying the projections will prove not to be valid, and unanticipated eventsand circumstances are likely to occur. Actual results will vary from the financial projections and those variations may be material. Consequently, thisreport should not be regarded as a representation by us or any other party that the financial projections will be achieved. Current uncertain market
trends in the global economy make it particularly difficult at present to predict product demand and other related matters.

Looking Ahead
The management team of Toyota Industries — your company — sees its most crucial mission as raising
corporate value by enhancing long-term and stable profitability. Therefore, we will emphasize dynamic andstrategic business operations and strive toward building more efficient management systems, achieving
stable growth in our businesses and steadily improving our business results. As a good corporate citizen, we
will work to gain the trust of society through our environmental protection and social contribution activities,
while taking a proactive approach to compliance and corporate governance.
For fiscal 2005, your company forecasts slightly slower growth in business results compared withprevious years. Rest assured, however, that we expect this slowdown to be just a temporary pause. In fact,
we view fiscal 2005 as a run-up period for attaining even stronger growth from fiscal 2006 onward. As weapproach this next phase of new and sustained growth, we will re-examine and reinforce the superiority ofeach of our businesses as we work to build a solid foundation for growth. We will also step up our efforts toimprove profitability in periods of sluggish sales.

8

ANNUAL REPORT 2004 — TOYOTA INDUSTRIES CORPORATION

Letter to Shareholders

In our message to you in last year’s annual
report, we noted that your company is blessedwith excellent people who can think and act
independently in accordance with the corporate
philosophy and management strategies. We alsomentioned that although these human resources
do not appear in the balance sheets, they
represent one of Toyota Industries’ most importantand precious assets. We still firmly believe this.
Toyota Industries’ employees share the same setof values as top management, and possess aremarkable degree of passion and sense of
mission in executing their duties at their respective
workplaces. Whether at production plants, thefront line of sales or in R&D laboratories, they
devote their energies and wisdom in a quest to
create value for customers, shareholders andinvestors. These personnel are the source of thecreation of outstanding value in a continually
evolving and uncertain management environment.
In pursuing future growth and development, we
remain committed to developing staff who not only
Tadashi Ishikawa
President
have expertise and technical skills but are also
filled with passion.
Seeking to ensure the sustained growth of your company, the management team will take measures toearn your trust. Such measures will allow us to respond flexibly to ever-changing markets and management
environments, and to continually maintain our competitive edge.
In this year’s annual report, we have done our best to explain candidly the measures the management
team is taking to guide your company along the path of future prosperity. We sincerely hope this reportprovides investors, shareholders and other stakeholders with an understanding of the directions in which weare headed, and offers a glimpse of the future shape of your company. In closing, we ask for your continued
support.
July 2004

Akira Yokoi
ChairmanTadashi Ishikawa
President

ANNUAL REPORT 2004 — TOYOTA INDUSTRIES CORPORATION9At a Glance

At a Glance
Toyota Industries engages in activities that span a diverse
spectrum of business domains. These range from the Textile
Machinery Segment, the business upon which we were founded,to such core businesses as the Automobile Segment and theMaterials Handling Equipment Segment. Our businesses also
encompass the Others Segment.
Essentially, Toyota Industries is a conglomerate that engages
in a wide range of businesses, with clearly defined corebusinesses. By strategically and organically combining theabundance of different technologies, production know-how andcustomer bases cultivated in each of our businesses, Toyota
Industries makes the whole greater than the sum of the parts.
Note: Segment net sales figures do not include intersegment transactions. However,segment operating income figures do include operating income arising fromintersegment transactions.

Automobile Segment
The Automobile Segment, comprising vehicles, engines,
car air-conditioning compressors and other businesses(including foundry parts for engines and electronic
components for automobiles) is Toyota Industries’
largest business segment, accounting for 51.9% ofconsolidated net sales in fiscal 2004. The Vehicle
Business produces the Vitz (Yaris in Europe), RAV4 (forEurope and North America) and Corolla Sedan (forNorth America). The Engine Business produces the 1CD
and 1HZ diesel engines as well as the 2AZ and 1FZgasoline engines. Our Car Air-Conditioning Compressor
Business develops and produces various types ofcompressors, including swash plate compressors with
fixed displacement, one-way swash plate compressors
with continuous variable displacement and scroll-type
compressors. We supply these to the world’s leading
automakers through DENSO Corporation.
Net sales of the Automobile Segment for fiscal 2004
amounted to ¥603.9 billion in fiscal 2004. Operating
income was ¥27.5 billion.

Materials Handling Equipment
Segment
The Materials Handling Equipment Segment’s
core products include the GENEO (7FG/D outside
Japan) internal combustion counterbalanced
forklift truck, the GENEO-B (7FB outside Japan)
electric counterbalanced forklift truck, warehousetrucks, automated storage and retrieval systems,
and automatic guided vehicle systems. This
segment consists mainly of TOYOTA Material
Handling Company (an in-house company), the
BT Industries Group and Aichi Corporation, whichbecame a consolidated subsidiary in May 2003
and commands a large share of the domestic
market for aerial work platforms.
Net sales of the Materials Handling Equipment
Segment for fiscal 2004 amounted to ¥443.4
billion. Operating income was ¥19.3 billion.

10

ANNUAL REPORT 2004 — TOYOTA INDUSTRIES CORPORATION

Vitz (Yaris)

7SEU16 compressor

1CD diesel engine
Business/Operation

Products

VehiclePassenger vehicles

EngineDiesel engines, Gasoline engines, etc.

Car Air-Conditioning
Compressor

Car air-conditioning compressors, etc.

OthersElectronic equipment for automobiles,
Foundry parts for automobiles, etc.

Business/Operation
Industrial Vehicle

Products
Counterbalanced forklift trucks,
Warehouse trucks, Aerial work
platforms, etc.

Materials Handling
SystemAutomated storage and retrieval
systems,
Automatic guided vehicle systems, etc.

SH-15A
Truck mount aerial
work platform

GENEO-B (7FB15)
Electric counterbalanced
forklift truck

BT REFLEX AC
Reach truck

3.9%

6.1%

38.1%

Automobile
Materials Handling Equipment
Textile Machinery
OthersAt a Glance

Percentage of
Net Sales

51.9%
0.2%
10.9%
36.7%

52.2%

Percentage ofOperating Income(Elimination of intersegment transactions is not included.)

Textile Machinery Segment
The Textile Machinery Segment engages in the manufactureand sales of spinning and weaving machinery. In spinningmachinery, this segment produces ring spinning frames, roving
frames and combing machines. Toyota Industries also
manufactures and sells weaving machinery, including air-jet
looms and water-jet looms as well as such preparatory
machinery for weaving as sizing machines and automatic
drawing-in machines.
Net sales of the Textile Machinery Segment for fiscal 2004
totaled ¥46.0 billion. Operating income was ¥0.1 billion.

Business/Operation

Products

Spinning Machinery

Ring spinning frames, Roving frames,
Drawing frames, etc.

Weaving Machinery

Air-jet looms, Water-jet looms,
Sizing machines, etc.

RX240NEW
Ring spinning frame

JAT710 air-jet loom

Others Segment
The Others Segment consists mainly of businesses that
we have entered recently. Although the scale of theiroperations is still relatively small, we view thesebusinesses as future pillars of corporate growth. The
core businesses of the Others Segment are theElectronics Business and Logistics Solutions Business.
The Electronics Business is made up of the Corporate
Technical Center (an in-house organization), ST Liquid
Crystal Display Corp.* (“ST-LCD,” a joint venture withSony Corporation) and TIBC Corporation (“TIBC,” a joint
venture with Ibiden Co., Ltd.). The Corporate TechnicalCenter is involved in the development and production of
power electronics parts for automobiles. ST-LCD
produces low-temperature polysilicon TFT-LCDs, while
TIBC manufactures ball grid array (BGA) plastic package
substrates and flexible printed circuit (FPC) substrates.
The Logistics Solutions Business undertakes all phasesof logistics for companies on an outsourced basis. We
plan to accelerate efforts to develop the Electronics andLogistics Solutions businesses into mainstay businessesof Toyota Industries.
Net sales of the Others Segment for fiscal 2004 amounted
to ¥71.1 billion. Operating income was ¥5.8 billion.
*As ST-LCD is not a consolidated subsidiary but an affiliate, its sales and operating
income (loss) are not included in the consolidated figures, but are accounted forby the equity method.

DC-DC converter

Low-temperaturepolysilicon TFT-LCDs

Ball grid array (BGA)
plastic package substrates

Business/Operation

Products/Service

Corporate TechnicalCenter

DC-DC converter, DC-AC inverter, Radiotuner modules, Wireless LAN modules,
etc.

ST Liquid Crystal
Display Corp.

Low-temperature polysilicon TFT-LCDs

TIBC Corporation

Ball grid array (BGA) plastic package
substrates,
Flexible printed circuit (FPC) substrates

Others

Logistics solutions,
Production equipment, etc.

ANNUAL REPORT 2004 — TOYOTA INDUSTRIES CORPORATION

11

1

FOCUS
Toyota Industries in Focus

Passion for Future Growth—Medium-Term Management Vision—
To ensure future growth and achieve a stable increase in corporate value, Toyota Industries formulated a Medium-Term Management
Vision, introduced in May 2001. We set out the highly ambitious targets of consolidated net sales of more than ¥1.2 trillion andconsolidated ordinary income of ¥80.0 billion for fiscal 2006 (ending March 2006). Although we are not certain whether we will reachthese targets in the rapidly changing business environment, we are nonetheless doing our very best to achieve it.
Details of the thinking embodied in the business strategies that form the basis of our Medium-Term Management Vision are as follows.

Materials Handling Equipment andCar Air-Conditioning Compressor Fields: Strong
Competitive Edge and Global Strategies
Toyota Industries is striving to further consolidate its leading
share of the Japanese market as well as expand its top share of
the global market for materials handling equipment. Highlighting
its determination to attain this objective, Toyota Industries
acquired BT Industries AB (“BT Industries”), a Swedish
warehouse truck manufacturer, and integrated the sales andservice functions of Toyota Motor Corporation’s (“TMC”) forklift
truck and logistics engineering businesses into its own
operations. Through the mutual supply of products in addition toreciprocal transfers of production and sales know-how, theacquisition of BT Industries is steadily yielding synergies that we
expect will become even more apparent in the future.
Toyota Industries and BT Industries are supplying each otherto augment mutual product lineups. TOYOTA Material Handling
Company (“TMHC”) supplies its counterbalanced forklift trucks to
BT Industries, while introducing various types of BT Industries’
warehouse trucks in its own markets in Europe, the U.S. andJapan. Also, we are making full-fledged efforts to introduce the
Toyota Production System (TPS), TMC’s manufacturing
technique that we also use, to BT Industries. Concurrently, we
are incorporating BT Industries’ outstanding solution proposal-

Medium-Term Sales and Income Targets (Consolidated Base)
Ordinary Income(¥ Billion)
80
47.9

51.4

59.0

100

60
60

44.5

20

Net Sales(¥ Billion)
1,400
Beyond 1,200
1,164.4

1,200

1,150

1,069.2
980.2

1,000

800

767.4

Textile Machinery and Others

600

Vehicle & Engine
400

Electronics and Logistics Solutions
Car Air-Conditioning Compressor

200

Materials Handling Equipment
0
FY

12

01

02

03

ANNUAL REPORT 2004 — TOYOTA INDUSTRIES CORPORATION

0405
Target06
Targetwhite organic light-emitting diodes.
ST-LCD manufactures small and medium-sized lowtemperature poly-Si TFT-LCDs for use mainly in video cameras,
digital still cameras, personal digital assistants and mobile
phones. ST-LCD’s products have such characteristics as highnumerical aperture, high resolution and reduced power
consumption — features that are underpinning increased
demand for applications in digital cameras and mobile phones.
In fall 2001, ST-LCD invested approximately ¥75.0 billion andestablished a second production line, boosting its monthly
production capacity to 32,000 panels. Expecting further growthin demand, ST-LCD plans to make additional capital investmentof ¥10.0 billion in 2004, with the aim of raising monthly
production capacity to 40,000 panels (600 x 720 mm size) from
April 2005.
TIBC will focus on efficiently producing high-quality, cuttingedge technologies/products attuned to customer needs, such as
high-performance package substrates, while further raisingproductivity and strengthening competitiveness.
Toyota Industries has entered the Logistics Solutions
Business, which encompasses commissioned logistics
operations of warehouses and third party logistics, with the aimof addressing customer needs for cost reductions andimprovements in their logistics operations. Our entry into this
sector is being facilitated by our accumulated experiences in the
production and sales of materials handling equipment — such as
forklift trucks and automated storage and retrieval systems — aswell as our production know-how, as exemplified by the TPS.
Toyota Industries views the electronics and logistics solutions
markets as being highly attractive, with huge medium- to longterm growth potential. Accordingly, we will intensively invest
management resources in the Electronics and Logistics
Solutions businesses to position them as future core businesses,
and do our utmost to ensure the success of these businesses.
Toyota Industries will also aggressively explore and cultivate
promising new technologies and businesses to ensure stable
growth over the medium to long term.

Electronics and Logistics Solutions: Future Core
Businesses

Our Vehicle Business, one of the manufacturing bases for the
Toyota Group’s small cars, will work to raise the value of
TOYOTA cars by further enhancing product quality and cost
efficiency. In addition, the Vehicle Business strives to contributeto car production by the Toyota Group by continually improving
its production technologies.
In the Engine Business, we will cooperate closely with TMC
while working to develop highly functional engines withoutstanding environment-friendly features.
With TMC determined to increase its presence in theEuropean market, it is especially crucial to meet needs related todiesel-engine vehicles. We expect that Toyota Motor Industries
Poland Sp.zo.o., established jointly with TMC, and our Engine
Business will play a vital role in TMC’s Europe business strategy
by functioning as the bases for supplying diesel engines to TMC.

Although relatively small in scale at present, we believe ourElectronics Business has high potential to drive our growth overthe long term. The nucleus of our Electronics Business consistsof the Corporate Technical Center (an in-house organization);
ST Liquid Crystal Display Corp. (“ST-LCD”), a joint venture withSony Corporation that manufactures low-temperature polysilicon(poly-Si) TFT-LCD panels; and TIBC Corporation (“TIBC”), a joint
venture with Ibiden Co., Ltd. that manufactures ball grid arrayplastic package substrates.
The Corporate Technical Center engages in the development
and commercialization of leading-edge technologies andproducts, including those related to power electronics parts forautomobiles as well as radio tuners, wireless LAN modules andToyota Industries in Focus

based sales techniques into our own sales activities. In particular,
we have begun offering BT Industries’ fleet management
program to customers in Japan. Additionally, we are promoting
personnel and technology exchanges as well as joint component
purchases and product development as part of our efforts togenerate further synergies as quickly as possible.
In another noteworthy development, in May 2003 Aichi
Corporation (“Aichi”) became a Toyota Industries subsidiary. Aichi
is a leading manufacturer of special-purpose vehicles,
commanding an approximately 66% share of the Japanesemarket for aerial work platforms in fiscal 2004. This consolidation
will allow the Materials Handling Equipment Segment to augment
its product line in sectors other than forklift trucks.
The Materials Handling Equipment Segment will carry out
strategic marketing on a global basis that will include its sales
and service activities and the development of products that meetcustomer/market needs, as we strive to maximize customer
satisfaction and business performance.
Determined to reinforce our position as the world’s leading
manufacturer of car air-conditioning compressors, we willcontinue to vigorously develop new products that ensure
customer satisfaction. In our Car Air-Conditioning Compressor
Business, we operate a global tri-polar production structure, with
manufacturing bases in the world’s three principal markets ofJapan, the U.S. and Europe (Germany). By manufacturing close
to our customers, we are well positioned to produce productsthat reflect market needs, reduce distribution costs and minimize
exchange rate risks. In view of an expected continued increasein the proportion of cars in Europe equipped with air-conditioning
systems, we will proceed with aggressive sales activities
targeting European automakers. At the same time, we will work
to expand sales in the North American market.
The Materials Handling Equipment Segment and the Car AirConditioning Compressor Business represent Toyota Industries’
core operations as well as strategic businesses driving ourefforts to achieve the objectives of our Medium-Term
Management Vision. Considering the dim prospects for a sharp
increase in demand in the mature Japanese market, we will strive
to further develop our operations globally as a means of securingongoing growth in the scale of our business.

Vehicle and Engine Businesses: Cost Reductionand Higher Productivity for Solid Business
Foundation

ANNUAL REPORT 2004 — TOYOTA INDUSTRIES CORPORATION

13

FOCUS

1

Toyota Industries in Focus

Also, we started supplying aluminum die cast components fortransmissions to TMC’s Innovative International Multi-Purpose
Vehicle (IMV) Project through an Indian subsidiary. Whilecontributing to TMC’s overseas business development, we aim
to expand our own vehicle-related business through increased
production of foundry parts and commencement of productionof stamping dies for automobiles in China.
Our Vehicle and Engine businesses are dedicated mainly tocommissioned production for TMC. Our production is therefore
dependent on TMC’s production plans and outsourcing policies.
We seek to strengthen our sales link to TMC through ceaselessquality enhancement, cost-reduction activities and flexible
production. Our goal is for TMC to entrust us with the assemblyof, and employ our engines in, a wider range of models.
Our Vehicle and Engine businesses are a source of stablerevenues. We intend to improve cost competitiveness and build
stronger revenue foundations.

Implementing Cost-Reduction Measures
The wave of global mega-competition has triggered brutal pricecompetition. To ensure our survival in this environment, it isimperative that we continually enhance our revenue structure byintroducing appealing new products and implementing sustained
cost-reduction activities. We are taking measures to continually
reduce costs throughout the Company. A project team in eachdivision carries out systematic and well-planned cost-reduction
activities. Beside strengthening our ongoing value engineering(VE) and value analysis (VA) activities, our cost-reduction
activities also include optimized global procurement of materials
and components, and reductions in general expenses and head
office fixed costs.

In May 2002, we opened “e-Lab,” an information technology
research laboratory for various IT-related R&D activities, as abase station for the information system department. Its wide
range of research activities encompasses research on digital
simulation technologies to cut product development times andreduce production lead-times, from development to manufactureand shipment. E-lab is also engaged in the development of an
optimal network system for joint development of parts with
suppliers, and for parts procurement.

Cultivating Employee Skills
Toyota Industries manufactures a diverse range of products. We
maintain our strong competitiveness by producing high-quality
products through efficient production. TPS is one vital source ofour competitiveness and represents know-how that supports
efficient production. The keys to further bolstering ourcompetitiveness are to continually refine TPS and cultivate staff
with a deep understanding of the system. To this end, we haveestablished a specialized section to foster the development ofqualified personnel. We are also actively promoting thedevelopment of excellent personnel through training courses
covering worker skills and quality control.

Developing Global Businesses
We realize that further business expansion cannot be achieved
by depending solely on the Japanese market. Toyota Industries
has therefore steadily globalized its operations. For example, weestablished production bases for forklift trucks and car airconditioning compressors in North America and Europe,commenced production of foundry parts and forklift trucks in
China, and acquired BT Industries. Guided by our belief that
globalization is paramount for expanding business and raising
corporate value, we will provide customers worldwide withexcellent products, procure high-quality, price-competitive parts
from worldwide sources, and manufacture products close to ourcustomers around the world. We are also strengthening the sales
network for forklift trucks and other industrial vehicles.

Strengthening Approach to Information
Technology
We recognize that the deployment of information technology (IT)is a crucial strategic issue in determining corporate
competitiveness, and are thus pushing ahead with the strategic
utilization of IT. We have introduced the enterprise resource
planning (ERP) program into our corporate accounting system,
and are installing three-dimensional CAD systems. The greateruse of IT has already yielded reductions in development times
and enhanced productivity among non-manufacturing divisions.

14

ANNUAL REPORT 2004 — TOYOTA INDUSTRIES CORPORATION

Technical Training Center
The Technical Training Center opened on April 1, 2004 in order to strengthen education forworkers who engage in Toyota Industries’ production activities and to raise its international
competitiveness through higher levels of employee skills. A variety of employees taketraining courses at the Center to improve their skill levels.

Toyota Industries has cultivated new markets and achieved
growth in its businesses by pushing forward with technologicalinnovation based on its long-accumulated key technologies.
Today, Toyota Industries operates many divisions, each having its
own core technologies and markets. It will be necessary todevelop new technologies that will function as cores of new
business spheres and next-generation products. These

technologies must also create added value by strategically andorganically combining the technologies and markets of individual
divisions. We believe that such cooperation among divisions will
help raise the value of Toyota Industries as a whole and expand
our businesses.

Basic Philosophy

Respect for the Natural Environment

The following is a statement of Toyota Industries’ basic
philosophy. This basic philosophy constitutes the expressly
stated beliefs of the management and serves as a guide forcorporate behavior.

Toyota Industries believes that economic growth andconservation of the natural environment are compatible. It
strives to offer products and services that are clean, safeand of high quality.

Respect for the Law

Respect for Customers

Toyota Industries is determined to comply with the letterand spirit of the law, in Japan and overseas, and to be fair
and transparent in all its dealings.

Toyota Industries conducts intensive product research andforward-looking development activities to create new value
for its customers.

Respect for Others

Respect for Employees

Toyota Industries is respectful of the people, culture andtraditions of each region and country in which it operates. It
also works to promote economic growth and prosperity inthose regions and countries.

Toyota Industries nurtures the inventiveness and otherabilities of its employees. It seeks to create a climate ofcooperation, so that both employees and the Company
can realize their full potential.

Toyota Industries in Focus

Maximizing Benefits of Synergy

Five Values
We also have Five Values that form an action guide for our
employees to enforce our basic philosophy.

PROFESSIONAL
EXCELLENCE

Global Perspective
Learning from the best in the world, we aim tobecome the best in the world.

CUSTOMERORIENTATION

Customer FirstWe forge partnerships with our customers andstrive to exceed their expectations.

Welcoming New Challenges
Unbound by convention, we embrace thechallenge of creation.

CHALLENGE TO
CHANGEGLOBALIZATION

Encouraging Professional Excellence
We develop our strengths, and think and act
responsibly.

Encouraging Effective Teamwork

TEAMWORK

We recognize the human worth of each individualand collaborate to achieve goals.

ANNUAL REPORT 2004 — TOYOTA INDUSTRIES CORPORATION

15

FOCUS

2

Toyota Industries in Focus

Passion for Globalizing—Materials Handling Equipment Segment—
Toyota Industries’ Materials Handling Equipment Segment, aworld leader in the production and sales of forklift trucks,
comprises TOYOTA Material Handling Company (“TMHC”) and
BT Industries AB (“BT Industries”). TMHC is the global leader incounterbalanced forklift trucks, whereas BT Industries is theworld’s leading supplier of warehouse trucks. Also included inthis segment is Aichi Corporation (“Aichi”), which held a market
share of 66% in Japan for aerial work platforms in fiscal 2004.
TMHC and BT Industries operate as parallel groups,
collaborating in such areas as sales, procurement and R&D, andoperating under a common global scheme as equal strategic
partners.
Competition in the forklift truck market is intensifying, marked
by cross-border consolidation and alliances. Against thisbackdrop, we are resolved to strengthen our position as a global
leader distinguished by our abilities to develop superior

TOYOTA Material Handling Company

Brand Portfolio of the Materials Handling
Equipment Segment
The Materials Handling Equipment Segment continues to provide
products under the TOYOTA and BT brands. The BT and
Raymond brands are well recognized in Europe and North
America, respectively, and Toyota Industries is keen to exploit
BT Industries’ brand assets to the fullest. While maintaining theirown brand names, TMHC and BT Industries cooperate closely tomaximize benefits of synergy on a global scale. Aichi, asubsidiary of Toyota Industries since May 2003 and a leading
manufacturer of special-purpose vehicles in Japan, will also
continue to maintain its own brand.

BT Industries Group

Japanese market

European market

Non-Japanese markets

North American market

Materials handling equipment produced by TMHC is sold inJapan under the brand name of TOYOTA L&F (Logistics
and Forklifts), which refers to materials handling systems
and industrial vehicles and equipment. Outside Japan, thesignature of TOYOTA INDUSTRIAL EQUIPMENT is used.

AICHI CORPORATION

16

technologies and provide optimum solutions to customers’materials handling needs.

ANNUAL REPORT 2004 — TOYOTA INDUSTRIES CORPORATIONBT Industries uses the brand names BT in Europe andother regions, and Raymond in North America.
BT Industries also uses the Cesab, Prime-Mover andLift-Rite brand names in certain markets.

Aichi uses the AICHI brand throughout the world.
Visit http://www.aichi-corp.jp/ for further
information on Aichi Corporation.

Gearing Up for Future Growth
TMHC was created as an in-house company in April 2001 after
Toyota Industries took over the industrial equipment sales andmarketing operations of Toyota Motor Corporation.
This consolidation positions materials handling equipment asa core business within the Toyota Group, and underlines Toyota
Industries’ status as one of the world’s leading comprehensive

manufacturers in the field. The integration of development andmanufacturing expertise with strong sales and marketing
capabilities makes for more flexible management, faster
decision-making and strengthened global competitiveness.
For more information on TMHC’s global sales network andproducts, please visit www.global-toyotaforklifts.com.

Toyota Industries in Focus

TOYOTA Material Handling Company

Operations in JapanTMHC Leads the Japanese Market
by Providing Optimum Solutions for Customers
Calendar year 2003 saw total demand in the domestic forklift
truck market increase by 3.9% over 2002, while TMHC increased
its domestic unit sales by 7.6%. TMHC embarked on sales
promotion activities that focused on optimized solutions formaterials handling problems and the cost-reduction needs of ourcustomers. These activities included the marketing ofenvironmentally sound products with excellent safety, handlingand operability, as represented by the GENEO Series (7-Seriesoutside Japan). TMHC also provided prompt and reliable services,
as well as a full-fledged fleet management program which
undertakes comprehensive management of materials handlingequipment from introduction to maintenance and makes
improvement suggestions, thus contributing to further cost
reduction.
In 2003, the GENEO-E (7FBE outside Japan) three-wheel
electric counterbalanced forklift truck and the GENEO-R (7FBR
outside Japan) reach truck achieved brisk sales with the benefit offavorable customer review.
For calendar year 2003,
TMHC achieved a recordhigh market share of 42.6%
in Japan, an increase of 1.4
percentage points over
2002, exceeding 40% for
the fifth consecutive year.
This marked the 38th
consecutive year that TMHC
was No. 1 in the Japanese
forklift truck industry.
As part of enhancing its
warehouse truck line, TMHC
introduces BT Industries’
products into the Japanese
CBT6
Compact tow tractor (sit-down type)market under the TOYOTA

4SDT15
Job Fighter wheel loader

L&F brand. One example is BT Industries’ very narrow aisle
trucks, marketed as the Rack Stocker MD and the Rack
Stocker MU in November 2003. TMHC aims to develop thewarehouse equipment market, still a small segment in Japan,
through the introduction of more BT Industries products as well
as vigorous sales and marketing activities.
TMHC developed the CBT Series of compact electric tow
tractors for transporting loads and marketed the product inJapan in November 2003. The CBT Series comprises threemodels: The two models with 4-ton towing capacity come as
either stand-up or sit-down types, and the model with 6-ton
towing capacity is available as a sit-down type. TMHC also
introduced the upgraded version of the Job Fighter wheel
loader into the Japanese market in March 2004. The new Job
Fighter is equipped with a new engine that boasts better fuelefficiency and cleaner exhaust emission, as well as asuspension seat and seat belt for greater safety and operability.

ANNUAL REPORT 2004 — TOYOTA INDUSTRIES CORPORATION

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Toyota Industries in Focus

TMHC anticipates the domestic forklift truck market will
improve slightly in 2004 due to a recovering Japanese economy.
In these circumstances, we will respond precisely to customer
needs, promote a fleet management program to major accounts
and offer materials handling solutions optimized for eachcustomer, thereby aiming at further expansion of sales andmarket share.
TMHC supplies TOYOTA-brand forklift trucks, materials
handling systems and other peripheral equipment through anestablished sales network of 41 dealers throughout Japan.

TMHC’s extensive product lineup in the Japanese market
TMHC responds precisely to customer needs with anextensive product lineup — from forklift trucks toautomated storage and retrieval systems — forwarehousing, storing and low-level or high-level order

18

Order picking trucks

Racks

Counterbalanced forklift trucks

Walkie rider trucks

ANNUAL REPORT 2004 — TOYOTA INDUSTRIES CORPORATION

picking. Very narrow aisle trucks and other warehousetrucks supplied by BT Industries make TMHC’s productline even more comprehensive.

Automated storage andretrieval systems

Automatic guided vehicle systems

High-speed sorting equipment

Toyota Is the Leading Lift Truck Supplier in the U.S.
for Second Consecutive Year
Toyota Material Handling, U.S.A., Inc. (“TMHU,” the U.S. divisionof TMHC) entered 2004 poised to strengthen its lead in thematerials handling industry. Offering a full line of top-quality
products, TMHU was the No. 1 selling forklift truck supplier in
the U.S. for the second consecutive year, increasing sales incalendar year 2003 nearly 13%.
As part of a long-term growth strategy, TMHU continues tofocus on securing and maintaining large national accountcustomers. Currently, TMHU has major contracts with highprofile customers such as Bridgestone Americas and New
United Motor Manufacturing, Inc.

TMHU’s headquarters in Irvine, California

Headquartered in Irvine, California, TMHU markets its
products under the TOYOTA INDUSTRIAL EQUIPMENT brandthrough an elite network of dealers located throughout the U.S.
More than 99% of Toyota forklift trucks sold in the U.S. aremanufactured in North America. Toyota Industrial Equipment
Mfg., Inc. (“TIEM”), TMHC’s world-class manufacturing facility, islocated in Columbus, Indiana. This year, TIEM announced amajor expansion in order to accommodate TMHU’s recent
growth and enhance its training and sales facilities. Completionis scheduled for early 2005.

TIEM’s plant in Columbus, Indiana
In April 2004, TIEM achieved cumulative production of 200,000 forklift trucks sincecommencing operations.

Creating Long-Term Value
TMHU introduced a number of important new products in 2004,
all of which deliver productivity, energy efficiency andcost-of-ownership advantages. Several of these new forklift
trucks — a 4,500 lb. capacity electric pallet truck, a line of
7-Series reach trucks and a line of 7-Series electric stand-up
riders — reflect the progress of TMHU’s partnership with BT/
Raymond. TMHU also made improvements to current models in
its line of electric pallet trucks, and expanded its electric productline with new electric walkie straddle stacker forklift trucks
featuring adjustable baselegs.
Also in 2003, thecompany debuted newelectric sit-down tugger
models, the CBT4 and CBT6
Floor-Runners, and the
CBTY4 Stand-Up Tugger.
TMHU continues to leadthe materials handlingindustry in safety technology
with its exclusive System of
Active Stability (SAS) andActive Mast Control (AMC).
These dramaticadvancements help reduce
the risk of accidents andinjuries, and minimize thepotential for product andequipment damage, while
TMHU's new 7-Series electric reach trucks
maintaining higher levels of
are a reliable and cost-effective solution fora wide variety of applications.
productivity.

Toyota Industries in Focus

Operations in the United States

Premier Dealer Network
In order to strengthen its exceptional dealer network and focus
on its high level of customer support, TMHU has employed aphilosophy of consolidation. In 2002, there were 80 dealers and
183 dealership locations. Currently, TMHU has 71 dealers with a
total of 185 dealership locations.
TMHU considers its dealers to be partners in meetingcustomer needs, and provides extensive support to ensure
ultimate customer satisfaction. Such support includes
sophisticated online training resources, factory-trained
technicians, STARLIFT parts, Toyota Certified Used forklift trucks,
and flexible leasing and finance packages through Toyota
Financial Services.
This support, combined with 37 years of experience in the
U.S., continued innovation and superior engineering, means that
TMHU’s complete line of forklift trucks can be tailored for any
application. For more information or to locate the nearest dealer,call 800-226-0009 or visit www.toyotaforklift.com.

ANNUAL REPORT 2004 — TOYOTA INDUSTRIES CORPORATION

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Toyota Industries in Focus

Operations in Europe

TIEE Increases Market Share Supported by Product Launches
and Customer Commitment
Toyota Industrial Equipment Europe (“TIEE”), the European
division of TMHC, offers a comprehensive line of forklift trucks
and warehouse equipment for use in various materials handlingsituations.
For TIEE, 2003 was marked by a number of significant
developments. In particular, TIEE continued to expand its rangeof warehouse equipment and forklift trucks, and further
strengthened its regional distribution network.

TIEE’s European sales & marketing office in Brussels, Belgium

European Customer Commitment

Operational Results Outperform the Market

Offering a full range of top-quality products, TIEE is supported bya distributor network in 22 European countries. It has earned theloyalty of its customers through an ongoing commitment to aftersales services and customer support. Most TIEE forklift trucks
sold in Europe are assembled by Toyota Industrial Equipment, S.A.
at its state-of-the-art facility in France. Under the theme “Made inEurope For Europe,” TIEE responds to local market needs.
TIEE’s key aims for 2004 are to implement after-sales training
courses throughout its distributor and dealer network, shorten
lead-times, reduce costs and increase overall customer
satisfaction levels. The ultimate goal is to provide European
customers with optimum materials handling solutions, and TIEE
is well on its way to achieving this.
For more information on products and services, visit
www.tiee.com.

Difficult market conditions made 2003 a challenging period.
Toward the end of the year, the European market showed aslight sign of recovery and grew 3% overall compared with theprevious 12 months. TIEE reported very good results, achieving
an increase in sales of almost 18% compared with 2002. This
was the third consecutive year that TIEE significantly
outperformed the market.
The European market for counterbalanced forklift trucks
continued its steep decline as a result of the general economic
slowdown. Sales in this sector decreased almost 3% in total.
TIEE, however, increased its share of this market. On the other
hand, sales of warehouse equipment recorded an increase of
8%. TIEE substantially outperformed the market, increasing sales

Toyota Industrial Equipment, S.A., our forklift truck production base in France,
manufactures approximately 13,000 forklift trucks annually for the European market.

During the year, TIEE launched several innovative new
products that complement TIEE’s existing line of industrial
equipment. An electric range of four low-level order pickers
equipped with ergonomic enhancing features will improve both
operator comfort and performance for first- and second-level
order picking. The new electric tow tractors provide an ideal
solution for the continuous movement of loads over longer
distances in factories and warehouses. Also, TIEE introduced
stainless steel versions of its Generation 7 powered pallet andstacker trucks. These INOX models are designed for specialized
applications in strictly controlled hygienic environments, such as
food processing facilities, abattoirs and pharmaceutical factories.

20of warehouseequipment 40%.
Looking ahead,the materials
handling market inEurope may again
see a slight recovery in
2004: In the first quarter, themarket performed better than in
the corresponding period of 2003. It
is expected that the slowly improving
economic conditions in Europe will
have a moderate but positive impact
on the materials handling market.
Throughout 2004, TIEE will
LOP10CF
continue to strengthen its position
Low-Level Order Picker
with Elevating Cabin
within the European market by further
extending its sales, distribution andafter-sales network to ensure quick and effective responses tocustomer demands.

ANNUAL REPORT 2004 — TOYOTA INDUSTRIES CORPORATIONOperations in Brazil and Argentina

In 2003, TMHC completed construction of a new forklift truck
assembly plant within the premises of Toyota Industry (Kunshan)Co., Ltd. (“TIK”), a subsidiary of Toyota Industries engaged in the
production of foundry parts in Kunshan, Jiangsu Province. TIK
began production of forklift trucks in April 2003, and in calendar
year 2003 assembled more than 300 units of the 1-3 ton internal
combustion forklift truck. In the same period, including exports
from its production facilities in Japan, TMHC sold roughly 800
units in China. Closely monitoring the trend in demand, TIK will
gradually increase unit production as well as the number ofmodels.
In May 2003, we established Toyota Material Handling(Shanghai) Co., Ltd. (“TMHS”) jointly with Toyota Tsusho
Corporation as a distributor of forklift trucks in China. The newcompany, which started operations in June 2003, will take theleading role in augmenting a dealer network and forging a stronger
sales and after-sales service structure in the country.
Sales in the forklift truck market in China in calendar year 2003
were approximately 44,000 units. In 2005, TMHC expects sales togrow to 65,000 units. In response to growth in demand, TMHC
will accordingly increase local production at TIK and provide quick
and reliable after-sales services at TMHS with a view to further
strengthening competitiveness in the growing Chinese market.

In January 2004, Toyota Industries established Toyota Industries
Mercosur Ltda. (“TIM”) in Brazil as a new distributor with the aimof enhancing sales of forklift trucks and other materials handlingequipment in Brazil and Argentina, the two largest markets inSouth America. TIM began operations in April 2004. Prior to theestablishment of TIM, materials handling equipment sales in
Brazil and Argentina were carried out by TMC subsidiaries
Toyota do Brasil Ltda. (“TDB”) and Toyota Argentina S.A.
(“TASA”), respectively. TIM took over and consolidated thematerials handling equipment operations of TDB and TASA,
enabling quicker decision-making and flexible business
management in both markets.
By building a strong sales structure centered on TIM, Toyota
Industries aims to raise its competitiveness and establish a solid
position in these markets.

Toyota Industries in Focus

Operations in China

Guests and Brazil-based staff gather for a photo opportunity after
TIM’s opening ceremony in Brazil.

TIK, our forklift truck production base in China

Operations in Australia
In June 2003, Toyota Industries established Toyota Industries
Corporation Australia Pty Limited (“TICA”) as a new distributor
with a view to expanding sales of forklift trucks and othermaterials handling equipment. TICA started operations on July 1,
2003 after acquiring the materials handling equipment sales
operations of Toyota Motor Corporation Australia Ltd., a TMC
subsidiary that handled sales of these products in Australia.

Guests and Argentina-based staff gather for a photo opportunity
after TIM’s opening ceremony in Argentina.

Opening ceremony at TICA

ANNUAL REPORT 2004 — TOYOTA INDUSTRIES CORPORATION

21

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Toyota Industries in Focus

BT Industries GroupIn June 2000, BT Industries, a Swedish warehouse truck manufacturer, became
an important member of the Toyota Industries Group. BT Industries plays a crucialrole together with TMHC in the field of materials handling equipment.
Note: The fiscal year of BT Industries runs from January 1 to December 31.

Statement by the President of BT Industries
BT Industries is the world’s leading manufacturer of electric warehouse trucks. We
have achieved this position through a long-term, focused effort at every level of the
BT Group. Our vision is to have the industry’s highest quality, strong brands and a
product range second to none.

Per Zaunders
President and CEO

Part of our business concept is to anticipate customers’ needs
for efficient materials handling and provide customized solutions.
This means we have to be constantly attentive to whatcustomers want and interpret their needs, so that we can quickly
translate their demands into a range of products and services.
Only by satisfying our customers can we remain a successfulcompany in the long term.
Changing customer demands also create new opportunities
for us to exploit. As a whole, this places great demands on all
employees of BT Industries, regardless of the markets andfunctions in which they work. It is their competence that forms
the backbone of BT’s global organization. The BT Group is
distinguished by a decentralized organization with delegatedresponsibility and confidence in individuals.
In today’s rapidly changing world, you can never rest on yourlaurels. The ability to continuously change for the better is what
creates competitive companies. This means that we mustquestion the ways we think and work and constantly strive toimprove. An important part of this effort is maintaining highquality in everything we do — not only our products and services
but also how we work with each other within the BT Group.

Faster Product Development
In a marketplace with growing competition and ever-fasterdevelopment, high demands are placed on the BT Group’s ability
to continuously develop new, competitive products and services.
We maintain a long-term approach to product development andquality improvement. We are already on the cutting edge in termsof such important aspects as performance, ergonomics andsafety. But there is more we can do. A key to achieving faster,
more cost-efficient product development is shared use ofcomponents and modularly designed systems and platforms. We

22

ANNUAL REPORT 2004 — TOYOTA INDUSTRIES CORPORATION

are also working with clear objectives to renew our productrange.
The cooperation between our units in North America andEurope — and also with our owner, Toyota Industries
Corporation — has intensified in the last year. We have a lot tolearn from each other. Methods and processes that weredeveloped in one part of the BT Group can also be used in otherparts; there is no reason to reinvent the wheel. Even though wehave only taken the first steps in this respect, it is obvious thatthe rate of product development has improved. Investments in
product development are investments in the future. Together with
our size, established position and customer focus, they will help
to strengthen the BT Group competitively.
Naturally, there are several areas aside from productdevelopment where opportunities for synergies exist within the
BT Group and between the BT Group and Toyota Industries,
such as economies of scale in production, product andcomponent supply, and purchasing. We are cooperating moreclosely to identify the best methods and processes to benefit all
the parties concerned, while at the same time respecting andhaving patience for the time it takes to achieve synergy gains. Bybuilding long-term relationships, we create opportunities to utilize
each other’s strengths and competencies in the best way
possible. A good example of successful cooperation is thetrainee exchange we have established. Young employees at BT
Industries are given the opportunity to work at Toyota Industries
in Japan for a period of time, in the same way that Japanesetrainees can work in the BT Group in England, Sweden or the
U.S., for example. In this way, we increase understanding ofeach other’s cultures and at the same time encourage an
exchange of knowledge and experience.

Our core business is electric trucks. In the warehouse truck
segment, we are the world leader. Our product range also
includes counterbalanced forklift trucks, primarily electricpowered. Together with TMHC, which is the world’s largest
manufacturer of counterbalanced forklift trucks, we are theleader in the overall truck market.
Our approach is to utilize two distribution channels — BT
Industries and TMHC — and to continue working with two
separate brands. This is expected to achieve the greatest benefit
for BT Industries and Toyota Industries as a whole, since BT
Industries’ focus is on customers that primarily demand
warehouse trucks, while TMHC’s customers consist largely ofcompanies in industries where the emphasis is on
counterbalanced forklift trucks.
At BT Industries, we utilize two main brands: Raymond in
North America and BT in the rest of the world. We are a global
player with approximately 20% of the world market for
warehouse trucks, and we have a competitive advantage since
we are the only major truck manufacturer that can supply
products that meet both European and U.S. standards.

One Group – Two Strong Brands

BT Industries uses the BT brand in Europe and the rest of the world
with the exception of North America. The Raymond brand is usedmainly in North America.

We are seeing a clear trend in the market in that customers
want to work with a single supplier for all their truck needs. The
BT Group has the product and service range, the geographic
coverage and the financial resources necessary to be an
attractive partner to customers with high demand for efficientmaterials handling. We can provide complete materials handlingsolutions — no matter where in the world the customers happen
to be. The reliability of our turn-key offerings is what sets
BT Industries apart.
We have also made a name for ourselves by the fact that
service has long been an integral part of our core business. It isthrough our day-to-day service work that we strengthen therelationship with customers and together with them build longterm confidence in each other.

BT Industries’ Worldwide Manufacturing Bases

Toyota Industries in Focus

Market Leader

BT Industries presently operates seven manufacturing bases in four countries:
two in Sweden, two in the U.S., two in Canada and one in Italy. Products made atthese bases are sold worldwide through BT’s own sales and service organizations
and some 450 distributors and dealers.

weak development in recent years. Use of warehouse trucks
generally follows a society’s standard of living. A higher
consumption level leads to a greater range of goods, which inturn necessitates more transports and more goods handling. The
manufacturing industry is also using warehouse trucks to a
growing extent as many large companies outsource more andmore of their manufacturing to subcontractors. This is raising thevolume of components being transported. In addition, goods
flows are speeding up. Goods and components have to be in theright place in the right quantity at the right time. The faster this isdone, the more goods handling is needed.
Ergonomics and safety are other important driving forces
behind growth. Trucks should do the heavy work, not people.
The global market for trucks is overwhelmingly concentrated
in Western Europe, North America and Japan, but with rising
standards of living in other regions there are several interesting
growth markets as well. In mature markets in the industrialized
world, the historic growth rate for electric warehouse trucks has
averaged 6 - 7% a year. Markets in Central and Eastern Europe,
Asia and Latin America have greater growth potential as a resultof their fast-growing standards of living and, consequently,
consumption patterns similar to those of Western Europe andNorth America.

High Activity in BT Industries
The year 2003 proved to be a long wait for an economic
recovery that never really took off. However, BT Industries
continued to develop well, with a high level of customer activity,
positive energy in change and improvement projects, and stableprofitability, despite demand being relatively weak. After a long
string of years with good profitability, we are in a position ofstrength from which we can grow once demand turns upwardagain. With our broad customer base, strong product range,
efficient production facilities and focus on constant improvement,
I am convinced that we will not only defend our market sharesand profitability but also succeed in increasing them.

Long-Term Growth Market
The industrial truck market, especially the warehouse truck
segment, is experiencing long-term growth despite relatively

Per Zaunders
President and CEO

ANNUAL REPORT 2004 — TOYOTA INDUSTRIES CORPORATION

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3

Toyota Industries in Focus

Passion for Cutting-Edge Technologies—Car Air-Conditioning Compressor Business—
Our Car Air-Conditioning Compressor Business is the corebusiness of the Automobile Segment as well as one of the
crucial strategic businesses of Toyota Industries. Capitalizing on
our outstanding technologies, we develop and manufacturehigh-quality, efficient products tailored to customer needs. Alongthe way, we have contributed to improvements in the comfort
and technological advances of vehicles manufactured by theworld’s leading automakers.

Outstanding Technology Development
Capabilities
Toyota Industries’ car air-conditioning compressors have won
wide acclaim for outstanding quality and reliability not only fromToyota Motor Corporation (“TMC”) but also from leading
automakers worldwide. Drawing on strong technologicalcapabilities, Toyota Industries’ Car Air-Conditioning Compressor
Business has firmly established its technological strengths.
Our Car Air-Conditioning Compressor Business has createdepoch-making new products that consistently anticipate evolving
market needs, thereby making meaningful contributions totechnological innovation among automakers. As primeexamples, in the 1980s we developed a compact, lightweight
10-cylinder compressor with swash plate and fixed displacementthat provides outstanding reliability at high operating speeds. In
the 1990s, we responded to mounting concerns about theenvironment with the development of an internally controlled
compressor with one-way swash plate and continuous variabledisplacement that increases fuel efficiency by reducing the loadon the engine. In the late 1990s, we unveiled an externallycontrolled, clutchless-type compressor with one-way swash
plate and continuous variable displacement. This compressor
enhances smooth continuous operation and improves energy
consumption by sensing changes in the external environment,such as engine acceleration. To tackle such environmental
problems as destruction of the ozone layer and global warming,in 2002 Toyota Industries, in collaboration with DENSO
Corporation (“DENSO”), developed a compressor for fuel-cellhybrid vehicles that uses CO2 as a refrigerant instead ofhydrofluorocarbon (HFC). Also in collaboration with DENSO, in2003 we developed an electrically driven car air-conditioning

Automobile Trends and Toyota Industries’ Product Development
1980s

1990s

2000s

Provide higher engine performance and comfortable interior
Slow down global warming

Reduce ozone layer destruction

Automobile
trends

Improve gas mileage
Hybrid cars, fuel-cell hybrid vehicles
Reliability at high speed, quiet operation
Compact, lightweight, power efficientCompressor
needs

Ultra-lightweight, ultra-power efficient
Replacing withnatural refrigerant

Eliminating CFCs
Lower jolt turning air conditioners ON/OFF
Fixed displacement type
1981

ToyotaIndustries’
product
development

Compact, lightweight
10-cylinder swash
plate compressor

Superb drivability

Use of HFC-134a refrigerant
Power efficient, 1995
superb drivability
7-cylinder one-way
swash plate compressor

World’s first commercial products

Variable
displacement
type

Externally controlled, variable displacement,
clutchless type1997

Ultra-lightweight,
ultra-power efficient, 2002
CO2 compressor
superb drivability
6-cylinder one-way swash plate compressor CFC-free
CO2 compressor for fuel-cell hybrid vehicles

2003

Electrically driven compressor

Compact, lightweight, highly efficientElectrically driven compressor for hybrid vehicles

24

ANNUAL REPORT 2004 — TOYOTA INDUSTRIES CORPORATION

Toyota Industries in Focus

Worldwide Manufacturing Bases and Local Offices
TDDK
MunichDNTS
MACI

Detroit
TACG

DWHI

ACTIS

YSD
SUBROSDNIA
DNBRConsolidated subsidiaries
Licensed manufacturers
Local offices
TACG is slated to commence production in December 2005.

Reflecting our outstanding technological capabilities, Toyota
Industries’ total global production and sales of car airconditioning compressors in fiscal 2004 amounted to 17.9
million units, giving us the top share of the world market.
Toyota Industries has globalized its production bases andbuilt a tri-polar production network with bases in all the threeprincipal automobile markets — Europe, the United States andJapan. We augment this structure by licensing production in Asia
(excluding Japan) and South America. Undertaking production

close to our markets allows us to offer products accurately
matched to local needs, while giving us such benefits as lower
shipment costs and exchange rate risks. We have also beensteadily increasing local procurement rates for our U.S. andEuropean production bases. We are committed to raising these
rates even further in the future.
Toyota Industries plans to produce 20 million car airconditioning compressors in fiscal 2006 in response to expected
increases in demand. In accordance with this plan, we arereinforcing production capacities at our bases in Japan, North
America and Europe.
In Japan — our largest production base — we completed
construction of, and began operations at, the Higashiura Plant in
2002, and finished renovation of the Obu Plant in April 2004. As
a result, we have established an efficient three-plant integrated
production structure covering materials to processing andassembly. These three plants are the Obu Plant, which produces
aluminum die casts for compressors, the Higashiura Plant, which
processes compressor pistons, and the Kariya Plant, which

The Obu Plant produces aluminum die casts for compressors.

The Higashiura Plant processes compressor pistonscompressor for hybrid cars and a two-way compressor with abuilt-in motor for hybrid cars. This two-way compressor is driven
alternately by the engine during driving and by a built-in motor
during engine stop, achieving a balance between fuel efficiency
and comfort when the car air-conditioner is turned on. These
revolutionary compressors were developed and commercialized
ahead of competitors, and present clear evidence of Toyota
Industries’ technological and competitive strengths.

Strong Global Presence

ANNUAL REPORT 2004 — TOYOTA INDUSTRIES CORPORATION

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FOCUS

3

Toyota Industries in Focus
MACI, our U.S. production base in Parma, Michigan

TDDK, our European production base in Straßgräbchen, Germany

develops and assembles compressors. Having built thisproduction structure, we are now firmly positioned to respond to
growing future demand for car air-conditioning compressors.
In fiscal 2004, Michigan Automotive Compressor, Inc.
(“MACI”)*, our U.S. production base, produced and sold over 6.5
million swash plate compressors with fixed displacement.
Our European production base, TD Deutsche
Klimakompressor GmbH (“TDDK”)*, produced approximately 1.5
million swash plate compressors with variable displacement.

Japan. To respond to this anticipated rise in demand, we
decided to establish TACG as a plant specializing in variabledisplacement compressors in the southern United States, where
automakers have been actively setting up operations. TACG isslated to produce 2 million compressors annually by 2010.
Toyota Industries and DENSO will press forward with thelocalization of production — manufacturing variable displacement
compressors at the new company and fixed displacement
compressors at MACI — and will work to build a supply structurethat responds quickly to customer needs, with the aim of further
expanding business in the North American market.

* MACI and TDDK are joint ventures with DENSO. As of March 31, 2004,
Toyota Industries held 60% and 65%, respectively, of the shares of thesecompanies.

In fiscal 2004, Toyota Industries was the market leader inJapan, with sales of approximately 5.3 million car air-conditioning
compressors to TMC and other major car manufacturers. In
North America, Toyota Industries supplied U.S. automakers andJapanese auto manufacturers producing in North America with
6.9 million units (including exports from Japan and local
production), of mainly fixed displacement compressors. In
Europe, Toyota Industries supplied over 5.6 million units(including exports from Japan and local production), such as
variable displacement compressors for luxury cars and compact
variable displacement compressors for small cars.

Toward the Future
Our medium-term strategy emphasizes aggressively expanding
sales, particularly in North America and Europe, where weforesee huge potential. In North America, we will redouble efforts
to secure new orders. As part of these efforts, in July 2004
Toyota Industries and DENSO jointly established TD AutomotiveCompressor Georgia, LLC (“TACG”)* near Atlanta, Georgia. Our
second compressor production base in North America, TACG
was established to meet the local procurement needs ofautomakers in the growing North American market.
Up to the present, fixed displacement compressors havebeen the compressor of choice in North America. However, amid
rising environmental awareness, Toyota Industries projects thatvariable displacement compressors, with their excellent energy
efficiency, will experience growth in demand as in Europe and26

ANNUAL REPORT 2004 — TOYOTA INDUSTRIES CORPORATION* TACG is capitalized at US$100 million. Toyota Industries North
America, Inc. (a holding company controlling Toyota Industries’
North American operations) invested 65% of this capital and DENSOInternational America (a company controlling DENSO’s North
American operations) invested 35%. Production is scheduled to commencein December 2005.

In Europe, the proportion of cars fitted with car airconditioners has risen to around 70%, and we anticipate this will
climb further. Toyota Industries plans to aggressively cultivate
new customers by developing and supplying products closely
customized to the needs of the European market, such as highly
efficient compact variable displacement compressors.
At the end of April 2004, cumulative production of car airconditioning compressors by Toyota Industries in Japan, Europe
and North America reached 200 million units. Although it tookapproximately 36 years for cumulative production to reach 100
million units in July 1996, the figure then soared to 200 million
units in a mere eight years. Mere volume, however, is not ourgoal. We will further augment our technology development
capabilities. We will develop and market new products
responsive to customer needs ahead of competitors. These
measures, we believe, will in turn enable us to solidify ourposition in the car air-conditioning compressor market.
All our car air-conditioning compressors are supplied to DENSO,
which in turn sells them to leading automakers worldwide.
DENSO not only sells our compressors as separate units but
also incorporates them in its car air-conditioning systems.

FOCUS

4
Toyota Industries in Focus

Passion for Nurturing New Businesses
Toyota Industries regards the Electronics and Logistics Solutions businesses as two major pillars
of future growth, and is aggressively channeling management resources to them.

Electronics BusinessCorporate Technical Center
The Corporate Technical Center engages in a wide spectrum of
research and development (R&D), ranging from powerelectronics parts for automobiles to radio tuner modules,
wireless LAN modules and organic light-emitting diodes (OLEDs).
The Center functions as Toyota Industries’ R&D facility and its
production base for electronics parts, so accumulating a diverse
assortment of know-how in electronics parts manufacturing.
A product representative of those developed andmanufactured by the Center is a DC-DC converter. Incorporating
our know-how in the development of control devices for electric
forklift trucks, the converter is fitted in Toyota Motor
Corporation’s Prius hybrid car. A key device in hybrid cars, theconverter down-converts the high-voltage current of the mainbattery to a lower DC current to supply the electronic control unit
(ECU) — the heart of a hybrid car — and other in-car devices.
We foresee a steady rise in demand for hybrid cars in tandemwith growing demand for environment-friendly vehicles. The
Center will make unceasing efforts to establish a solid position asa manufacturer of power sources for hybrid cars.
Another product that epitomizes the Center’s involvement in
R&D of cutting-edge technologies is a world-class white OLEDthat achieves a high balance between superb color reproduction,

DC-DC converter for the Prius

Radio tuner module

Wireless LAN module

White OLED

OLED display

brightness and life span. The Center has also developed
prototypes of an OLED backlight for LCDs and an OLED display(white OLED + color filter), both of which are applications of
OLED technology. These prototypes have been displayed atvarious exhibitions since October 2003 and have earned wide
acclaim.
To further strengthen the Electronics Business, Toyota
Industries plans to establish a base in Anjo, Aichi Prefecture,
Japan, for consolidating R&D and production of electronics
products. A major portion of electronics-related R&D andproduction handled by the Center is currently undertaken at the
Kyowa Plant (Obu, Aichi Prefecture), but we intend to graduallytransfer these functions to the new location. As a first step, weplan to construct a new Electronics Wing for R&D andproduction of electronics products.
Seeking to further expand its business, the Corporate
Technical Center will advance the level of its technology
development and accelerate its R&D activities in new fields withgrowth potential.

ANNUAL REPORT 2004 — TOYOTA INDUSTRIES CORPORATION

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4

Toyota Industries in Focus

Low-Temperature Polysilicon TFT-LCD Panels
ST Liquid Crystal Display Corp. (“ST-LCD”) was established in
October 1997 as a 50-50 joint venture with Sony Corporation to
manufacture low-temperature polysilicon TFT-LCD panels.
Blending Sony’s outstanding LCD development capabilities andToyota Industries’ expertise in quality control and manufacturing
technology, ST-LCD has built an optimal production system tomanufacture high-quality, high-performance LCD panels.
Because our investment is not a majority stake, we account for
ST-LCD as an affiliate by the equity method rather than as a
subsidiary. Nevertheless, we regard ST-LCD as one of the core
operations of our Electronics Business.

Low-temperature polysilicon TFT-LCDs

28

ST-LCD will make an additional investment of ¥10.0 billion toaugment its production facilities. This will enable ST-LCD to
increase its monthly production capacity to 40,000 panels (600 x
720mm) from April 2005.

Semiconductor Package Substrate BusinessToyota industries is engaged in the business of semiconductor
package substrates, which are essential components of PCs,
digital still and video cameras, mobile phones and smart cards.
In 1998, we established TIBC Corporation (“TIBC”), a joint
venture with Ibiden Co., Ltd. TIBC manufactures space-efficientand lightweight ball grid array (BGA) plastic package substrates
as well as flexible printed circuit (FPC) substrates.

Ball Grid Array (BGA)
Plastic Package Substrates

Flexible Printed Circuit (FPC)
Substrates

Since starting mass production in April 1999, ST-LCD has
produced small and medium-sized LCD panels for digital still andvideo cameras, personal digital assistants (PDAs) and mobile
phones. In the fall of 2001, ST-LCD invested ¥75 billion toestablish a second production line and now has a monthly
production capacity of 32,000 panels (600 x 720 mm).
ST-LCD’s products offer such basic features as highresolution and low energy consumption. Also, Sony is actively
promoting its system-on-glass technology that integrates thedisplay device and its driver circuits into a single glass baseplate. This product realizes highly reliable, lightweight andminiaturized display modules.
We foresee healthy growth in demand for low-temperaturepolysilicon TFT-LCD panels, primarily for digital still cameras andcamera-equipped mobile phones. To respond to this demand,

TIBC’s package substrates are sold through Ibiden to major
integrated device manufacturers and semiconductor-packaging
companies mainly in South Korea, Taiwan and Singapore for use
in PCs, mobile phones and other products. TIBC’s FPC
substrates are marketed via Ibiden to SIM-card and smart-card
suppliers mainly in Europe, China and Japan for integration into
credit cards and telephone cards.
In fiscal 2004, TIBC achieved a sharp improvement inbusiness results compared with the previous fiscal year, thanks
to a solid contribution from its high-performance BGA plastic
package substrates, for which it commenced production in
October 2002, in favorable market conditions for PCs andmobile phones. In fiscal 2005, TIBC expects to sustain a highlevel of production.

ST Liquid Crystal Display Corp.

TIBC Corporation

ANNUAL REPORT 2004 — TOYOTA INDUSTRIES CORPORATIONDetermined to build another pillar of future growth, Toyota
Industries began operations of its Logistics Solutions Business inJapan, through which we provide companies with logistics
solutions covering logistics planning to the operation of
distribution centers. Our aim is to help customers reduce their
total logistics costs and respond to their needs for logistics
improvements by utilizing our accumulated experience acquired
through the production and sales of such materials handlingequipment as forklift trucks and automated storage and retrieval
systems, as well as our production know-how as exemplified by
the Toyota Production System.
As part of our entry into this field, in March 2002 weestablished Advanced Logistics Solutions Co., Ltd. (“ALSO”), a
wholly owned subsidiary that plans overall logistics operations
and operates distribution centers. ALSO thoroughly evaluates
logistics operations and provides customer-oriented proposals
for optimizing logistics and reducing costs. At the same time,
ALSO provides efficient operation of distribution centers andfunctions as the nucleus of Toyota Industries’ Logistics Solutions
Business.
To achieve solid growth, we intend to develop our Logistics
Solutions Business incrementally, giving due consideration tovarious industry sectors and possible formats for undertaking
logistics operations. In Phase I, we will secure orders for
managing and operating distribution centers on a case-by-casebasis. During Phase II, we will handle all aspects of outsourced
logistics for companies, including logistics management andoperations. In Phase III, we will deploy our information networkand planning capabilities to carry out joint deliveries for multiple

companies as well as for multiple divisions within a single
company. We will operate our Logistics Solutions Business in an
optimal format for each client — undertaking individual orders for
operating distribution centers, carrying out outsourced logistics
for clients through the establishment of joint ventures with them,or securing orders for handling logistics for clients through theestablishment of joint ventures with other logistics companies.
At present, our Logistics Solutions Business is achieving
steady growth in new orders, mainly in the Chubu and Tokyo
Metropolitan regions. Adopting medium- and long-term
perspectives, Toyota Industries is aggressively allocating
management resources to the Logistics Solutions Business andwill spare no efforts to develop this business into one of its future
core businesses.

Toyota Industries in Focus

Logistics Solutions Business

Development of Logistics Solutions Business

Tie-ups with trading companies
Tie-ups with other logistics companies
Tie-ups with customers

Logistics Solutions
Phase III
Joint
logistics

Phase II
All phasesof logistics

Phase I
Logistics
centers

Joint deliveries for multiple divisions within companies
Joint deliveries among multiple companies

Distributor related
Manufacturer related

Distributor related

Procurement logistics,
product logistics,
international logistics

Food wholesalers, convenience stores,
home improvement centers,
sundry goods, drugstoresMarubeni Teion Shokuhin Ryutsu
Fuji Logistics

TF Logistics

Trancom

ALTRAN

Takasue ALT Logistics

Kokuyo Logitem

KTL

These companies are joint ventures formed as a result of tie-ups.

ANNUAL REPORT 2004 — TOYOTA INDUSTRIES CORPORATION

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Toyota Industries in Focus

Research and Development
Based on its founding spirit of “Be ahead of the times throughendless creativity, inquisitiveness and pursuit of improvement,”
Toyota Industries undertakes strategic R&D activities aimed atensuring sustainable future growth rather than just improving shortterm business results.
Toyota Industries’ R&D activities can be broadly divided into two
categories: Product development and improvement carried out
independently by each division, and R&D, conducted mainly by the
Corporate Technical Center, that is separate from the work ofbusiness divisions and is carried out from the perspective of acompany-wide management strategy.
Toyota Industries has a diverse range of businesses, and eachof the Company’s divisions has its own distinct technologicalstrengths, core technologies and market characteristics. To
efficiently develop new products attuned to customer needs, it isessential that product improvement, technology development andapplied research activities be undertaken mainly by the technicaldepartments of each division. Accordingly, each division has its own
staff of engineers, experiment facilities and research laboratories,and engages in vigorous technology development activities inaccordance with product development plans.
The Corporate Technical Center plays a leading role in basic
R&D in materials fields — basic to all divisions — as well as
conducts R&D in such new fields as leading-edge electronics,
including power electronics devices, radio tuners, organic lightemitting diodes (OLEDs) and wireless LAN modules. The Centerengages in R&D together with each division or independently. It alsocollaborates with Toyota Central Research & Development
Laboratories, Inc., an R&D facility of the Toyota Group, and otheroutside R&D institutions, including universities.

The following are some of the new products and technologies developed by Toyota Industries in fiscal 2004.

Automobile Segment
Two-Way Compressor
We developed jointly with DENSO Corporation (“DENSO”) and started production of a
two-way compressor with a built-in motor for use in air conditioners for hybrid cars. This
compressor is driven alternately by the engine during driving and by a built-in motor
during engine stop. This achieves a balance between fuel efficiency and comfort when
the car air-conditioner is turned on. The compressor is installed in Toyota Motor
Corporation’s (“TMC”) Estima Hybrid, which was re-introduced to the market in July
2003 after a minor change, and Alphard Hybrid, which was launched in the same month.

Electrically Driven Air-Conditioning Compressors for Hybrid Cars
We also developed jointly with DENSO and started production of an electrically driven
car air-conditioning compressor for hybrid cars. This compressor is driven by a built-in
motor, unlike conventional compressors that are belt-driven by the engine. As a result,the air conditioner can remain on even when the engine is turned off, ensuring bothinterior comfort and fuel economy for idling stop vehicles such as hybrid cars.
The optimized shape of the scroll and other innovations allow the electrically driven
compressor to improve the compression efficiency of the refrigerant and minimize energy
loss for optimum performance. What’s more, this compressor is 40% smaller and lighter
than previous electrically driven compressors. It is installed in the new Prius, a hybrid car
introduced by TMC in September 2003.

Rotary Valve-Type Variable Displacement Compressor (5SER09)
We developed jointly with DENSO and began production of a rotary valve-type variabledisplacement compressor (swash plate type). The use of a rotary valve intake, instead of
the traditional lead intake valve, gives the compressor excellent cooling capabilities andquiet running. The compressor is installed in TMC’s Sienta, which was introduced in
September 2003.

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ANNUAL REPORT 2004 — TOYOTA INDUSTRIES CORPORATION

conducts technological exchanges with BT Industries and isconsidering the feasibility of jointly developing key parts for suchmaterials handling equipment as forklift trucks. Aichi Corporation
also has its own independent R&D facilities for the development ofspecial-purpose vehicles.
At our subsidiary TIBC Corporation, our joint-venture partner
Ibiden Co., Ltd. contributes to product development, while Toyota
Industries provides expertise in manufacturing technology fields.
ST Liquid Crystal Display Corp., an equity-method affiliate
established as a 50-50 joint venture with Sony Corporation (“Sony”),
receives technologies and personnel in product development from
Sony, and know-how and personnel in production management
and technology fields from Toyota Industries.
In fiscal 2004, R&D expenses amounted to ¥29.6 billion, adecrease of ¥0.1 billion (0.5%) from the previous fiscal year, andaccounted for 2.5% of consolidated net sales, a decrease of 0.3
percentage point. By segment, R&D expenses were ¥15.8 billion in
the Automobile Segment, ¥10.6 billion in the Materials Handling
Equipment Segment, ¥1.2 billion in the Textile Machinery Segmentand ¥2.0 billion in the Others Segment.

Toyota Industries in Focus

The Business Planning Department, part of the Corporate
Center, is responsible for the promotion of new businessdevelopment and technology management. To establish a strong
and efficient corporate R&D structure, the Business Planning
Department engages in lateral transfers of technologies among thedifferent divisions and examines new technology development
themes. Concurrently, it deploys the accumulated technologicalknow-how and external networks (both human and information) of
each division to systematically and continually explore the potential
for new products and services that may become future pillars of ourbusiness.
“E-Lab,” our IT research laboratory that serves as a base station
for the information system department, undertakes various R&D
activities. It carries out research on digital simulation technologies
with the aim of shortening product development times as well as
reducing lead-times from development to manufacture andshipment. It is also developing an optimal network system for joint
development of parts with suppliers, and for parts procurement.
BT Industries, our largest subsidiary, operates its own
independent R&D facilities, which focus primarily on warehouseequipment research. TMHC, a Toyota Industries in-house company,

Materials Handling Equipment Segment
CBT Series of Compact Tow Tractors
In November 2003, we started domestic sales of the CBT Series of compact electric tow
tractors for transporting loads inside factories and warehouses. Consisting of three models, theCBT tow tractors are electrically powered in consideration of work environments inside
warehouses and similar facilities. The two CBT models with 4-ton towing capacity are available
in sit-down and stand-up types, while the model with a 6-ton towing capacity is a sit-down
type. Use of a high-output motor provides the appropriate power and a large-capacity battery
enables extended operation times. These tow tractors also feature designs that emphasize
comfort and ease of operability for the driver.

Electronics BusinessWhite OLED
Toyota Industries has developed a world-class white OLED that achieves an excellent balance
between outstanding color reproduction, brightness and life span. Using this technology, we
have completed prototypes of a white OLED backlight for LCD panels and an OLED display(white OLED + color filter). Our OLED creates white using a three-color light emission
technique (red, green and blue), enabling more faithful color reproduction compared withconventional white OLEDs (which emit orange and bluish green lights) or white light-emitting
diodes. We are currently working hard to improve the technology prior to commercialization,and first aim to supply assembly makers for applications in portable devices such as mobile
phones and digital cameras.

ANNUAL REPORT 2004 — TOYOTA INDUSTRIES CORPORATION

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Toyota Industries in Focus

Corporate GovernanceWith the aim of creating fair and sound management, Toyota
Industries strives to enhance the transparency of its
management through prompt disclosure of accurate information
to its shareholders and other stakeholders.
Following amendments to Japan’s Commercial Code,publicly listed Japanese companies are now allowed to selectbetween a “Company with Committees” system — U.S.-style,committee-based corporate governance — and the traditional“Corporate Auditor/Board of Corporate Auditors” system. Toyota
Industries has opted to retain the traditional system, as theCompany believes this system adequately ensures that theBoard of Directors will properly execute their duties.

Decision-Making Structure
Toyota Industries’ Board of Directors, Management Committee
and Business Operation Committee ensure effective and efficientdecision-making with regard to matters deemed to have a

The main decision-making bodies of Toyota Industries are
the Board of Directors, Management Committee andBusiness Operation Committee. The Management
Committee and the Business Operation Committee are
Toyota Industries’ independent creations to raise theefficiency and speed of management and decision-making.
Of all the issues deliberated on by the Management

significant impact on shareholders’ interests as well as important
issues affecting business operations. The Board of Directors
generally convenes once a month, and deliberates on andresolves important management matters, such as those requiredby the law. As of June 22, 2004, the Board of Directors
consisted of 30 directors, including one external director.
Toyota Industries’ corporate auditors strictly monitor the
execution of duties by board members by means of attending
meetings of the Board of Directors and expressing their opinions
when necessary.
Toyota Industries has adopted a divisional system. In
principle, authority for the execution of business operations intheir respective divisions is delegated to division managers.
Strategic decision-making and the establishment of divisionaland corporate targets are discussed and resolved by theManagement Committee and other deliberative bodies. Whennecessary, cases are put before the Board of Directors.

Committee and Business Operation Committee, issues
stipulated in Japan’s Commercial Code and Board Rules
are presented for discussion by the Board of Directors.
Barring matters resolved at the Shareholders’ Meeting, allimportant management matters stipulated in theCommercial Code and the Board Rules are discussed anddecisions are made by the Board of Directors.

Shareholders’ Meeting

Appoints

Reports toReports to
Appoints

Corporate Auditors
Board of Corporate Auditors

Board of Directors
ChairmanPresident

Management Committee
The Management Committee deliberates on important mattersconcerning all aspects of management, such as company-wide
strategy and allocation of management resources. The Committee iscomposed of directors above the Executive Vice President level.
When he deems it necessary, the President calls in certain otherdirectors and managers.

32

ANNUAL REPORT 2004 — TOYOTA INDUSTRIES CORPORATION

Monitors

Business Operation Committee
The Business Operation Committee deliberates on importantmatters regarding each business segment. The Committee is
attended by the President, directors in charge of corporate planningand directors assigned to oversee divisional operations (division
managers, etc.).

Establishing an Internal Control System

As of June 22, 2004, the Board of Corporate Auditors wascomposed of five corporate auditors, including two standing
corporate auditors and three outside corporate auditors.
Appointed at the Shareholders’ Meeting, the corporate auditors
monitor execution of duties by board members. Their auditing
duties concern mainly business operations and accounting
activities. In undertaking operations audits, they investigate
whether ordinances and articles of incorporation are strictly
observed by the directors in the execution of their duties. The
corporate auditors must attend meetings of the Board of
Directors and give their opinions if necessary to prevent illegal or
improper resolutions from being adopted at these meetings.
When any violation of an ordinance or articles of incorporation ismade by a director or the prospect of such a violation is
identified, the corporate auditors must report this to the Board of
Directors. Also, we have set up the Corporate Auditor’s Officewith specialist staff so that the corporate auditors are able toadequately execute their auditing duties.

In addition to the auditing activities performed by corporate
auditors, we strive to upgrade our internal control systemthrough measures that include audits of each department by the
Audit Office and periodic autonomous audits by individual
departments.

Strengthening and Upgrading Compliance
Code of Conduct Council
Toyota Industries considers compliance with the law to be thecornerstone of good corporate governance. As a good
corporate citizen, Toyota Industries has taken various measures
to ensure all employees execute their duties fairly and honestly inthe light of the law and corporate ethics. To undertake its
corporate activities appropriately and legally, Toyota Industries
established the Code of Conduct Council in the early 1990s.
In 1998, the Council published a guide for distribution to all
employees. This guide contains specific guidelines on good
conduct and compliance with the law. Chaired by an Executive
Vice President and attended by standing corporate auditors andthose above the rank of Managing Director, the Code of Conduct
Council convenes on a regular basis and when necessary. The
Council monitors overall corporate activities from the legal andcorporate ethics viewpoints, checks that employee conduct
conforms to the guidelines and encourages educational
activities.
In parallel with these activities, the Legal Department, Global
Human Resources Department and Audit Office provide
employees with highly focused educational programs as well as
conduct internal audits.
For the purpose of early detection and quick handling ofimportant compliance-related information, we established a
corporate ethics hotline — in addition to other such existing lines
and counseling desks — staffed by outside lawyers in
September 2003.
In addition, our “Basic Philosophy” and “Five Values,” which
serve as the basis of employee actions, clearly express action
guidelines and ensure that the Company is operated with ashared high ethical standard, from top management down.

Information Disclosure
Toyota Industries strives to adhere to the letter and spirit of thelaw in Japan and overseas, while conducting its corporate
activities fairly and transparently. Our disclosure activities are notlimited to providing only legally required information. Rather, we
proactively disclose information to fulfill our responsibility forproviding clear explanations to our shareholders and otherstakeholders, thus raising management transparency. In line withthese efforts, we disclose pertinent information to the public in atimely manner through such media as the Investor Relations
section of our Web site.

Toyota Industries in Focus

Corporate Auditors (Board of Corporate Auditors)

Toyota Industries intends to continue to explore ways ofachieving the best possible corporate governance, not only
through a legal framework but also through independent efforts.

http://www.toyota-industries.com/ir/

ANNUAL REPORT 2004 — TOYOTA INDUSTRIES CORPORATION

33

FOCUS

7

Toyota Industries in Focus

Harmonious Coexistence with theEnvironment and Local Communities
Environmental Protection Activities
Basic Principle
Acutely aware that global environmental problems could
jeopardize the survival of humankind, Toyota Industries has
designated environmental soundness as a key medium- to longterm management priority. Our basic corporate principle statesthat “Toyota Industries believes that economic growth andconservation of the natural environment are compatible. It strives
to offer products and services that are clean, safe and of highquality.” In keeping with the spirit of this principle, Toyota

Industries has been proactively engaged in the protection of theenvironment.

Corporate Commitment to the Environment
In January 2003, we introduced the Toyota Industries Group
Corporate Commitment to the Environment. This declaration
highlights Toyota Industries’ firm resolve to fulfill its corporate
responsibilities to society and to reinforce its environmental
protection activities.

Toyota Industries Group Corporate Commitment to the Environment
Toyota Industries carries out its everyday businessactivities to contribute to global economic development
and enhance the quality of life through its products andservices. In all our business activities, we always consider
environmental issues throughout the entire lifecycles of our

products. In aiming for a balance between environmental
protection and economic development, we havedesignated “sustainable management” as an issue of thehighest priority, as all Toyota Industries employees
combine their efforts to tackle environmental issues.

Global VisionCorporate Commitment

Collaborate with local communities
and global society in addressing
environmental protection.

2. The Toyota Industries Group will develop and provide
products and services with top-level environmental
performance.

Harmony

3. The Toyota Industries Group will conduct production
activities, in a manner that takes into account preventionof global warming, effective applications of energy andresources, and reduction of substances ofenvironmental concern.

Sustainable
Management
Improvement

Improve eco-efficiency for
all our business activities,
products and services.

34

1. The Toyota Industries Group will strive for further
reduction of environmental impact, as well ascompliance with environmental laws and regulations.

Responsibility

Fulfill our social
responsibility ofenvironmental protection.

ANNUAL REPORT 2004 — TOYOTA INDUSTRIES CORPORATION

4. The Toyota Industries Group will communicate closelywith a wide range of stakeholders, including its
customers and shareholders, and continually improve its
system of “sustainable management.”
5. The Toyota Industries Group will actively address
various environmental issues in local communities andglobal society as a good corporate citizen.

Environmental Committee
Chaired by the President

Product Technology
Subcommittee

EnergySubcommittee

Pollution Prevention
Subcommittee

Waste Minimization
Subcommittee• Development ofenvironment-friendly
products• Facilitation of productrecycling• Promotion of life cycle
assessment (LCA)
system• Proposal of plans forincreasing energy
efficiency and related
activities• Promotion of pollutionprevention activities• Management of
hazardous substances• Management andphase-out of materials
that impose a burden
on the environment• Preparation andpromotion of activities
that reduce waste
volumes• Promotion of reuse ofmaterials

Toyota Industries in Focus

In-House Organization for Environmental Activities

Plant Environmental Committee(at each plant)

Third Environmental Action Plan
Toyota Industries has been systematically involved in a diverse
range of environmental protection activities since formulating its
First Environmental Action Plan in 1993. In 1996, we revised thisaction plan and launched the Second Environmental Action Plan.
Having virtually attained our targets, we re-evaluated all aspectsof the second plan and in August 2000 introduced the Third
Five-Year Environmental Action Plan (April 2001 - March 2006).
We continue to work toward attaining the objectives of this plan.
With respect to specific numerical targets, by the end of
March 2006 we aim to reduce our volume of CO2 emissions by
5% compared with the fiscal 1991 level (and achieve a 10%
reduction by the end of March 2011, using the same fiscal 1991
level as the comparison), and by the end of March 2006 we
intend to reduce total emissions of PRTR (Pollutant Release andTransfer Register) substances as designated by the Ministry of
the Environment by 50% compared with fiscal 1999 levels.

Commitment to the Environment, we are currently examining
additional ways to strengthen our environmental approach.

Complying with International Environmental
Standards
Toyota Industries is making vigorous efforts to obtain ISO14001
certification in line with plans to establish a company-wide
environmental management system and fulfill its corporate
responsibilities for global environmental protection. All production
plants of the Company had obtained ISO14001 as of March
2003. Most of our major domestic subsidiaries and affiliates havealso received this certification while others are making
preparations to do so.
Overseas, our principal manufacturing bases, including
MACI, TIEM, TIESA, TIK, KTTM and TDDK, have been certified.
Several production bases of the BT Industries Group have also
received this certification. We are working to obtain certification
at all companies in the Toyota Industries Group.

In-House Organization for Environmental
Activities

Environmental Accounting

Determined to address environmental issues in an organized andsystematic manner, Toyota Industries has established theEnvironmental Committee, chaired by the President. The
committee has four specialized subcommittees. In addition, eachplant has organized its own Plant Environmental Committee andspecialized subcommittees for addressing individual
manufacturing issues.
We have placed top priority on establishing anencompassing organizational framework to uniformly andefficiently manage and promote the environmental activities
carried out individually by Toyota Industries Corporation and its
subsidiaries. To augment the Toyota Industries Group Corporate

Today, there are a growing number of environmental issues.
Accordingly, accurate analysis of the costs and effectiveness ofenvironmental investment has become increasingly important for
management decision-making and information disclosure toinvestors and shareholders. There are currently no uniform
international standards on the scope and definition ofenvironmental costs. However, using guidelines (2002 edition)prescribed by the Japanese Ministry of the Environment, theCompany has formulated its own internal standards for calculating
the cost effectiveness of environmental protection investments
and the cost efficiency of our environmental activities. Please see
our Social & Environmental Report for details.

ANNUAL REPORT 2004 — TOYOTA INDUSTRIES CORPORATION

35

FOCUS

7

Toyota Industries in Focus

Social Contribution Activities
Fundamental Thinking
While striving for sustained corporate growth, Toyota Industries
works to fulfill its role as a good corporate citizen to contribute to
the betterment of local communities that provide the foundationfor our corporate activities and employees’ lives. As part of these
efforts, Toyota Industries cooperates closely with local
communities to carry out an assortment of activities that
contribute to society. We also enthusiastically support volunteer
activities by employees.

Support for Employees’ Volunteer Activities
Toyota Industries set up the Heartful Club as an organization forsupporting volunteer activities by employees. The club provides
registered members with information about volunteering, solicits
volunteers and encourages employee participation in suchvolunteer activities as social welfare and environmental
protection events.

Communicating about Environmental
Protection and Social Contribution Activities
Toyota Industries publishes the Social & Environmental Report, asummary of our approach toward and the achievements of ourenvironmental protection
and social contribution
activities. Until 2003, we
published a report that
Social & Environmental Report2004
contained information
mainly on our environmental
protection activities. From
2004, however, we added
information about our social
contribution activities andre-christened the
publication as the Social &Environmental Report. To
obtain a copy of our Social& Environmental Report, see
the contact information
Social & Environmental Reportlisted on the last page ofthis annual report. The
contents of the Social & Environmental Report, together withdetails of our recent environmental protection and social
contribution activities, are also available on our Web site(http://www.toyota-industries.com).
Through our Web site and Social & Environmental Report,
Toyota Industries proactively discloses information to
stakeholders about how it fulfills its social responsibilities.

Employees volunteer for cleanup activities along the coastline nearproduction plants.

Sponsoring Social Welfare and Cultural
EventsWe provide broad-ranging support for social welfare and cultural
events, mainly in regions near our headquarters and production
bases. This includes supporting events for disabled children andchildren orphaned by traffic accidents. We also support concerts
as part of our cultural support activities.

http://www.toyota-industries.com/environment/

At the “Public Welfare Communication Festival,” we invite physicallyhandicapped children living near our head office to our company
facilities.

36

ANNUAL REPORT 2004 — TOYOTA INDUSTRIES CORPORATION

Financial Section

Eleven-Year Summary

38

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

40

Consolidated Balance Sheets

50

Consolidated Statements of Income

52

Consolidated Statements of Shareholders’ Equity

53

Consolidated Statements of Cash Flows

54

Notes to Consolidated Financial Statements

55

Report of Independent Accountants

76

ANNUAL REPORT 2004 — TOYOTA INDUSTRIES CORPORATION

37

Eleven-Year Summary
Eleven-Year Summary

Toyota Industries Corporation
Years ended March 31
The figures in this table are unaudited.
(Consolidated)

Millions of yen

2004

2003

2002

2001

¥1,164,379¥1,069,219¥ 980,163¥ 767,383

Operating income

52,63152,47846,33047,304

Ordinary income

58,971

51,37547,86644,525

For The YearNet sales

Income before income taxes

57,741

43,67047,86638,220Net income

33,623

21,93427,311

22,637¥ 497,357¥ 451,594¥ 396,470¥ 298,794

65,35259,15455,17446,454

Overseas sales
Depreciation and amortization
Capital expenditures

89,50987,55988,320127,273

Research and development expenses

29,562

29,70529,98526,196Per share of common stock (yen, U.S. dollars):
Net income — basic¥

108.04

¥

70.19

¥

87.28

¥

75.90

Net income — diluted

101.97

62.90

78.26

67.77

Shareholders’ equity

3,199.69

2,522.52

2,809.54

3,036.77

24.00

22.00

19.00

17.00

Total assets¥2,011,995¥1,650,391¥1,770,401¥1,869,642

Shareholders’ equity

Cash dividends
At Year-End

1,016,764

738,868

878,812951,298

Common stock

80,46368,04768,02268,019Number of shares outstanding (excluding treasury stock)317,666

292,777

312,796313,260

Cash FlowsNet cash provided by operating activities

92,406¥ 103,183

Net cash used in investing activities¥(92,668)(95,121)

Net cash provided by (used in) financing activities(56,015)

Cash and cash equivalents at end of year

77,212¥

81,078¥78,413(106,711)(155,871)

57,776

1,225

94,472

136,929

71,12095,297

Indices
Return on equity (ROE) (%)

3.8

2.7

3.0

3.6

Return on assets (ROA) (%)

1.8

1.3

1.5

1.8

Return on sales (ROS) (%)

2.9

2.1

2.8

2.9

Debt/equity ratio (%)

31.6

55.6

35.9

30.7

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

7.4¥ 113,676
27,431

6.7¥

95,47225,0305.8¥

97,5409.1¥

23,056

Notes: 1. U.S. dollar amounts have been translated from yen, for convenience only, at the rate of ¥105.69 = US$1, the approximate exchange rate on March 31, 2004.
2. Main changes in accounting standards and methods during the above periods are as follows. These changes have not been applied to the financial statements presented
prior to each year retroactively.
(1) Effective beginning the year ended March 31, 2003, the new accounting standards for net income per share have been applied. Details are described in Notes toConsolidated Financial Statements.
(2) Effective beginning the year ended March 31, 2001, the new accounting standards for retirement benefits, financial instrument and foreign currency transactions havebeen applied. Details are described in Notes to Consolidated Financial Statements.
(3) Effective beginning the year ended March 31, 2000, Toyota Industries Corporation (the “Company”) has used annual average exchange rate instead of the year-end ratein order to present the operating results more precisely as significance of the overseas consolidated subsidiaries had been increasing and their revenue and expenses
were incurred throughout the fiscal years. The Company also has adopted tax effect accounting due to the amendment of the accounting standards for income taxes.
Deferred tax assets have been newly recognized in current assets, and investments and other assets. Deferred tax liabilities have been recognized in current andlong-term liabilities.

38

ANNUAL REPORT 2004 — TOYOTA INDUSTRIES CORPORATION

79,921
21,118(Consolidated)Thousands of
U.S. dollars

Millions of yen

2000

1999

1998

1997

1996

1995

1994

¥ 625,773¥558,876¥572,698¥530,851¥ 476,084¥ 457,565¥ 467,246$ 11,016,927

28,867

24,81432,72932,67519,926

16,796

13,110497,975

27,162

23,172

33,202

31,157

21,56016,775

14,530557,962

27,162

23,172

33,202

31,157

21,56016,775

14,530546,325

13,686

10,391

20,491

17,931

13,54910,638

10,730318,128¥ 191,992¥178,737¥150,417¥116,738¥ 119,358¥ 99,835¥ 88,049$ 4,705,809

42,752

34,38027,95828,04327,24026,35927,116618,337

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

26,640846,901

24,062

23,231

23,112

19,691

18,77017,633

17,439279,705

¥

48.32

¥

36.30

¥

72.33

¥

63.55

¥

48.03

¥

37.72

¥

2004

38.05

$

1.02

43.18

32.62

63.48

55.20

47.13

37.10

37.41

0.96

1,116.62

1,063.05

1,056.81

996.18947.04905.89881.52

30.27

16.00

16.00

16.00

16.00

13.00

13.00

13.00

0.23

¥ 685,914¥617,071¥593,004¥556,291¥ 454,503¥ 427,206¥ 402,929$ 19,036,758

316,293

301,158

304,097

281,154

267,145

255,536

248,583

9,620,248

40,17840,17840,13331,45831,322

31,321

31,245

761,311283,260

283,296287,752

282,233

282,083

282,082

281,994¥ 68,058¥ 44,133¥ 50,952¥ 51,327

N/A

N/A

N/A

(67,187)(96,222)(26,897)(74,968)

N/A

N/A

N/A

(876,791)

27,50024,368(12,918)

69,081

N/A

N/A

N/A

(529,993)

77,332

49,95574,30362,322

N/A

N/A

N/A

730,552

4.4

3.4

7.0

6.5

5.2

4.2

4.4

2.1

1.7

3.6

3.6

3.1

2.5

2.6

2.2

1.9

3.6

3.4

2.8

2.3

2.3

60.5

51.6

37.5

46.0

20.4

20.2

19.2

14.5

16.4

17.6

13.0

8.7

6.4

6.1

¥ 64,681¥ 51,033¥ 55,212¥ 55,548¥ 44,830¥ 41,502¥ 38,031

13,132

12,797

11,23910,73810,806

10,452

9,670$

Eleven-Year Summary(Non–Consolidated)(Consolidated)

874,312$ 1,075,561(4) Effective beginning the year ended March 31, 1999, the Company has presented consolidated financial statements as follows: In the consolidated statements of income,enterprise taxes, which had been included in selling, general and administrative expenses up to and including the previous year, have been included in income taxes.
Amortization of goodwill, which had been classified as a deductible item from income before income taxes until the previous year, has been included in selling, generaland administrative expenses. Equity in earnings/losses of affiliates, which had been added to or deducted from income before income taxes until the previous years, hasbeen included in non-operating income or expenses.
(5) Effective beginning the year ended March 31, 1995, consolidated financial statements have been presented on a consolidated basis. The data for the year ended
March 31, 1994 are non-consolidated basis.
3. Net income per share, ROE and ROA are computed based on the average number of shares, shareholders’ equity and total assets, respectively, for each year.
4. Debt/equity ratio = Interest-bearing debt / Shareholders’ equity
5. Interest coverage = (Operating income + Interest and dividends income) / Interest expenses
6. EBITDA = Income before income taxes + Interest expenses - Interest and dividends income + Depreciation and amortization

ANNUAL REPORT 2004 — TOYOTA INDUSTRIES CORPORATION

39

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

Management’s Discussion and Analysisof 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 tomanagement as of July 2004.
This section contains projections and forward-looking statements that involve risks, uncertainties and assumptions. You should beaware that certain risks and uncertainties could cause the actual results of Toyota Industries Corporation and its consolidated
subsidiaries to differ materially from any projections or forward-looking statements. These risks and uncertainties include, but are notlimited to, those listed under “Risk Information” and elsewhere in this annual report.
The fiscal year ended March 31, 2004 is referred to as fiscal 2004 and other fiscal years are referred to in a corresponding manner.
All references to the “Company” herein are to Toyota Industries Corporation; and references to “Toyota Industries” herein are to theCompany and its 140 consolidated subsidiaries.

Results of Operations
Operating Performance
During fiscal 2004, the Japanese economy began a steadyrecovery, as private-sector capital expenditure increased alongwith an expansion in exports, while consumer spending also
emerged from sluggishness. Overseas, the economic situation
improved as well, with the U.S. economy recovering and theEuropean economy picking up.
In this operating environment, Toyota Industries made efforts
to strengthen its corporate structure by developing new products
to raise customer satisfaction, aggressively conducting sales
promotions, carrying out a company-wide cost-reduction
program and enhancing group-wide management control. As aresult, Toyota Industries recorded consolidated net sales of¥1,164.4 billion, an increase of ¥95.2 billion (8.9%) over fiscal

2003. (For a breakdown in operating results by businesssegment, refer to Operating Performance Highlights by Business
Segment.)
At the profit level, ordinary income amounted to ¥59.0 billion,
an increase of ¥7.6 billion (14.8%) over fiscal 2003. This increasereflected growth in income at our domestic and overseas
subsidiaries as well as a contribution to profits by ST Liquid
Crystal Display Corp. (“ST-LCD”), a joint venture with Sony
Corporation (“Sony”). Net income amounted to ¥33.6 billion, an
increase of ¥11.7 billion (53.3%) over fiscal 2003.

Cost of Sales and Selling,
General and Administrative Expenses
Cost of sales for fiscal 2004 increased ¥78.8 billion (8.8%) overfiscal 2003 to ¥978.5 billion, due mainly to an increase in net
sales.

Net Sales, Overseas Sales andOverseas Sales Ratio

Capital Expenditures(¥ Billion)
150(¥ Billion)

(%)

1,200

60

1,000

50

800

40

600

30

400

20

200

10

100

50

0
FY

00

01

02

03

04

Automobile
Materials Handling Equipment
Textile Machinery
Others (including corporate or elimination)

40

ANNUAL REPORT 2004 — TOYOTA INDUSTRIES CORPORATION

0
FY

0

00

01

02

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

03

04

Operating Income andOperating Income Ratio

Net Sales ofAutomobile Segment

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

60

12

600

30

50

10

40

8

400

20

30

6

20

4

200

10

10

2

0
FY

0

00

01

02

03

04

0
FY 00

0
FY

01 02 03 04

00 01 02 03 04

Operating income (left)
Operating income ratio (right)

Selling, general and administrative expenses increased ¥16.3
billion (13.9%) to ¥133.3 billion. This increase was mainly the
result of Aichi Corporation (“Aichi”) becoming a consolidated
subsidiary of Toyota Industries.

Operating Income
Operating income for fiscal 2004 increased ¥0.2 billion (0.3%)
over fiscal 2003 to ¥52.6 billion. Despite a decrease in operating
income by the Company, overall operating income increased due
primarily to the consolidation of Aichi and favorable results at
Toyota Industries’ subsidiaries.

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

Automobile Segment
Net sales of the Automobile Segment increased ¥8.4 billion(1.4%) over fiscal 2003 to ¥603.9 billion. However, operating
income decreased ¥2.6 billion (8.6%) to ¥27.5 billion.
Sales in the Japanese, European and North American
markets were virtually at the same levels as recorded in theprevious fiscal year. In the Vehicle Business, sales of the Vitz, ourmainstay vehicle, also remained at the same level as for fiscal
2003. While sales of the Corolla Sedan for North America, forwhich production commenced in January 2003, contributed tooverall performance, sales of the RAV4 decreased. In the Engine
Business, we recorded higher sales of the AZ-type gasoline
engine, which is installed in the Estima. However, we posted
lower sales of the UZ-type and FZ-type gasoline engines, which
are incorporated into the Land Cruiser. Sales were also adversely

affected because a portion of CD-type diesel engines for Europe
is now shipped as parts, thus decreasing the overall productionof the engine as a complete product. Toyota Motor Industries
Poland Sp.zo.o., jointly established with Toyota Motor
Corporation (“TMC”), is progressing smoothly with preparations
for the commencement of diesel engine production in January
2005. In the Car Air-Conditioning Compressor Business, sales inboth domestic and overseas markets increased, due mainly tofavorable sales of vehicles fitted with our car air-conditioning
compressors and an expanded range of automobiles equippedwith our products.

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

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

15

10

5

0
FY

00

01

02

03

04

Japan
North America
EuropeAsia and Oceania

ANNUAL REPORT 2004 — TOYOTA INDUSTRIES CORPORATION

41

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

Net Sales of
Textile Machinery
Segment

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

20

50

3

40

2

30

1

20

0

10

(2)

Net Sales ofMaterials Handling
Equipment Segment

Operating Income ofMaterials Handling
Equipment Segment(¥ Billion)
500

400
15
300
10
200
5

100

0
FY 00

01 02 03 04

0
FY 00

01 02 03 04

Materials Handling Equipment Segment
Net sales of the Materials Handling Equipment Segment
increased ¥70.4 billion (18.9%) over fiscal 2003 to ¥443.4 billion.
Operating income increased ¥3.2 billion (19.6%) to ¥19.3 billion.
Sales were robust in Japan amid a recovery in private-sector
capital expenditure. Sales in Europe and the U.S. also increased
over fiscal 2003. During fiscal 2004, we developed new products
attuned to customer needs while undertaking aggressive sales
promotion activities in close cooperation with our distributors. As
a result, we achieved worldwide sales of 82,000 TOYOTA-brandforklift trucks and 59,000 BT-brand forklift trucks, the latterproduced by the subsidiary BT Industries AB. In Japan, we
attained an all-time high 42.6% share of the forklift truck market
in calendar year 2003. Overseas, export sales of forklift trucks forNorth America and Europe decreased due to the ongoingtransferring of production to local subsidiaries, but export sales
in Asia and Oceania increased sharply.
In fiscal 2004, we strengthened our sales and production
structures globally. In Japan, we made Aichi into one of our
subsidiaries in May 2003 and worked closely with Aichi to carryout cost-reduction activities. Supported by these efforts andbrisk demand, Aichi’s performance is now steadily recovering. In
China, Toyota Industry (Kunshan) Co., Ltd. commenced local
production of forklift trucks in April 2003, while Toyota Material
Handling (Shanghai) Co., Ltd. began sales operations in June
2003. Additionally, we established Toyota Industries Corporation
Australia Pty Limited in Sydney in June 2003 and Toyota
Industries Mercosur Ltda. in São Paulo, Brazil, in January 2004.
These companies have commenced sales operations with theaim of expanding sales in their respective markets.

Textile Machinery Segment
Net sales of the Textile Machinery Segment decreased ¥2.8
billion (5.7%) from fiscal 2003 to ¥46.0 billion. Operating income
decreased ¥2.2 billion (95.7%) to ¥0.1 billion.

42

ANNUAL REPORT 2004 — TOYOTA INDUSTRIES CORPORATION

0
FY 00

01 02 03 04

(4)
FY 00

01 02 03 04

Although sales of air-jet looms to Pakistan and ring spinning
frames to Vietnam increased, sales of air-jet looms to China
decreased, as shipments for a large order to Wujiang, Jiangsu
province that was received in the previous fiscal year werecompleted during fiscal 2004. In China, one of our core markets,strong demand for air-jet looms since 2002 began waning at theend of 2003, due mainly to the effects of monetary tightening in
response to an overheating economy. Although sales of spinningmachinery and weaving machinery showed signs of recovery inIndia and Pakistan, overall sales in other Asian markets remainedsluggish.

Others Segment
Net sales of the Others Segment increased ¥19.1 billion (36.7%)
over fiscal 2003 to ¥71.1 billion. Operating income increased¥1.8 billion (47.0%) to ¥5.8 billion.

Sales by Geographical Segment
Below are Toyota Industries’ operating results by geographicalsegment. Net sales for each geographical segment do notinclude intersegment transactions.

Japan
Net sales totaled ¥785.3 billion, an increase of ¥51.4 billion(7.0%) over fiscal 2003. Operating income amounted to ¥45.8
billion, an increase of ¥0.8 billion (1.7%). The increases mainly
resulted from the consolidation of Aichi.

North America
Net sales amounted to ¥198.7 billion, an increase of ¥6.4 billion(3.3%) over fiscal 2003. Operating income totaled ¥6.1 billion,
the same level as in fiscal 2003. The increase in net sales wasdue mainly to an increase in sales volumes by forklift truck

Net Sales of
Others Segment

Operating Income of
Others Segment
Net Income per Share(¥)(¥ Billion)(¥ Billion)

80

6

120

5

100

4

80

3

60

2

40

1

20

0
FY

0
FY

60

40

20

0
FY

00 01 02 03 04

00 01 02 03 04

manufacturing subsidiaries and car air-conditioning compressor
manufacturing subsidiaries.

EuropeNet sales were ¥167.5 billion, an increase of ¥28.0 billion(20.1%) over fiscal 2003. Operating income amounted to ¥3.1
billion, an increase of ¥1.2 billion (61.7%). These increases
resulted chiefly from higher sales volumes by forklift truck
manufacturing subsidiaries and car air-conditioning compressor
manufacturing subsidiaries.

Others
Net sales totaled ¥12.9 billion, an increase of ¥9.4 billion(272.8%) over fiscal 2003. An operating loss of ¥0.1 billion wasrecorded, an increase of ¥0.1 billion (73.7%).

Basic
Diluted

00

01

02

03

04

Income before Income Taxes
Income before income taxes increased ¥14.1 billion (32.2%) overfiscal 2003 to ¥57.7 billion. This increase was due chiefly to anincrease in ordinary income as well as decreases in revalued lossof investment securities and loss on disposal of property, plantand equipment, both of which were recorded in fiscal 2003.

Management’s Discussion and Analysis of Financial Condition and Results of Operations(Including Elimination ofIntersegment Transactions)

Income Taxes
Net of current and deferred income taxes was ¥20.7 billion,
virtually the same as in fiscal 2003. This was mainly because anincrease in income taxes at subsidiaries was offset by adecrease in taxes at the Company.

Minority Interest in Consolidated Subsidiaries
Non-Operating Income and Expenses
Non-operating income for fiscal 2004 increased ¥3.9 billion(14.6%) over fiscal 2003 to ¥30.2 billion. This increase resulted
mainly from an increase in dividends from TMC and higher equity
in earnings of ST-LCD.
Non-operating expenses decreased ¥3.6 billion (13.1%) to¥23.8 billion, owing primarily to a decrease in equity in net loss of
ST-LCD.

Extraordinary Income and Losses

Minority interest in consolidated subsidiaries increased ¥2.5
billion (266.8%) to ¥3.4 billion. The increase resulted primarily
from the consolidation of Aichi and favorable business results ofsubsidiaries.

Net Income
Net income for fiscal 2004 increased ¥11.7 billion (53.3%) overfiscal 2003 to ¥33.6 billion. Net income per share amounted to¥108.04, compared with ¥70.19 in fiscal 2003. Diluted net
income per share increased from ¥62.90 in fiscal 2003 to¥101.97.

The transition of the benefit plan into a defined contribution
pension plan on a portion of pensions assets in the first half of2003 resulted in an extraordinary gain of ¥0.6 billion. On theother hand, we posted provision for retirement and severance
benefits for directors and corporate auditors as an extraordinary
loss of ¥1.9 billion.

ANNUAL REPORT 2004 — TOYOTA INDUSTRIES CORPORATION

43

Liquidity and Capital Resources
Management’s Discussion and Analysis of Financial Condition and Results of Operations

44

Toyota Industries’ financial policy is to ensure sufficient financing
and liquidity for its business activities and to maintain thestrength of its balance sheets. Currently, funds for capital
investments and other long-term capital needs are provided fromretained 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.
In addition to current assets such as cash and cash
equivalents and securities, Toyota Industries maintained acommercial paper issuance capacity of ¥100.0 billion as ofMarch 31, 2004.
Toyota Industries continues to maintain its solid financial
condition. Through the use of such current assets as cash andcash equivalents and securities, as well as free cash flows andfunds procured from financial institutions, Toyota Industries
believes that it will be able to provide sufficient funds for theworking capital necessary to expand existing businesses anddevelop new projects, and for future investments.

Assets, Liabilities andShareholders’ Equity
Total assets at the end of fiscal 2004 amounted to ¥2,012.0
billion, an increase of ¥361.6 billion (21.9%) over the end of fiscal
2003. This increase was attributable mainly to a significant
increase in investments and other assets.
Current assets decreased ¥21.9 billion (5.9%) from theprevious fiscal year-end to ¥349.9 billion. This decrease primarilyreflected a decrease in cash and cash equivalents. Cash andcash equivalents decreased ¥59.7 billion (43.6%) to ¥77.2 billion,
due chiefly to repayments of corporate bonds.
Property, plant and equipment increased ¥27.2 billion (7.5%)
to ¥389.4 billion, due primarily to the consolidation of Aichi
during fiscal 2004.
Intangible assets increased ¥3.1 billion (3.2%) to ¥99.9
billion, due to an increase in software.
Investments and other assets increased ¥353.2 billion(43.1%) to ¥1,172.8 billion. This increase was mainly the result of
an increase in the market prices of shares of Toyota Group
companies, including TMC, held by Toyota Industries.
On the liabilities side, current liabilities decreased ¥67.0
billion (17.0%) from the previous fiscal year-end to ¥326.3 billion.
This decrease was due mainly to the repayments of corporate
bonds and convertible bonds.
Long-term liabilities amounted to ¥634.0 billion, an increaseof ¥139.8 billion (28.3%) over the previous fiscal year-end. Thiswas due chiefly to an increase of ¥134.0 billion in deferred tax
liabilities as a result of an increase in the market value ofinvestment securities.

ANNUAL REPORT 2004 — TOYOTA INDUSTRIES CORPORATION

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

(%)

2,000

80

1,500

60

1,000

40

500

20

0
FY

0

00

01

02

03

04

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

Interest-bearing debt, including short-term bank loans, longterm debt due to mature within one year, corporate bonds,
convertible bonds and long-term bank loans, amounted to¥321.0 billion, a decrease of ¥89.7 billion (21.8%) from the endof fiscal 2003.
Minority interest in consolidated subsidiaries increased ¥10.9
billion (45.6%) to ¥34.9 billion, primarily because Aichi became a
newly consolidated subsidiary.
Shareholders’ equity increased ¥277.9 billion (37.6%) to¥1,016.8 billion. This was mainly because of an increase of¥202.4 billion in net unrealized gains on other securities in
response to an increase in the market value of investment
securities. It was also due to an increase of ¥28.8 billion incommon stock and capital surplus resulting from the conversionof convertible bonds. The ratio of shareholders’ equity to total
assets increased to 50.5% from 44.8% at the end of theprevious fiscal year, while shareholders’ equity per share at yearend increased to ¥3,199.69 from ¥2,522.52.

Cash FlowsNet cash and cash equivalents provided by operating activities
amounted to ¥92.4 billion, a decrease of ¥10.8 billion (10.4%)
from fiscal 2003. Net cash and cash equivalents used ininvesting activities decreased ¥2.5 billion (2.6%) to ¥92.7 billion.
Net cash and cash equivalents used in financing activities
amounted to ¥56.0 billion, a difference of ¥113.8 billion from net
cash and cash equivalents provided by financing activities in theprevious fiscal year. Including translation adjustments and a net

Depreciation and Amortization(¥ Billion)(¥ Billion)

70

100
60
50
50
0

40

(50)

30

(100)

20
10

(150)

0
FY

(200)
FY

00

01

02

03

00

01

02

03

04

04

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

decrease in cash and cash equivalents due to changes insubsidiaries’ year-ends, cash and cash equivalents at the end of
fiscal 2004 decreased ¥59.7 billion (43.6%) to ¥77.2 billion.
The decrease in net cash provided by operating activities
was mainly because increases in receivables and income taxes
paid outweighed an increase in depreciation and amortization.
Income taxes paid in fiscal 2004 amounted to ¥30.6 billion, an
increase of ¥6.7 billion over fiscal 2003.
Net cash used in investing activities decreased in fiscal 2004.
Although proceeds from the sales of marketable securities
decreased ¥4.6 billion (54.1%) from fiscal 2003 to ¥3.9 billion,
payments for purchases of property, plant and equipment
decreased ¥8.4 billion (9.7%) to ¥78.3 billion. The amounts used
for purchases of property, plant and equipment consisted mainlyof ¥48.8 billion in the Automobile Segment, a decrease of ¥0.6
billion (1.2%); ¥1.2 billion in the Textile Machinery Segment, adecrease of ¥1.0 billion (45.5%); and ¥7.7 billion in the Others
Segment, a decrease of ¥4.3 billion (35.8%).
Net cash used in financing activities was ¥56.0 billion,
compared with ¥57.8 billion in net cash provided by financing
activities in fiscal 2003. This mainly reflected the absence ofcorporate bond issuances during fiscal 2004 and the repaymentof corporate bonds in an amount of ¥31.7 billion. In fiscal 2004,
Toyota Industries paid ¥7.4 billion in cash dividends, an increaseof ¥1.2 billion (19.4%) over fiscal 2003. Toyota Industries also
repurchased 7.7 million of its common shares in an amount of¥17.1 billion.

Automobile
Materials Handling Equipment
Textile Machinery
Others (including corporate or elimination)

Strategies and Outlook
Business Strategies
Since its establishment as a specialized textile machinery
manufacturer in 1926, Toyota Industries has diversified the scopeof its businesses. Drawing strength from this diversification andinnovation, we are preparing ourselves for further growth overthe coming years. Toyota Industries’ strategic operations are
divided into three categories, based on the mission assigned toeach.

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

Cash FlowsFirst Category: Vehicle Business and Engine Business<Mission>
As a member of the Toyota Group, to contribute to the highquality and technological advances of TOYOTA cars.

Second Category: Car Air-Conditioning Compressor
Business, Materials Handling Equipment Businessand Textile Machinery Business<Mission>
To aggressively expand global markets through the developmentof products using Toyota Industries’ unique technologies.

Third Category: Electronics Business,
Logistics Solutions Business, etc.
<Mission>
To be a key source of Toyota Industries’ future growth.
The first category, the Vehicle Business and the Engine Business,handles mainly the production of vehicles consigned by TMC
and the production of engines for TOYOTA cars. To play a more

ANNUAL REPORT 2004 — TOYOTA INDUSTRIES CORPORATION

45

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

46

important role in the Toyota Group, Toyota Industries is making
continual efforts to improve its production technologies andstrengthen quality control. For Toyota Industries, this field of
business provides a stable platform for its own growth, while
also contributing to the success of the Toyota Group.
Aiming to be more proactive in the development andproduction of TOYOTA cars and engines, Toyota Industries will
step up its efforts to strengthen its R&D capability and improve
productivity. Toyota Industries will also make proposals to TMC
for the design and launch of auto parts and small cars, andactively work to ensure such proposals are adopted. In theEngine Business, Toyota Industries will contribute to TMC’s
global strategy, especially in Europe, with its diesel engines.
The second category comprises the Car Air-Conditioning
Compressor Business, the Materials Handling Equipment
Business and the Textile Machinery Business. This is a businessfield in which Toyota Industries must cultivate further
development of global markets by precisely identifying customer
needs, and developing and marketing state-of-the-art productsthat meet these needs through the application of originaltechnologies. Firmly believing that technological improvement is
the key to competitiveness, Toyota Industries strives tostrengthen its technological development capabilities by fostering
the development of superior engineers. Since the Car
Air-Conditioning Compressor Business and the Materials
Handling Equipment Business are positioned as corebusinesses, Toyota Industries intends to prioritize its allocation ofmanagement resources to them. In addition, on April 1, 2001,
Toyota Industries established TOYOTA Material Handling
Company as an independent company within Toyota Industries.
The main purpose of this move was to help ensure a flexible andspeedy response to changes in the business environment andemerge a winner in the face of intensifying global competition.
The third category consists of the Electronics Business,
which includes the production of LCDs, and the Logistics
Solutions Business. These businesses will also be made apriority in Toyota Industries’ allocation of management resourcesin order to grow them into core businesses. The Electronics
Business is a field characterized by rapid advances intechnological innovation, requiring stronger R&D capability andcontinual capital expenditure to maintain competitiveness. The
key to success in this field is to get production on track quickly,
improve the rejection rate of products and achieve a quick returnon investment. In order to participate in the Electronics Businessand expand operations in a short period of time, as well as todiversify the risks of entering new areas of this business, Toyota
Industries has not only carried out independent productdevelopment, but has also entered into joint ventures with Sonyand Ibiden Co., Ltd. In addition, Toyota Industries independently
conducts R&D into power electronics parts for automobiles andorganic light-emitting diodes. Toyota Industries believes that thisstrategy has been successful to date and sees the Electronics
Business as a key source of future corporate growth.

ANNUAL REPORT 2004 — TOYOTA INDUSTRIES CORPORATIONIn recent years, Japanese industries have been increasingly
moving toward outsourcing product distribution and storage
functions in order to reduce logistics costs. Seeing this as anopportunity, Toyota Industries entered into the Logistics
Solutions Business in Japan. Taking advantage of our materials
handling know-how accumulated through the production andsales of forklift trucks and other materials handling equipment,
we aim to provide customer-oriented proposals for optimized
logistics and cost reduction. Through proactive allocation ofmanagement resources, we hope our Logistics Solutions
Business will become a new source of stable revenues for
Toyota Industries.

Outlook for Results for Fiscal 2005
Although the Japanese economy is expected to continue on apath toward a steady recovery, there are numerous areas ofconcern, including exchange rate fluctuations and market
conditions for such raw materials as steel. Overseas, theeconomic outlook is clouded by uncertainties about the directionof the U.S. economy prior to the presidential election as well as
movements in the overheating Chinese economy.
For fiscal 2005, Toyota Industries expects to record
consolidated net sales of ¥1,150.0 billion, ordinary income of¥60.0 billion and net income of ¥34.0 billion. Toyota Industries
will make group-wide efforts aimed at the timely development
and introduction of products tailored to customer needs, carryout sales and service activities and undertake cost-reduction
activities.
Toyota Industries’ forecasts are based on an assumed
exchange rate of ¥105=US$1.

Dividend Policy
Toyota Industries’ dividend policy is to continue paying stabledividends, while giving overall consideration to business results
and the dividend payout ratio, in order to meet the expectationsof shareholders. Toyota Industries’ Ordinary General Meeting of
Shareholders, held on June 22, 2004, approved a year-end cash
dividend of ¥12.0 per share. Including the interim cash dividendof ¥12.0 per share, cash dividends for the year totaled ¥24.0 per
share, an increase of ¥2.0 per share over fiscal 2003. The
dividend payout ratio increased from 34.0% to 35.5%. Toyota
Industries will use retained earnings to improve thecompetitiveness of its products, augment production capacity inJapan and overseas, as well as expand into new fields ofbusiness and strengthen its corporate constitution in securing
future profits for its shareholders. It will also use retained
earnings to repurchase treasury stock.

Risk Information

Economic Trends
Demand for products supplied by the various businesses ofToyota Industries is influenced by market trends in suchindustries as automobiles, logistics, electronics and textiles. Also,
the choice of whether or not to purchase Toyota Industries’
products is at the discretion of customers. Accordingly,
worsening of economic conditions or a worsening economic
outlook could result in sluggish consumption in Toyota Industries’
principal sales regions, which could either directly or indirectly
cause Toyota Industries’ sales and operating income todecrease. Toyota Industries aims to build an earnings structurethat is not easily influenced by changes in the businessenvironment by diversifying its businesses while raisingproductivity, reducing fixed and variable costs and lowering its
break-even margin. Nevertheless, Toyota Industries believes that
decreases in demand in related industries as well as economic
slowdowns in regions and countries where it engages in sales
could have an adverse impact on its business results. Although,as a matter of course, economic trends in Japan are especiallycrucial, Toyota Industries also carries out its Car Air-Conditioning
Compressor, Materials Handling Equipment and Textile
Machinery businesses globally. Therefore, economic trends inprincipal regions and countries where Toyota Industries carriesout business activities, including the U.S., European countries,
China and other Asian countries, could have a significant impact
on its business results.

Principal Customers
Toyota Industries’ automobile and engine products are soldprimarily to TMC. In fiscal 2004, net sales to TMC accounted for
34.9% of consolidated net sales. Therefore, TMC’s vehicle sales
could have an impact on Toyota Industries’ business results. Asof March 31, 2004, TMC held 24.1% of Toyota Industries’ total
voting rights and 23.5% of total shares issued.

Product Development Capabilities
Based on the concept of “developing appealing new products,”
Toyota Industries proactively develops new products by utilizing
its leading-edge technologies, as it strives to anticipate
increasingly sophisticated and diversifying needs of the market

New Businesses
Toyota Industries invests in companies that engage in new
businesses, as well as aggressively carries out new businesses
independently. In undertaking new businesses, a myriad oftechnological and marketing-related issues must be resolved andlatent demand must be effectively stimulated. New businesses
involve numerous uncertain factors, and in the event thatbusiness plans are not achieved in accordance withexpectations, all investment burdens incurred could have an
adverse impact on Toyota Industries’ financial condition andbusiness results.

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

The following represent risks that could have a material impact
on Toyota Industries’ financial condition, business results andshare prices. The risks mentioned in this annual report represent
only a portion of the risks that could have an impact on Toyota
Industries’ financial condition and business results, and do notnecessarily cover all possible risks. There is also a possibility that
Toyota Industries could be affected in the future by risks currently
unknown or not considered noteworthy or significant.

and ensure the satisfaction of its customers. R&D activities arefocused mainly on developing and upgrading products in current
business fields and peripheral sectors. Toyota Industries expects
that revenues derived from these fields will continue to accountfor a significant portion of total revenues and anticipates that
future growth will be contingent on the development and sales of
new products in these fields. Toyota Industries believes that it
can continue to develop appealing new products. However,Toyota Industries may not be able to forecast market needs anddevelop and introduce appealing new products in a timely
manner. This could result in lower future growth and have an
adverse impact on Toyota Industries’ financial condition andbusiness results. Such a situation could result from risks that
include no assurance Toyota Industries can allocate sufficient
future funds necessary for the development of appealing new
products; no assurance that product sales will be successful, as
forecasts of products supported by the market may not always
be accurate; no assurance that newly developed products andtechnologies will always be protected as intellectual property;
and no assurance that Toyota Industries’ products will not
become obsolete due to rapid technological advances andchanges in market needs.

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 defectfree and that product recalls will not be made in the future.
Toyota Industries is insured for product liability indemnity.
However, Toyota Industries cannot guarantee that this insurance
will sufficiently cover final indemnity amounts incurred. Productdefects that could lead to large-scale recalls and product liability
indemnities could result in large cost burdens and have asignificant negative impact on the evaluation of Toyota Industries.
It could also have an adverse effect on Toyota Industries’
financial condition and business results due to a decrease insales, deterioration of profitability and decrease in share prices ofToyota Industries.

ANNUAL REPORT 2004 — TOYOTA INDUSTRIES CORPORATION

47

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

Toyota Industries faces extremely harsh competition in each of
the industries in which it conducts business, including its
materials handling equipment and automobile businesses, which
are the core of Toyota Industries’ earnings foundation. Toyota
Industries believes it offers high-value-added products that are
unrivalled in terms of technology, quality and cost. Amid anenvironment characterized by intensifying price competition,
however, Toyota Industries may be unable to maintain or
increase market share against low-cost competitors or tomaintain profitability. This could have an adverse impact on
Toyota Industries’ financial condition and business results.

Reliance on Suppliers of Raw Materials
and Components
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 shortages of raw
materials and components, which arise from a global shortagedue to tight supply or an unforeseen accident involving a
supplier. Such shortages could have a negative effect on Toyota
Industries’ product production and cause an increase in costs,
which could have an adverse impact on Toyota Industries’
financial condition and business results.

because export sales of several businesses are denominatedmainly in yen, exchange rate fluctuations could have an adverse
impact on Toyota Industries’ financial condition and businessresults due to a change in market prices.

Effects of Disasters, Power Blackouts
and Other Incidents
Toyota Industries carries out regular checks and inspections of
its production facilities. However, there is no assurance Toyota
Industries can completely prevent or lessen the impact of manmade or natural disasters, including malfunctions of production
facilities, fires at production facilities and power blackouts. For
example, the majority of Toyota Industries’ domestic production
facilities and most of its business partners are situated in the
Chubu region. Therefore, a major earthquake such as the Tokai
Earthquake, or an incident that affects other operations, could
have an adverse impact on Toyota Industries’ financial condition
and business results.

Latent Risks Associated with International
Activities
Toyota Industries manufactures and sells products and provides
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 businessresults.

Alliances with Other Companies
Aiming to expand its businesses, Toyota Industries engages injoint activities with other companies through alliances and joint
ventures. However, a 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. This could have an adverse impact on
Toyota Industries’ financial condition and business results.

Official Restrictions
Toyota Industries’ business activities are subject to a diverse
range of regulations in countries in which it carries out business
operations. They include regulations related to investment, trade,
competition, intellectual property, taxes, foreign exchange, theenvironment and recycling. Significant changes in such
regulations could restrict Toyota Industries’ business activities orlead to an increase in costs.

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 other currencies(especially against the U.S. dollar and the euro, which accountfor a significant portion of Toyota Industries’ sales) has anadverse impact on Toyota Industries’ business, while aweakening of the yen has a favorable impact. An increase in thevalue of currencies in countries or regions where Toyota
Industries carries out production could lead to an increase inlocal production, procurement and distribution costs. Such anincrease in costs could reduce Toyota Industries’ pricecompetitiveness and have an adverse impact on Toyota
Industries’ financial condition and business results. Additionally,

48

ANNUAL REPORT 2004 — TOYOTA INDUSTRIES CORPORATION

Share Price Fluctuations
At the end of fiscal 2004, Toyota Industries held marketablesecurities, mostly shares, valued at approximately ¥1,076.9
billion, and therefore bears the risk of price fluctuation of theseshares. Based on fair market value of these shares at the end of
fiscal 2004, Toyota Industries had unrealized gains of ¥889.5
billion on these shares. However, unrealized gains on marketablesecurities could worsen depending on future share pricemovements. Additionally, a fall in share prices could reduce thevalue of pension assets, leading to an increase in the pension
shortfall.

Retirement Benefit Liabilities

expense and is recognized as a liability in future accounting
periods. Toyota Industries believes its assumptions arereasonable. However, differences between actual results orchanges in the assumptions could have an impact on retirement
benefits and retirement benefit expenses and liabilities after
employee retirement.

Toyota Industries’ Relationship to
Toyota Motor Corporation
Significant Accounting Policies
and Estimates
Toyota Industries’ financial statements are prepared in conformity
with accounting principles and practices generally accepted inJapan. In preparing financial statements, management must
make estimates, judgments and assumptions that affectreported amounts of assets and liabilities at fiscal year-end as
well as revenues and expenses during each fiscal year. Among
Toyota Industries’ significant accounting policies, the following
categories require a considerable degree of judgment andestimation and are highly complex.

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 experiences in credit
losses for ordinary receivables and individually examining thefeasibility of collection for receivables that seem to beuncollectible. Evaluating the allowance for doubtful accounts
involves judgments made in accordance with the nature of thesituation, and this allowance represents an essential and crucial
estimate — including future estimates of cash flow amounts andtiming — that could change significantly. Based on currently
available information, Toyota Industries’ management believes its
present allowance for doubtful accounts is sufficient. However,the need to significantly increase allowance for doubtful
accounts in the future could have an adverse impact on Toyota
Industries’ business results.

For historical reasons, Toyota Industries has a close relationshipwith TMC and Toyota Group companies in terms of capital
investment and business dealings.
Determined to manufacture Japanese-made automobiles, in
1933, Kiichiro Toyoda, the eldest son of founder Sakichi Toyoda
and then Managing Director of Toyota Industries (then Toyoda
Automatic Loom Works, Ltd.), established the Automobile
Division within the Company. In 1937, the Automobile Division
was spun off and became an independent company, Toyota
Motor Co., Ltd. (the present Toyota Motor Corporation).
As of March 31, 2004, Toyota Industries held 5.4% (196,725
thousand shares) of TMC’s total shares issued. As of the samedate, TMC held 24.1% (76,600 thousand shares) of Toyota
Industries’ total voting rights and 23.5% of total shares issued.
Toyota Industries is one of TMC’s affiliates accounted for by theequity method.
Toyota Industries assembles certain cars and produces
automobile engines under consignment from TMC, while its car
air-conditioning compressors are sold to DENSO Corporation(“DENSO”). Also, a portion of our other automobile-related
components and products is directly or indirectly sold to Toyota
Group companies. In fiscal 2004, our net sales to TMC andDENSO accounted for approximately 34.9% and 9.2% ofconsolidated net sales, respectively.
As a member of the Toyota Group, we intend to enhance thecompetitiveness of TMC and other Toyota Group companies bycontributing in such areas as quality, cost, delivery andtechnology. We believe that this will be reflected in increases inour sales to and profits from the Toyota Group, thus increasing
the shareholder value of Toyota Industries.

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

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

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

ANNUAL REPORT 2004 — TOYOTA INDUSTRIES CORPORATION

49

Consolidated Balance Sheets
Consolidated Balance Sheets

Toyota Industries Corporation
As of March 31, 2004 and 2003
Thousands of
U.S. dollars (Note 1)

Millions of yen

ASSETS

2004

2003

2004

Current assets:
Cash and cash equivalents

77,212¥ 136,929

144,575

119,048

1,367,916

228

3,692

2,157

Inventories (Note 6)

77,574

69,141

733,977

Deferred tax assets (Note 15)

17,534

14,072

165,900

Other current assets

35,12830,925332,368

Less — allowance for doubtful accounts(2,337)(1,999)(22,112)349,914

371,808

3,310,758

Buildings and structures (Notes 8 and 16)

124,423

118,449

1,177,245

Machinery, equipment and vehicles (Notes 8 and 16)

160,787

157,733

1,521,308

Tools, furniture and fixtures (Note 16)

15,56516,007

147,270

Trade notes and accounts receivable (Note 8)
Short-term investments (Note 5)

Total current assets¥$

730,552

Fixed assets:
Property, plant and equipment:

Land (Note 8)

71,78756,255679,222

Construction in progress

16,835

13,749159,286

Total property, plant and equipment

389,397362,1933,684,331

Software11,993

9,195

113,473

Goodwill

87,86387,578

831,328

Total intangible assets

99,856

96,773

944,801

1,095,031

745,909

10,360,781

23,20816,431

219,586

Intangible assets:

Investments and other assets:
Investments in securities (Notes 5 and 8)
Unconsolidated subsidiaries and affiliated companies
Long-term loans

9,756

10,522

92,308Long-term prepaid expenses

13,55415,082

128,243

Deferred tax assets (Note 15)

3,538

2,863

33,475

Other investments and other assets (Note 14)

27,991

29,057

264,841

Less — allowance for doubtful accounts

(250)

(247)

(2,366)

Total investments and other assets

1,172,828

819,617

11,096,868

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

50

ANNUAL REPORT 2004 — TOYOTA INDUSTRIES CORPORATION

1,662,081

1,278,583

15,726,000¥2,011,995¥1,650,391$19,036,758

LIABILITIES AND SHAREHOLDERS’ EQUITY

2004

2003

2004

¥ 129,822¥ 117,424$ 1,228,328

Short-term bank loans (Note 8)

70,442

78,053

666,496

Commercial paper

15,000–141,925–

20,000–Current liabilities
Trade notes and accounts payable

Current portion of bonds
Current portion of convertible bonds–

75,692–Other payables

19,067

17,406

180,405

Accrued expenses

51,58742,027

488,097

Accrued income taxes

8,845

14,144

83,688Deposits received from employees

19,497

19,234

184,474

Deferred tax liabilities (Note 15)

2,743

1,192

25,953

Other current liabilities (Note 8)

9,334

8,193

88,315326,337

393,365

3,087,681

200,300

200,300

1,895,165

Total current liabilities

Consolidated Balance Sheets

Thousands of
U.S. dollars (Note 1)

Millions of yen

Long-term liabilities:
Bonds (Note 7)Long-term debt (Notes 7 and 8)

35,22536,577333,286

Deferred tax liabilities (Note 15)346,336

212,355

3,276,904

Allowance for retirement benefits (Note 14)34,264

34,100324,193

Other long-term liabilities

17,843

10,833

168,824

633,968

494,165

5,998,372

Total liabilities

Total long-term liabilities

960,305

887,530

9,086,053

Minority interest in consolidated subsidiaries

34,92623,993

330,457

80,46368,047

761,311

Capital surplus

105,743

89,3651,000,501

Retained earnings

294,672

269,3812,788,078

Net unrealized gains on other securities

534,079

331,668

5,053,260

Foreign currency translation adjustments

19,783

16,890187,180

Treasury stock at cost — 8,174,958 shares as of March 31, 2004

(17,976)(36,483)(170,082)

Total shareholders’ equity

1,016,764

738,868

9,620,248

Total liabilities and shareholders’ equity¥2,011,995¥1,650,391$19,036,758

Shareholders’ equity (Note 10):
Common stock:
Authorized — 1,091,245,000 shares
Issued—325,840,640 shares as of March 31, 2004
313,324,451 shares as of March 31, 2003

20,547,253 shares as of March 31, 2003

ANNUAL REPORT 2004 — TOYOTA INDUSTRIES CORPORATION

51

Consolidated Statements of Income
Consolidated Statements of Income

Toyota Industries Corporation
For the years ended March 31, 2004, 2003 and 2002
Thousands of
U.S. dollars (Note 1)

Millions of yen

2004

2003

2002

2004

¥1,164,379¥1,069,219¥980,163$11,016,927

Cost of sales (Note 11)

978,459

899,702828,626

9,257,820

Gross profit

185,920

169,517

151,537

1,759,107

133,289

117,039

105,207

1,261,132

52,63152,47846,330497,975

Interest income

8,175

8,985

8,618

77,349Dividends income

10,998

8,888

7,726

104,059

Equity in net earnings of unconsolidated subsidiaries and affiliated companies

1,842

–

–

17,428Other non-operating income (Note 12)

9,169

8,461

6,779

86,754

9,756

10,522

10,84492,308

–

4,634

928

–

14,08812,281

9,815

133,295

58,971

51,37547,866557,962

621

–

–

5,876

Net sales

Selling, general and administrative expenses (Note 11)
Operating income
Non-operating income:Non-operating expenses:
Interest expenses
Equity in net loss of unconsolidated subsidiaries and affiliated companies
Other non-operating expenses (Note 12)
Ordinary income
Extraordinary gains:
Gain on transfer to a defined contribution pension plan
Extraordinary losses:
Provision for retirement and severance benefits
for directors and corporate auditors

1,851

–

–

17,513

Revalued loss of investment securities

–

4,298

–

–

Loss on disposal of property, plant and equipment

–

3,407

–

–

57,741

43,67047,866546,325

Income before income taxes
Income taxes — current (Note 15)

23,96728,121

20,843

226,767

Income taxes — deferred (Note 15)(3,220)(7,304)(1,136)(30,465)

Minority interest in consolidated subsidiaries

3,371

919

848

31,89521,934¥ 27,311

Net income¥

33,623¥

Yen

318,128

U.S. dollars

Net income per share — basic (Note 20)¥ 108.04¥70.19¥87.28$1.02

Net income per share — diluted (Note 20)

101.97

62.90

78.26

0.96

Cash dividends per share

24.00

22.00

19.00

0.23

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

52$

ANNUAL REPORT 2004 — TOYOTA INDUSTRIES CORPORATION

Consolidated Statements of Shareholders’ Equity
Millions of yen

Balance at March 31, 2001
Net income
Cash dividends
Bonuses to directors and corporate auditors
Net unrealized gains on other securities
Foreign currency translation adjustments
Conversions of convertible bonds
Treasury stock at cost
Transfer due to merger of a subsidiary
Balance at March 31, 2002
Net income
Cash dividends
Bonuses to directors and corporate auditors
Net unrealized gains on other securities
Foreign currency translation adjustments
Conversions of convertible bonds
Treasury stock at cost
Gain on disposal of treasury stock
Balance at March 31, 2003
Net income
Cash dividends
Bonuses to directors and corporate auditors
Net unrealized gains on other securities
Foreign currency translation adjustments
Conversions of convertible bonds
Treasury stock at cost
Gain on disposal of treasury stock
Change in subsidiaries’ year-ends
Balance at March 31, 2004

Numberof shares(Thousands)

Commonstock

CapitalsurplusRetainedearnings

Net unrealized
gains on other Translation
securities
adjustments

Treasurystock
at cost313,296¥68,019¥ 88,513¥233,368¥ 558,673¥ 2,746

–
–
–
–
–
3
–
–

–
–
–
–
–
3
–
–

–
–
–
–
–
3
–
811

27,311(5,635)
(258)
–
–
–
–
(811)

–
–
–
(102,258)
–
–
–
–

–
–
–
–
9,615
–
–
–

–
–
–
–
–
–
(1,267)–313,299

68,02289,327

253,975

456,415

12,361(1,288)

–
–
–
–
–
25
–
–

–
–
–
–
–
25
–
–

–
–
–
–
–
25
–
13

21,934(6,246)
(282)
–
–
–
–
–

–
–
–
(124,747)
–
–
–
–

–
–
–
–
4,529
–
–
–

–
–
–
–
–
–
(35,195)–

313,324

68,04789,365

269,381

331,668

16,890(36,483)–––––
12,517
–
–
–

–
–
–
–
–
12,416
–
–
–

–
–
–
–
–
12,416–
3,962–

33,623(7,417)
(290)
–
–
–
–
–
(625)

–
–
–
202,411
–
–
–
–
–

–
–
–
–
2,893
–
–
–
–

–
–
–
–
–
35,601(17,094)––

325,841¥80,463¥105,743¥294,672¥ 534,079¥19,783¥ (17,976)

¥

(21)

Consolidated Statements of Shareholders’ Equity

Toyota Industries Corporation
For the years ended March 31, 2004, 2003 and 2002

Thousands of U.S. dollars (Note 1)

Commonstock

CapitalsurplusRetainedearnings

Net unrealized
gains on other Translation
securities
adjustments

Treasurystock
at costBalance at March 31, 2003
Net income
Cash dividends
Bonuses to directors and corporate auditors
Net unrealized gains on other securities
Foreign currency translation adjustments
Conversions of convertible bonds
Treasury stock at cost
Gain on disposal of treasury stock
Change in subsidiaries’ year-ends$ 643,835 $ 845,538
–
–
–
–
–
–
–
–
–
–
117,476
117,476–––
37,487––$2,548,785
318,128(70,177)(2,744)–––––(5,914)$3,138,121–––
1,915,139
–
–
–
–
–

$159,807 $ (345,189)
–
–
–
–
–
–
–
–
27,373––336,844– (161,737)––––

Balance at March 31, 2004

$ 761,311 $1,000,501$2,788,078$5,053,260$187,180 $(170,082)

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

ANNUAL REPORT 2004 — TOYOTA INDUSTRIES CORPORATION

53

Consolidated Statements of Cash Flows
Consolidated Statements of Cash Flows

Toyota Industries Corporation
For the years ended March 31, 2004, 2003 and 2002

Cash flows from operating activities:
Income before income taxes
Adjustments to reconcile income before income taxes
to net cash provided by operating activities:
Depreciation and amortization
Increase in allowance for doubtful accounts
Interest and dividends income
Interest expenses
Equity in net (earnings) loss of affiliates(Increase) decrease in receivables
Decrease (increase) in inventories
Increase (decrease) in payables
Others, net
SubtotalInterest and dividends income received
Interest expenses paid
Income taxes paid
Net cash provided by operating activities
Cash flows from investing activities:
Payments for purchases of marketable securities
Proceeds from sales of marketable securities
Payments for purchases of property, plant and equipment
Proceeds from sales of property, plant and equipment
Payments for purchases of investment securities
Proceeds from sales of investment securities
Payments for acquisition of subsidiaries’ stock
resulting in change in scope of consolidation
Payments for loans madeProceeds from collections of loans
Payments for acquisition of business
Others, net
Net cash used in investing activities
Cash flows from financing activities:(Decrease) increase in short-term loans
Proceeds from issuance of commercial paper
Redemption of commercial paper
Proceeds from long-term bank loans
Repayments of long-term bank loans
Proceeds from issuances of bonds
Repayments of bonds
Payments to convertible bond redemption funds
Proceeds from convertible bond redemption funds
Payments for repurchase of treasury stock
Cash dividends paid
Cash dividends paid for minority shareholders
Others, net
Net cash (used in) provided by financing activities
Translation adjustments of cash and cash equivalents
Net (decrease) increase in cash and cash equivalents
Cash and cash equivalents at beginning of year
Net decrease in cash and cash equivalents due to change in subsidiaries’ year-ends
Cash and cash equivalents at end of year
The accompanying notes are an integral part of these financial statements.

54

Thousands of
U.S. dollars (Note 1)

Millions of yen

ANNUAL REPORT 2004 — TOYOTA INDUSTRIES CORPORATION

2004

2003

2002

2004

¥ 57,741¥ 43,670¥ 47,866$ 546,325

65,352
46(19,173)
9,756(1,842)(11,051)
751
2,631
9,741
113,952
18,900(9,845)(30,601)
92,40659,154220(17,874)
10,522
4,634(7,406)
1,253
5,431
20,416
120,020
17,983(10,945)(23,875)
103,183

55,174
251(16,343)
10,844928
8,081(1,371)(3,403)(174)
101,853
16,372(10,907)(26,240)
81,078618,337435(181,408)
92,308(17,428)(104,561)
7,106
24,893
92,165
1,078,172
178,825(93,150)(289,535)
874,312

(101)
3,874
(78,268)3,201(14,301)
2,615(1,664)
8,447(86,703)749(21,896)
9,792(5,884)
4,213(73,606)
2,617(21,121)
4,033

(956)
36,654(740,543)
30,287(135,311)
24,742

1,216(4,978)5,448(961)(10,413)(92,668)944(1,664)
2,931–(6,057)(95,121)(705)(3,139)2,575(23,719)8,025(106,711)

11,506(47,100)
51,547(9,093)(98,524)(876,791)(10,959)
110,000(95,000)
4,522(8,530)–(31,677)(56,670)
56,670(17,094)(7,414)(252)
389(56,015)323(55,954)
136,929(3,763)¥ 77,212––5,886––––––
21,797(9,808)79,690–––(35,195)(6,244)(195)
1,845
57,776(29)
65,80971,120–¥136,929

1,062
–
–
8,048
(2,755)––––(1,389)(5,634)
(614)
2,507
1,225
231
(24,177)
95,297–¥ 71,120(103,690)
1,040,780(898,855)
42,785(80,708)–(299,716)(536,191)
536,191(161,737)(70,149)(2,384)
3,681(529,993)
3,056(529,416)
1,295,572(35,604)$ 730,552

Notes to Consolidated Financial Statements
The accompanying consolidated financial statements have beenstatements submitted to the Director of Kanto Finance Bureau in

prepared based on the accounts maintained by Toyota Industries

Japan have been reclassified in these accounts for the

Corporation (the “Company”) and its consolidated subsidiaries

convenience of readers outside Japan.

(together, hereinafter referred to as “Toyota Industries”) in

Amounts in U.S. dollars are included solely for theaccordance with the provisions set forth in the Commercial Codeconvenience of readers outside Japan. The rate ofof Japan and the Securities and Exchange Law, and in¥105.69=US$1, the approximate rate of exchange prevailing at

conformity with accounting principles and practices generally

March 31, 2004, has been used in translation. The inclusion of

accepted in Japan, which are different in certain respects fromsuch amounts are not intended to imply that the Japanese yen

the application and disclosure requirements of International

actually represent, have been or could be converted into

Accounting Standards.

equivalent amounts in U.S. dollars at this rate or any other rates.

Notes to Consolidated Financial Statements

1. Basis of presenting consolidated financial statements

Certain items presented in the consolidated financial

2. Summary of significant accounting policies(1) Consolidation

three months, the Company is using those subsidiaries’

The consolidated financial statements include the accounts ofstatements for those fiscal years, making adjustments for

the Company and its 140 subsidiaries (42 domestic subsidiaries

significant transactions that materially affect the financial position

and 98 overseas subsidiaries, which are listed on pages 90 andor results of operations.

91) in 2004, 118 subsidiaries (33 domestic subsidiaries and 85

All significant intercompany transactions, balances andoverseas subsidiaries) in 2003 and 111 subsidiaries (26 domestic

unrealized profits within Toyota Industries have been eliminated.

subsidiaries and 85 overseas subsidiaries) in 2002.
For the year ended March 31, 2004, 22 subsidiaries were
newly added to the scope of consolidation. One unconsolidated
subsidiary is excluded from the scope of consolidation due totemporary investments.
For the year ended March 31, 2003, eight subsidiaries were
newly added to the scope of consolidation and one company
was excluded from the scope of consolidation. Since two
subsidiaries out of eight subsidiaries were deemed as being
acquired by the Company as of the semi-annual period end andas of October 1, 2002, respectively, the results of operations of
the latter half of the year of those subsidiaries were consolidated
in the consolidated financial statements. Two unconsolidated
subsidiaries were excluded from the scope of consolidation due
to temporary investments.
For the year ended March 31, 2002, 15 subsidiaries were

All of the assets and liabilities of the acquired subsidiaries isstated at fair value as of the date of acquisition of control.

(2) Investments in unconsolidated subsidiaries andaffiliates
Investments in three unconsolidated subsidiaries and 19 majoraffiliates in 2004, two unconsolidated subsidiaries and 16 majoraffiliates in 2003, and one unconsolidated subsidiary and 18
major affiliates in 2002 are accounted for by the equity method of
accounting. Investments in unconsolidated subsidiaries andaffiliates not accounted for by the equity method are stated atcost due to their insignificant effect on the consolidated financial
statements.
The major affiliates accounted for by the equity method arelisted on page 91.

(3) Translation of foreign currencies

newly added to the scope of consolidation and four companies

Foreign currency denominated receivables and payables are

were excluded from the scope of consolidation. Since fivetranslated into Japanese yen at the year-end exchange rates andsubsidiaries out of 15 subsidiaries were deemed as being

the resulting transaction gains or losses are included in income

acquired by the Company as of the semi-annual period end, thestatements.

results of operations of the latter half of the year of those

All asset and liability accounts of overseas subsidiaries andsubsidiaries were consolidated in the consolidated financial

affiliates are translated into Japanese yen at the year-end

statements. One unconsolidated subsidiary was excluded fromexchange rates and all revenue and expense accounts are

the scope of consolidation due to temporary investments.

translated at prevailing fiscal average rates.

The fiscal years of certain subsidiaries are different from thefiscal year of the Company. Since the difference is not more than

ANNUAL REPORT 2004 — TOYOTA INDUSTRIES CORPORATION

55

Notes to Consolidated Financial Statements(4) Cash and cash equivalents(8) Intangible assets and amortization

Cash and cash equivalents include all highly liquid investments,

Amortization of intangible assets is computed using the straight-

generally with original maturities of three months or less, that areline method. Software costs for internal use are amortized by thereadily convertible to known amounts of cash and are so nearstraight-line method over their expected useful lives (mainly fivematurity that they present insignificant risk of changes in value

years).

because of changes in interest rates.

(5) Marketable securities and investment in securities
Toyota Industries classifies securities into four categories bypurpose of holding: trading securities, held-to-maturity securities,
other securities and investments in unconsolidated subsidiaries
and affiliates. Toyota Industries did not have trading securities orheld-to-maturity securities as of March 31, 2004 and 2003.
Other securities with readily determinable fair values are

Goodwill, if material, is amortized principally over less than 20
years on a straight-line basis, while immaterial goodwill ischarged to income as incurred. Goodwill incurred before April 1,
2000 has been amortized over five years on a straight-line basis.
Accumulated amortization of intangibles and goodwill as ofMarch 31, 2004 and 2003 was ¥30,743 million (US$290,879
thousand) and ¥23,579 million, respectively.

(9) Allowances for doubtful accounts

stated at fair value based on market prices at the end of the year.

Toyota Industries adopted the policy of providing an allowance for

Unrealized gains and losses are included in “Net unrealized gains

doubtful accounts in an amount sufficient to cover possible losses

on other securities” as a separate component of shareholders’on collection by estimating individually uncollectible amounts andequity. Cost of sales of such securities is determined by theapplying to the remaining accounts a percentage determined bymoving-average method. Other securities without readily

certain factors such as historical collection experiences.

determinable fair values are stated at cost, as determined by themoving-average method.
Investments in unconsolidated subsidiaries and affiliates areaccounted for by the equity method (see Note 2 (2)).

(6) Inventories
Inventories are stated mainly at cost determined by the movingaverage method.

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

(11) Allowance for retirement benefits
Toyota Industries accrues an amount which is considered to be
incurred in the period based on the estimated projected benefit
obligations and estimated pension assets at the end of the year.

(7) Property, plant and equipment, and depreciation

To provide for the retirement benefits for directors and corporate

Property, plant and equipment are stated at cost. Depreciation

auditors, an amount which is calculated at the end of the year as

expenses of property, plant and equipment are computed mainly

required by an internal rule describing the retirement benefits forby the declining-balance method for the Company and Japanese

directors and corporate auditors is accrued.

subsidiaries and by the straight-line method for overseas
subsidiaries.
Significant renewals and additions are capitalized at cost.
Repair and maintenance are charged to income as incurred.
Accumulated depreciation as of March 31, 2004 and 2003
was ¥509,379 million (US$4,819,553 thousand) and ¥465,151
million, respectively.
Estimated useful lives are mainly as follows:(12) Lease transactions
Finance leases other than those that are deemed to transfer theownership of the leased assets to lessees are accounted formainly by a method similar to that applicable to ordinary
operating leases.

(13) Consumption tax
The consumption tax under the Japanese Consumption Tax Law

Building and structures ………………….. 5 – 50 years

withheld by Toyota Industries on sales of goods is not included in

Machinery, equipment and vehicles…….. 3 – 22

the amount of net sales in the accompanying consolidated

Tools, furniture and fixtures………………. 2 – 20

statements of income, and the consumption tax paid by Toyota
Industries under the law on purchases of goods and services,and expenses is not included in the related amount.

56

ANNUAL REPORT 2004 — TOYOTA INDUSTRIES CORPORATION

(15) Appropriation of retained earnings(a) Method of hedge accounting

In the accompanying consolidated statements of shareholders’

Mainly the deferral method of hedge accounting is applied. In theequity, the approved amount during the relevant fiscal year iscase of foreign currency forward contracts and foreign currency

reflected for the appropriation of retained earnings ofoption contracts, the hedged items are translated at contracted

consolidated subsidiaries. In Japan, the payment of bonuses toforward rates if certain conditions are met.

directors and corporate auditors is made out of retained earnings(b) Hedging instruments and hedged items

through an appropriation, instead of being charged to income for

Hedging instruments: derivatives instruments (interest rate

the year.

swaps, foreign currency forwards andforeign currency option contracts)
Hedged items:

risk of change in interest rate on
borrowings and risk of change in forward
exchange rate on transactions
denominated in foreign currencies (assets
and liabilities, and forecasted
transactions)(c) Hedging policy
Hedging transactions are executed and controlled based on
Toyota Industries’ internal rule and Toyota Industries is hedging(16) 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 and assets for the expected future tax consequences ofNotes to Consolidated Financial Statements(14) Hedge accounting

temporary differences between the carrying amounts and the tax
bases of assets and liabilities.
Valuation allowances are recorded to reduce deferred tax
assets when it is more likely than not that a tax benefit will not berealized.

interest rate risks and foreign currency risks. Toyota Industries’(17) Net income per sharehedging activities are reported periodically to a director

The computation of basic net income per share is based on the

responsible for accounting.

weighted-average number of outstanding shares of common(d) Method used to measure hedge effectivenessstock. The calculation of diluted net income per share is similar

Hedge effectiveness is measured by comparing accumulated

to the calculation of basic net income per share, except that thechanges in market prices of hedged items and hedging

weighted-average number of shares outstanding includes the

instruments or accumulated changes in estimated cash flows

additional dilution from potential common stock equivalents suchfrom the inception of the hedge to the date of measurements

as convertible bonds. Cash dividends per share shown in theperformed. Currently it is considered that there are highstatements of income are the amounts applicable to thecorrelations between them.

respective years. The change in accounting policy is described in(e) Others

Note 3.

Due to the fact that counterparties to Toyota Industries represent
major financial institutions which have high creditworthiness,
Toyota Industries believes that the overall credit risk related to its
financial instruments is insignificant.

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

(2) Recent accounting pronouncements in Japan

Accounting Standard for Earnings Per ShareOn August 9, 2002, the Business Accounting Council of Japan

Effective beginning the year ended March 31, 2003, Financial

issued “Accounting Standard for Impairment of Fixed Assets.”

Accounting Standard No. 2 “Accounting Standard for Earnings

The standard requires that fixed assets be reviewed for

Per Share” and Financial Accounting Standards Implementation

impairment whenever events or changes in circumstances

Guidance No. 4 “Implementation Guidance for Accounting

indicate that the carrying amount of an asset may not beStandards for Earnings Per Share” issued by the Accounting

recoverable. An impairment loss shall be recognized in theStandards Board of Japan have been applied.

income statement by reducing the carrying amount of impaired
assets or a group of assets to the recoverable amount to bemeasured as the higher of the asset’s net selling price and value
in use. The standard shall be effective for fiscal years beginning
April 1, 2005, with earlier adoption permitted.

ANNUAL REPORT 2004 — TOYOTA INDUSTRIES CORPORATION

57

4. Acquisitions
Notes to Consolidated Financial Statements

For the year ended March 31, 2002
Summary of assets and liabilities that increased due to the acquisition of business (materials handling sales operation) from Toyota Motor
Corporation is as follows:
Millions of yen

Current assets¥11,912

Fixed assets

14,957

Current liabilities(1,184)Long-term liabilities(1,152)Acquisition cost

24,533

Less: cash and cash equivalents(814)

Cash payment for the acquisition¥23,719

5. Marketable securities(1) As of and for the year ended March 31, 2004(a) Other securities with readily determinable fair value as of March 31, 2004 are as follows:
Thousands of U.S. dollars

Millions of yen

Acquisition
cost

Carrying
amountDifference

Acquisition
cost

Carrying
amountDifference

Securities with carrying amountexceeding acquisition cost:
Stocks¥185,252 ¥1,075,222¥889,970$1,752,786 $10,173,356 $8,420,570

Subtotal

185,252

1,075,222

889,970

1,752,786

10,173,356

8,420,570

2,097

1,653

(444)

19,841

15,640(4,201)Government and municipal bonds, etc.

0

0

0

0

0

0

Other bonds

1

1

0

9

9

0

2,098

1,654

(444)

19,85015,649(4,201)¥187,350 ¥1,076,876¥889,526

Securities with carrying amountnot exceeding acquisition cost:
Stocks
Bonds

SubtotalTotal

In this year, Toyota Industries recorded ¥184 million (US$1,741$1,772,636 $10,189,005 $8,416,369

securities with carrying amount not exceeding the cost lines.

thousand) of impairment on an equity security included in(b) Other securities sold during the year ended March 31, 2004 are as follows:
Millions of yen

Proceeds¥2,181

58

Realized gains

Thousands of U.S. dollars

Realized losses¥803

ANNUAL REPORT 2004 — TOYOTA INDUSTRIES CORPORATION¥11

Proceeds

Realized gains$20,636$7,598Realized losses$104(c) Contents and carrying amount of securities (excluding held-to-maturity bonds within securities with fair value) without readily
determinable fair value as of March 31, 2004 are as follows:

Thousands of
U.S. dollars

Millions of yen

Held-to-maturity securities

¥

–

$

–

Other securities
Domestic unlisted stocks excluding over-the-counter stocks

18,200172,202

Money management funds

20,019189,412(d) Redemption schedule of securities which have maturities within other securities as of March 31, 2004 is as follows:

Within1 yearMillions of yen

Thousands of U.S. dollars

Over 1 year Over 5 years
withinwithin5 years
10 years

Over 1 year Over 5 years
withinwithin5 years
10 yearsOver
10 yearsWithin1 yearOver
10 years

Notes to Consolidated Financial Statements

Carrying amount

Bonds
Government bonds

¥ –

¥–

¥0

¥–

Corporate bonds

–

–

–

Other bonds

46

0

¥46

¥0

Total

$

–

$–

$0

$–

–

–

–

–

–

–

–

435

0

–

–

¥0

¥–

$435

$0

$0

$–

(2) As of and for the year ended March 31, 2003(a) Other securities with readily determinable fair value as of March 31, 2003 are as follows:
Millions of yen

Acquisition
cost

Carrying
amountDifference¥159,155¥713,979¥554,824

Securities with carrying amount exceeding acquisition cost:
Stocks
Bonds
Corporate bonds

703

703

0

430

472

42

160,288715,154554,866

17,963

14,341(3,622)Government and municipal bonds, etc.

20,00020,000(0)Corporate bonds

2,002

2,002

(0)

3

3

–

39,96836,346(3,622)¥200,256¥751,500¥551,244

Other
Subtotal
Securities with carrying amount not exceeding acquisition cost:
Stocks
Bonds

Other bonds
SubtotalTotal
In this year, Toyota Industries recorded ¥3,671 million ofcarrying amount not exceeding the cost lines.

impairment on an equity security included in securities with(b) Other securities sold during the year ended March 31, 2003 are as follows:
Millions of yen

Proceeds

Realized gains¥9,762¥1,558Realized losses¥5

ANNUAL REPORT 2004 — TOYOTA INDUSTRIES CORPORATION

59

(c) Contents and carrying amount of securities (excluding held-to-maturity bonds within securities with fair value) without readily
determinable fair value as of March 31, 2003 are as follows:
Notes to Consolidated Financial Statements

Carrying amountMillions of yen

Held-to-maturity securities¥–

Other securities
Domestic unlisted stocks excluding over-the-counter stocks

17,117

Money management funds

30,073(d) Redemption schedule of securities which have maturities within other securities as of March 31, 2003 is as follows:
Millions of yen

Over 1 year Over 5 years
withinwithin5 years
10 yearsWithin1 yearOver
10 years

Bonds
Government bonds¥20,000

¥0

¥–

¥–

Corporate bonds

2,705

–

–

–

Other bonds
Total

3

–

–

–

¥22,708

¥0

¥–

¥–

6. Inventories
Inventories as of March 31, 2004 and 2003 consist of the following:Thousands of
U.S. dollars

Millions of yen

2004

2003

2004

Finished goods¥31,265¥28,524$295,818

Raw materials

11,722

10,284110,909

Work in process

26,893

22,956

254,452

Supplies
Total

60

ANNUAL REPORT 2004 — TOYOTA INDUSTRIES CORPORATION

7,694

7,377

72,798¥77,574¥69,141$733,977

7. Long-term debt
Thousands of
U.S. dollars

Millions of yen

2004

2003

2004

The Company:
0.35% convertible bonds due 2003 without collateral¥–¥ 75,692$–

2.70% bonds due 2008 without collateral

30,00030,000283,849

1.50% bonds due 2003 without collateral–

20,000–2.15% bonds due 2008 without collateral

20,00020,000189,233

1.50% bonds due 2006 without collateral

15,00015,000141,924

1.94% bonds due 2009 without collateral

15,00015,000141,924

1.25% bonds due 2005 without collateral

20,00020,000189,233

1.91% bonds due 2010 without collateral

20,00020,000189,233

0.41% bonds due 2007 without collateral

30,00030,000283,849

1.13% bonds due 2012 without collateral

50,00050,000473,082

Notes to Consolidated Financial Statements(1) Long-term debt as of March 31, 2004 and 2003 consists of the following:

Consolidated subsidiaries:
1.80% bonds due 2005

300

300

2,838

Long-term bank loans

38,26339,904362,030(3,038)(99,019)(28,744)¥235,525¥236,877$2,228,451

Less: current portion of long-term debt
Total(2) Annual maturities of long-term debt as of March 31, 2004 are as follows:Year ending March 31

2005

Millions of yen

¥

3,038

Thousands of
U.S. dollars$

28,744

2006

29,657

280,6042007

16,337

154,575

2008

61,698583,764

2009

20,344

192,487

2010 and thereafter

107,489

1,017,021

Total¥238,563$2,257,195

ANNUAL REPORT 2004 — TOYOTA INDUSTRIES CORPORATION61

8. Assets pledged as collateral
Notes to Consolidated Financial Statements(1) Assets pledged as collateral as of March 31, 2004 and 2003 are as follows:
Thousands of
U.S. dollars

Millions of yen

2004

2003

2004

Investments in securities¥33,126¥21,724$313,426

Buildings and structures

3,837

3,713

36,305

Land

8,466

5,340

80,1022–

19

Machinery, equipment and vehicles
Trade notes and accounts receivable

431

519

4,078

Other

232

29

2,195

Total

¥46,094¥31,325$436,125(2) Secured liabilities as of March 31, 2004 and 2003 are as follows:
Thousands of
U.S. dollars

Millions of yen

Other current liabilities

2004

2003

2004

¥19,422¥18,936$183,764

Short-term bank loans

5,059

7,756

47,866Long-term debt

2,435

3,276

23,039¥26,916¥29,968$254,669

Total

9. Contingent liabilities
Toyota Industries is contingently liable for guarantees as of March 31, 2004 and 2003 as follows:
Thousands of
U.S. dollars

Millions of yen

2004

2003

2004

Guarantees given by the Company¥11,250¥32,996$106,443

Guarantees given by consolidated subsidiaries

10,0306,378

94,900

Guarantee forwards given by the Company

3,314

3,621

31,356

10. Shareholders’ equity:
Under the Japanese Commercial Code, amounts equal to at

the fiscal year to which the dividend is applicable. In addition,

least 10% of the sum of the cash dividends and other externalinterim cash dividends may be paid upon resolution of theappropriations paid by the Company and its domestic

Board of Directors, subject to limitations imposed by thesubsidiaries must be set aside as a legal reserve until it equals

Japanese Commercial Code.

25% of common stock. The legal reserve may be used to reducebeen accounted for in approximately equal amounts asappropriate corporate action. In consolidation, the legal reservescommon stock and capital surplus. At least 50% of theof the Company and its domestic subsidiaries are accounted forproceeds have been accounted for as common stock, in

as retained earnings.

accordance with the provisions of the Japanese Commercial

Year-end cash dividend is approved at the Ordinary General
Meeting of Shareholders of the Company held after the close of62

Proceeds from the conversion of convertible bonds havea deficit or may be transferred to common stock by taking

ANNUAL REPORT 2004 — TOYOTA INDUSTRIES CORPORATION

Code.

11. Research and development expenses¥29,705 million and ¥29,985 million for the years ended March

selling, general and administrative expenses and manufacturing31, 2004, 2003 and 2002, respectively.

costs, amounted to ¥29,562 million (US$279,705 thousand),12. Other non-operating income and expenses
Thousands of
U.S. dollars

Millions of yen

2004

2003

2002

2004

¥

¥ 1,851¥$

Other non-operating income:Gain on sales of marketable securities
Rental income of fixed assets
Exchange gain
Gain on sales of fixed assets

242

7,749

1,833

2,036

2,214

17,343

836

1,709

2,324

7,910

808

332

375

7,645

4,873

2,533

1,624

46,107¥ 9,169¥ 8,461¥ 6,779$ 86,754

¥

¥

¥

$

Sundries
Total

819

Notes to Consolidated Financial Statements

Research and development expenses, which are included in

Other non-operating expenses:
Loss on impairment of securities
Depreciation

152
2,342

–

302

2,202

2,082

1,438
22,159Loss on disposal of fixed assets

3,523

3,101

1,941

33,333

Exchange loss

1,283

1,224

557

12,139Bond issue costs
Sundries
Total

502

329

19

4,750

6,286

5,425

4,914

59,476¥ 14,088¥ 12,281¥ 9,815$133,295

13. Derivative instruments(1) Qualitative disclosure about derivatives

fact that counterparties to Toyota Industries represent(a) Contents of derivative instruments into which Toyota

major financial institutions which have highIndustries entered, policy with respect to entering into

creditworthiness, Toyota Industries believes that thederivative instruments, and purpose of using derivative

overall credit risk related to its financial instruments is

instruments:
Toyota Industries uses interest rate swap agreements to
reduce interest rate risks on borrowings. Toyota Industries

insignificant.
(c) Controls in place over transactions handling derivative
instruments:

also uses foreign currency forward contracts and foreign

Hedging transactions are executed and controlled based

currency option contracts to hedge foreign currency risks

on Toyota Industries’ internal rule and Toyota Industries’

on transactions denominated in foreign currencies

hedging activities are reported periodically to a director(receivables and payables and forecasted transactions).

responsible for accounting.

(b) Contents of risks related to derivative instruments:
Interest rate swaps, foreign currency forward contracts
and foreign currency option contracts into which Toyota
Industries entered have risks of fluctuations in interest
rates and in foreign currency exchange rates. Due to the(2) Quantitative disclosure about derivatives
Toyota Industries omitted this information because hedge
accounting is applied to all of the derivative instruments into
which Toyota Industries entered.

ANNUAL REPORT 2004 — TOYOTA INDUSTRIES CORPORATION

63

14. Retirement benefits
Notes to Consolidated Financial Statements(1) Outline of retirement benefit plans:
The Company and its domestic subsidiaries maintain tax qualified

transferring the covering percentages of pension plan from lump-pension plans and lump-sum indemnities plans, both of which

sum indemnities plan to tax-qualified pension plan. As of March

are non-contributory defined benefit pension plans. In addition,

31, 2004, tax-qualified pension plan covers 50% of total plans.

certain overseas subsidiaries maintain non-contributory defined
benefit pension plans. Since 1987, the Company has beenAlso, the Company established an employee retirement
benefit trust.

(2) Components of allowance for retirement benefits as of March 31, 2004 and 2003 are as follows:
Thousands of
U.S. dollars

Millions of yen

2004

2003

2004

Benefit obligation¥ 96,344¥ 95,904$ 911,572

Plan assets(57,929)(46,640)(548,103)

Unfunded benefit obligation

38,41549,264363,469

Unrecognized actuarial loss

(15,372)(25,341)(145,444)

Unrecognized loss in prior service obligation

(597)

(187)

(5,649)Net amount recognized on the balance sheet

22,44623,736

212,376

Prepaid pension expenses(7,218)(7,626)(68,294)¥ 29,664¥ 31,362$ 280,670

Allowance for retirement benefits
Certain subsidiaries use the simplified method to determine(US$43,527 thousand) and ¥2,738 million of allowance forbenefit obligations. Prepaid pension expenses are included inretirement and severance benefits for directors and corporate

other investments and other assets. Allowance for retirement

auditors as of March 31, 2004 and 2003, respectively.

benefits on the balance sheets includes ¥4,600 million(3) Components of retirement benefit expenses for the years ended March 31, 2004, 2003 and 2002 are as follows:
Thousands of
U.S. dollars

Millions of yen

2003

2002

2004

Service cost

¥ 7,424¥6,615¥6,018$ 70,243

Interest cost

4,559

2,036

1,843

43,136

Expected return on plan assets

(822)

(797)

(704)

(7,777)

79

12

–

747

Amortization of prior service obligation
Amortization of unrecognized actuarial gain or loss
Retirement benefit expenses
Retirement expenses of subsidiaries which adopted thesimplified method are included in both service cost and

64

2004

ANNUAL REPORT 2004 — TOYOTA INDUSTRIES CORPORATION

1,854

484

225

17,542¥13,094¥8,350¥7,382$123,891

amortization of transition obligation.

(4) Assumptions used for calculation of retirement benefits for the years ended March 31, 2004, 2003 and 2002 are as follows:
2003

2002

to periods of employee service: straight-line method
Discount rate

2.00%

2.00%

3.00%

Expected return on plan assets

3.00%

3.00%

3.00%

6–11 years

6–11 years–

Amortization period of prior service obligation— Straight-line method
over the remaining
service period of
employees startingfrom following year

Amortization period of unrecognized actuarial gains or losses

20 years

20 years

20 years— Straight-line method
over the average

Notes to Consolidated Financial Statements

2004
Method of attribution of estimated retirement benefits

remaining service
period of employees
starting from following
year

ANNUAL REPORT 2004 — TOYOTA INDUSTRIES CORPORATION

65

15. Income taxes
Notes to Consolidated Financial Statements(1) The significant components of deferred tax assets and liabilities as of March 31, 2004 and 2003 are as follows:
Thousands of
U.S. dollars

Millions of yen

2004

2003

2004

Deferred tax assets:
Allowance for retirement benefits

¥

8,927

¥

6,285

$

84,464

Trade receivables

5,026

5,122

47,554

Accrued expenses

5,458

4,644

51,642

Net operating loss carry-forwards for tax purposes

4,985

2,437

47,166

Depreciation

3,732

2,867

35,311

Securities

2,238

3,149

21,175Enterprise tax payable

1,566

1,124

14,817

Other

14,80011,567140,032

Subtotal

46,732

37,195442,161

Less — valuation allowance(6,556)(2,508)(62,031)40,176

34,687

380,130

Other securities

354,600

219,413

3,355,095

Depreciation

4,298

4,513

40,666

Land

1,110

2,650

10,502

Reserve for advanced depreciation

468

337

4,428

Reserve for special depreciation

589

549

5,573

7,118

3,837

67,348

Total deferred tax assets
Deferred tax liabilities:

Other
Total deferred tax liabilities

368,183

231,2993,483,612

Net deferred tax liabilities¥(328,007)¥(196,612)$ (3,103,482)

Net deferred tax liabilities consist of the following components on the consolidated balance sheet.
Thousands of
U.S. dollars

Millions of yen

Current assets — deferred tax assets

2004

2003

2004

¥ 17,534¥ 14,072

Investments and other assets — deferred tax assets

3,538

2,863

$

165,900
33,475Current liabilities — deferred tax liabilities(2,743)(1,192)(25,953)

Long-term liabilities — deferred tax liabilities(346,336)(212,355)(3,276,904)

Net deferred tax liabilities¥(328,007)¥(196,612)$(3,103,482)(2) Reconciliations of differences between the statutory rate of income taxes and the effective rate of income taxes for the years
ended March 31, 2004, 2003 and 2002 are as follows:
2004
Statutory rate of income taxes

2003

2002

41.2%

41.2%

41.2%

(3.4)

(3.5)

(5.4)

(1.9)

10.0

5.4

35.9%

47.7%

41.2%

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

66

ANNUAL REPORT 2004 — TOYOTA INDUSTRIES CORPORATION

16. Leases(a) Pro forma information regarding the leased properties such as acquisition cost and accumulated depreciation, which are notreflected in the accompanying consolidated balance sheets as of March 31, 2004 and 2003 is as follows:
Thousands of
U.S. dollars

Millions of yen

2004

2003

2004

Buildings and structures
Acquisition cost equivalents¥

13

Accumulated depreciation equivalents

¥

–

$

123

11

–

104

2

–

19

Acquisition cost equivalents

10,095

8,258

95,515

Accumulated depreciation equivalents

5,203

2,772

49,229

4,892

5,486

46,286

Acquisition cost equivalents

5,340

5,277

50,525

Accumulated depreciation equivalents

3,279

2,911

31,025

2,061

2,366

19,500Acquisition cost equivalents

147

–

1,391

Accumulated depreciation equivalents

63

–

596

84

–

795

¥ 7,039¥7,852$ 66,600

Buildings and structures net balance equivalents
Machinery and equipment:

Machinery and equipment net balance equivalents

Notes to Consolidated Financial Statements(1) Finance leases (as a lessee) which do not transfer ownership of leased properties to lessees

Tools, furniture and fixtures:

Tools, furniture and fixtures net balance equivalents
Software:

Software net balance equivalents
Total net leased properties
Acquisition cost equivalents include the imputed interest

dividing future minimum lease payments by total balance ofexpense portion because the percentage which is computed byproperty, plant and equipment at year-end is immaterial.

(b) Pro forma information regarding future minimum lease payments as of March 31, 2004 and 2003 is as follows:
Thousands of
U.S. dollars

Millions of yen

2004

2003

2004

Due within 1 year

¥2,696¥2,274$25,508

Due after 1 year

4,343

5,577

41,092

Total¥7,039¥7,851$66,600

The amount equivalent to future minimum lease payments as of

future minimum lease payments by total balance of property,

the end of the year includes the imputed interest expense

plant and equipment at year-end is immaterial.

portion because the percentage which is computed by dividing(c) Total lease payments for the years ended March 31, 2004, 2003 and 2002 are as follows:
Millions of yen

Thousands of
U.S. dollars

2004¥3,614$ 34,193

2003

2,566

–

2002

1,842

–

Pro forma depreciation expenses, which are not reflected in thezero residual value and leasing term to be useful lives for theaccompanying consolidated statements of income, areyears ended 2004, 2003 and 2002, and are equivalent to thecomputed mainly by the straight-line method, which assumes

amount of total lease payments of the above.

ANNUAL REPORT 2004 — TOYOTA INDUSTRIES CORPORATION

67

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

Pro forma future lease payments under operating leases as of March 31, 2004 and 2003 are as follows:
Thousands of
U.S. dollars

Millions of yen

Due within 1 year

2004

2003

2004

¥ 3,091¥ 2,878$ 29,246

Due after 1 year

13,584

10,084

128,527

Total¥ 16,675¥12,962$157,773(3) Finance leases (as a lessor) which do not transfer ownership of leased properties to lessees(a) Information regarding leased properties such as acquisition cost and accumulated depreciation under finance leases as ofMarch 31, 2004 and 2003 is as follows:
Thousands of
U.S. dollars

Millions of yen

2004

2003

2004

¥8,061¥7,306$ 76,270

Machinery and equipment:
Acquisition cost
Accumulated depreciation
Total net leased property

4,686

4,284

44,337¥3,375¥3,022$ 31,933(b) Pro forma information regarding future minimum lease income as of March 31, 2004 and 2003 is as follows:
Thousands of
U.S. dollars

Millions of yen

2004

2003

2004

Due within 1 year

¥1,673¥1,816$15,829

Due after 1 year

2,842

2,657

26,890Total¥4,515¥4,473$42,719

The amount equivalent to future minimum lease income

income by total balance of property, plant and equipment at

includes the imputed interest income portion because theyear-end is immaterial.

percentage which is computed by dividing future minimum lease(c) Total lease receipts and depreciation expenses for the years ended March 31, 2004 and 2003 are as follows:
Thousands of
U.S. dollars

Millions of yen

68

2004

2003

2004

Total lease payments to be received¥2,179¥1,930$ 20,617

Depreciation expenses

1,847

1,631

17,476

ANNUAL REPORT 2004 — TOYOTA INDUSTRIES CORPORATION

(4) Operating leases (as a lessor)
Thousands of
U.S. dollars

Millions of yen

2004

2003

2004

Due within 1 year

¥ 7,217¥ 5,431$ 68,285

Due after 1 year

10,741

9,320

101,627

Total¥ 17,958¥ 14,751$169,912

17. Subsequent events
On June 22, 2004, the shareholders of the Company authorized

and corporate auditors of ¥246 million (US$2,328 thousand).

payment of a year-end cash dividend to shareholders of record

Cash dividends for the year totaled ¥24 (US$0.228) per share,

as of March 31, 2004 of ¥12 (US$0.114) per share, or a total ofincluding a semi-annual dividend of ¥12 (US$0.114).

Notes to Consolidated Financial Statements

Pro forma information regarding future minimum rentals under operating leases as of March 31, 2004 and 2003 is as follows:¥3,812 million (US$36,068 thousand), and bonuses to directors

ANNUAL REPORT 2004 — TOYOTA INDUSTRIES CORPORATION

69

18. Segment information
Notes to Consolidated Financial Statements(1) Business segments
As of and for the years ended March 31, 2004, 2003 and 2002:
Thousands of
U.S. dollars

Millions of yen

2004

2003

2002

2004

¥ 563,599$ 5,713,530

Sales:
Automobile
Outside customer sales¥

Intersegment transactions

603,863 ¥ 595,460
15,69815,523

15,412

148,529

619,561

610,983

579,011

5,862,059

443,444

373,008

353,043

4,195,704

138

90

44

1,306

443,582373,098

353,087

4,197,010

45,96948,74030,705434,942

Materials handling equipment
Outside customer sales
Intersegment transactions

Textile machinery
Outside customer sales
Intersegment transactions

16

6

50

151

45,98548,74630,755435,093

Outside customer sales

71,10352,01132,816

672,751

Intersegment transactions

14,132

13,078

11,056

133,712

85,23565,08943,872806,463

1,194,363

1,097,916

1,006,725

11,300,625(29,984)

OthersSubtotal
Elimination of intersegment transactions
Total(28,697)(26,562)(283,698)¥ 1,164,379 ¥1,069,219¥ 980,163$11,016,927¥¥ 550,051$ 5,601,580

339,721

4,013,937

Operating costs and expenses:
Automobile
Materials handling equipment

592,031 ¥ 580,875
424,233

356,923

Textile machinery

45,88546,43731,146434,147

Others

79,48561,17739,390752,058

Elimination of intersegment transactions(29,886)(28,671)(26,475)(282,770)¥ 1,111,748 ¥1,016,741¥ 933,833$10,518,952

¥

¥

$

Total
Operating income (loss):
Automobile
Materials handling equipment
Textile machinery
OthersElimination of intersegment transactions
Total

70

ANNUAL REPORT 2004 — TOYOTA INDUSTRIES CORPORATION¥

27,530 ¥30,10819,34916,17528,96013,366

260,479
183,073

100

2,309

(391)

946

5,750

3,912

4,482

54,405

(98)

(26)

(87)

(928)

52,631 ¥

52,478¥46,330$497,975

2004

2003

2002

2004

Assets:Automobile¥ 338,247 ¥ 328,370 ¥ 317,133$ 3,200,369

Materials handling equipment

406,384

337,453

319,335

3,845,056

Textile machinery

24,74430,922

22,323

234,119

Others100,626

51,83931,640952,086

1,141,994

901,807

Corporate assets or elimination
Total

1,079,970

10,805,128¥ 2,011,995 ¥1,650,391 ¥1,770,401$19,036,758¥$

Notes to Consolidated Financial Statements

Thousands of
U.S. dollars

Millions of yen

Depreciation and amortization:
Automobile
Materials handling equipment
Textile machinery

35,793 ¥34,157 ¥33,40323,53820,801

18,882

338,660
222,708

931

1,006

797

8,809

Others

5,443

3,487

2,307

51,500

Corporate or elimination of intersegment transactions

(353)

(297)

(215)

(3,340)¥65,352 ¥59,154 ¥55,174$

618,337¥

48,793 ¥49,380 ¥61,023$

461,661

Materials handling equipment

32,20524,35026,337

304,712

Textile machinery

1,204

2,164

523

11,392Others

7,749

12,068903

73,318

Corporate or elimination of intersegment transactions

(442)

(403)

(466)

(4,182)89,509 ¥87,559 ¥88,320

Total
Capital expenditures:
Automobile

Total

¥

$

846,901

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

Corporate assets included in corporate assets or elimination

investments and investments in securities held by theconsist mainly of cash and cash equivalents, short-term

Company.

ANNUAL REPORT 2004 — TOYOTA INDUSTRIES CORPORATION

71

(2) Geographical segments
Notes to Consolidated Financial Statements

As of and for the years ended March 31, 2004, 2003 and 2002:
Thousands of
U.S. dollars

Millions of yen

2004

2003

2002

2004

¥ 675,346$ 7,429,776

Sales:
Japan
Outside customer sales¥ 785,253 ¥ 733,869

Intersegment transactions

87,271

78,51861,097825,726

872,524

812,387

736,443

8,255,502

Outside customer sales

198,753

192,385

180,535

1,880,528

Intersegment transactions

1,113

1,411

1,392

10,531

199,866

193,796

181,927

1,891,059

167,512

139,515

121,036

1,584,937

North America

EuropeOutside customer sales
Intersegment transactions

5,896

4,899

5,426

55,786

173,408

144,414

126,462

1,640,723

Others
Outside customer sales

12,861

3,450

3,246

121,686

Intersegment transactions

1,630

1,034

652

15,422

Subtotal
Elimination of intersegment transactions
Total

14,491

4,484

3,898

137,108

1,260,289

1,155,081

1,048,730

11,924,392(95,910)(85,862)(68,567)(907,465)¥ 1,164,379 ¥1,069,219¥ 980,163$11,016,927¥ 826,696 ¥ 767,342¥ 695,442$ 7,821,894

Operating costs and expenses:
Japan
North America

193,745

187,596

177,442

1,833,145

Europe170,263

142,469

125,345

1,610,966

Others

14,623

4,560

4,011

138,357(93,579)

Elimination of intersegment transactions
Total(85,226)(68,407)(885,410)¥ 1,111,748 ¥1,016,741¥ 933,833$10,518,952

¥

¥

$

Operating income (loss):Japan

45,828 ¥45,045

North America

6,121

6,200

4,485

57,914

Europe

3,145

1,945

1,117

29,757

(132)

(76)

(113)

(1,249)(2,331)

(636)

(160)

(22,055)

OthersElimination of intersegment transactions
Total

72

ANNUAL REPORT 2004 — TOYOTA INDUSTRIES CORPORATION¥

52,631 ¥

52,478¥41,001

46,330$433,608

497,975

2004

2003

2002

2004

Assets:Japan¥

643,180 ¥ 554,034 ¥ 511,856$ 6,085,533

North America

136,830

144,739

156,188

1,294,635

Europe238,388

223,446

202,078

2,255,540

Others

22,082

9,759

5,757

208,932

Corporate assets or elimination

971,515

718,413894,522

9,192,118¥ 2,011,995 ¥ 1,650,391 ¥1,770,401$ 19,036,758

Total
Significant countries or areas belonging to each segment as of March 31, 2004 are as follows:

Notes to Consolidated Financial Statements

Thousands of
U.S. dollars

Millions of yen

North America .................................. U.S.A., Canada
Europe ............................................. Sweden, France, Germany
Others .............................................. China, India

Corporate assets included in corporate assets or elimination

investments and investments in securities held by theconsist mainly of cash and cash equivalents, short-term

Company.

(3) Overseas sales
For the years ended March 31, 2004, 2003 and 2002:
Thousands of
U.S. dollars

Millions of yen

2004

2003

2002

2004

¥181,177$ 1,862,626

160,456

1,997,171

Overseas sales:
North America
EuropeOthers¥ 196,861 ¥ 192,422
211,081

181,347

89,41577,82554,837

846,012

Total¥ 497,357 ¥ 451,594¥396,470$ 4,705,809

Total sales¥ 1,164,379 ¥1,069,219¥980,163$11,016,927

Ratio of overseas sales to total sales (%):
North America

16.9%

18.0%

18.5%

Europe

18.1

17.0

16.4

Others

7.7

7.2

5.5

42.7%

42.2%

40.4%

Total
Significant countries or areas belonging to each area as of March 31, 2004 are as follows:
North America .................................. U.S.A., Canada
Europe ............................................. Germany, France, Italy
Others .............................................. China, Australia, Pakistan

ANNUAL REPORT 2004 — TOYOTA INDUSTRIES CORPORATION73

19. Related party transactions
Notes to Consolidated Financial Statements

The following transactions were carried out with related parties:(1) Sales of goods and services for the years ended March 31, 2004, 2003 and 2002 were as follows:
Thousands of
U.S. dollars

Millions of yen

Toyota Motor Corporation
Toyota Motor Corporation held 24.1% of the Company’s shares

2004

2003

2002

2004

¥406,267¥417,058¥410,995$ 3,843,949

on commercial terms and conditions.

as of March 31,2004. The above transactions were carried out(2) Purchase of goods and services for the years ended March 31, 2004, 2003 and 2002 were as follows:
Purchase of goods:
Thousands of
U.S. dollars

Millions of yen

Toyota Motor Corporation

2004

2003

2002

2004

¥285,412¥293,853¥284,531$ 2,700,464

Purchase of services:
Thousands of
U.S. dollars

Millions of yen

2004
Toyota Industries Health Insurance Society

2003

2002

2004

¥ 66

¥ 69

¥ 72

Toyota Medical Corporation

37

39

42

350

Toyota Technological Institute

50

–

–

473

¥ 153

¥108

¥114

$1,447

Total

$ 624

Toyota Industries Health Insurance Society’s chairman as ofof the Company and holds 0.05% of the Company’s shares.

March 31, 2004, 2003 and 2002 was Shiro Endo, who is a

Toyota Technological Institute’s chairman as of March 31, 2004

director of the Company and holds 0.01% of the Company’s

was Tatsuro Toyoda, who is a director of the Company andshares. Toyota Medical Corporation’s chairman as of March 31,

holds 0.08% of the Company’s shares. The transactions above

2004, 2003 and 2002 was Yoshitoshi Toyoda, who is a director

were carried out on commercial terms and conditions.

(3) Outstanding balances arising from sale/purchase of goods/services as of March 31, 2004 and 2003 are as follows:
Receivables from a related party:
Millions of yen

Toyota Motor Corporation

Thousands of
U.S. dollars

2004

2003

2004

¥23,421¥ 21,108$ 221,601

Payable to a related party:
Millions of yen

Toyota Motor Corporation

74

ANNUAL REPORT 2004 — TOYOTA INDUSTRIES CORPORATION

Thousands of
U.S. dollars

2004

2003

2004

¥29,247¥ 29,753$ 276,724

20. Net income per share (EPS)
Thousands of
U.S. dollars

Millions of yen

2004

2003

2004

¥ 33,623¥ 21,933$318,128

330

329

3,122
315,006

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

33,293

21,603Weighted-average shares (thousand)

308,144

307,813

Net income per share (exact yen)

¥ 108.04

¥

¥

¥

–

70.19

$

1.02

157

$

114

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

12
18,468¥ 101.97

38,153¥62.90

Notes to Consolidated Financial Statements

Bases of calculation for net income per share and net income per share diluted for the years ended March 31, 2004 and 2003 are as follows:

–
$

0.96

ANNUAL REPORT 2004 — TOYOTA INDUSTRIES CORPORATION

75

Report of Independent Accountants
Report of Independent Accountants

Report of Independent Auditors

To the Board of Directors and Shareholders of
Toyota Industries Corporation

We have audited the accompanying consolidated balance sheets of Toyota Industries
Corporation and its consolidated subsidiaries as of March 31, 2004 and 2003, and the related
consolidated statements of income, shareholders' equity, and cash flows for the years thenended, all expressed in Japanese Yen. These consolidated financial statements are theresponsibility of the Company's management. Our responsibility is to express an opinion onthese consolidated financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted in Japan.
Those standards require that we plan and perform the audit to obtain reasonable assurance
about whether the consolidated financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and disclosures in the
consolidated financial statements. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating the overall
consolidated financial statement presentation. We believe that our audits provide a reasonablebasis for our opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in all material
respects, the consolidated financial position of Toyota Industries Corporation and its consolidated
subsidiaries as of March 31, 2004 and 2003, and the consolidated results of their operations andtheir cash flows for the years then ended in conformity with accounting principles generally
accepted in Japan.
The amounts expressed in U.S. dollars, which are provided solely for the convenience of thereader, have been translated on the basis set forth in Note 1 to the accompanying consolidated
financial statements.

ChuoAoyama PricewaterhouseCoopers
Nagoya, Japan
June 22, 200476

ANNUAL REPORT 2004 — TOYOTA INDUSTRIES CORPORATION

Toyota Industries
Close-up
Founded in 1926 by Japanese inventor Sakichi Toyoda as a manufacturing
company of automatic looms, Toyota Industries has grown into a diverse
enterprise covering a wide range of businesses, including textile machinery,automobiles, materials handling equipment and electronics.
The following pages provide a closer look at our extensive range of businessfields and product groups.

Materials Handling Equipment

78

Automobile

82

Compressor Division

82

Vehicle Division

83

Engine Division

83

Electronics

84

Textile Machinery

85

Others85

ANNUAL REPORT 2004 — TOYOTA INDUSTRIES CORPORATION

77

Toyota Industries Close-up
Materials Handling Equipment

Toyota Industries Close-up

TOYOTA Material Handling Company
A Solid Presence in World Markets
TOYOTA Material Handling Company (“TMHC”) develops,
manufactures and markets a wide array of industrial vehicles.
TMHC is a world leader in forklift trucks, with a full lineup ofinternal combustion and electric forklift trucks that range incapacity from 0.5 tons to over 40 tons. TMHC also offers skid
steer loaders, tow tractors and other industrial vehicles.
Additionally, TMHC manufactures and markets materials handlingsystems for picking, conveying, storing and sorting — such as
racks, automatic guided vehicle systems, and automatedstorage and retrieval systems — to address customer needs forenhancing the efficiency of their materials handling operations.
TMHC’s wealth of accumulated know-how in materials handlingis based on the Toyota Production System and helps TMHC
provide customers with optimal materials handling solutions.
Note: TMHC is an in-house company (a division of Toyota Industries) and not a legallyincorporated entity. Toyota Industries’ materials handling systems such as racks,
automatic guided vehicle systems, and automated storage and retrieval systems are
sold only in Japan.

Products for the Japanese Market — Industrial Vehicles

GENEO (7FD25)
Internal Combustion
Counterbalanced Forklift Truck

GENEO-R (7FBR15)
Electric Reach Truck78

ANNUAL REPORT 2004 — TOYOTA INDUSTRIES CORPORATIONGENEO-B (7FB15)
Electric Counterbalanced
Forklift Truck

2TG25
Tow Tractor

GENEO-E (7FBE15)
Three-Wheel ElectricCounterbalanced
Forklift Truck

Jobsun (4SDK8)
Skid Steer Loader

Toyota Industries Close-up

Products for the Japanese Market — Materials Handling Systems

Partner Rack
(Rail-Less Mobile Type)
Rail-Less Mobile Rack

Rack Sorter B

Rack Sorter P

Automated Storage andRetrieval System (Plastic Container Type)

Automated Storage andRetrieval System (Pallet Type)Road Sorter H(ACBH10)
Automatic Guided Vehicle System

2AFBR15APLB8Automatic Guided Forklift Truck

Automatic Guided Pallet Truck

Materials Handling Equipment

Aichi Corporation
Truck Mount Aerial Work Platforms

Self-Propelled Aerial Work
Platforms

Leading the JapaneseMarket for Aerial Work
Platforms
Aichi Corporation (“Aichi”) is a
top manufacturer of specialpurpose vehicles, with anapproximately 66% share of
the Japanese market for aerial
work platforms in fiscal 2004.
Aichi aims to serve as an
indispensable partner tocustomers in providing
solutions to their needs.

SE-08A

RM04B
SH-15A

TZ-10A type “RR”

SC40A

SR-18AJ

ANNUAL REPORT 2004 — TOYOTA INDUSTRIES CORPORATION

79

Toyota
Industries
Close-upToyotaIndustries
Close-upToyota Industries Close-up

Products for the North American Market

7FGU707FGCU25

7FGCU35-BCS

Internal Combustion Pneumatic Tire
Counterbalanced Forklift Truck

Internal Combustion Cushion Tire
Counterbalanced Forklift Truck

Internal Combustion Cushion Tire
Counterbalanced Forklift Truck—
Boxcar Special Model

7FBEU15

7FBCU25

7BRU23Three-Wheel ElectricCounterbalanced Forklift Truck

Electric Cushion Tire
Counterbalanced Forklift Truck

Electric Reach Truck

7FG/DF30

7FBMF45

7FBRE14

Internal Combustion Counterbalanced
Forklift Truck with Deluxe Cabin

Electric Counterbalanced Forklift Truck

Electric Reach Truck

7PML20

7FBEF18

LOP10CFElectric Pallet Truck

Three-Wheel Electric Counterbalanced
Forklift Truck

Low-Level Order Picker with Elevating Cabin

Products for the European Market

80

ANNUAL REPORT 2004 — TOYOTA INDUSTRIES CORPORATION

Materials Handling Equipment

Global Supplier of Warehouse Trucks
Headquartered in Sweden, BT Industries AB (“BT Industries”) is
the world’s leading supplier of warehouse trucks.
BT Industries manufactures in seven plants in Europe andNorth America, where the company has particularly strong
customer bases. BT Industries’ products contribute to efficientmaterials handling operations for customers in over 70 countries.
BT Industries meets the needs of the entire spectrum ofmaterials handling, with products including hand pallet trucks,
electric pallet trucks, reach trucks, very narrow aisle trucks andcounterbalanced forklift trucks. Some examples are shown
below.

Toyota Industries Close-up

BT Industries GroupBT Products

BT PRO LIFTERBT PRO LIFTER M

BT ORIONBT IXION

Hand Pallet Truck

Motorized Hand Pallet Truck

Electric Pallet Truck

Stacker Truck

BT REFLEX AC

BT OPUSBT OPALBT VECTORBT CARGO

Reach Truck

Low-Level Order Picking
Truck

High-Level Order Picking
Truck

Very Narrow Aisle Truck

Counterbalanced Truck

Raymond Products

Raymond Model 7400
Reach-Fork Truck

Raymond Model 112
Pallet Truck

Reach Truck

Electric Pallet Truck

Raymond EASi Pacer
Stand-Up
Counterbalanced Truck

Raymond EASi
Orderpicker Truck

RaymondSwing-Reach Truck

Order Picking Truck

Very Narrow Aisle Truck

Electric Counterbalanced Truck

ANNUAL REPORT 2004 — TOYOTA INDUSTRIES CORPORATION

81

Toyota Industries Close-up
Automobile

Toyota Industries Close-up

Compressor Division
Compressors — the Core of Car Air-Conditioners
Car air-conditioners use the vaporized heat of refrigerants to cool
the interiors of cars. The core of a car air-conditioner is thecompressor. Boasting the top share of the world market for car
air-conditioning compressors, Toyota Industries is a leading
manufacturer of car air-conditioning compressors, employing
outstanding, unrivaled technologies. These products include acontinuous variable displacement compressor that automaticallycontrols cooling in accordance with cabin temperature and theload on the engine. Our compact, lightweight 10-cylinder
compressors with swash plate and fixed displacement are widelyadopted by automakers in Japan and overseas. Additionally, withthe aim of environmental protection, we are developing
compressors that offer superb fuel efficiency and use CFC
substitutes. The Division is also working on the development ofelectrically driven car air-conditioning compressors andcompressors that use CO2, a natural refrigerant.

Compressor

Cooling unit
expansion valve
evaporator
Receiver and drier
Condenser

Toyota Industries manufactures compressors — devices that pressurize refrigerant gas,
which must give off heat to liquefy (condense). When subject to increased pressurization,
refrigerant gas becomes comparatively easier to liquefy. To cool the interior of vehicles,
liquid (refrigerant) is cycled throughout a sealed air-conditioning system through a repeatedprocess of vaporization (evaporation), liquefaction and re-vaporization.

Fixed Displacement Type

10S17 Compressor

SCS06 Compressor

SV07 Compressor(Fixed Displacement,
Swash Plate Type)(Scroll Type)(Vane Type)Continuous Variable Displacement Type82

For Hybrid Vehicles

Auxiliary Car Heater

7SBU16 Compressor

7SEU16 Compressor

ES18 Electric Compressor

Viscous-Type Power Heater(Variable Displacement,
Swash Plate Type)(Externally Controlled,
Variable Displacement,
Clutchless Type)(Hermetic Scroll Type)(Vehicle Cabin Supplementary
Heater)

ANNUAL REPORT 2004 — TOYOTA INDUSTRIES CORPORATION

Automobile

Building Safe, Environment-Friendly Cars
Toyota Industries currently assembles the Vitz (Yaris in Europe),
RAV4 and Corolla Sedan under consignment from TMC. The
fuel-efficient, environment-friendly Vitz is positioned as TMC’s

Vitz

strategic small car in global markets. The RAV4 sport utility
vehicle is exported to the United States and Europe, while theCorolla Sedan is exported to the United States.

Toyota Industries Close-up

Vehicle Division

Corolla Sedan(Yaris in Europe)

RAV4

Automobile

Engine Division
From Small Cars to Large Industrial Vehicles
Toyota Industries manufactures diesel and gasoline engines
ranging in capacity from 1500cc to 5200cc. Our car engines are
manufactured on consignment from TMC and are all fitted in
TOYOTA cars. In collaboration with TMC, we are developing
environment-friendly diesel engines for automobiles that offer

high power and lighter weight, as well as low noise and vibration.
Superior in output and environmental impact, our industrial
engines are fitted in forklift trucks and other industrial vehicles
manufactured by TMHC as well as in gas heat pumps and bus
air conditioners.

Diesel Engines

Gasoline Engines

1CD Diesel Engine

1HD-FTE Diesel Engine

2UZ Gasoline Engine

1FZ-FE Gasoline Engine(Displacement: 2.0 Liters,
Used in the Avensis, RAV4and Corolla for Europe)(Displacement: 4.2 Liters,
Used in the Land Cruiser)(Displacement: 4.7 Liters,
Used in the Lexus LX470
and the Land Cruiser)(Displacement: 4.5 Liters,
Used in the Land Cruiser)

ANNUAL REPORT 2004 — TOYOTA INDUSTRIES CORPORATION

83

Toyota Industries Close-up
Electronics

Toyota Industries Close-up

Corporate Technical Center
The Corporate Technical Center carries out product planning,
design and manufacture of products related primarily to power
supply and communications. The Center manufactures DC-AC
inverters and DC-DC converters for hybrid cars, both of which
are fitted in TOYOTA cars. It also develops and manufactures
wireless LAN modules. Functioning as Toyota Industries’ R&D
base, the Center is involved in basic R&D in materials and otherfields. The Center also conducts research in such leading-edge
electronics fields as organic light-emitting diodes and radio tuner
modules.

DC-DC Converter
for the Prius

Wireless LAN
ModuleDC-AC Inverter

Radio Tuner
Module(Pre-Installed Type)Electronics

ST Liquid Crystal Display Corp.
ST Liquid Crystal Display Corp. (“ST-LCD”) was established in
1997 as a 50-50 joint venture with Sony Corporation to
manufacture low-temperature polysilicon TFT-LCD panels.
Combining Sony’s superb LCD technology and Toyota
Industries’ expertise in quality control and manufacturing
technology, ST-LCD produces high-quality, high-performance
LCD panels using the Toyota Production System. These LCD
panels are energy-efficient and offer high resolution as well as
high numerical aperture. They also facilitate the integration of thedisplay device and its driver circuits into a single TFT glass
substrate. The resultant reduction in cost and miniaturization of
the display unit allow the LCD panel to be used in a wide range
of applications, including mobile phones, digital video and stillcameras, and personal digital assistants.
Low-Temperature
Polysilicon TFT-LCDs

Electronics

TIBC Corporation
TIBC Corporation (“TIBC”), a joint venture between Toyota
Industries and Ibiden Co., Ltd., manufactures ball grid array(BGA) plastic package substrates and flexible printed circuit(FPC) substrates for smart cards. TIBC’s products are soldthrough Ibiden to major integrated device manufacturers
worldwide for use in a wide range of electronic and informationequipment.
Ball Grid Array (BGA)
Plastic Package Substrates

84

ANNUAL REPORT 2004 — TOYOTA INDUSTRIES CORPORATION

Flexible Printed Circuit (FPC)
Substrates

Textile Machinery

Innovation and Creativity in the Global Textile Industry
Tracing its origin to the founding of Toyota Industries, the Textile
Machinery Division develops and produces spinning and weaving
machinery, which is marketed to customers around the world. To
stay ahead of ever-advancing market needs, the Textile
Machinery Division is enhancing its products with the latest

communications, mechatronics and other technologies. Toyota
Industries is a global leader in the manufacture of air-jet looms,
ring spinning frames and roving frames. The Textile Machinery
Division continues its commitment to customer satisfaction witha complete range of high-quality products that meet the needs oftoday’s global textile industry.

Toyota Industries Close-up

Textile Machinery Division

Weaving Machinery

JAT710 Air-Jet Loom

LW600 Series Water-Jet Loom

Mackee Eagle
Sizing Machine for Spun Yarn

Filamaster Express 610
Sizing Machine for Filament Yarn

Spinning Machinery

RX240NEW Ring Spinning Frame

FL100 Roving Frame

DX8 Drawing Frame

VC5A Comber

OthersAutomotive Stamping Dies
Superior Stamping Die Manufacturing
Technologies
Toyota Industries designs and manufactures high-precision,
high-quality automotive stamping dies for its Vehicle Division and
TMC. Toyota Industries will continue to contribute to TMC’s
production of superior vehicles with stamping dies that offer
excellent quality, cost efficiency and fast delivery times.

Stamping Dies

OthersManufacturing Equipment
Designing and Producing Manufacturing
Equipment In-House
Toyota Industries carries out in-house manufacturing of key
machining and assembly equipment for its various divisions suchas the Compressor Division, Engine Division and ST-LCD, giving
them a competitive edge.
Sealing Equipmentfor LCDs

NC Machine Tool
for Aluminum Parts

ANNUAL REPORT 2004 — TOYOTA INDUSTRIES CORPORATION

85

Major Developments in Toyota Industries’ History
Major Developments in Toyota Industries’ History

1920s

1940

1960

Toyoda Automatic Loom Works, Ltd.
(now Toyota Industries Corporation)
established to manufacture andmarket automatic looms invented by
Sakichi Toyoda.

Steel Production Division separates
and becomes Toyoda Steel Works,
Ltd. (now Aichi Steel Corporation).

Shovel loader production starts.

1944

Sakichi Toyoda

Obu Plant starts operations,producing castings.

Toyoda Automatic Loom TypeG invented by Sakichi Toyoda.

86

Car air-conditioning compressor(CC3A type, CC3B type) production
starts.

1963
Dump truck production starts.
Friction welder production starts.

1929

1949

1964

Spinning frame production starts.

Company stock listed on Tokyo,
Osaka and Nagoya Stock Exchanges.

J-type diesel engine production starts.

Automatic loom patent sold to PlattBrothers & Co., Ltd. of the U.K.

1930s
1933
Automobile Division set up.

1950s
1952
Automobile engine (S-type gasoline
engine) production starts.

1967

1934

Nagakusa Plant starts operations,producing small commercial vehicles.

A-type automobile engine completed.

Publica (van) and Mini Ace(automobile) production starts.

1935
Prototype of Model A1 passenger carcompleted.

1953
Kyowa Plant starts operations,producing engines and assembling
automobiles.

1955
Company unveils Model G1 truck at a
new-car-release exhibition in Shibaura,
Tokyo.

1924

1960s

1926

Founder

Sakichi Toyoda was born inShizuoka Prefecture, Japan, in
1867. He became an inventor
while still in his teens anddevoted his life to the study
and development of textile
machinery. Starting with awooden handloom, he
subsequently pioneered a new
era in textile machinery withinventions that included
Japan’s first power loom, thecircular loom and the Toyoda
Automatic Loom Type G.
Sakichi was awarded 84
patents and 35 utility models in
his lifetime and is rememberedwith pride in Japan as one of
the world’s greatest inventors.
We at Toyota Industries areproud to carry on theengineering spirit of ourillustrious founder.

1940s

Automobile Division separates andbecomes Toyota Motor Co., Ltd. (nowToyota Motor Corporation).

ANNUAL REPORT 2004 — TOYOTA INDUSTRIES CORPORATIONElectric counterbalanced forklift truck
production starts.

Vehicle Division set up.

1968

1956

Open-end spinning machine
production starts.

Forklift truck production starts.

1959
1937

Publica (van)P-type gasoline engine production
starts.

2000s

1985

1995

1970

Engine Division separates from
Vehicle Division.

Takahama Plant starts operations,producing industrial vehicles.

10PA-type compressor production
starts.

Toyota Industrial Equipment, S.A.
(“TIESA”) established in France as a
joint venture with Toyota Motor
Corporation and Manitou B.F.

1971

1986

7SB-type compressor production
starts.

Corolla (van) production starts.

Company awarded the Deming Prize
for quality control implementation.

B500 electric counterbalanced forklift
truck production starts.

X300 series forklift truck production
starts.

2UZ-type gasoline engine production
starts.

1987

Kirloskar Toyoda Textile Machinery
Ltd. (“KTTM”) established in India asa joint venture with the Kirloskar
Group.

Sprinter Cielo (exported as the Corolla
Lift Back) production starts.

1996

2001

JAT610 air-jet loom production starts.

GENEO-R (7FBR outside Japan)
reach truck production starts.

Divisional organization system
introduced (3 divisions: Textile
Machinery, Industrial Vehicle, andVehicle).
Toyoda-Sulzer Manufacturing Ltd.
established as a joint venture with
Sulzer Brothers, Ltd. of Switzerland to
produce projectile looms.

Electronics Sub-Division set up.

1974
6P-type compressor production
starts.

1977
Swash plate compressor technology
licensed to Chrysler and Ford.
Compressor Division separates from
Textile Machinery Division.

1978

1988

1980s
1980
JA-type air-jet loom production starts.

1981
10P-type compressor production starts.

Hekinan Plant starts operations,producing automobile diesel engines.

Higashichita Plant starts operations,producing foundry parts.

Compressor production at Kariya
Plant reaches 100 million units.

TOYOTA Material Handling Company
established as an in-house company.

RX100 ring spinning frame
production starts.

6SE-type compressor production
starts.

RAV4 (SUV) production starts.

1989

ST Liquid Crystal Display Corp.
(“ST-LCD”) established as a joint
venture with Sony Corporation.

Michigan Automotive Compressor,
Inc. (“MACI”) established in Jackson,
Michigan, U.S., as a joint venture with
DENSO Corporation.

1990
Sprinter Carib (automobile; exported
as the Corolla Wagon) production
starts.

1998
TD Deutsche Klimakompressor
GmbH (“TDDK”) established inGermany as a joint venture with
DENSO Corporation to produce car
air-conditioning compressors.
GENEO (7FG/D outside Japan) internal
combustion counterbalanced forklift
trucks introduced.

Company receives 1990 PM Excellent
Plant Award.

Name changed to Toyota Industries
Corporation.

2002
Advanced Logistics Solutions Co., Ltd.
(“ALSO”) established to plan overalllogistics operations and operate
distribution centers.
Higashiura Plant starts operations,producing parts for car
air-conditioning compressors.
Toyota Motor Industries Poland
Sp.zo.o. (“TMIP”) established in Poland
as a joint venture with Toyota Motor
Corporation to produce diesel engines.

2003
1992

Corolla Sedan production starts.

Materials Handling System Division
set up.

JAT710 air-jet loom production starts.

Production starts on automatedstorage and retrieval systems.

TIBC Corporation (“TIBC”) established
as a joint venture with Ibiden Co., Ltd.
to produce plastic package substrates.

GENEO-E (7FBE outside Japan)
three-wheel electric counterbalanced
forklift truck production starts.

JAT600 air-jet loom production starts.

10S-type compressor production starts.

1993

1999

Aichi Corporation, a manufacturer of
special-purpose vehicles, becomes a
Toyota Industries subsidiary.

RX200 ring spinning frame production
starts.

Vitz (Yaris in Europe) production starts.

X500 series internal combustion
counterbalanced forklift truck
production starts.

Production starts on C-type diesel
engines for small passenger cars.

BT Industries AB of Sweden, a worldleading manufacturer of warehousetrucks, becomes a Toyota Industries
subsidiary.

1997

1994

1982

LW600 series water-jet loom
production starts.

Company takes over the Industrial
Equipment Sales Division of Toyota
Motor Corporation.

Toyota Industrial Equipment Mfg., Inc.
(“TIEM”) established in Columbus,
Indiana, U.S., as a joint venture with
Toyota Motor Corporation.

1990s
Starlet (automobile) production starts.
Aerial lift equipment production starts.

RX240 ring spinning frame
production starts.

2000

Major Developments in Toyota Industries’ History

1970s

Toyota Industry (Kunshan) Co., Ltd.
(“TIK”) established in China as a joint
venture with Toyota Tsusho
Corporation and Lioho MachineWorks, Ltd.
R500 reach truck production starts.

Company takes over water-jet loom
business from Nissan Texsys Co., Ltd.
1CD-type diesel engine production
starts.
GENEO-B (7FB outside Japan) electriccounterbalanced forklift trucks
introduced.

2004
Toyota Industry Automotive Parts(Kunshan) Co., Ltd. (“TIAP”)
established in China as a joint venturewith Toyota Tsusho Corporation and
Lioho Machine Works, Ltd. to
produce foundry parts.
TD Automotive Compressor Georgia,
LLC (“TACG”) established in the U.S.
as a joint venture with DENSO
Corporation to produce car
air-conditioning compressors.

ANNUAL REPORT 2004 — TOYOTA INDUSTRIES CORPORATION

87

Corporate Organization(As of July 1, 2004)

Corporate Organization

Corporate Auditors
Corporate Auditor’s Office

TOYOTA Material Handling Company*

Board ofCorporate Auditors
Corporate Center

Board of Directors

Management
Committee

Corporate Planning Dept.
Business Reform Office
Audit OfficeBusiness Planning Dept.
Advanced Logistics Project Office
BT OfficeInvestor Relations OfficePublic Affairs Dept.
Global Human Resources Dept.
Global Quality Control Dept.
Osaka Office

Chairman

Textile Machinery Division

Compressor Division

Vehicle Division

Engine Division

President
Business Support Center
Business Operation
Committee

Legal Dept.
Secretarial Dept.
General Administration Dept.
Technical Training Center
Accounting Dept.
Global IT Dept.
Purchasing Dept.
Safety, Health & Environment Dept.
Operations Management Consulting Dept.
Plant Engineering Dept.
Intellectual Property Dept.
Health Care Administration CenterTokyo Office

Corporate Code of Conduct Council
Environmental Committee
Export Supervisory Committee
Safety and Health Committee
Stock Option Committee
Human Resources Development Committee
Information Technology Promotion Committee
Manufacturing Technique Promotion Committee
Technical Committee

88

ANNUAL REPORT 2004 — TOYOTA INDUSTRIES CORPORATION

Corporate Technical Center

Machinery & Tools Sub-Division

Trading & Logistics Sub-Division

Mechatronics Systems Dept.
*TOYOTA Material Handling Company is simply the nameof a division of Toyota Industries Corporation, not alegally incorporated entity.

Directors and Corporate Auditors(As of June 22, 2004)

Directors and Corporate Auditors

Board of Directors

ChairmanPresident

Akira Yokoi*

Tadashi Ishikawa*Executive Vice President

Executive Vice President

Executive Vice President

Executive Vice President

Shozo Nakayama*

Koichiro Noguchi*

Tetsuro Toyoda*

Norio Sato*

Senior Managing Directors
Shiro Endo*
Kazuhiko Takeuchi*
Masazumi Konishi*
Shinjiro Kamimura*
Tatsuo Matsuura*
Iwao Katayama*
Managing Directors
Shigetaka Yoshida
Masafumi Kato
Yasuharu Toyoda
Honorary Chairman

Directors
Tatsuro Toyoda
Kimpei Mitsuya
Hiroya Kono
Kazunori Yoshida
Kenji Takenaka
Kosaku Yamada
Satoshi Kaseda
Shoji Shimo
Yutaka Murodono
Ryoji Inoue
Hirofumi Tsuji
Yukio Yamakita
Takaki Ogawa
Kazue Sasaki

Yoshitoshi Toyoda* Representative Director

Corporate Auditors
Standing Corporate Auditors
Shigetaka Mitomo
Masanori Ito

Corporate Auditors
Kosuke Ikebuchi
Kosuke Shiramizu
Masaaki Furukawa

ANNUAL REPORT 2004 — TOYOTA INDUSTRIES CORPORATION

89

Corporate Data

(As of March 31, 2004)

Corporate Data

Plants and Offices (Parent Company)
Main Products

Kariya Plant
Takahama Plant
Nagakusa Plant
Kyowa Plant
Obu Plant
Hekinan Plant
Higashichita Plant
Higashiura Plant
Head Office and Others
Total

Number of
Employees

Textile machinery, car air-conditioning compressors
Forklift trucks, materials handling systems
Automobiles
Electronics components, manufacturing equipment, stamping dies
Parts for car air-conditioning compressors
Engines
Foundry parts
Parts for car air-conditioning compressors

1,704
1,442
2,096
917
432
1,415
370
87
1,336
9,799

Land Area(1,000 m2)

172
333
267
161
148
271
333
245
755
2,685

Consolidated Subsidiaries
Location

Capital(thousands of the local currency)Japan
Aichi Corporation Group *1 (5 companies)
TIBC Corporation
TOYOTA L&F Tokyo Co., Ltd.
Logistics Planning Tokyo Co., Ltd.
Altex Co., Ltd.
Sun River Co., Ltd.
Izumi Machine Mfg. Co., Ltd.
TOYOTA L&F Keiji Co., Ltd.
Tokyu Co., Ltd.
Mino Tokyu Co., Ltd.
Advanced Logistics Solutions Co., Ltd.
ALTRAN Corporation
Teion Shokuhin Ryutsu Inc.
Toyoda High System, Incorporated
Nishina Industrial Co., Ltd.
Suzaka Nishina Industrial Co., Ltd.
Tokaiseiki Co., Ltd.
Logistec Co., Ltd.
Taikoh Transportation Group *2 (5 companies)
SKE Inc.
SK Maintenance Inc.
Iwama Loom Works, Ltd.
Kawamoto System Corporation
Arti Inc. *3
TOYOTA L&F Shizuoka Co., Ltd.
Hara Corporation
Mizuho Industry Co., Ltd.
Sun Valley Inc. *3
Sun Staff, Inc.
Tokai System Institute Corp.
Shine’s Inc.
ALT Logistics Co., Ltd.
KTL Co., Ltd.
Toyota Industries Well Support Corporation

90

ANNUAL REPORT 2004 — TOYOTA INDUSTRIES CORPORATION

–
Aichi
Tokyo
Tokyo
Shizuoka
Osaka
Aichi
Kyoto
Aichi
Gifu
Aichi
Aichi
Tokyo
Aichi
NaganoNaganoShizuoka
Aichi
–
Aichi
Aichi
Aichi
Aichi
Aichi
Shizuoka
Gifu
Aichi
Aichi
Aichi
Aichi
Aichi
Aichi
Tokyo
Aichi

–
¥3,250,000¥350,000¥10,000¥200,000¥150,000¥150,000¥140,000¥135,000¥18,000¥100,000¥100,000¥55,000¥100,000¥100,000¥50,000¥98,000¥90,000–¥78,500¥50,000¥49,920¥47,000¥30,000¥30,000¥23,193¥20,000¥20,000¥20,000¥10,000¥10,000¥20,000¥100,000¥10,000

EquityOwnership

–
60.0%
90.0%
100.0%
75.0%
100.0%
60.7%
65.0%
63.3%
93.4%
100.0%
60.0%
60.0%
90.0%
69.2%
96.8%
92.1%
100.0%–
100.0%
70.0%
100.0%
100.0%
100.0%
90.0%
100.0%
93.8%
100.0%
100.0%
100.0%
100.0%
60.0%
50.5%
100.0%

Location

CapitalMjölby, Sweden–
Mjölby, Sweden
Parma, Michigan, U.S.A.
Schaumburg, Illinois, U.S.A.
Columbus, Indiana, U.S.A.
Irvine, California, U.S.A.
Grapevine, Texas, U.S.A.
Santa Fe Springs, California, U.S.A.
Charlotte, North Carolina, U.S.A.
Schaumburg, Illinois, U.S.A.
–
Straßgräbchen, Germany
Bangalore, Karnataka, India
Kunshan, Jiangsu, China
Shanghai, China
Trondheim, Norway
Trondheim, Norway
Vejle, Denmark
Vejle, Denmark
Ancenis, France
Duisburg, Germany
Castleford, West Yorkshire, U.K.
Castleford, West Yorkshire, U.K.
Ancenis, France
Bologna, Italy–São Paulo, Brazil

EquityOwnership

SEK6,652,977–
SEK25,000
US$146,000
US$37,900
US$60,000
US$12,500
US$2,000
US$1,500
US$1,300
US$100–EUR20,452
Rs2,426,200
US$16,000
US$1,000
NOK110,000
NOK100
DKK9,000
DKK500EUR9,000
EUR720
GBP48
GBP1,243
EUR75
EUR3,249–
R$26,510

100.0%–
100.0%
60.0%
100.0%
100.0%
100.0%
60.0%
100.0%
100.0%
100.0%
–
65.0%
95.1%
70.0%
70.0%
100.0%
100.0%
100.0%
100.0%
60.0%
100.0%
100.0%
100.0%
100.0%
100.0%–
100.0%

CapitalEquityOwnership

Corporate Data

Outside Japan
Toyota Industries Sweden AB *4
BT Industries Group *4*5 (64 companies)
Toyota Industries Finance International AB *4
Michigan Automotive Compressor, Inc.
Toyota Industries North America, Inc. *6
Toyota Industrial Equipment Mfg., Inc. *6
Toyota Material Handling USA, Inc. *6
ACTIS Manufacturing, Ltd. LLC *6
Toyota-Lift of Los Angeles, Inc. *6
Toyoda Textile Machinery, Inc. *6
Toyota Industries Personnel Service of America, Inc.*6
Aichi Corporation Group (1 company) *1
TD Deutsche Klimakompressor GmbH
Kirloskar Toyoda Textile Machinery Limited
Toyota Industry (Kunshan) Co., Ltd.
Toyota Material Handling (Shanghai) Co., Ltd.
Toyota Truck Norge AS
Toyota Truckutleie Norge AS
Toyota Truck Danmark A/S
Toyota Truckudlejning Danmark A/S
Toyota Industrial Equipment, S.A.
Toyota Gabelstapler Deutschland GmbH
Toyota Industrial Equipment (UK) Limited
Toyota Industrial Equipment (Northern) Limited
Toyota Industrial Equipment Europe, S.A.R.L.
Toyota Carrelli Elevatori Italia S.r.l.
Toyota Industries Corporation Australia Group *7 (8 companies)
Toyota Industries Mercosur Ltda.

(thousands of the local currency)

Unconsolidated Subsidiary Accounted for by the Equity Method
Location(thousands of the local currency)

Outside JapanBT Industries Group *5 (1 company *8)

–

–

–

Affiliates Accounted for by the Equity Method
Location

Capital(thousands of the local currency)Japan
ST Liquid Crystal Display Corp.
Fuji Logistics Co., Ltd.
Aichi Corporation Group (1 company) *1
Outside JapanBT Industries Group *5 (15 companies)
Aichi Corporation Group (1 company) *1

Aichi
Tokyo
–
–
–

EquityOwnership¥50,000,000¥2,979,670
–

50.0%
26.8%
–

–
–

–
–

*1 Aichi Corporation Group comprises Aichi Corporation, its five subsidiaries and two affiliates. Aichi Corporation is headquartered in Aichi and capitalized at ¥10,425 million.
Toyota Industries Corporation holds 51.0% of the outstanding shares of Aichi Corporation. Aichi Corporation is slated to move its headquarters to Saitama Prefecture on October 1, 2004.
*2 Taikoh Transportation Group comprises Taikoh Transportation Co., Ltd. and its four subsidiaries.Taikoh Transportation Co., Ltd. is headquartered in Aichi and capitalized at ¥83,985 thousand.
Toyota Industries Corporation holds 50.2% of the outstanding shares of Taikoh Transportation Co., Ltd.
*3 On April 1, 2004, Arti Inc. and Sun Valley Inc. merged, with Sun Valley Inc. as the successor company. Following the merger, Sun Valley Inc. is capitalized at ¥22,500 thousand.
*4 Toyota Industries Sweden AB is a holding company which holds a 100.0% share of BT Industries AB and Toyota Industries Finance International AB.
*5 BT Industries Group comprises BT Industries AB, its 64 subsidiaries and 15 affiliates. BT Industries AB is headquartered in Mjölby, Sweden and capitalized at SEK560 million.
*6 Toyota Industries North America, Inc. is a holding company that exercises control over Toyota Industrial Equipment Mfg., Inc., Toyota Material Handling USA, Inc., ACTIS Manufacturing, Ltd. LLC,
Toyota-Lift of Los Angeles, Inc., Toyoda Textile Machinery, Inc. and Toyota Industries Personnel Service of America, Inc.
*7 Toyota Industries Corporation Australia Group comprises Toyota Industries Corporation Australia Pty Limited and its seven subsidiaries. Toyota Industries Corporation Australia Pty Limited isheadquartered in Sydney, Australia and capitalized at AUD12 million. Toyota Industries Corporation holds 100.0% of the outstanding shares of Toyota Industries Corporation Australia Pty Limited.
*8 BT Industries AB temporarily holds more than a 50% share of the capital of one subsidiary.
Note: ¥–Japanese yen; SEK–Swedish krona; US$–U.S. dollar; EUR–Euro; Rs–Indian rupee; NOK–Norwegian krone; DKK–Danish krone; GBP–British pound; AUD–Australian dollar, R$–Brazilian real

ANNUAL REPORT 2004 — TOYOTA INDUSTRIES CORPORATION

91

Investor Information(As of March 31, 2004)

Investor Information

Corporate Head OfficeTransfer Agent

TOYOTA INDUSTRIES CORPORATION
2-1, Toyoda-cho, Kariya-shi, Aichi-ken,
448-8671, Japan
Telephone: +81-(0)566-22-2511
Facsimile: +81-(0)566-27-5650

UFJ Trust Bank Limited
1-4-3, Marunouchi, Chiyoda-ku, Tokyo-to 100-0005, Japan
Telephone: +81-(0)3-3287-2211

Major Shareholders
Date of Establishment% ofVoting rights

November 18, 1926
Toyota Motor Corporation
DENSO Corporation
The Master Trust Bank of Japan, Ltd.
Japan Trustee Services Bank, Ltd.
Custodial Trust Company
State Street Bank and Trust Company
Towa Real Estate Co, Ltd.
Nippon Life Insurance Company
Aisin Seiki Co., Ltd.
Toyota Tsusho Corporation

Common Stock
No par value
Authorized: 1,091,245,000 shares
Issued :325,840,640 shares

Stock Exchange Listings
Tokyo, Osaka and Nagoya (Ticker Code: 6201)

24.14
9.34
7.94
3.23
2.91
2.58
2.43
2.12
2.07
1.98

Number of Shareholders
17,322

Independent Accountants
ChuoAoyama PricewaterhouseCoopers
3-28-12, Meieki, Nakamura-ku, Nagoya-shi,
Aichi-ken 450-8565, Japan

Common Stock Price and Trading Volume(Tokyo Stock Exchange)
High
Opening
Closing
Low

High
Closing
Opening
Low

Black: Opening Price > Closing PriceWhite: Closing Price > Opening Price(yen)(thousand shares)

3,500

28,00024,0003,000
Common stock price (left scale)
2,500

20,0002,000

16,000
Trading volume (right scale)

1,500

12,000

1,000

8,000

500

4,000

0

92

4/99

7

10

1/00

4

7

10

1/01

ANNUAL REPORT 2004 — TOYOTA INDUSTRIES CORPORATION

4

7

10

1/02

4

7

10

1/03

4

7

10

1/04

0

Publications
Our Corporate Brochure and Social & Environmental Report are available in both English and Japanese upon written request to the Public
Affairs Department at our Corporate Head Office.

Internet Home Page
Updated information is published regularly on our Web site. (http://www.toyota-industries.com/)

Further Information
For further information, please write to the Investor Relations Office at our Corporate Head Office.

2-1, Toyoda-cho, Kariya-shi, Aichi-ken 448-8671, Japan
Telephone: +81-(0)566-22-2511 Facsimile: +81-(0)566-27-5650
www.toyota-industries.com

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