Management’s Discussion and Analysis ofFinancial Condition and Results of Operations
The following Management’s Discussion and Analysis ofFinancial Condition and Results of Operations is based on
information known to management as of November 30, 2004.
It includes forward-looking statements concerning the expected
future performance of Toyota Industries. Please refer to“Cautionary Statement with Respect to Forward-LookingStatements” at the beginning of this semiannual report, whichpertains to the report as a whole.

Cost of Sales and Selling, General andAdministrative Expenses
Cost of sales for the term totaled ¥505.9 billion, an increaseof ¥27.3 billion, or 5.7%, over the previous term.
Selling, general and administrative expenses totaled¥71.1 billion, an increase of ¥7.1 billion, or 11.0%, over theprevious term.

Non-Operating Income and Expenses

Results of Operations
Net Sales
In the six months ended September 30, 2004 (the “term”),
the Japanese economy achieved a stable recovery, as growthin exports was accompanied by an increase in private-sector
capital investment while consumer spending showed amodest upswing. Overseas, an overall economic recovery
spread amid continued growth in the U.S. economy and amoderate rebound in the European economy.
Under these conditions, Toyota Industries’ consolidated
net sales amounted to ¥607.1 billion, up ¥37.5 billion, or6.6%, over the six months ended September 30, 2003 (the“previous term”).
Toyota Industries’ net sales for the term by geographicalsegment are as follows.
Net sales for each geographical segment do not include
intersegment transactions.

JapanNet sales totaled ¥398.5 billion, an increase of ¥15.1 billion,
or 3.9%, over the previous term. This increase was due
primarily to higher unit sales in the Materials Handling
Equipment Segment.

North America
Net sales totaled ¥105.5 billion, an increase of ¥5.2 billion,
or 5.2%, over the previous term. This increase was mainly
the result of growth in sales volumes by car air-conditioning
compressor manufacturing subsidiaries.

EuropeNet sales totaled ¥90.1 billion, an increase of ¥8.5 billion, or10.5%, over the previous term. This increase primarilyreflected higher unit sales of forklift truck manufacturingsubsidiaries and car air-conditioning compressor
manufacturing subsidiaries.

Others
Net sales totaled ¥13.0 billion, an increase of ¥8.7 billion, or202.9%, over the previous term.
* Please refer to “Letter to Shareholders” for results bybusiness segment.

8TOYOTA INDUSTRIES CORPORATIONSEMIANNUAL REPORT 2005

Non-operating income was ¥18.9 billion, an increase of ¥2.9billion, or 18.0%, over the previous term. This increase
resulted mainly from an increase in dividends from Toyota
Motor Corporation (“TMC”) and higher equity in earnings ofST Liquid Crystal Display Corp.
Non-operating expenses decreased ¥2.8 billion, or21.3%, to ¥10.1 billion.

Extraordinary Losses
Toyota Industries decided to implement an early applicationof accounting for impairment of fixed assets ahead ofschedule for the year ending March 31, 2006. As a result,
Toyota Industries recorded impairment loss of fixed assets inthe amount of ¥0.4 billion as an extraordinary loss.
(see note 2 (8))

Income Taxes
Net of current and deferred income taxes, income taxes forthe term totaled ¥12.3 billion, an increase of ¥2.1 billion, or
20.6%, over the previous term.

Minority Interest in Consolidated
Subsidiaries
Minority interest in consolidated subsidiaries increased ¥0.6billion, or 35.3%, to ¥2.3 billion, reflecting an increase in net
income of consolidated subsidiaries.

Net Income
Net income for the term was ¥23.9 billion, an increase of¥6.8 billion, or 40.1%, over the previous term. Net income
per share (EPS) was ¥75.31 compared with ¥58.12 for theprevious term, and diluted net income per share was ¥75.28
compared with ¥51.65 for the previous term.

Financial Position
Total assets at the end of the term stood at ¥2,173.3 billion,
an increase of ¥161.3 billion, or 8.0%, over the previous
fiscal year ended March 31, 2004 (“fiscal 2004”). This
increase was attributable mainly to an increase ininvestments and other assets.
Current assets were ¥369.1 billion, an increase of ¥19.2
billion over fiscal 2004, due mainly to increases in tradenotes and accounts receivable, up ¥6.0 billion, and ininventories, up ¥9.0 billion.
Property, plant and equipment was ¥410.0 billion, anincrease of ¥20.6 billion, or 5.3%, over fiscal 2004.
Intangible assets decreased ¥3.9 billion, or 3.9%, to ¥95.9billion, due to a decrease in goodwill.
Investments and other assets increased ¥125.5 billion, or10.7%, to ¥1,298.3 billion. This increase was mainly theresult of an increase in the market prices of shares of Toyota
Group companies, including TMC, held by Toyota Industries.
Current liabilities stood at ¥366.2 billion, an increase of¥39.9 billion, or 12.2%, over fiscal 2004. Current portion ofbonds increased ¥20.3 billion since certain corporate bonds
became due to mature within one year.
Long-term liabilities were ¥670.6 billion, an increase of¥36.7 billion, or 5.8%, over fiscal 2004. Deferred tax
liabilities increased ¥42.0 billion as a result of an increase inmarket value of investment securities.
Minority interest in consolidated subsidiaries increased¥3.3 billion, or 9.4%, to ¥38.2 billion.
Shareholders’ equity stood at ¥1,098.2 billion, an
increase of ¥81.5 billion, or 8.0%, over fiscal 2004. Net
unrealized gain on other securities increased ¥64.8 billion.
The ratio of shareholders’ equity to total assets was50.5%.

Dividend Policy
Toyota Industries’ dividend policy is based on maintaining
stable dividends while giving full consideration to businessperformance, the dividend payout ratio and other factors as
it makes every effort to meet the expectations ofshareholders. Toyota Industries will use retained earnings to
improve the competitiveness of its products and augment
production capacity in Japan and overseas, as well as toexpand into new fields of business and strengthen its
corporate constitution in securing future profits for its
shareholders. It will also use retained earnings to repurchaseits own shares.
The Board of Directors of Toyota Industries Corporationvoted to distribute an interim cash dividend of ¥13.0 percommon share, an increase of ¥1.0 over the previous term.

Cash Flows
Cash flows from operating activities increased ¥45.2 billion
during the term, due largely to income before income taxes
in the amount of ¥38.5 billion. Net cash provided byoperating activities increased ¥12.9 billion from ¥32.3 billion
during the same period of fiscal 2004. Cash flows frominvesting activities resulted in a ¥55.0 billion decrease in cash
during the term, attributable primarily to payments forpurchases of property, plant and equipment amounting to¥45.9 billion. Net cash used in investing activities increased¥18.5 billion from ¥36.4 billion during the same period offiscal 2004. Cash flows from financing activities resulted in a
¥9.4 billion increase in cash during the term, due mainly toproceeds from long-term loans in an amount of ¥7.8 billion.
Net cash provided by financing activities increased ¥66.2
billion from ¥56.8 billion in net cash used in financing
activities for the same period of fiscal 2004, when
repayments of bonds and payments to convertible bondredemption funds were posted.
After translation adjustments, cash and cash equivalents
as of September 30, 2004 stood at ¥76.8 billion, a decreaseof ¥0.4 billion, or 0.5%, from the end of fiscal 2004.

TOYOTA INDUSTRIES CORPORATIONSEMIANNUAL REPORT 2005

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