Notes to Consolidated Financial Statements
1. Basis of presenting consolidated financial statements
The accompanying interim consolidated financial statements
have been prepared based on the accounts maintainedby Toyota Industries Corporation (the “Company”) and its
consolidated subsidiaries (together, hereinafter referred toas “Toyota Industries”) in accordance with the provisions
set forth in the Corporate Law of Japan and the Financial
Instruments and Exchange Law, and in conformity withaccounting principles generally accepted in Japan, which are
different in certain respects from the application and disclosure
requirements of International Financial Reporting Standards.
Certain items presented in the interim consolidated financial

statements submitted to the Director of Kanto Finance Bureau
in Japan have been reclassified in these accounts for theconvenience of readers outside Japan.
Amounts in U.S. dollars are included solely for theconvenience of readers outside Japan. The rate of¥115.43=US$1, the rate of exchange prevailing at September
30, 2007, has been used in translation. The inclusion of suchamounts are not intended to imply that the Japanese yen
actually represent, or have been or could be converted into,
equivalent amounts in U.S. dollars at this rate or any other rates.

2. Summary of significant accounting policies(1) Consolidation
The interim consolidated financial statements include theaccounts of the Company and its 165 subsidiaries (46 domestic
subsidiaries and 119 overseas subsidiaries, of which major
subsidiaries are listed on pages 24 and 25) as of September 30,
2007 and 159 subsidiaries (45 domestic subsidiaries and 114
overseas subsidiaries) as of September 30, 2006.
For the six-month period ended September 30, 2007, two
subsidiaries were newly added to the scope of consolidationand two companies were excluded from the scope of
consolidation because of liquidation and sale. Additionally, eightsubsidiaries were newly added to the scope of consolidationand five companies were excluded from the scope of
consolidation because of mergers and acquisitions.
For the six-month period ended September 30, 2006, sevensubsidiaries were newly added to the scope of consolidationand one company was excluded from the scope of
consolidation because of mergers and acquisitions.
Some of the affiliates are not accounted for under the equity
method since their net income/losses, retained earnings andother financial amounts are immaterial.
The interim periods of certain subsidiaries are different
from the interim period of the Company. Since the difference
is not more than three months, the Company is using thosesubsidiaries’ statements for their interim periods, making
adjustments for significant transactions that materially affect thefinancial position or results of operations.
The interim periods of certain unconsolidated subsidiaries
and affiliates acounted for by the equity method are different
from the interim periods of the Company. The Company is using
the financial statements of the unconsolidated subsidiaries andaffiliates acounted for by the equity method for thier respective
interim periods.
All significant intercompany transactions, balances andunrealized profits within Toyota Industries have been eliminated.
A full portion of the assets and liabilities of the acquired
subsidiaries is stated at fair value as of the date of acquisition ofcontrol.

In the six-month period ended September 30, 2006, Toyota
Industries Sweden AB and its consolidated subsidiaries decided
to change their fiscal year-end from December 31 to March 31.
As a result, the Company’s consolidated financial statements
include nine months of their operating results.
In May 2007, Toyota Industries Sweden AB changed thecompany name to Toyota Industries Europe AB.

(2) Investments in unconsolidated subsidiaries andaffiliates
Investments in 17 affiliates as of September 30, 2007 andinvestments in 21 affiliates as of September 30, 2006 are
accounted for by the equity method of accounting.
Investments in unconsolidated subsidiaries and affiliates
not accounted for by the equity method are stated at cost
due to their insignificant effect on the consolidated financial
statements.
The major affiliates accounted for by the equity method arelisted on page 25.

(3) Translation of foreign currencies
Foreign currency denominated receivables and payables
are translated into Japanese yen at the exchange rates as of
September 30, 2007 and 2006, and the resulting transaction
gains or losses are included in the consolidated statements ofincome.
All asset and liability accounts of foreign subsidiaries andaffiliates are translated into Japanese yen at the exchange
rates as of September 30, 2007 and 2006, and all revenue andexpense accounts are translated at prevailing average rates forthe interim periods.

(4) Cash and cash equivalents
Cash and cash equivalents include all highly liquid investments,
generally with original maturities of three months or less, thatare readily convertible to known amounts of cash and are sonear maturity that they present insignificant risk of changes invalue because of changes in interest rates.

SEMIANNUAL REPORT 200815

Notes to Consolidated Financial Statements(5) Marketable securities and investments in securities
Toyota Industries classifies securities into four categories
by purpose of holding: trading securities, held-to-maturity
securities, other securities and investments in unconsolidated
subsidiaries and affiliates. Toyota Industries did not have trading
securities or held-to-maturity securities as of September 30,
2007 and 2006.
Other securities with readily determinable fair values arestated at fair value based on market prices at the end of theinterim periods. Unrealized gains and losses are included in “Netunrealized gains on other securities” as a separate componentof net assets. Cost of sales of such securities is determined by
the moving-average method. Other securities without readily
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.

amortized by the straight-line method over their expected
useful lives (mainly five years).
Goodwill, if material, is amortized principally over less than
20 years on a straight-line basis, while immaterial goodwill ischarged to income as incurred.

(9) Impairment of fixed assets
Calculation of the impairment of fixed assets is based onreasonable and supportable assumptions and projection of thegrouping of assets and recoverable value, with due consideration
for the specific conditions of each company. The recoverable
amount of assets is calculated based on net selling price.

(10) Allowance for doubtful accounts
Toyota Industries adopted the policy of providing an allowancefor doubtful accounts in an amount sufficient to cover possible
losses on collection by estimating individually uncollectible
amounts and applying to the remaining accounts a percentage
determined by certain factors such as historical collection
experiences.

(11) Deferred charges(7) Property, plant and equipment, and depreciation
Property, plant and equipment are stated at cost. Depreciation
expenses of property, plant and equipment are computed
mainly by the declining-balance method for the Company
and Japanese subsidiaries and by the straight-line method foroverseas subsidiaries.
Significant renewals and additions are capitalized at cost.
Repair and maintenance are charged to income as incurred.
Accumulated depreciation as of September 30, 2007 and2006 was ¥693,312 million (US$6,006,342 thousand) and¥620,382 million, respectively.
Effective from the fiscal year beginning April 1, 2007, Toyota
Industries changed the depreciation method for property,
plant and equipment acquired on or after April 1, 2007 inaccordance with the revised Corporate Tax Law of Japan. As
a result, operating income decreased ¥821 million (US$7,117
thousand), and ordinary income and income before income
taxes decreased ¥822 million (US$7,125 thousand), respectively.
As for property, plant and equipment acquired before April 1,
2007, Toyota Industries applied the pre-revised depreciation
method during the fiscal year beginning April 1, 2007. Amongthese, property, plant and equipment for which the allowable
limit on the depreciable amount has been reached are to be
depreciated evenly over five years beginning from the following
fiscal year. As a result, operating income decreased ¥899 million(US$7,796 thousand), and ordinary income and income before
income taxes decreased ¥900 million (US$7,797 thousand),
respectively.

(8) Intangible assets and amortization
Amortization of intangible assets is computed using thestraight-line method. Software costs for internal use are

16

TOYOTA INDUSTRIES CORPORATION

Stock issuance costs and bond issuance costs are expensed as
incurred.

(12) Allowance for bonuses to directors andcorporate auditors
Bonuses to directors and corporate auditors are recorded on theaccrual basis with a related charge of income.

(13) 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 period. To provide for the retirement benefits for directors
and corporate auditors, an amount which is calculated at theend of the period as required by an internal rule describing
the retirement benefits for directors and corporate auditors is
accrued.

(14) Lease transactions
Finance leases other than those that are deemed to transfer
the ownership of the leased assets to lessees are accounted
for mainly by a method similar to that applicable to ordinary
operating leases.

(15) Consumption tax
The consumption tax under the Japanese Consumption Tax Law
withheld by Toyota Industries on sales of goods is not includedin the amount of net sales in the accompanying consolidated
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.

(16) Hedge accounting(a) Method of hedge accounting
Mainly the deferral method of hedge accounting is applied.
In the case of foreign currency forward contracts and foreign
currency option contracts, the hedged items are translated atcontracted forward rates if certain conditions are met.
(b) Hedging instruments and hedged items
Hedging instruments:
Derivatives instruments (interest rate swaps, foreign currency
forwards and foreign currency option contracts)
Hedged items:
Risk of change in interest rate on borrowings and risk ofchange in forward exchange rate on transactions denominatedin foreign currencies (assets and liabilities, and forecasted
transactions)interest rate risks and foreign currency risks. Toyota Industries’
hedging activities are reported periodically to a director
responsible for accounting.

(d) Method used to measure hedge effectivenessHedge effectiveness is measured by comparing accumulatedchanges in market prices of hedged items and hedging
instruments or accumulated changes in estimated cash flows
from the inception of the hedge to the date of measurements
performed. Currently it is considered that there are highcorrelations between them.
(e) Others
Due to the fact that counterparties to Toyota Industries
represent major financial institutions which have highcreditworthiness, Toyota Industries believes that the overall
credit risk related to its financial instruments is insignificant.

(c) Hedging policy
Hedging transactions are executed and controlled based on
Toyota Industries’ internal rule and Toyota Industries is hedging

3. Assets pledged as collateral(1) Assets pledged as collateral as of September 30, 2007 and 2006 are as follows:
Thousands of
U.S. dollars

Millions of yen

Investments in securities
Property, plant and equipment
Inventories
Buildings and structures
Machinery, equipment and vehicles
Total

2007

2006

2007

¥54,695
925
413
378
–
¥56,412¥52,265
2,365
–
1,318
1,356
¥57,305$473,837
8,017
3,578
3,283
–
$488,715(2) Secured liabilities as of September 30, 2007 and 2006 are as follows:
Thousands of
U.S. dollars

Millions of yen

Other current liabilities
Short-term bank loans
Long-term debt
Total

2007

2006

2007

¥22,351512
49¥22,913¥21,433856
710¥23,000$193,639
4,437
426$198,503

4. Contingent liabilities
Toyota Industries is contingently liable for guarantees as of September 30, 2007 and 2006 as follows:
Thousands of
U.S. dollars

Millions of yen

2007

Guarantees given by the Company
Guarantees given by consolidated subsidiaries
Guarantee forwards given by the Company¥5,600
408
437

2006

¥4,200
620
508

2007

$48,514
3,537
3,791

SEMIANNUAL REPORT 200817

Notes to Consolidated Financial Statements

5. Leases(1) Finance leases (as a lessee) which do not transfer ownership of leased properties to lessees(a) Pro forma information regarding the leased properties such as acquisition cost and accumulated depreciation, which are notreflected in the accompanying consolidated balance sheets under finance leases as of September 30, 2007 and 2006 is as follows:
Thousands of
U.S. dollars

Millions of yen

Buildings and structures:
Acquisition cost equivalents
Accumulated depreciation equivalents
Buildings and structures net balance equivalents
Machinery and equipment:
Acquisition cost equivalents
Accumulated depreciation equivalents
Machinery and equipment net balance equivalents
Others:Acquisition cost equivalents
Accumulated depreciation equivalents
Others net balance equivalents
Total net leased properties

2007

2006

¥

¥

276
101
175

2007

–
–
–

$

2,395
878
1,517

16,747
8,118
8,629

14,9567,982
6,974

145,090
70,32974,761

14,462
6,643
7,818¥16,623

13,3006,205
7,095¥14,069

125,295
57,55767,738$144,016

Acquisition cost equivalents include the imputed interest expense portion because the percentage which is computed by dividing
future minimum lease payments by total balance of property, plant and equipment as of September 30, 2007 and 2006 is immaterial.
(b) Pro forma information regarding future minimum lease payments as of September 30, 2007 and 2006 is as follows:
Thousands of
U.S. dollars

Millions of yen

Due within one year
Due after one year
Total

2007

2006

2007

¥ 5,290
13,061¥18,352¥ 4,325
9,744¥14,069$ 45,835
113,156$158,991

Future minimum lease payments under finance leases include the imputed interest expense portion.
(c) Total lease payments for the six-month periods ended September 30, 2007 and 2006 are as follows:
Millions of yen

2007
2006

¥2,685
2,865

Thousands of
U.S. dollars$23,266–

Pro forma depreciation expenses, which are not reflected in the accompanying interim consolidated statements of income, arecomputed mainly by the straight-line method, which assumes zero residual value and leasing term to be useful lives for the sixmonth periods ended September 30, 2007 and 2006, and are equivalent to the amount of total lease payments of the above.

18

TOYOTA INDUSTRIES CORPORATION

(2) 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 of
September 30, 2007 and 2006 is as follows:
Thousands of
U.S. dollars

Millions of yen

2007

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

2006¥11,836
6,953¥ 4,883¥8,625
4,804¥3,821

2007$102,547
60,242$ 42,305(b) Pro forma information regarding future minimum lease income as of September 30, 2007 and 2006 is as follows:
Thousands of
U.S. dollars

Millions of yen

2007

Due within one year
Due after one year
Total

2006

¥2,374
6,160¥8,535¥1,0693,223¥4,292

2007$20,568
53,374$73,942

Future minimum lease payments under finance leases include the imputed interest expense portion.
(c) Total lease receipts and depreciation for the six-month periods ended September 30, 2007 and 2006 are as follows:
Thousands of
U.S. dollars

Millions of yen

2007

Total lease payments to be received
Depreciation expenses

2006¥1,575
1,186¥1,097848

2007$13,645
10,275(3) Operating leases (as a lessee)
Pro forma future lease payments under operating leases as of September 30, 2007 and 2006 are as follows:
Millions of yen

Due within one year
Due after one year
Total

Thousands of
U.S. dollars

2007

2006

2007

¥ 8,159
39,844¥48,004¥ 5,417
16,193¥21,611$ 70,687
345,186$415,874(4) Operating leases (as a lessor)
Pro forma information regarding future minimum rentals under operating leases as of September 30, 2007 and 2006 is as follows:
Millions of yen

Due within one year
Due after one year
Total

Thousands of
U.S. dollars

2007

2006

2007

¥17,062
22,939¥40,001¥13,251
24,628¥37,880$147,819
198,729$346,547

SEMIANNUAL REPORT 200819

Notes to Consolidated Financial Statements

6. Marketable securities(1) As of September 30, 2007(a) Other securities with readily determinable fair value are as follows:
Thousands of U.S. dollars

Millions of yen

StocksBonds:
Other bonds
Total

Acquisition cost

Carrying amount

Difference¥227,201¥2,029,977¥1,802,775$1,968,309 $17,586,221 $15,617,912

405¥227,607

405¥2,030,382–¥1,802,775

3,512
3,512
–
$1,971,821 $17,589,733 $15,617,912

Acquisition cost

Carrying amount

Difference(b) Significant contents and carrying amount of securities (excluding held-to-maturity bonds within securities with fair value) without
readily determinable fair value are as follows:
Carrying amountMillions of yen

Other securities:
Domestic unlisted stocks excluding over-the-counter stocks
Money management funds
Negotiable certificates of deposit¥17,606
40,13524,000Thousands of
U.S. dollars$152,533
347,706
207,918(2) As of September 30, 2006(a) Other securities with readily determinable fair value are as follows:
Millions of yen

Stocks
Total

Acquisition cost

Carrying amount¥220,327¥220,327¥1,895,562¥1,895,562

Difference¥1,675,235¥1,675,235(b) Significant contents and carrying amount of securities (excluding held-to-maturity bonds within securities with fair value) without
readily determinable fair value are as follows:
Carrying amountMillions of yen

Other securities:
Domestic unlisted stocks excluding over-the-counter stocks
Money management funds¥18,458
25,021

7. Derivative instruments
Notes relating to derivative instruments are omitted, since Toyota Industries has not used derivative instruments for other thanhedging.

20

TOYOTA INDUSTRIES CORPORATION

8. Segment Information(1) Business segments

Sales:
Automobile
Outside customer sales
Intersegment transactions
Materials Handling Equipment
Outside customer sales
Intersegment transactions
Logistics
Outside customer sales
Intersegment transactions
Textile Machinery
Outside customer sales
Intersegment transactions
Others
Outside customer sales
Intersegment transactions
Subtotal
Elimination of intersegment transactions
Total
Operating costs and expenses:
Automobile
Materials Handling Equipment
Logistics
Textile Machinery
OthersElimination of intersegment transactions
Total
Operating income:Automobile
Materials Handling Equipment
Logistics
Textile Machinery
OthersElimination of intersegment transactions
Total

Millions of yen

Thousands of
U.S. dollars

For the six months
ended September 30

For the six months
ended September 30

2007

2006

2007

¥458,962
11,843
470,806¥431,024
9,972
440,997$3,976,111
102,604
4,078,715

377,333
1,759
379,093388,270310
388,5813,268,936
15,2453,284,182

57,962
3,899
61,861

39,8983,435
43,333502,144
33,778535,92230,788030,78827,495
2
27,497

266,7275
266,73130,714
11,08741,802
984,351(28,590)¥955,760

26,396
11,33337,729938,139(25,054)¥913,085

266,085
96,058362,1428,527,692(247,690)$8,280,002¥451,949
357,155
59,88029,42939,156(28,770)¥908,800¥427,234
365,782
42,781
26,93935,431(25,135)¥873,033$3,915,351
3,094,134
518,757
254,952
339,219(249,244)$7,873,170¥ 18,857
21,937
1,981
1,359
2,646
179
¥ 46,960¥ 13,762
22,799
552
557
2,297
81
¥ 40,051$ 163,363
190,048
17,164
11,77922,923
1,554$ 406,832

1. Business segments are divided by the type and nature of the product.
2. Main products and services of each segment are as follows:
Automobile ........................................................Passenger vehicles, diesel and gasoline engines, car air-conditioning compressors, foundry parts, electronics parts
Materials Handling Equipment.................Counterbalanced lift trucks, warehouse trucks, automated storage and retrieval systems, aerial work platforms
Logistics ...............................................................Transportation services, collection and delivery of cash and management of sales proceeds, total information management
Textile Machinery ............................................Air-jet looms, water-jet looms, ring spinning frames
Others...................................................................Semiconductor package substrates

SEMIANNUAL REPORT 200821

Notes to Consolidated Financial Statements(2) Geographical segments

Sales:
Japan
Outside customer sales
Intersegment transactions

1. Geographical segments are divided into categories based on their geographical proximity.
2. Significant countries or areas belonging to each segment are as follows:
North America ..............................................................U.S.A., Canada
Europe ..............................................................................Sweden, Germany, France
Others...............................................................................Australia, China, Brazil

22

TOYOTA INDUSTRIES CORPORATION

For the six months
ended September 30

For the six months
ended September 30

2006

2007

¥ 634,339
66,240700,579¥579,171
58,800637,972$5,495,449
573,855
6,069,304

139,198972
140,170

154,771952
155,724

1,205,909
8,428
1,214,337

151,838
3,310
155,148

157,7433,436
161,179

1,315,413
28,6791,344,092

30,384
3,804
34,1891,030,088(74,328)¥ 955,760

21,397
2,341
23,739978,615(65,530)¥913,085

263,231
32,962
296,193
8,923,926(643,924)$8,280,002¥660,925
136,883
151,975
31,839(72,823)¥ 908,800¥607,832
151,459
157,105
22,306(65,670)¥873,033$5,725,766
1,185,860
1,316,601
275,830(630,887)$7,873,170¥¥ 30,139
4,265
4,073
1,433
140
¥ 40,051$ 343,538
28,47727,491
20,362(13,037)$ 406,832

EuropeOutside customer sales
Intersegment transactions

Subtotal
Elimination of intersegment transactions
Total
Operating costs and expenses:
Japan
North America
EuropeOthersElimination of intersegment transactions
Total
Operating income:Japan
North America
EuropeOthersElimination of intersegment transactions
Total

Thousands of
U.S. dollars

2007

North America
Outside customer sales
Intersegment transactions

Others
Outside customer sales
Intersegment transactions

Millions of yen¥

39,654
3,287
3,173
2,350
(1,504)46,960