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 2003.
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 Group companies todiffer materially from any projections or forward-looking statements. These risks and uncertainties include, but are not limited to, thoselisted on the first page of this annual report.
The fiscal year ended March 31, 2003 is referred to as fiscal 2003 and other fiscal years are referred to in a corresponding manner.

Liquidity and Capital Resources

Higashiura Plant to augment production capacity of car air-Toyota Industries’ financial policy is to ensure sufficientconditioning compressors, the relocation of the Obu Plant andfinancing and liquidity for its business activities and to

additional production facilities for electronic components.

maintain the strength of its balance sheets. Currently, inprinciple, funds for capital investments and other long-term
capital needs are raised from retained earnings and long-term

Intangible assets increased ¥1.9 billion (2.0%) to ¥96.8
billion resulting from an increase in software.
Investments and other assets decreased ¥222.9 billion

debt, and working capital needs are met through short-term(21.4%) to ¥819.6 billion. This is attributable largely to aloans. Long-term debt financing is carried out mainly throughdecrease in the market prices of shares of Toyota Groupissuance of corporate bonds and loans from financial

companies, including Toyota Motor Corporation (“TMC”), held

institutions.

by Toyota Industries.

In addition to current assets such as cash and cash
equivalents, time deposits and securities, Toyota Industries
maintains ¥100.0 billion of commercial paper issuanceTotal Assets, Shareholders’ Equity
and Shareholders’ Equity Ratio

capacity as of March 31, 2003.
Toyota Industries’ financial condition remains solid. Throughthe use of current assets such as cash and cash equivalents(¥ Billion)

(%)

2,000

80

1,500

60

1,000

40

500

20

and securities, as well as free cash flows and fund-raising fromfinancial institutions, Toyota Industries believes that it will beable to provide sufficient funds for the working capitalnecessary to expand existing operations and develop new
projects, and for future investments.

Assets, Liabilities and Shareholders’ Equity
Total assets at the end of fiscal 2003 stood at ¥1,650.4 billion, adecrease of ¥120.0 billion (6.8%) from fiscal 2002. This was due
largely to a significant decrease in investments and otherassets.
Current assets increased ¥76.5 billion (25.9%) to ¥371.8
billion. This was due mainly to an increase in cash and cash

0
FY

0

99

00

01

02

03

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

equivalents. Cash and cash equivalents increased ¥65.8 billion(92.5%) to ¥136.9 billion, owing chiefly to issuance ofcorporate bonds in the total amount of ¥80.0 billion in
December 2002.

40

Current liabilities increased ¥156.7 billion (66.2%) over fiscal
2002 to ¥393.4 billion. This was because portions of long-term

Property, plant and equipment increased ¥24.6 billion

debt, including long-term bank loans, corporate bonds and(7.3%) to ¥362.2 billion, due largely to the establishment of theconvertible bonds, were reclassified to the category of current

TOYOTA INDUSTRIES CORPORATIONANNUAL REPORT 2003

liabilities due to mature within one year.

Cash Flows

Long-term liabilities were ¥494.2 billion, a decrease of¥141.9 billion (22.3%). This was because deferred tax liabilities(¥ Billion)100

decreased ¥103.6 billion as a result of a decrease in the market
value of investment securities, and portions of long-term debt

50

were reclassified to the category of current liabilities. Corporate
bonds increased ¥60.0 billion to ¥200.3 billion. This increase
was attributable largely to issuance of corporate bonds in the

0

(50)

amount of ¥80.0 billion in December 2002, despite the fact that
corporate bonds in the amount of ¥20.0 billion werereclassified to the category of current liabilities. Interest-

(100)

(150)

bearing debt, including short-term bank loans, long-term debt
due to mature within one year, corporate bonds, convertible
bonds and long-term bank loans, totaled ¥410.6 billion, an
increase of ¥95.3 billion (30.2%) over fiscal 2002.
Minority interest in consolidated subsidiaries increased ¥5.1

(200)
FY

99

00

01

02

03

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

billion (27.2%) to ¥24.0 billion, due largely to the newly
consolidated Taikoh Transportation Group.
Shareholders’ equity decreased ¥139.9 billion (15.9%) to

Net cash used in investing activities decreased in fiscal¥738.9 billion. This was mainly because net unrealized gains on

2003. While Toyota Industries spent ¥86.7 billion in fiscal 2003

other securities decreased ¥124.7 billion as a result of ato purchase property, plant and equipment, an increase of

decrease in the market value of investment securities. In¥13.1 billion (17.8%), the Company had expended ¥23.7 billion

addition, Toyota Industries repurchased 20 million of its

for acquisition of the industrial equipment sales business from

common shares. As a result, treasury stock at cost increased

TMC in fiscal 2002. The amounts used for purchase of property,¥35.2 billion. The ratio of shareholders’ equity to total assets

plant and equipment by principal segment were ¥49.4 billion,

decreased from 49.6% to 44.8%, while shareholders’ equity pera decrease of ¥11.6 billion (19.1%), in the Automobile Segment,

share at year-end decreased from ¥2,809.54 to ¥2,522.52.

and ¥24.4 billion, a decrease of ¥2.0 billion (7.5%), in the
Materials Handling Equipment Segment.

Cash FlowsNet cash and cash equivalents provided by operating activitieswas ¥103.2 billion, an increase of ¥22.1 billion (27.3%) over

Depreciation and Amortization

fiscal 2002. Net cash and cash equivalents used in investing(¥ Billion)

activities decreased ¥11.6 billion (10.9%) to ¥95.1 billion. Net

60

cash and cash equivalents provided by financing activities
increased ¥56.6 billion to ¥57.8 billion. Including translation
adjustments, cash and cash equivalents increased ¥65.8 billion

40(92.5%) to ¥136.9 billion.
The increase in net cash provided by operating activities
was mainly because increases in payables and non-cash

20

expenses outweighed an increase in receivables. Depreciation
and amortization increased ¥4.0 billion to ¥59.2 billion overfiscal 2002. Specifically, depreciation of property, plant andequipment was ¥51.4 billion, and amortization of intangible
assets was ¥7.8 billion.

0
FY

99

00

01

02

03

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

TOYOTA INDUSTRIES CORPORATIONANNUAL REPORT 2003

41

Management’s Discussion and Analysisof Financial Condition and Results of Operations
Capital Expenditures

Net Sales, Overseas Sales andOverseas Sales Ratio(¥ Billion)
150(¥ Billion)

(%)

1,000

50

800

40

600

30

400

20

200

10

100

50

0
FY

99

00

01

02

03

0
FY

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

An increase in net cash provided by financing activities was

0

99

00

01

02

03

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

due mainly to issuance of corporate bonds in the amount of

Cost of Sales andSelling, General and Administrative Expenses¥80.0 billion. In fiscal 2003, Toyota Industries paid ¥6.2 billion,

Toyota Industries’ cost of sales for fiscal 2003 increased ¥71.1

an increase of ¥0.6 billion (10.8%), in cash dividends. The

billion (8.6%) over fiscal 2002 to ¥899.7 billion, due mainly toCompany also repurchased 20 million of its common shares inincreased sales of the Automobile and Materials Handlingthe amount of ¥35.2 billion.

Equipment segments. The ratio of cost of sales to net sales fell
from 84.5% to 84.1%, primarily because the effects of cost

Results of Operations

reduction activities outweighed an increase in labor costs andOperating Performanceother expenses.

In fiscal 2003, the Japanese economy remained sluggish. In

Selling, general and administrative (SGA) expenses

addition to a declining stock market, private sector capitalincreased ¥11.8 billion (11.2%) to ¥117.0 billion. The ratio ofinvestment continued to be stagnant. Consumer spending

SGA expenses to net sales increased from 10.7% to 10.9%. Thisremained weak due to employment uncertainties. Overseas,

was largely because selling expenses of the Materials Handling

although the European economy was on its way to a slow

Equipment Segment increased as a result of the expanded

recovery, the U.S. economy started decelerating in the latter

scope of consolidation.

half of the year.
In this operating environment, Toyota Industries madeDue to the factors summarized above, operating income for

new products to bring about greater customer satisfaction,

fiscal 2003 increased ¥6.1 billion (13.3%) over fiscal 2002 toaggressively conducting sales promotions and carrying out a¥52.5 billion. The operating income ratio increased from 4.7%

company-wide program to reduce costs. As a result, total

to 4.9%.

consolidated net sales of Toyota Industries amounted to¥1,069.2 billion, an increase of ¥89.1 billion (9.1%) over fiscal
2002.

42

Operating Income

efforts to strengthen its corporate structure by developing

TOYOTA INDUSTRIES CORPORATIONANNUAL REPORT 2003

Net sales amounted to ¥595.5 billion, an increase of ¥31.9

Operating Income andOperating Income Ratio

billion (5.7%) over fiscal 2002 and accounting for 55.7% of the(¥ Billion)(%)

total net sales of Toyota Industries. The increase was due

50

10

mainly to a rise in sales of car air-conditioning compressors in40

8

was ¥30.1 billion, an increase of ¥1.1 billion (4.0%).

30

6Vehicle Business
During fiscal 2003, we assembled five models under20

4

consignment from TMC: Vitz (Yaris in Europe); RAV4 compact

10

2

0
FY

0

overseas markets, notably in North America. Operating income

sport utility vehicle; Corolla Sedan; bB Open Deck(discontinued in March 2003); and Sprinter Carib (exported as
the Corolla Wagon, discontinued in July 2002). Although
99

00

01

02

03

Operating income (left)
Operating income ratio (right)

assembly of the Corolla Sedan for North America began in
fiscal 2003, sales of the Vitz (Yaris), our mainstay vehicle,
decreased due to TMC’s full-fledged local production of thismodel in Europe and ruthless domestic competition in thesmall car market.

Operating Performance Highlights
by Business Segment

228,000 units, down 19,000 from fiscal 2002. Net sales of theBelow are the operating results by business segment.

Vehicle Business amounted to ¥281.9 billion, an increase of

Net sales for each segment do not include intersegment¥1.8 billion (0.6%) over fiscal 2002. This increase was due

transactions.

mainly to the fact that Toyota Industries now pays for tires,

Total Vehicle Business production for fiscal 2003 waswheels and other parts previously supplied free by TMC andAutomobile Segment

recoups an identical aggregate amount in the form ofThis segment consists of vehicle (automobile assembly),

increased unit prices to TMC.

engine, car air-conditioning compressor and other businesses(including foundry parts and electronic components forautomobiles).

Engine BusinessWe produce gasoline and diesel engines for TMC vehicles andfor our own line of forklift trucks and other industrial vehicles.
For fiscal 2003, gasoline engine production totaled 193,500

Net Sales ofAutomobile Segment

Operating Income ofAutomobile Segment

units, an increase of 22,000 over fiscal 2002. Though the(¥ Billion)(¥ Billion)

2UZ gasoline engines increased and 2AZ gasoline engines for

600

30

the Estima, for which production started in August 2002, madeproduction of the 5E gasoline engine decreased, production ofan excellent contribution to the total. Production of diesel
engines totaled 207,400 units, down 4,700. Though production
400of the 1CD 2000cc direct injection turbo diesel engine with a20

common rail fuel system, which is fitted in the Avensis for
Europe, the Corolla and RAV4, increased, production of 2000cc200class C-type diesel engines for automobiles decreased. Total

10

engine production, including both intersegment transactions
and outside sales, was 400,900 units, up 17,200 over fiscal 2002.
0
FY 99

00 01 02 03

0
FY

99 00 01 02 03

TOYOTA INDUSTRIES CORPORATIONANNUAL REPORT 2003

43

Management’s Discussion and Analysisof Financial Condition and Results of Operations
In April 2001, Toyota Industries absorbed TMC’s Industrial

Materials Handling Equipment Segment

Equipment Sales Division. Sales of engines for forklift trucks

The Materials Handling Equipment Segment manufactures andsince then are all intersegment transactions. Previously, wesells forklift trucks, warehouse trucks and materials handlingsold forklift engines to TMC, which were then supplied to us

systems such as automated storage and retrieval systems, andfor production of forklift trucks. Excluding intersegment sales

automatic guided vehicle systems.

(i.e., excluding engines for forklift trucks), sales of gasoline

Net sales of the Materials Handling Equipment Segment

engines and diesel engines totaled 165,200 and 188,100 units,

totaled ¥373.0 billion, an increase of ¥20.0 billion (5.7%) overrespectively. On the same basis, total engine sales amounted

fiscal 2002. Operating income was ¥16.2 billion, an increase of

to 353,300 units, up 11,200 over fiscal 2002. Net sales¥2.8 billion (21.0%). One of the main reasons for the sales

excluding intersegment sales totaled ¥117.7 billion, an

increase of this segment was the consolidation of the financial

increase of ¥2.8 billion (2.4%).

results of TOYOTA Material Handling Company’s (“TMHC’s”)
seven overseas sales subsidiaries, which we acquired during

Car Air-Conditioning Compressor BusinessCar air-conditioning compressors developed andfiscal 2002, for the full year (the consolidation was for nine

manufactured by Toyota Industries are marketed to leadingin the previous fiscal year). The other was an increase in TMHC’s

auto manufacturers worldwide through DENSO Corporation

unit sales.

months for two subsidiaries and six months for five subsidiaries(“DENSO”). Sales of car air-conditioning compressors in thedomestic market increased due largely to a transfer of theassembly line for scroll-type compressors from DENSO.

Net Sales ofMaterials Handling
Equipment Segment

Operating Income ofMaterials Handling
Equipment Segment

366,000 over fiscal 2002. Overseas, we sold 10.4 million units,(¥ Billion)(¥ Billion)

up 1,635,000.Total unit sales were 15.8 million, up 2 million.

400

20

300

15

200

10

100

5

Overseas, orders increased in North America and sales
expanded in Europe. In Japan, we sold 5.4 million units, up

Net sales totaled ¥177.9 billion, an increase of ¥24.8 billion(16.2%) over fiscal 2002.

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

0
FY

15

99 00 01 02 03

0
FY

99 00 01 02 03

10

In the forklift truck business excluding BT Industries AB (“BTIndustries”), unit sales increased both in Europe and North
5

America amid the challenging economic environment. In thedomestic market, sales of our GENEO-B (7FB outside Japan)

0
FY

99

00

01

02

03

electric counterbalanced forklift truck continued strong(though unit sales decreased, its market share increased).The

Japan
North America
EuropeAsia and Oceania

GENEO-E (7FBE outside Japan), a revamped version of thethree-wheel electric counterbalanced forklift truck launched in
January 2003, also contributed to total sales.

44

TOYOTA INDUSTRIES CORPORATIONANNUAL REPORT 2003

Sales of materials handling systems, which compriseThis reflected a significant increase in sales of air-jet looms

automatic guided vehicle systems and automated storage

to China. We sold more than 9,200 units, an increase of about

and retrieval systems for the domestic market, increased

6,000 units over fiscal 2002. We sold more than 1,600 water-jet

substantially as a result of concerted sales efforts with ourlooms, an increase of some 400 units. On the other hand, sales

distributors, contributing to the overall good performance ofof ring spinning frames decreased by over 130,000 spindles tothis segment.

340,000, due mainly to sluggish export, except to Pakistan.

BT Industries’orders received were slightly up in 2002.

The export ratio in this segment is very high, and exports,

Orders received in Europe increased, but orders received inmainly to Asia, accounted for approximately 90% of total net

North America showed a slight decrease due to thesales for fiscal 2003.

deteriorating economic environment. BT Industries’ sales inNorth America decreased from the previous fiscal year,

Others Segment

reflecting low order backlogs at the beginning of 2002. In

This segment, currently relatively small, comprises mainly new

Europe, overall sales increased because an increase in service

businesses that we believe have outstanding growth potential.

sales offset a decrease in unit sales.

A core business in this segment is TIBC Corporation (“TIBC”), a

The Materials Handling Equipment Segment also

joint venture with Ibiden Co., Ltd. established in 1998. TIBC

manufactures and sells tow tractors, shovel loaders, sweepers

manufactures ball grid array (BGA) plastic package substrates,and other industrial equipment.

and flexible printed circuit (FPC) substrates. This segment also
includes the Logistics Solutions Business, the manufacture andTextile Machinery Segment

sales of press dies and production equipment, and other

The Textile Machinery Segment manufactures and sells

smaller businesses.

spinning-related machinery, including ring spinning frames,
and weaving-related machinery such as air-jet looms. Toyota
Industries is a world leader in the air-jet loom and spinningmachinery fields.

Net Sales of
Others Segment(Including Elimination ofIntersegment Transactions)

Net sales of the Textile Machinery Segment amounted to¥48.7 billion, an increase of ¥18.0 billion (58.7%) over fiscal
2002. Operating income was ¥2.3 billion, an impressive

Operating Income of
Others Segment(¥ Billion)(¥ Billion)

50

5

40

4

30

3

20

2

10

1

recovery from an operating loss in fiscal 2002, due largely to anincrease in sales.

Net Sales of
Textile Machinery
Segment

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

50

3

40

2

30

1

0
FY

99 00 01 02 03

0
FY

99 00 01 02 03

Net sales of the Others Segment totaled ¥52.0 billion, an
20

0

10

(2)

0
FY 99

(4)
FY

increase of ¥19.2 billion (58.5%) over fiscal 2002. This was due
largely to the consolidation of Taikoh Transportation Co., Ltd.
and its four subsidiaries, even though TIBC suffered fromdepressed conditions in the IT market. Operating income was

00 01 02 03

99 00 01 02 03¥3.9 billion, a decrease of ¥0.6 billion (12.7%), due mainly to an

TOYOTA INDUSTRIES CORPORATIONANNUAL REPORT 2003

45

Management’s Discussion and Analysisof Financial Condition and Results of Operations
increase in depreciation that accompanied TIBC’s capital

Income Taxes

investment to augment production capacity of high-Net of current and deferred income taxes was ¥20.8 billion, an

performance plastic package substrates.

increase of ¥1.1 billion (5.6%) over fiscal 2002. The effective

ST Liquid Crystal Display Corp. (“ST-LCD”) is notconsolidated but is accounted for by the equity method inincome tax rate increased from 41.2% to 47.7%, due largely to
an increase in equity in loss of affiliates.

Toyota Industries’ consolidated financial results. Consequently,
its operating income (loss) is not included in the operating

Minority Interest in Consolidated Subsidiaries

income (loss) for this segment. However, ST-LCD, a joint

Minority interest in consolidated subsidiaries increased ¥0.1

venture that we established with Sony Corporation in 1997, isbillion to ¥0.9 billion over fiscal 2002, due mainly to an increase

considered as another core business within this segment.

in earnings of consolidated subsidiaries. As a result, net income

ST-LCD manufactures low-temperature polysilicon TFT-LCDs,

for fiscal 2003 decreased by the same amount.

for which demand is expected to increase substantially for theforeseeable future. Though ST-LCD’s sales increased, its

Net Income

operating loss worsened as a result of an increase in

Net income for fiscal 2003 was ¥21.9 billion, a decrease of ¥5.4

depreciation that accompanied the second capital investment.

billion (19.7%) from fiscal 2002. Return on sales (ROS)

Its performance is expected to improve significantly due to adecreased from 2.8% to 2.1%. Return on equity (ROE), using

projected increase in sales of its displays for mobile phones,

the average at fiscal 2002 and fiscal 2003 year-ends, decreased

digital still cameras and personal digital assistants.

from 3.0% to 2.7%. Net income per share decreased from¥87.28 to ¥70.19, and diluted net income per share decreased

Non-Operating Income and Expenses

from ¥78.26 to ¥62.90.

Non-operating income for fiscal 2003 increased ¥3.2 billion(13.9%) over fiscal 2002 to ¥26.3 billion. Dividends income
increased ¥1.2 billion. Proceeds from sales of marketablesecurities also increased.
Non-operating expenses increased ¥5.9 billion (27.1%) to

Net Income, ROE and ROS(¥ Billion)

(%)

30

6

20

4

10

2

¥27.4 billion. Equity in net loss of affiliates increased ¥3.7
billion.

Ordinary Income
Due to the factors summarized above, ordinary income
increased ¥3.5 billion (7.3%) over fiscal 2002 to ¥51.4 billion.

Extraordinary Losses
As a result of depressed stock prices in Japan, a revalued loss ofinvestment securities in financial institutions was posted as an
extraordinary loss in the amount of ¥4.3 billion. A loss on
disposal of property, plant and equipment amounted to ¥3.4
billion, which resulted from the relocation of a plant.

Income before Income Taxes
Due to the factors summarized above, income before income
taxes decreased ¥4.2 billion (8.8%) from fiscal 2002 to ¥43.7
billion.

46

TOYOTA INDUSTRIES CORPORATIONANNUAL REPORT 2003

0
FY

0

99

00

Net income (left)
ROE (right)
ROS (right)

01

02

03

Net Income per Share

The first category, the Vehicle Business and the Engine
Business, handles mainly the production of vehicles consigned(¥)

by TMC and production of engines for TOYOTA cars. To play a100

more important role in the Toyota Group, Toyota Industries ismaking continual efforts to improve its production

80

technologies and strengthen quality control. For Toyota
Industries, this field of business provides a stable platform for60

its own growth, while also contributing to the success of the
Toyota Group.

40

Aiming to play a more important role in the development
and production of TOYOTA cars and engines, Toyota Industries

20

will step up its efforts to strengthen its research and
0
FY

99

00

01

02

03

development capability and improve productivity. In its workin this category for TMC, Toyota Industries will also make

Basic
Dilutedproposals for the design and launch of auto parts and smallcars, and actively work to ensure that such proposals are
adopted. In the Engine Business, Toyota Industries will

Strategies and Projections

contribute to TMC’s global strategy, especially in Europe, withits diesel engines.

Business Strategies

The second category, which comprises the Car Air-

Since its establishment as a textile machinery manufacturer

Conditioning Compressor Business, the Materials Handlingover 75 years ago, Toyota Industries has expanded the scope of

Equipment Business and the Textile Machinery Business, is

its specific characteristics. The operational strategies for theseidentified as a business field in which Toyota Industries must

categories are based on the mission assigned to each

cultivate further development of global markets by precisely

category.

grasping customers’ needs, and developing and marketingstate-of-the-art products that meet these needs through theFirst Category: Vehicle Business and Engine Businessapplication of original technologies. Firmly believing that<Mission>technological improvement is the key to competitiveness,

As a member of the Toyota Group, to contribute to the highToyota Industries strives to strengthen its technologicalquality and technological advances of TOYOTA cars.

development capabilities by fostering the training anddevelopment of superior engineers. Since the Car Air-

Second Category: Car Air-Conditioning Compressor Business,

Conditioning Compressor Business and the Materials Handling

Materials Handling Equipment Business and Textile Machinery

Equipment Business are positioned as core businesses, Toyota

Business

Industries places a priority on them in its allocation of<Mission>management resources. In addition, on April 1, 2001, Toyota

To aggressively expand global markets through theIndustries established TOYOTA Material Handling Company as

development of products using Toyota Industries’ uniquea uniquely independent company within Toyota Industries. The

technologies.

main purpose of this move was to strengthen independent
management in the unit by giving it the authority needed toThird Category: Electronics Business, Logistics Solutions

respond flexibly and speedily to changes in the businessBusiness, etc.

environment and to emerge a winner in the face of<Mission>

intensifying global competition.

To be a key source of Toyota Industries’ future growth.

TOYOTA INDUSTRIES CORPORATIONANNUAL REPORT 2003

47

Management’s Discussion and Analysisof Financial Condition and Results of Operations
The third category, the Electronics Business, which includes

In June 2003, Toyota Industries Finance International AB

the production of LCDs, and the Logistics Solutions Business,(“TIFI”), our newly established finance subsidiary in Sweden,

will also be made a priority in Toyota Industries’ allocation ofassumed fund-raising operations for all of our overseas

management resources in order to develop this activity into a

subsidiaries and began centrally managing the funds of ourcore business.

European subsidiaries. TIFI draws on the expertise and

The Electronics Business is a field characterized by rapid

resources of BT Industries (part of the Toyota Industries Groupadvances in technological innovation. Toyota Industries

since June 2000), which has been conducting integrated fundrecognizes that it must strengthen its research andmanagement of its approximately 80 subsidiaries and affiliates

development capability to maintain competitiveness in thisover many years. The establishment of TIFI is aimed atfield. Continuing capital expenditures will be required to doachieving greater benefits of synergy by expanding the scopethis. Swift decision-making is also required for success in thisof subsidiaries for integrated fund management.

business, which depends on rapidly getting production on

Also in June 2003, the Company commenced integrated

track, improving the rejection rate of products and achieving afund management of its domestic subsidiaries. In North

return on investment. Aiming to participate in the Electronics

America, Toyota Industries North America, Inc. (“TINA”) has

Business and expand operations in the short term, and to

centrally managed the funds of our North American

diversify risks by entering new areas of this business, Toyota

subsidiaries for some time.

Industries has not only carried out independent productThrough close cooperation among the Company, TINA anddevelopment, but has also entered into joint ventures with

TIFI, it is now possible to realize unified fund management

both Sony Corporation and Ibiden Co., Ltd. Toyota Industries

covering Japan, North America and Europe for efficient fundbelieves that this strategy has been successful to date andand corporate management on a global, consolidated basis.

views the Electronics Business as a key source of future

Capital and Business Collaboration

corporate growth.
In recent years, Japan’s industries have been increasingly

On April 25, 2002, the Board of Directors of both Toyota

moving toward outsourcing product distribution and storage

Industries and Aichi Corporation (“Aichi”) voted to conclude afunctions in order to reduce materials handling costs. Seeing

comprehensive agreement on capital and businessthis as an opportunity, Toyota Industries entered into thecollaboration between the two companies. Aichi is an

Logistics Solutions Business in Japan. Taking advantage of ourestablished manufacturer of special-purpose vehicles such as

long-accumulated materials handling know-how, we aim toaerial lift equipment for construction works. Through thisprovide customer-oriented proposals for optimized logistics

collaboration, both companies will be able to offer productand cost reduction. Through proactive allocation oflineups that best exploit the strengths of each company.

management resources, we hope our Logistics Solutions

Toyota Industries will concentrate on the manufacture ofBusiness will become a new source of stable revenues for thematerials handling equipment such as forklift trucks, while

Company.

Aichi will specialize in special-purpose vehicles.
On May 14, 2002, Aichi issued and allocated 20,056,000

Global Fund Management

shares of common stock to Toyota Industries. This amounted to

To achieve more efficient fund utilization, Toyota Industries

34% of Aichi’s total shares issued, for which we paid ¥3.2

Group is pushing ahead with localized fund management bybillion. We also obtained a warrant that would raise ourregion. We are spreading risk by switching to more secure

holding to a 51% controlling stake.

credit and establishing deposit limits in accordance with bankcredit ratings.

48

TOYOTA INDUSTRIES CORPORATIONIn May 2003, we exercised the warrant, incorporating Aichi
into our network of subsidiaries.

ANNUAL REPORT 2003

Forecast for Fiscal 2004

In fiscal 2003, the Company repurchased 20 million of its

Amid the current deflationary trend, Toyota Industries

common shares at a total purchase cost of ¥35.2 billion. As aanticipates a package of government-led economic recovery

result, the Company now holds 20.55 million shares of its

measures will be implemented to positive effect; however,treasury stock. Its total outstanding common shares at year-

falling global stock prices and continuing uncertainties

end were 292,777 thousand shares (excluding treasury stock).

regarding employment and the U.S. economy will likely resultin a rather sluggish business environment overall.

On June 27, 2003, the Ordinary General Meeting of
Shareholders adopted a resolution to authorize the Company

For fiscal 2004, ending March 31, 2004, Toyota Industries

to repurchase an additional 20 million shares at a total priceforecasts consolidated net sales of ¥1,100.0 billion, ordinary

not exceeding ¥45.0 billion. This will allow the Company toincome of ¥57.0 billion and net income of ¥34.0 billion. We are

obtain more shares in accordance with changes in thedetermined to develop new products that are of high quality

business environment.

and responsive to customer needs, as well as enhance sales,
service and cost-reduction activities company-wide.
Our projections are based on an exchange rate of¥115.0=US$1.

Toyota Industries’ Relationship to
Toyota Motor Corporation (“TMC”)
Because of its historical background, Toyota Industries has aclose relationship with TMC and Toyota Group companies in

Dividend Policy

terms of capital investment and business dealings.

Toyota Industries Corporation’s dividend policy is to continue

In 1933, Kiichiro Toyoda, eldest son of founder Sakichi

paying stable dividends, while giving overall consideration to

Toyoda and Managing Director of Toyota Industries (thenbusiness results and the dividends payout ratio, in order to

Toyoda Automatic Loom Works, Ltd.) at the time, establishedmeet the expectations of shareholders.

the Automobile Division within the Company. In 1937, theToyota Industries’ Ordinary General Meeting ofAutomobile Division was spun off and became an

Shareholders, held on June 27, 2003, approved a year-end cash

independent company, Toyota Motor Co., Ltd. (the present

dividend of ¥12.0 per share. Including the interim cash

Toyota Motor Corporation).

dividend of ¥10.0 per share, cash dividends for the year totaled

As of March 31, 2003, Toyota Industries holds 5.4% (196,725¥22.0 per share, an increase of ¥3.0 per share over fiscal 2002.

thousand shares) of TMC’s total shares issued. As of the same

The dividend payout ratio increased from 23.8% to 34.0%.

date, TMC holds 24.7% (72,316 thousand shares) of total voting

Toyota Industries Corporation will use retained earnings to
improve the competitiveness of its products, augment
production capacity in Japan and overseas, as well as expand

rights. Toyota Industries is one of TMC’s affiliates accounted forby the equity method.
TMC assigns the assembly of certain cars and theinto new fields of business and strengthen its corporate

production of automobile engines to us. We also directly or

constitution in securing future profits for its shareholders. It

indirectly manufacture and sell other automobile components

will also use retained earnings to repurchase treasury stock.

to TMC. In fiscal 2003, our net sales to Toyota Group companies
accounted for approximately 56% of consolidated net sales.

Stock Repurchase Program

As a member of the Toyota Group, we intend to enhance

On June 27, 2002, the Ordinary General Meeting of

the competitiveness of TMC and other Toyota Group

Shareholders resolved to authorize the Board of Directors ofcompanies by contributing in such areas as quality, cost,

Toyota Industries Corporation to repurchase up to 20 million ofdelivery and technology. We believe that this will be reflected

the Company’s common shares. This allows the Company toin increases in sales and profits for the Toyota Group, thus

implement flexible capital policies in accordance with theincreasing the shareholder value of Toyota Industries.

business environment.

TOYOTA INDUSTRIES CORPORATIONANNUAL REPORT 2003

49