Securities Report 5/12

Toyota Motor Corporation 24 June 2004 Significant Matters for Preparation of Consolidated Financial Statements FY2003 FY2004 For the year ended March 31, 2003 For the year ended March 31, 2004 1. Scope of Consolidation Number of consolidated subsidiaries: 581 (1) Number of consolidated subsidiaries in Japan: 355 Tokyo Toyota Motor Co., Ltd. Tokyo Toyo-Pet Motor Sales Co., Ltd. Osaka Toyopet Co., Ltd. Toyota Tokyo Corolla Co., Ltd. Hino Motors, Ltd. Toyota Motor Kyushu, Inc. Daihatsu Motor Co., Ltd. Toyota Motor Hokkaido, Inc. Toyota Auto Body Co., Ltd. Kanto Auto Works, Ltd. Araco Corporation Toyota Financial Services Corporation Toyota Finance Corporation Others (2) Number of overseas consolidated subsidiaries: 226 Toyota Motor North America, Inc. Toyota Motor Europe n.v./s.v. Toyota Motor Sales, U.S.A., Inc. Toyota Motor Marketing Europe n.v./s.a. Toyota Deutschland G.m.b.H. Toyota France S.A. Toyota Motor Italia S.p.A. Toyota (GB) PLC Toyota Motor Manufacturing, North America, Inc. Toyota Motor Manufacturing, Kentucky, Inc. Toyota Motor Manufacturing, Indiana, Inc. Toyota Motor Manufacturing Canada Inc. Toyota Motor Engineering & Manufacturing Europe n.v./s.a. Toyota Motor Manufacturing (UK) Ltd. Toyota South Africa Motors (Pty) Ltd. Kuozui Motors Ltd. Toyota Motor Thailand Co., Ltd. Toyota Motor Corporation Australia Ltd. Toyota Motor Credit Corporation Toyota Credit Canada Inc. Toyota Kreditbank G.m.b.H. Toyota Motor Finance (Netherlands) B.V. Toyota Financial Services (UK) PLC Toyota Finance Australia Ltd. Others FY2003 FY2004 For the year ended March 31, 2003 For the year ended March 31, 2004 During this fiscal year, 41 companies, including Toyota Motor Europe n.v./s.v., newly became subsidiaries of Toyota Motor Corporation ('TMC') and were consolidated. Subsidiaries excluded from the scope of consolidation included (i) 6 companies, including Toyota Kyoei Service Co., Ltd., that ceased to be subsidiaries of TMC due to decreases in shareholding ratios resulting from sales of their respective voting shares or other reasons; (ii) 12 companies, including Toyota Media Station Inc., that were liquidated; and (iii) 6 companies, including Toyota Modellista Fukuoka Corporation, that were merged into other consolidated subsidiaries. 2. Application of Equity Method (1) Number of affiliates accounted for under the equity method: 51 (a) Number of domestic affiliates accounted for under the equity method: 34 Toyota Industries Corporation Aichi Steel Corporation Toyoda Machine Works, Ltd. Toyota Tsusho Corporation Aisin Seiki Co., Ltd. Denso Corporation Toyoda Gosei Co., Ltd. Aisin AW Co., Ltd. Aioi Insurance Co., Ltd. Others (b) Number of overseas affiliates accounted for under the equity method: 17 New United Motor Manufacturing, Inc. Toyota Canada Inc. Others From this fiscal year, 6 affiliates, including Tianjin Toyota Motor Co., Ltd. were accounted for under the equity method in consideration of their materiality. In addition, 4 companies previously accounted as equity method affiliates, including Toyota Woodyou Home Corporation and Toyota Espana S.L., have newly become subsidiaries of TMC and have consequently been consolidated. Jeco Co., Ltd. was no longer accounted for under the equity method in consideration of its materiality, resulting from the sale of its shares. (2) Number of unconsolidated subsidiaries and affiliates not accounted for under the equity method Affiliates: 182, including Aisin Takaoka Co., Ltd. (3) Affiliates not accounted for under the equity method are all insignificant in terms of their net income (loss), legal reserve and retained earnings, and impact on the consolidated financial statements is immaterial. FY2003 FY2004 For the year ended March 31, 2003 For the year ended March 31, 2004 3. Fiscal Year Ends of Consolidated Subsidiaries (1) The fiscal year ends of the following consolidated subsidiaries differ from that of TMC, which is March 31. A total of 39 subsidiaries whose fiscal year ends on December 31 includes: OOO Toyota Motor Tianjin Toyota Forging Co., Ltd. Tianjin Fengjin Auto Parts Co., Ltd. Toyota Motor (China) Investment Co., Ltd. Toyota Motor Technical Center (China) Co., Ltd. Toyota Motorsport GmbH In addition, the following subsidiaries' fiscal years end on the date specified in parentheses: Fahren Miyagi Co., Ltd. (April 30) Itagaki Syouji Co., Ltd. (June 30) Itagaki Kousan Co., Ltd. (September 30) (2) Of the above subsidiaries, Fahren Miyagi Co., Ltd (whose fiscal year ends on April 30), Itagaki Syouji Co., Ltd (whose fiscal year ends on June 30), Itagaki Kousan Co., Ltd (whose fiscal year ends on September 30) and 10 other subsidiaries whose fiscal years end on December 31, including Banco Toyota do Brasil S.A., were consolidated based on the amounts for a year ended March 31 prepared for the purpose of consolidation. In addition, 29 subsidiaries, including OOO Toyota Motor, were consolidated based on their respective financial statements. 4. Significant Accounting Policies (1) Valuation of assets (a) Securities Securities with fair value Principally stated at fair value based on market prices at end of fiscal year. (Unrealized holding gains and losses are accounted for as a component of shareholders' equity; cost of sales is determined using the moving average method.) Securities not practicable to fair value Principally stated at cost using the moving average method. (b) Derivatives Principally stated at fair value. (c) Money trusts for trading purposes Stated at fair value. (d) Inventories TMC and domestic consolidated subsidiaries Principally stated at cost, as determined using the periodic average method or the specific identification method. Overseas consolidated subsidiaries Principally stated at the lower of cost or market value based on the specific identification method, first-in-first-out method or last-in-first-out method. FY2003 FY2004 For the year ended March 31, 2003 For the year ended March 31, 2004 (2) Depreciation and amortization (a) Depreciation of property, plant and equipment TMC and domestic consolidated subsidiaries: Principally computed using the declining balance method. The determination of useful life and residual value is based on the same standards as in the Corporation Tax Laws of Japan. Buildings and structures, machinery and equipment, vehicles and delivery equipment and other property, plant and equipment of TMC is depreciated to their actual residual value after they have been depreciated to their depreciable limit under the Corporation Tax Laws of Japan. Overseas consolidated subsidiaries: Principally computed using the straight-line method. (b) Amortization of intangible fixed assets Software for internal use is amortized over its estimated useful life of 5 years using the straight-line method. (3) Accounting of deferred assets Organization expenses, business commencement expenses, share issuance expenses, bond issuance expenses and bond discounts are expensed when the payment is made. (4) Significant allowances (a) Allowance for doubtful accounts TMC: To prepare for losses from uncollectible receivables, allowance for doubtful accounts is provided in an amount equivalent to the maximum limit deductible for tax purposes which is determined by the Corporation Tax Laws or an amount determined by considering the collectibility of receivable. Consolidated subsidiaries: Principally computed based on the maximum limit deductible for tax purposes which is determined by the Corporation Tax Laws or the historical loss experience. (b) Allowance for product warranties To prepare for expenses related to after-sale services, allowance for product warranty is provided based on the terms of the warranties and historical experience. (c) Allowance for employee bonuses To provide for employee bonuses, some of the consolidated subsidiaries accrue part of the estimated bonus payments for the following fiscal year which are attributed to the current fiscal year. (d) Allowance for retirement benefits Principally to provide for the retirement benefits for employees, including those already retired, allowance for retirement benefits obligations deemed to have been incurred during the current fiscal year is stated based on estimated retirement benefit obligations and estimated pension assets at the end of the fiscal year. FY2003 FY2004 For the year ended March 31, 2003 For the year ended March 31, 2004 (5) Accounting for Lease Transactions Finance lease transactions other than those which are deemed to transfer the ownership of the leased assets to lessees are accounted for by a method similar to that used for ordinary operating lease transactions. (6) Accounting for Hedges Gains or losses arising from changes in fair value of the derivatives designed as 'hedging instruments' are deferred as assets or liabilities, or those derivatives are used for valuating hedged assets or liabilities. TMC and its consolidated subsidiaries enter into the following hedge transactions: (i) foreign exchange forward contracts and foreign currency options, primarily to hedge against exchange rate fluctuation risks related to accounts receivable denominated in foreign currencies, primarily the U.S. dollar; (ii) interest rate options, primarily to hedge against interest rate fluctuation risks related to floating-rate liabilities; and (iii) interest rate currency swaps and interest rate swaps, primarily to hedge against currency and interest rate fluctuation risks related to the principal and interest of bond portfolios denominated in foreign currencies and straight bonds issued in foreign currencies. The assessment of hedge effectiveness is conducted by comparing the accumulated fluctuation in fair value or cash flow of the hedged item and the hedge instrument in the period between the start date of the hedge transaction and the day of assessment. TMC believes that its exposure to credit risk is immaterial as the counterparties of the transactions entered into by TMC and its subsidiaries are diversified among financial institutions with strong credit profiles. The execution and management of hedge transactions are conducted by the financial department of each company upon obtaining approval from directors overseeing the accounting and financial operations. The status of these transactions is periodically reported to these overseeing directors. (7) Accounting of consumption taxes Consumption tax is computed using the net-of-tax method. 5. The valuation of assets and liabilities of consolidated subsidiaries Assets and liabilities of consolidated subsidiaries are revalued at their fair value not recognizing minority interest as of the date of acquisition. 6. Amortization of goodwill Goodwill is principally amortized over 5 years using the straight-line method. If the amount of goodwill is immaterial, however, it is expensed as incurred. Goodwill recorded in this fiscal year was expensed as incurred due to its immateriality. FY2003 FY2004 For the year ended March 31, 2003 For the year ended March 31, 2004 7. Appropriation of retained earnings Consolidated Statements of Retained Earnings and Capital Surplus are prepared based on the appropriation of retained earnings approved during this fiscal year. 8. Definition of funds on consolidated statements of cash flows Cash and cash equivalents on the consolidated statements of cash flows include cash on hand, immediately accessible bank deposits, and short-term investments with original maturities of 3 months or less, that are readily convertible into cash and that bear insignificant risk of changes in value. Changes in Accounting Policy FY2003 FY2004 For the year ended March 31, 2003 For the year ended March 31, 2004 1. Accounting Standards for Treasury Stock and the Withdrawal of Legal Reserve In conjunction with the implementation of 'Accounting Standards for Treasury Stock and the Withdrawal of Legal Reserve' (Financial Accounting Standards No. 1) effective from April 1, 2002, TMC and its domestic subsidiaries have adopted this statement for this fiscal year. The adoption of the new standard had no material impact on the results for this fiscal year. In connection with the amendment of the Regulations Regarding Consolidated Financial Statements, shareholders' equity in the consolidated balance sheet and consolidated statements of retained earnings and capital surplus for this fiscal year have been prepared in accordance with the amended regulations 2. Earnings per share In conjunction with the implementation of 'Accounting Standard for Earnings Per Share' (Financial Accounting Standards No. 2) and 'Implementation Guidance of Accounting Standard for Earnings Per Share' (Implementation Guidance of Financial Accounting Standards No. 4) for the year beginning on and after April 1, 2002, TMC has adopted these statements for this fiscal year. The impact due to the adoption of these new standards is described in (Per share data). Changes in Presentation FY2003 FY2004 For the year ended March 31, 2003 For the year ended March 31, 2004 'Commercial papers' is presented as a separate line item in the consolidated balance sheet because it exceeded 5% of the total amount of liabilities, minority interests in consolidated subsidiaries and shareholders' equity as of March 31, 2003. The line item 'Other current liabilities' under 'Current liabilities' in the consolidated balance sheet of the previous year included commercial papers in the amount of 952,553 million yen. Additional Information FY2003 FY2004 For the year ended March 31, 2003 For the year ended March 31, 2004 In conjunction with enforcement of the Defined Benefit Enterprise Pension Plan Law, TMC, some of its domestic consolidated subsidiaries and domestic affiliates accounted for under the equity method received approval from the Minister of Health, Labor and Welfare, for exemption from the obligation for benefits related to future employee service under the substitutional portion. (TMC received the approval on April 1, 2002) TMC and these subsidiaries and affiliates applied the transitional provision stipulated in paragraph 47-2 of the 'Practical Guidelines of Accounting for Retirement Benefits (Interim Report)' (Accounting Committee Report No. 13 issued by the Japanese Institute of Certified Public Accountants), and recognized an extinguishment of retirement benefit obligation related to the substitutional portion as of the date of the approval. As a result, 32,341 million yen was recognized as 'Equity in earnings of affiliates' under 'Non-operating income', and 235,314 million yen was recognized as 'Gains on return of substitutional portion of employees' pension fund plans' under 'Extraordinary gains' in this fiscal year. Perspective amount to be returned is 474,400 million yen as of March 31, 2003. Notes to Consolidated Financial Statements (Consolidated Balance Sheets) FY2003 FY2004 March 31, 2003 March 31, 2004 1. 1 Accumulated depreciation of property, plant and equipment 7,931,514 million yen 2 Vehicles and delivery equipment include assets under lease contracts (Toyota as lessor) in the amounts of 1,134,883 million yen. *3 Assets related to affiliates (Assets) Yen in millions Investments in securities (Stock) 1,028,941 Investments in securities(Bonds) 200 Investments in 48,990 securities (Convertible bonds) Number of outstanding shares of TMC is 3,609,997,492 shares (common share). Number of treasury stock held by TMC, its consolidated subsidiaries, and affiliates accounted for under the equity method is 259,094,384 shares (common stock). Fair value of securities held as collateral of repurchase agreement transactions, which TMC and its consolidated subsidiaries have the right to dispose of, are 24,999 million yen. 2. Assets pledged as collateral and secured liabilities (1) Assets pledged as collateral Yen in millions Notes receivable 38,134 Installment credit from dealers 66,013 Buildings and structures 58,691 Machinery and equipment 12,190 Land 98,248 Other 27,445 Total 300,723 (2) Secured liabilities Yen in millions Short-term borrowings 143,266 Long-term borrowings 56,769 Bonds 66,013 Total 266,048 FY2003 FY2004 March 31, 2003 March 31, 2004 3. Liabilities for guarantees Yen in millions Debt guarantees related to the 841,871 operation of consolidated finance subsidiaries Other liabilities for guarantees 35,619 Other acts similar to guarantees 13 Total 877,504 4. Notes receivable Yen in millions Discounted 17,343 Endorsed 11 5. Unfunded loans under overdraft contracts and loan commitments Unfunded loans provided by consolidated finance subsidiaries under overdraft contracts and loan commitments 1,306,483 million yen The above funds are not necessarily fully executed, as some of the overdraft contracts and loan commitments referred above are contingent upon a satisfactory review of the creditworthiness of the customer. (Consolidated Statements of Income) FY2003 FY2004 For the year ended March 31, 2003 For the year ended March 31, 2004 * Research and development related expenses included in general and administrative expenses and manufacturing costs are 671,608 million yen. (Consolidated Statements of Cash Flows) FY2003 FY2004 For the year ended March 31, 2003 For the year ended March 31, 2004 1. Reconciliation between cash and cash equivalents and accounts presented in the consolidated balance sheets (March 31, 2003) Yen in millions Cash and deposits 620,870 Marketable securities 1,661,978 Total 2,282,848 Time deposits and securities with (659,606) maturities over 3 months Cash and cash equivalents 1,623,241 2. Significant non-cash transactions During FY2003, no non-cash transaction that will have a material impact on cash flows in subsequent fiscal years has occurred. (Lease) FY2003 FY2004 For the year ended March 31, 2003 For the year ended March 31, 2004 1. Finance lease transactions not involving a transfer of ownership of leased property to the lessee (1) As lessee (a) Amounts equivalent to acquisition cost, accumulated depreciation and book value of leased property Acquisition cost Accumulated Book value (Yen in millions) depreciation (Yen in (Yen in millions) millions) Machinery and 31,726 8,468 23,257 equipment Vehicles and 7,232 2,637 4,595 delivery equipment Other 39,141 18,287 20,854 Total 78,100 29,392 48,707 (b) The amounts equivalent to the outstanding future lease payments Yen in millions Due within one year 8,366 Due after one year 49,405 Total 57,772 (c) Lease payments, the amounts equivalent to depreciation and interest expenses Yen in millions Lease payments 10,887 Depreciation expenses 9,830 Interest expenses 2,987 (d) Calculation method of the amount equivalent to depreciation expenses The amount equivalent to depreciation expenses is calculated based on the straight-line method with no residual value over the lease term (e) Calculation method of the amount equivalent to interest expenses The amount equivalent to interest expenses is calculated as the difference between the total lease payment and the amount equivalent to acquisition cost of the leased property. The allocation of the amount equivalent to interest expenses to each period is based on the interest method. FY2003 FY2004 For the year ended March 31, 2003 For the year ended March 31, 2004 (2) As lessor (a) Acquisition cost, accumulated depreciation and book value of leased property included in property, plant and equipment Acquisition cost Accumulated Book value (Yen in millions) depreciation (Yen in (Yen in millions) millions) Machinery and 20,530 7,212 13,317 equipment Vehicles and 53,045 29,160 23,884 delivery equipment Other 44,100 20,077 24,022 Total 117,676 56,451 61,224 (b) The amount equivalent to the outstanding future lease income Yen in millions Due within one year 24,119 Due after one year 43,571 Total 67,691 (c) Lease income, depreciation expenses and the amount equivalent to interest income Yen in millions Lease income 28,384 Depreciation expenses 19,851 Interest income 2,806 (d) Calculation method of the amount equivalent to interest income The amount equivalent to interest income is calculated as the difference between the total lease income and estimated residual value, and the acquisition cost of the leased property. The allocation of the amount equivalent to interest income to each period is based on the interest method. 2. Operating lease transactions (1) As lessee Outstanding future lease payments Yen in millions Due within one year 9,740 Due after one year 30,721 Total 40,461 (2) As lessor Outstanding future lease income Yen in millions Due within one year 281,033 Due after one year 352,155 Total 633,189 (Securities) (FY2003) (March 31, 2003) Marketable Securities 1. Marketable securities held for trading purposes (Yen in millions) Carrying amount on consolidated balance sheets - Gains/losses recognized in consolidated statement - of income 2. Bonds with fair values that are classified as held to maturity securities Category March 31, 2003 Carrying amount on Fair value Difference consolidated balance sheets (Yen in millions) (Yen in millions) (Yen in millions) Securities with fair values exceeding carrying amounts Government bonds, municipal bonds - - - and others Corporate bonds - - - Others - - - Subtotal - - - Securities with carrying amounts exceeding fair values Government bonds, municipal bonds - - - and others Corporate bonds - - - Others - - - Subtotal - - - Total - - - 3. Other securities with fair values Category March 31, 2003 Acquisition cost Carrying amount on Difference (Yen in millions) consolidated balance (Yen in millions) sheets (Yen in millions) Securities with carrying amounts exceeding acquisition costs Equity securities 291,823 415,736 123,913 Bonds Government bonds, municipal 568,847 581,500 12,653 bonds and others Corporate bonds 300,047 313,203 13,156 Others - - - Others 1,876 2,217 341 Subtotal 1,162,595 1,312,657 150,062 Securities with acquisition costs exceeding carrying amounts Equity securities 75,360 71,586 (3,774) Bonds Government bonds, municipal 939,411 938,476 (935) bonds and others Corporate bonds 385,425 383,885 (1,540) Others - - - Others 261,021 260,929 (92) Subtotal 1,661,219 1,654,877 (6,342) Total 2,823,815 2,967,534 143,719 Note: Impairment loss recognized for this fiscal year was 52,027 million yen. 4. Held to maturity bond securities sold during this fiscal year (For the year ended March 31,2003) Category Carrying amount of Selling price Gain/loss Reason for sale sold securities (Yen in millions) (Yen in millions) (Yen in millions) Bonds Government bonds, municipal bonds - - - - and others Corporate bonds - - - - Others - - - - Total - - - - 5. Other securities sold during this fiscal year (For the year ended March 31,2003) Selling price Gross amount of gain on sale Gross amount of loss on sale (Yen in millions) (Yen in millions) (Yen in millions) 185,753 7,580 103 6. Description and carrying amount of securities not practicable to determining fair value (1) Bonds classified as held to maturity securities (Yen in millions) Government bonds, municipal bonds and others - Corporate bonds - Others - (2) Other securities (Yen in millions) Unlisted equity securities 55,676 Unlisted bonds Government bonds, municipal bonds and others - Corporate bonds 5,787 Others - Other unlisted securities 237,802 7. Maturity schedule of bonds securities classified as other securities and held to maturity securities Category March 31, 2003 Within 1 year From 1 to 5 years From 5 to 10 Over 10 years years (Yen in millions) (Yen in millions) (Yen in millions) (Yen in millions) Bonds Government bonds, municipal 874,332 598,046 2,120 45,993 bonds and others Corporate bonds 336,473 349,733 15,440 - Others - - - - Others 398,545 244 3,069 - Total 1,609,350 948,025 20,631 45,993 (Derivative transaction) 1. Condition of transactions FY2003 FY2004 For the year ended March 31, 2003 For the year ended March 31, 2004 TMC and its consolidated subsidiaries employ derivative financial instruments, including foreign exchange forward contracts, foreign currency options, interest rate options, interest rate currency swap agreements and interest rate swaps to manage financial risks. TMC and its consolidated subsidiaries enter into the following hedge transactions: (i) foreign exchange forward contracts and foreign currency options, primarily to hedge against exchange rate fluctuation risks related to accounts receivable denominated in foreign currencies, primarily the U.S. dollar; (ii) interest rate options, primarily to hedge against interest rate fluctuation risks related to floating-rate liabilities; and (iii) interest rate currency swaps and interest rate swaps, primarily to hedge against currency and interest rate fluctuation risks related to the principal and interest of bond portfolios denominated in foreign currencies and bonds issued in foreign currencies. TMC believes that its exposure to credit risk is immaterial as the counterparties of the transactions entered into by TMC and its subsidiaries are diversified among financial institutions with strong credit profiles. TMC has established operational policy for derivative transactions, and obtained approval from directors overseeing the accounting and financial operations. The execution and management of hedge transactions are mainly conducted by the financial department of each company. The status of these transactions is periodically reported to these overseeing directors. 2. Fair value of derivative transactions The contract amount, fair value and unrealized gains (losses) of derivative transactions (1) Currency related transactions Item Type of FY2003 FY2004 transaction March 31, 2003 March 31, 2004 Contract Over 1 Fair Unrealized Contract Over 1 Fair Unrealized amount year value gains/ amount year value gains/ (Yen in (Yen in (Yen in losses (Yen in (Yen in (Yen in Losses millions) millions) millions) (Yen in millions) millions) millions) (Yen in millions) millions) Transactions Foreign exchange other than forward contracts market Selling transactions Other 19,928 - (280) (280) - - - - Buying U.S. dollar 12,033 - (47) (47) - - - - Other 2,180 - 10 10 - - - - Swap transactions Receive U.S. 2,999 2,999 10 10 - - - - dollar and pay Japanese yen Receive U.S. 4,646 - 324 324 - - - - dollar and pay Euro Other 137,811 72,900 3,197 3,197 - - - - Total - - - 3,214 - - - - FY2003 FY2004 March 31, 2003 March 31, 2004 (Notes) 1. Derivative transactions to which the hedge accounting is applied are not included in the above. 2. Derivative transactions allocated to receivables or payables denominated in foreign currencies in accordance with the 'Accounting Standard for Foreign Currency Transaction, etc.' are not included in the above. 3. The fair values of foreign exchange forward contracts and swap transactions are calculated by the discounted cash flow method. (2) Interest rate related transactions Item Type of FY2003 FY2004 transaction March 31, 2003 March 31, 2004 Contract Over 1 Fair Unrealized Contract Over 1 Fair Unrealized amount year value gains/ amount year value gains/ (Yen in (Yen in (Yen in losses (Yen in (Yen in (Yen in losses millions) millions) millions) (Yen in millions) millions) millions) (Yen in millions) millions) Transactions Options other than Cap purchased 1,093,820 673,120 4,022 4,022 - - - - market Swap transaction transactions Receive fixed, 673,027 429,280 9,332 9,332 - - - - pay floating Receive 1,729,098 1,210,595 (40,578) (40,578) - - - - floating, pay fixed Receive 342,930 296,052 150 150 - - - - floating, pay floating Total - - - (27,073) - - - - FY2003 FY2004 March 31, 2003 March 31, 2004 (Notes) 1. Derivative transactions to which the hedge accounting is applied are not included in the above. 2. The fair values of option transactions and swap transactions are calculated by the discounted cash flow method. (Retirement Benefit Plans) FY2003 March 31, 2003 1 Outline of retirement benefit plans TMC and domestic consolidated subsidiaries have employee pension funds, qualified pension plans or retirement lump sum plans as defined benefit pension plans. Some foreign consolidated subsidiaries also have defined benefit pension plans. TMC and certain domestic consolidated subsidiaries have employee retirement trusts. TMC and consolidated subsidiaries have a total of 254 retirement lump sum plans, 56 employee pension funds, and 148 qualified pension plans as of March 31, 2003 (excluding those which are referred to as joint trust or union plan and those which overlap with the joint trust contracts or union contracts). In conjunction with the enforcement of the Defined Benefit Enterprise Pension Law, TMC and some domestic consolidated subsidiaries received approval from the Minister of Health, Labor and Welfare for exemption from the obligation for benefits related to future employee service under the substitutional portion. (TMC received the approval on April 1, 2002) TMC changed part of lump sum plan to defined contribution pension plan in July, 2002. 2 Retirement benefit obligation Yen in millions (1) Benefit obligation (1,702,469) (2) Plan assets * 637,638 (3) Funded status ((1)+(2)) (1,064,831) (4) Unrecognized actuarial loss 535,736 (5) Unrecognized prior service cost (reduction of liabilities) (3,974) (6) Net amounts included in the consolidated balance sheets ((3)+(4)+(5)) (533,069) (7) Prepayment for retirement benefits 106,639 (8) Allowance for retirement benefits ((6)-(7)) (639,708) (Notes) 1 Substitutional portion of employees' pension fund plans is included in the figures above. With respect to the return of the substitutional portion of employees' pension fund plans, TMC and some domestic subsidiaries applied the transitional provision stipulated in paragraph 47-2 of the 'Practical Guidelines of Accounting for Retirement Benefits (Interim Report)' (Accounting Committee Report No. 13 issued by the Japanese Institute of Certified Public Accountants), and recognized an extinguishment of retirement benefit obligation and plan assets to be returned to the government as of the date of receiving approval from the Minister of Health, Labor and Welfare for exemption from the obligation for benefits related to future employee service under the substitutional portion. Perspective amount to be returned is 474,400 million yen as of March 31, 2003. 2 *The plan assets of 66,645 million yen allocated by proportion of contributed amount to multiemployer pension plans, where the amount of plan assets cannot be reasonably identified, are not included. 3 Some consolidated subsidiaries apply a simplified method in calculating their retirement benefit obligation. FY2003 March 31, 2003 4 The impact of partial transition from lump sum pension plan to the defined contribution pension plan is as follows: Yen in millions Decrease in retirement benefit obligation 47,207 Unrecognized actuarial loss (3,063) Decrease in allowance for retirement benefit 44,144 The assets to be transferred to the defined contribution pension plan amounts 36,807 million yen, which is expected to be transferred over 4 years. The amount of 27,471 million yen not yet transferred as of March 31, 2003 was included in other accounts payable ('Accrued expenses and other accounts payable' in current liabilities and 'Other' in long-term liabilities). 3 Retirement benefit cost Yen in millions (1) Service cost *1, *2 73,538 (2) Interest cost 41,052 (3) Expected return on plan assets (19,022) (4) Amortization of net actuarial loss 25,113 (5) Amortization of prior service cost (2,170) (6) Employer contribution to the multiemployer pension plans 3,925 (7) Retirement benefit cost ((1)+(2)+(3)+(4)+(5)+(6)) 122,436 (8) Gain on return of the substitutional portion of employee pension fund (235,314) (9) Gain on transition to defined contribution pension plan (7,336) (10) Employer contribution to defined contribution pension plan 2,916 Total (117,298) (Notes) 1 Plan participants' contribution to the employee pension fund is not included. 2 Retirement benefit cost of consolidated subsidiaries applying simplified calculation method is included in '(1) Service cost'. 4 Assumption (1) Attribution method of retirement benefit Mainly benefit magnification method (2) Discount rate 1.5% - 11.5% (TMC 2.0%, domestic consolidated subsidiaries 1.5% - 3.5%) (3) Expected return on plan assets 1.3% - 10.5% (TMC 2.5%, domestic consolidated subsidiaries 1.3% - 4.5%) (4) Amortization period for unrecognized prior 1 year - 20 years (mainly based on straight line method service cost over the average remaining service period of employees) (5) Amortization period for unrecognized 2 years - 22 years (mainly based on straight line method actuarial loss over the average remaining service period of employees, will be expensed starting from the next fiscal year) (Deferred tax) FY2003 FY2004 March 31, 2003 March 31, 2004 1. Significant components of deferred tax assets and liabilities Deferred tax assets Yen in millions Allowance for retirement benefits 195,177 Accrued expenses 121,595 Property, plant and equipment 101,075 Allowance for product warranty 86,753 Intangible assets 47,614 Inventory adjustment 47,558 Allowance for doubtful accounts 40,639 Operating loss carryforwards for 158,080 tax purposes Other 237,966 Gross deferred tax assets 1,036,457 Less - valuation allowance (112,791) Total deferred tax assets 923,666 Deferred tax liabilities Property, plant and equipment (381,422) Unrealized gains on other (54,489) securities Other (40,493) Gross deferred tax liabilities (476,404) Net deferred tax asset 447,262 (Note) Net deferred tax asset is included in the consolidated balance sheets as follows: Yen in millions Current assets - Deferred income taxes 413,039 Fixed assets - Deferred income taxes 446,123 Current liabilities - Deferred income taxes (1,570) Long-term liabilities - Deferred income (410,330) taxes 2. Reconciliation of the differences between the effective income tax rate and the statutory tax rate The reconciliation is omitted because the differences between the effective income tax rate and the statutory tax rate is less than 5 percent of the effective income tax rate. 3. In conjunction with the promulgation of 'The law that amends part of local tax regulations that stipulate change of enterprise tax rate' (No.9, 2003 Law) on March 31, 2003, the effective income tax rate that is used for the calculation of deferred income tax assets and liabilities of TMC and its domestic consolidated subsidiaries as of March 31, 2003, which will be realized on and after April 1, 2004, was changed from 41.3% to 39.9%. As a result, 'Deferred income tax' under fixed assets, net of deferred tax liabilities, decreased by 8,528 million yen and 'Net unrealized gains on other securities' and 'Income tax - deferred' increased by 2,539 million yen and 11,067 million yen, respectively. (Segment information) (Business Segment Information) FY2003 (For the year ended March 31, 2003) Automotive Financial All other Total Intersegment Consolidated (Yen in services (Yen in (Yen in Elimination/ (Yen in millions) (Yen in millions) millions) Unallocated millions) millions) Amount (Yen in millions) 1 Revenues/Operating income Net revenues (1) Sales to external 14,788,940 700,961 564,387 16,054,290 - 16,054,290 customers (2) Intersegment sales 12,337 19,045 307,564 338,947 (338,947) - Total 14,801,278 720,007 871,952 16,393,238 (338,947) 16,054,290 Operating expenses 13,468,917 691,486 857,569 15,017,973 (327,363) 14,690,610 Operating income 1,332,360 28,520 14,383 1,375,264 (11,584) 1,363,679 2 Segment assets, depreciation and expenditures for segment assets Segment assets 9,617,993 7,657,144 857,739 18,132,877 2,609,508 20,742,386 Depreciation 722,742 109,151 19,740 851,634 - 851,634 Expenditures for segment 1,013,586 470,863 52,708 1,537,157 - 1,537,157 assets (Notes) 1 Reporting segments Reporting segments are defined by the type of products and services provided. 2 Main products and services of each reporting segment Automotive ------------------ Passenger cars, trucks, buses, etc. Financial services ----------- Financing operations, etc. All other ---------------------- Housing, Information Technologies, etc. 3 Unallocated corporate assets included in 'Intersegment Elimination/ Unallocated Amount' is 3,136,008 million yen, and consists primarily of funds such as cash and deposits, marketable securities and portion of investments in securities of TMC. (Notes) 4 Consolidated financial statements on non-financial services and financial services businesses (a) Consolidated balance sheets on non-financial services and financial services businesses FY2003 March 31, 2003 Item Yen in millions Percentage (Assets) (Non-Financial Services Businesses) 1 Current assets 1 Cash and deposits 443,913 2 Trade notes and accounts receivable 1,599,344 3 Marketable securities 1,655,596 4 Inventories 1,072,947 5 Other 1,293,207 Total current assets 6,065,008 29.2 2 Fixed assets (1) Property, plant and equipment 4,447,518 21.5 (2) Investments and other assets 1 Investments in securities 2,422,902 2 Long-term loans receivable 327,945 3 Other 590,028 Total investments and other assets 3,340,877 16.1 Total fixed assets 7,788,396 37.6 Total assets 13,853,404 66.8 (Financial Services Businesses) 1 Current assets 1 Cash and deposits 176,957 2 Marketable securities 6,381 3 Installment credits from dealers 3,320,405 4 Other 2,038,920 Total current assets 5,542,664 26.7 2 Fixed assets (1) Property, plant and equipment 1,059,466 5.1 (2) Intangible fixed assets 5,123 0.0 (3) Investments and other assets 1 Investments in securities 273,036 2 Long-term loans receivable 610,249 3 Other 166,603 Total investments and other assets 1,049,889 5.1 Total fixed assets 2,114,479 10.2 Total assets 7,657,144 36.9 (Elimination) Elimination of assets (768,162) (3.7) (Consolidated) Total assets 20,742,386 100.0 FY2003 March 31, 2003 Item Yen in millions Percentage (Liabilities) (Non-Financial Services Businesses) 1 Current liabilities 1 Trade notes and accounts payable 1,570,853 2 Current portion of bonds 63,308 3 Short-term borrowings 843,193 4 Accrued expenses and other accounts payable 1,235,818 5 Income taxes payable 310,232 6 Other 713,471 Total current liabilities 4,736,878 22.8 2 Long-term liabilities 1 Bonds and convertible bonds 500,400 2 Long-term borrowings 247,730 3 Other 842,864 Total long-term liabilities 1,590,995 7.7 Total liabilities 6,327,874 30.5 (Financial Services Businesses) 1 Current liabilities 1 Current portion of bonds 1,060,727 2 Short-term borrowings 667,814 3 Commercial papers 1,031,271 4 Accrued expenses and other accounts payable 154,595 5 Income taxes payable 6,962 6 Other 483,151 Total current liabilities 3,404,522 16.4 2 Long-term liabilities 1 Bonds 3,019,944 2 Long-term borrowings 510,829 3 Other 291,392 Total long-term liabilities 3,822,166 18.4 Total liabilities 7,226,689 34.8 (Elimination) (768,651) (3.7) Elimination of liabilities (Consolidated) 12,785,911 61.6 Total liabilities (Minority interest in consolidated subsidiaries) (Consolidated) 496,207 2.4 Minority interest in consolidated subsidiaries (Shareholders' equity) (Consolidated) 1 Common stock 397,049 1.9 2 Capital surplus 418,401 2.0 3 Retained earnings 7,219,896 34.8 4 Unrealized gain on other securities, net 78,630 0.4 5 Translation adjustments (112,350) (0.5) 6 Treasury stock (541,360) (2.6) Total Shareholder's equity 7,460,267 36.0 (Consolidated) Total liabilities, minority interest in consolidated 20,742,386 100.0 subsidiaries and shareholders' equity (Notes) 1 Segment assets in non-financial services businesses include unallocated corporate assets. 2 'Commercial papers' in the financial services businesses was previously included in 'Other' in current liabilities. Due to the fact that this amount became material as of March 31, 2003, it has been presented as a separate line item. (b) Consolidated statement of income on non-financial services and financial services businesses FY2003 For the year ended March 31, 2003 Item Yen in millions Percentage (Non-Financial Services Businesses) 1 Net revenues 15,362,780 100.0 2 Cost of revenues 11,730,912 76.4 Gross profit 3,631,868 23.6 3 Selling, general and administrative expenses 2,279,566 14.8 Operating income 1,352,301 8.8 4 Non-operating income 287,566 1.9 5 Non-operating expenses 256,878 1.7 Ordinary income 1,382,989 9.0 6 Extraordinary gains Gains on return of substitutional 235,314 235,314 1.5 portion of employees' pension fund plans Income before income taxes and minority interest in 1,618,304 10.5 consolidated subsidiaries Income taxes 637,385 4.2 Minority interest in consolidated subsidiaries 53,279 0.3 Net income 927,639 6.0 (Financial Services Businesses) 1 Net revenues 720,007 100.0 2 Cost of revenues 428,327 59.5 Gross profit 291,679 40.5 3 Selling, general and administrative expenses 263,158 36.5 Operating income 28,520 4.0 4 Non-operating income 12,773 1.8 5 Non-operating expenses 9,824 1.4 Ordinary income 31,468 4.4 Income before income taxes and minority interest in 31,468 4.4 consolidated subsidiaries Income taxes 13,790 1.9 Minority interest in consolidated subsidiaries 575 0.1 Net income 17,102 2.4 (Elimination) Elimination of net income (71) - (Consolidated) Net income 944,671 - (c) Consolidated statement of cash flows on non-financial services and financial services businesses FY2003 For the year ended March 31, 2003 Item Yen in millions (Non-Financial Services Business) 1 Cash flows from operating activities 1 Income before income taxes and minority interest in 1,618,304 consolidated subsidiaries 2 Depreciation 742,482 3 Losses on disposal of fixed assets 53,576 4 Decrease in allowance for retirement benefits (113,836) 5 Interest and dividend income (55,078) 6 Interest expenses 48,748 7 Equity in earnings of affiliates (70,649) 8 Decrease in trade notes and accounts receivable 2,952 9 Increase in inventories (25,842) 10 Increase in trade notes and accounts payable 105,652 11 Other 150,494 Subtotal 2,456,804 12 Interests and dividends received 69,798 13 Interests paid (49,285) 14 Income taxes paid (649,282) Cash flows from operating activities 1,828,034 2 Cash flows from investing activities 1 Net increase in time deposits (19,935) 2 Purchases of marketable securities and investments in (860,913) securities 3 Proceeds from sales of marketable securities and investments 146,331 in securities 4 Proceeds on maturity of marketable securities and 591,922 investments in securities 5 Additions to property, plant and equipment (excluding vehicles for lease) (964,338) 6 Additions to vehicles for lease (121,227) 7 Proceeds from sales of property, plant and equipment (excluding 52,929 vehicles for lease) 8 Proceeds from sales of vehicles for lease 61,222 9 Other (53,639) Cash flows from investing activities (1,167,647) 3 Cash flows from financing activities 1 Net decrease in short-term borrowings (104,607) 2 Proceeds from origination of long-term borrowings 39,447 3 Payments for long-term borrowings (82,090) 4 Purchase of treasury stock (454,611) 5 Dividends paid (109,330) 6 Other 11,982 Cash flows from financing activities (699,209) 4 Effect of exchange rate changes on cash and cash equivalents (34,172) 5 Net decrease in cash and cash equivalents (72,995) 6 Cash and cash equivalents at beginning of year 1,541,940 7 Cash and cash equivalents at end of year 1,468,944 FY2003 For the year ended March 31, 2003 Item Yen in millions (Financial Services Business) 1 Cash flows from operating activities 1 Income before income taxes and minority interest in 31,468 consolidated subsidiaries 2 Depreciation 109,151 3 Equity in earnings of affiliates (11,317) 4 Increase in trade notes and accounts receivable (367,213) 5 Increase in loans receivable of consolidated finance subsidiaries (407,186) 6 Other 153,296 Subtotal (491,800) 7 Interests and dividends received 1,766 8 Income taxes paid (8,526) Cash flows from operating activities (498,560) 2 Cash flows from investing activities 1 Net increase in time deposits (12,259) 2 Purchases of marketable securities and investments in (250,670) securities 3 Proceeds from sales of marketable securities and investments 62,444 in securities 4 Proceeds on maturity of marketable securities and 132,059 investments in securities 5 Additions to property, plant and equipment (excluding vehicles for lease) (48,465) 6 Additions to vehicles for lease (419,718) 7 Proceeds from sales of property, plant and equipment (excluding 11,144 vehicles for lease) 8 Proceeds from sales of vehicles for lease 222,617 9 Other 35,365 Cash flows from investing activities (267,482) 3 Cash flows from financing activities 1 Net decrease in short-term borrowings (45,124) 2 Net increase in commercial papers 159,080 3 Proceeds from origination of long-term borrowings 166,768 4 Payments for long-term borrowings (82,508) 5 Proceeds from issuance of bonds 1,414,564 6 Payments for redemption of bonds (830,698) Cash flows from financing activities 782,080 4 Effect of exchange rate changes on cash and cash equivalents (7,925) 5 Net increase in cash and cash equivalents 8,111 6 Cash and cash equivalents at beginning of year 146,185 7 Cash and cash equivalents at end of year 154,297 (Consolidated) 1 Effect of exchange rate changes on cash and cash equivalents (42,098) 2 Net decrease in cash and cash equivalents (64,884) 3 Cash and cash equivalents at beginning of year 1,688,126 4 Cash and cash equivalents at end of year 1,623,241 (Geographical Segment Information) FY2003 (For the year ended March 31, 2003) Japan North Europe Other Total Intersegment Consolidated (Yen in America (Yen in foreign (Yen in Elimination/ (Yen in millions) (Yen in millions) countries/ millions) Unallocated millions) millions) regions Amount (Yen in (Yen in millions) millions) 1 Revenues/Operating income Net revenues (1) Sales to external 6,990,384 5,973,581 1,505,895 1,584,428 16,054,290 - 16,054,290 customers (2) Intersegment sales 4,274,841 289,118 85,137 111,381 4,760,478 (4,760,478) - Total 11,265,225 6,262,699 1,591,033 1,695,810 20,814,769 (4,760,478) 16,054,290 Operating expenses 10,232,412 5,972,908 1,587,128 1,643,300 19,435,749 (4,745,139) 14,690,610 Operating income 1,032,813 289,791 3,904 52,509 1,379,019 (15,339) 1,363,679 2 Segment assets 9,474,768 6,577,056 1,557,523 1,211,312 18,820,660 1,921,725 20,742,386 (Notes) 1 Reporting segments Reporting segments are defined based on geographic proximity. 2 Main countries and regions in each reporting segment North America--------------United States of America, Canada Europe------------------------Belgium, Germany, United Kingdom Other foreign countries----Thailand, Australia 3 Unallocated corporate assets included in 'Intersegment Elimination/Unallocated Amount' is 3,136,008 million yen, and consists primarily of funds such as cash and deposits, marketable securities and portion of investments in securities of TMC. (Overseas Sales) FY2003 (For the year ended March 31, 2003) North America Europe Other foreign Total countries/regions 1 Overseas sales(Yen in 6,243,637 1,547,389 2,666,889 10,457,916 millions) 2 Consolidated sales(Yen in 16,054,290 millions) 3 Ratio of overseas sales 38.9 9.6 16.6 65.1 to consolidated revenues (%) (Notes) 1 Reporting segments Reporting segments are defined based on geographic proximity. 2 Main countries and regions in each reporting segment North America----------------United States of America, Canada Europe-------------------------Germany, United Kingdom Other foreign countries------Thailand, Australia 3 Overseas revenues shows net revenues recorded at TMC and its consolidated subsidiaries in countries or regions outside of Japan. (Related party transactions) FY2003 (For the year ended March 31, 2003) Directors and principal shareholders Name Address Capital Business or Voting Relationship Description Amount Account Ending investment occupation right of (*1) balance (Yen in ratio Transaction (Yen in (Yen in millions) (%) millions) millions) Interlocking Business Directorate relationship Director Hiroshi - - Chairman of 0.00, - - Donation of 6 - - and/or Okuda TMC, directly monthly their owned office family rental fee to members Chairman of Japan Japan Federation of Federation of Employers' Employers' Associations Associations (*2) - - Chairman of 0.00, - - Free lease of 1 - - TMC, directly one picture owned based on the Japan lease Federation of agreement Economic to Japan Organizations Federation of Economic Organizations (*2) Akihiko - - Vice 0.00, - - Loan of - Long-term 770 Saito President of directly construction loans TMC owned cost to Toyota Chairman of Automotive Toyota Engineering (interest - - Automotive College of income) Engineering Nagoya College of (*2, *3) 7 Nagoya Kazushi - - Vice 0.00, - - The following Iwatsuki President directly transactions of TMC, owned with Toyota Automotive Chairman of Engineering Toyota College of Automotive Tokyo: Engineering (*2, *3) College of Lease of land 16 - - Tokyo Donation of 422 - - construction cost Mitsuo - - Managing 0.00, - - The following Kinoshita Director of directly transactions TMC, owned with Toyota Health Chairman of Insurance Toyota Health Society :(*4) Payments for 280 - - Insurance part of Society medical treatment fees Name Address Capital Business or Voting Relationship Description Amount Account Ending investment occupation right of (*1) balance (Yen in ratio Transaction (Yen in (Yen in millions) (%) millions) millions) Interlocking Business Directorate relationship Shoichiro - - Honorary 0.44, - - Donation of 400 Other 800 Toyoda Chairman and directly construction accounts Director of owned cost to payable TMC Japan Chairman of Association Japan for Association the 2005 for the 2005 World World Exposition Exposition (*2) - - Honorary 0.44, - - Donation of 5 - - Chairman and directly the Director of owned operational TMC fund to Toyota Physical & Chairman of Chemical Toyota Research Physical & Institute (* Chemical 2) Research Institute - - Honorary 0.44, - - Contribution 2 - - Chairman and directly for Director of owned the TMC symposium Chairman of of Japan- Japan-China China Organization Organization for Science for Science & Industrial & Technology Industrial Exchange Technology Association Exchange Association (*2) (Notes) *1 Transaction amount does not include consumption tax. *2 The transaction was made by each described person as the representative of the third party, and the amount of transaction was well-determined by considering the relationship with and the requests from the third party. *3 The transaction was made by each described person as the representative of the third party, and price was determined based on the condition of the normal transaction. *4 The transaction was made by each described person as the representative of the third party, and the amount of payments for part of medical treatment fees was determined based on the medical treatment agreement between the Toyota Health Insurance Society and TMC. (Per Share Data) FY2003 FY2004 For the year ended March 31, 2003 For the year ended March 31, 2004 1 Net assets per share 2,226.34 yen 2 Basic net income per share 272.75 yen 3 Diluted net income per share 272.73 yen TMC has adopted 'Accounting Standard for Earnings Per Share' (Financial Accounting Standards No.2) and 'Implementation Guidance of Accounting Standard for Earnings Per Share' (Implementation Guidance of Financial Accounting Standards No. 4) for this fiscal year. The following represents the per share data for the year ended March 31, 2003, as if it was calculated based on the previous method. 1 Net assets per share 2,192.85 yen 2 Basic net income per share 269.48 yen 3 Diluted net income per share 269.48 yen (Note) Basis for the calculation of basic and diluted net income per share are as follows: FY2003 FY2004 For the year ended March 31, For the year ended March 31, 2003 2004 (Yen in millions) (Yen in millions) Basic net income per share Net income 944,671 - The amount not attributed to common 2,382 - shareholders (Bonuses to the directors based on the 2,382 - appropriation of earnings, inner amount) Net income attributed to common shares 942,289 - Weighted-average number of common shares 3,454,704,711 shares - shares during the period Diluted net income per share The amount adjusted to net income (52) - (The amount resulting from the changes in (52) - equity ownership of TMC and the decreased amount in interest expenses of the subsidiaries, inner amount) Increase in number of common shares 21,577 shares - shares (The number of common shares to be used for 21,577 shares - shares the stock option plan under Articles 280-20 and 280-21 of Japanese Commercial Code, inner amount) The description of shares not included in the The shares to be used for the calculation of diluted net income per share stock due to anti-dilutive effect option plan under Article 210-2 of the old Japanese Commercial Code 1,941,000 shares Unsecured warrant bonds 116,400 shares This information is provided by RNS The company news service from the London Stock Exchange

Companies

Toyota Motor Corp. (TYT)
UK 100
FTSE quotes by TradingView

Latest directors dealings

All directors dealings today