20-F - Part 2

Toyota Motor Corporation 23 August 2002 Operating Income Toyota's operating income increased by Y302.9 billion, or 38.3%, to Y1,093.6 billion during fiscal 2002 compared with the prior year. Operating income was affected primarily by the favorable impact of the foreign currency exchange rate changes as well as the impact of continuing cost reduction efforts that were partially offset by the impact of the disposal of the telecommunications business during fiscal 2001. During fiscal 2002, operating income (before the elimination of intersegment profits) increased by Y220.9 billion, or 35.4%, in Japan; Y70.2 billion, or 36.1%, in North America, Y6.4 billion, or 96.6 %, in other markets and operating loss decreased by Y0.7 billion, or 3.0%, in Europe compared with the prior year. The increase in Japan relates primarily to the favorable impact of the foreign currency exchange rate changes relating to export sales, the impact of higher average unit sales prices on export sales, the impact of increased exports to North America and Europe and cost reduction efforts that were partially offset by the impact of lower domestic average unit sales prices and the impact of decreased domestic vehicle unit sales. The increase in North America relates primarily to the favorable impact of the depreciation of the yen to the U.S. dollar and the impact of increased vehicle unit sales. The increase in other markets relates to improved vehicle unit sales and the impact of higher average unit sales prices. The decrease in operating loss in Europe relates primarily to the significantly improved operating results resulting from the impact of increased vehicle unit sales and the impact of higher average unit sales prices that were partially offset by the unfavorable impact of derivative financial instruments used to manage exposure to foreign currency fluctuation from an economic perspective where Toyota was unable to apply hedge accounting. The following is a discussion of operating income for each of Toyota's business segments. The operating income amounts discussed represent amounts before the elimination of intersegment profits. Automotive Operations Segment Operating income from Toyota's automotive operations increased by Y292.4 billion, or 38.2%, to Y1,057.9 billion during fiscal 2002 compared with the prior year. Operating income was favorably affected primarily by the impact of the foreign currency exchange rate changes, continued cost reduction efforts and the impact of the consolidation of Hino during fiscal 2002 that were partially offset by the impact of increased research and development expenses. Financial Services Operations Segment Operating income from Toyota's financial services operations increased by Y13.4 billion, or 42.4%, to Y45.1 billion during fiscal 2002 compared with the prior year. Operating income was favorably affected primarily by the impact of lower prevailing interest rates in the United States resulting in lower funding costs, the impact of increased spreads on financings and the impact of increased financings. These increases were partially offset by increased residual value losses, higher provisions for credit losses, the costs for expansion of operations and the impact of restructuring the field operations in the United States. All Other Operations Segment Operating loss from Toyota's other businesses decreased by Y1.6 billion to Y3.0 billion during fiscal 2002 compared with the prior year. This decline resulted primarily from the decrease of intelligent transportation system expenses that were partially offset by the impact of the disposal of the telecommunications business during fiscal 2001 and the impact of the disposal of the industrial equipment business during fiscal 2002. Other Income and Expenses Interest and dividend income decreased by Y15.6 billion, or 21.8%, to Y55.8 billion during fiscal 2002 compared with the prior year due to lower prevailing interest rates in the United States and Japan. Interest expense decreased by Y14.1 billion, or 34.5%, to Y26.8 billion during fiscal 2002 compared with the prior year due to lower prevailing interest rates in the United States and Japan. Foreign exchange loss decreased by Y5.9 billion during fiscal 2002 compared with the prior year. Foreign exchange gain and loss include the differences between the value of foreign currency denominated sales translated at prevailing exchange rates and the value of the sales amounts settled during the year, including those settled using foreign exchange forward contracts. Foreign exchange losses decreased due to the moderate movement of exchange rates during fiscal 2002, as compared with the trend of depreciation of the yen during the second half of fiscal 2001. Other income changed by Y442.5 billion to a loss of Y150.5 billion during fiscal 2002 from an income of Y292.0 billion in the prior year. During fiscal 2001, there was a gain of Y181.0 billion on the disposal of the ownership interest in IDO and a gain of Y161.2 billion relating to the contribution of certain marketable securities to an employee retirement benefit trust. During fiscal 2002, there were gains of Y75.1 billion on exchange transactions relating to financial institutions where Toyota held ownership interests and losses of Y 259.2 billion relating to other than temporary impairments on investment securities of which Y212.9 billion related to Toyota's investment in KDDI. Income Taxes Provision for income taxes decreased by Y101.1 billion during fiscal 2002 compared with the prior year primarily as a result of decrease in income before income taxes and decreased provision for taxes on undistributed earnings of affiliated companies accounted for by the equity method. The effective tax rate for fiscal 2002 decreased to 43.5% from 47.3% for the prior year due primarily to decreased provision for taxes on undistributed earnings of affiliated companies. Minority Interest in Consolidated Subsidiaries and Equity in Earnings of Affiliated Companies Minority interest in consolidated subsidiaries decreased by Y1.3 billion to Y 10.8 billion during fiscal 2002 compared with the prior year. The decrease in minority interest in consolidated subsidiaries reflects decreased earnings of Daihatsu and the impact of disposal of IDO during fiscal 2001 that were partially offset by the impact of the consolidation of Hino during fiscal 2002. Equity in earnings of affiliated companies during fiscal 2002 decreased by Y85.5 billion to Y18.1 billion during fiscal 2002 compared with the prior year as a result of the impact of the recognition of gains on securities relating to the contribution of marketable securities to employee retirement benefit trusts during fiscal 2001 and a loss by Aioi during fiscal 2002. Net Income Toyota's net income decreased by Y118.3 billion, or 17.5%, to Y556.6 billion during fiscal 2002 compared with the prior year. Other Comprehensive Income and Loss Other comprehensive loss changed by Y 172.3 billion, to an income of Y15.2 billion during fiscal 2002 compared with the prior year. This change resulted primarily from a decrease in an unrealized holding losses on securities during fiscal 2002 to Y3.6 billion compared to Y305.0 billion in the prior year and were partially offset by an increase in other comprehensive loss to Y114.3 billion relating to minimum pension liability adjustment compared to Y13.4 billion in the prior year and a decrease in a foreign currency translation adjustments gain during fiscal 2002 to Y133.9 billion compared to a gain of Y 161.3 billion in the prior year. Results of Operations - Fiscal 2001 Compared with Fiscal 2000 Net Revenues Toyota had net revenues for fiscal 2001 of Y13,137.1 billion, an increase of Y 487.3 billion, or 3.9%, compared to the prior year. This increase principally reflects the favorable impact of increased vehicle unit sales and higher average unit sales prices and was partially offset by the unfavorable impact of foreign currency translation rates and the impact of the disposal of the telecommunications business during fiscal 2001. Eliminating the difference in the yen value used for translation purposes, revenues would have been approximately Y13,473.7 billion during fiscal 2001, a 6.5 % increase compared to the prior year. Toyota's net revenues include sales of products which increased during fiscal 2001 by 3.8 % to Y12,583.9 billion compared to the prior year and financing operations which increased during fiscal 2001 by 4.7% to Y553.1 billion compared to the prior year. Eliminating the difference in the yen value used for translation purposes, revenues from sales of products would have been approximately Y12,901.3 billion, a 6.4 % increase, and revenues from financing operations would have been approximately Y572.3 billion, an 8.3% increase, during fiscal 2001 compared to the prior year. Revenues for fiscal 2001 increased by 2.9 % in Japan, increased by 6.3 % in North America, decreased by 6.8% in Europe and increased by 12.5% in all other markets compared with the prior year. Eliminating the difference in the yen value used for translation purposes, revenues would have increased by 2.9% in Japan, increased by 7.4% in North America, increased by 10.0% in Europe and increased by 25.9% in all other markets compared to the prior year. The following is a discussion of net revenues for each of Toyota's business segments. The net revenue amounts discussed represent amounts before the elimination of intersegment revenues. Automotive Operations Segment Net revenues from Toyota's automotive operations constitute the largest percentage of Toyota's revenues. During fiscal 2001, net revenues for Toyota's automotive operations increased by 5.6% to Y11,723.0 billion from Y11,098.9 billion in the prior year. The increase resulted primarily from the Y736.8 billion impact of increased vehicle unit sales and the Y204.8 billion combined impact of sales price increases and changes in sales mix, partially offset by the Y317.4 billion unfavorable impact of foreign currency translations rates during fiscal 2001. Eliminating the difference in the yen value used for translation purposes, automotive operations revenues would have been approximately Y12,040.4 billion during fiscal 2001, an 8.5% increase compared to the prior year. Revenues in Japan were impacted by increased vehicle unit sales and the introduction of new models that were partially offset by a continuing market shift in Japan to lower priced vehicles. Revenues in North America were impacted by vehicle unit sales growth and sales price increases during fiscal 2001 that were partially offset by the unfavorable impact of foreign currency translation rates. Revenues in Europe were unfavorably impacted by foreign currency translation rates during fiscal 2001 that were partially offset by vehicle unit sales growth. Revenues in all other markets were favorably impacted by vehicle unit sales growth during fiscal 2001 that were partially offset by the unfavorable impact of foreign currency translation rates. Vehicle unit sales in Japan, North America, Europe and all other markets increased during fiscal 2001 compared with the prior year. Japanese, North American, European and all other markets sales reflect vehicle unit sales growth of 6.7%, 2.6%, 9.0% and 14.4%, respectively, compared to the prior year. Financial Services Operations Segment Net revenues for Toyota's financial services operations increased by Y36.9 billion, or 6.9%, to Y571.1 billion during fiscal 2001 compared with the prior year. This increase resulted primarily from the increase in the volume of, and higher interest rates on, financings that was partially offset by the unfavorable impact of foreign currency translation rates during fiscal 2001. Eliminating the difference in the yen value used for translation purposes, financial services operations revenues would have been approximately Y590.3 billion during fiscal 2001, a 10.5% increase compared with the prior year. All Other Operations Segment Net revenues for Toyota's other businesses decreased by Y138.4 billion, or 11.5%, to Y1,069.4 billion during fiscal 2001 compared with the prior year. This decrease resulted from the Y235.7 billion impact of the disposal of the telecommunications business during fiscal 2001. Excluding revenues of telecommunication business, net revenues for all other business increased by Y 97.3 billion, or 13.4%, to Y825.8 billion during fiscal 2001, reflecting the higher revenues of the industrial equipment business. Operating Costs and Expenses Operating costs and expenses increased by Y395.1 billion, or 3.3%, to Y12,346.3 billion during fiscal 2001 compared with the prior year. The increase resulted primarily from the Y665.7 billion impact on cost of products sold of increased vehicle unit sales and sales mix, the Y98.2 billion impact of increased volume related to all other operations and the Y33.2 billion impact of increased volume related to financial services operations during fiscal 2001. These increases were partially offset by the Y208.1 billion impact of foreign currency translation rates, the Y180.0 billion impact of cost cutting efforts and the Y 205.6 billion impact of disposal of the telecommunications business during fiscal 2001. Continued cost cutting efforts reduced costs and expenses for fiscal 2001 by approximately Y180.0 billion over what would have otherwise been incurred. These cost cutting efforts relate to ongoing value engineering and value analysis activities, the use of common parts that result in a reduction of part types and other manufacturing initiatives designed to reduce the costs of vehicle production. As an additional cost saving initiative, Toyota has finished reducing domestic annual production capacity of Toyota branded vehicles from a level of 4 million vehicles during fiscal 1999 to a level of 3 to 3.5 million vehicles. Cost of products sold increased by Y378.8 billion, or 3.8%, to Y10,218.6 billion during fiscal 2001 compared with the prior year. This increase (before the elimination of intersegment amounts) reflects an increase of Y434.8 billion, or 4.8%, for the automotive operations and a decrease of Y 37.7 billion, or 4.3%, for the all other operations segment. The increase for the automotive operations reflects primarily the impact of increased vehicle unit sales during fiscal 2001 that was partially offset by the impact of lower costs resulting from foreign currency translation rates during the period as well as the impact of continued cost cutting efforts. The decrease for the all other operations segment reflects the Y129.0 billion impact of the disposal of the telecommunications business during fiscal 2001 that was partially offset by the impact of the increase in cost of products reflecting increased revenue in the industrial equipment business. Cost of products sold as a percentage of revenues from sales of products remains unchanged at 81.2% during fiscal 2001. This reflects the unfavorable impact of foreign currency rates on revenues related to Toyota's non-domestic sales produced in Japan and, to a lesser extent, revenues related to Toyota's continental Europe sales produced in the United Kingdom and the unfavorable impact of the disposal of the telecommunications business during fiscal 2001. These were almost completely offset by the impact of continued cost cutting efforts. Cost of financing operations increased by Y25.3 billion, or 6.3%, to Y427.3 billion during fiscal 2001 compared with the prior year. The increase resulted primarily from the impact of increased volume of financing operations and increased costs of financing caused by higher interest rates in the United States that was partially offset by the impact of foreign currency translation rates. The cost of financing operations as a percentage of revenue from financing operations increased to 77.3% during fiscal year 2001 from 76.1% in the prior year. This change was principally the result of the increased costs of financing caused by higher prevailing interest rates in the United States. Research and development expenses increased to Y475.7 billion during fiscal 2001 from Y451.2 billion in the prior year, as a result of increased activities relating primarily to the development of new models, vehicle safety and environmental technologies. Selling, general and administrative expenses (after the elimination of intersegment amounts) decreased by Y9.0 billion, or 0.5%, to Y1,700.4 billion during fiscal 2001 compared with the prior year. This decrease (before the elimination of intersegment amounts) reflects an increase of Y62.8 billion, or 4.5%, for the automotive operations, an increase of Y19.2 billion, or 19.2%, for the financial services operations and a decrease of Y69.7 billion, or 22.3%, for the other operations segment. The increase for the automotive operations consisted primarily of a corresponding increase resulting from increased vehicle unit sales that was partially offset by the impact of foreign currency translation rates during fiscal 2001, reduced sales promotion costs and continuing cost reduction efforts. The increase for the financial services operations reflects increased costs for expansion of operations, including the start-up costs for the credit card business, and higher provisions for credit losses resulting from the increase in finance receivables. These increases were partially offset by the impact of foreign currency translation rates during fiscal 2001. The decrease for the all other operations segment reflects the Y 76.5 billion impact of the disposal of the telecommunications business during fiscal 2001. Selling, general and administrative expenses as a percentage of revenue decreased to 12.9% during fiscal 2001 from 13.5% in the prior year. Selling, general and administrative expenses decreased as a percentage of revenue primarily due to the impact on the automotive operations of increased sales of vehicles, reduced sales promotion costs and continuing cost reduction efforts during fiscal 2001 as well as the impact of disposal of the telecommunications business during fiscal 2001. These were partially offset by the impact of foreign currency rates on revenues related to Toyota's non-domestic sales produced in Japan and, to a lesser extent, revenues related to Toyota's continental Europe sales produced in the United Kingdom in the automotive segment and increased costs for expansion of operations and higher provisions for credit losses in financing operations. Selling, general and administrative expenses in the automotive operations as a percentage of segment revenues were 12.3% during fiscal 2001, compared to 12.5% in the prior year. Selling, general and administrative expenses in the financial service operations as a percentage of segment revenues were 20.8% during fiscal 2001, compared to 18.7% in the prior year. Selling, general and administrative expenses in the all other operations segment as a percentage of segment revenues were 22.7% during fiscal 2001 compared to 25.9% in the prior year. Operating Income Toyota's operating income increased by Y92.2 billion, or 13.2%, to Y790.7 billion during fiscal 2001 compared with the prior year. Operating income was affected primarily by vehicle unit sales growth and sales price increases as well as continuing cost reduction efforts that was partially offset by the appreciation of the yen against the U.S. dollar and the euro and the related impact of the foreign currency exchange rate changes during fiscal 2001 as well as the impact of disposal of the telecommunications business during fiscal 2001. During fiscal 2001, operating income (before the elimination of intersegment profits) increased by Y83.5 billion, or 15.5%, in Japan; Y35.1 billion, or 22.0%, in North America and Y3.0 billion, or 81.4 %, in other markets compared with the prior year. These increases were partially offset by an increase in operating loss of Y15.0 billion, or 151.5%, in Europe compared with the prior year. The increase in Japan relates primarily to the favorable impact of increased vehicle unit sales in Japan, increased exports to North America and Europe and cost reduction efforts which were partially offset by the unfavorable impact of the appreciation of the yen to the U.S. dollar and the euro. The increase in North America relates primarily to the favorable impact of increased vehicle unit sales, sales price increases and expanded production at new production facilities which were partially offset by the impact of the depreciation of the U.S. dollar to the yen. The increase in other markets relates to improved vehicle unit sales in certain Asian markets and the combined impact of sales price increases and changes in sales mix. The decline in Europe relates primarily to the sharp depreciation of the euro to the yen and start-up costs of the new French plant that was partially offset by increased vehicle unit sales and sales price increases. The following is a discussion of operating income for each of Toyota's business segments. The operating income amounts discussed represent amounts before the elimination of intersegment profits. Automotive Operations Segment Operating income from Toyota's automotive operations increased by Y126.6 billion, or 19.8%, to Y765.6 billion during fiscal 2001 compared with the prior year. Operating income was favorably affected primarily by increased vehicle unit sales, sales price increases, changes in sales mix and continued cost reduction efforts. These increases were partially offset by the appreciation of the yen against the U.S. dollar and the euro and the appreciation of the British pound to the euro. Financial Services Operations Segment Operating income from Toyota's financial services operations slightly decreased by 0.1%, to Y31.7 billion during fiscal 2001 compared with the prior year. Operating income was adversely affected primarily by the increased costs for expansion of operations, including the start-up costs for the credit card business, and higher provisions for credit losses as well as the appreciation of the yen to the U.S. dollar and the euro. These decreases were offset by the impact of increased financings. All Other Operations Segment Operating income from Toyota's other businesses decreased by Y31.0 billion to a loss of Y4.6 billion during fiscal 2001 compared with the prior year. This decline resulted primarily from a decrease in earnings of the telecommunications business for the first half of fiscal 2001 and the impact of the disposal of the telecommunications business on October 1, 2001. Other Income and Expenses Interest and dividend income decreased by Y2.6 billion, or 3.5%, to Y71.4 billion during fiscal 2001 compared with the prior year due to lower prevailing interest rates in Japan. Interest expense decreased by Y6.5 billion, or 13.6%, to Y40.9 billion during fiscal 2001 compared with the prior year due to lower prevailing interest rates in Japan. Foreign exchange gain decreased by Y97.2 billion to a loss of Y6.0 billion during fiscal 2001 compared with the prior year. Foreign exchange gain and loss include the differences between the value of foreign currency denominated sales translated at prevailing exchange rates and the value of the sales amounts settled during the year, including those settled using foreign exchange forward contracts. Foreign exchange gains decreased due to the moderate movement of exchange rates during the first half of fiscal 2001 and the trend of depreciation of the yen during the second half of fiscal 2001, as compared with the trend of significant appreciation of the yen in the prior year. Other income increased by Y227.8 billion during fiscal 2001 compared with the prior year as a result of the gain of Y181.0 billion on the disposition of the ownership interest in IDO and the gain of Y161.2 billion relating to the contribution of certain marketable securities to an employee retirement benefit trust as discussed under ' - Liquidity and Capital Resources'. These increases were partially offset by a decrease in unrealized gains on trading securities and an increase in other non-operating expenses. Income Taxes Provision for income taxes increased by Y101.1 billion during fiscal 2001 compared with the prior year primarily as a result of increased earnings of consolidated companies and increased provision for taxes on undistributed earnings of affiliated companies accounted for by the equity method. The effective tax rate for fiscal 2001 decreased slightly to 47.3% from 48.0% for the prior year due primarily to decreased provision for valuation allowance as a percentage of pre-tax earnings which was partially offset by increased provision for taxes on undistributed earnings of affiliated companies. Minority Interest in Consolidated Subsidiaries and Equity in Earnings of Affiliated Companies Minority interest in consolidated subsidiaries increased by Y4.5 billion to Y 12.1 billion during fiscal 2001 compared with the prior year. The increase in minority interest in consolidated subsidiaries reflects increased earnings of Daihatsu that were partially offset by a decrease in earnings of IDO for the first half of fiscal 2001 and the impact of the disposal of IDO on October 1, 2001. Equity in earnings of affiliated companies during fiscal 2001 increased by Y72.0 billion to Y103.6 billion during fiscal 2001 compared with the prior year levels as a result of a general improvement in operating results of affiliated companies as well as the recognition of gains on securities relating to the contribution of marketable securities to employee retirement benefit trusts. Net Income Toyota's net income increased by Y193.0 billion, or 40.0%, to Y674.9 billion during fiscal 2001 compared with the prior year. Other Comprehensive Loss Other comprehensive loss increased by Y 66.0 billion, to Y157.1 billion during fiscal 2001 compared with the prior year. The other comprehensive loss resulted primarily from an unrealized holding losses on securities during fiscal 2001 of Y305.0 billion compared to a gain of Y82.9 billion in the prior year and an other comprehensive loss of Y13.4 billion relating to minimum pension liability adjustment. These losses were partially offset by a foreign currency translation adjustments gain during fiscal 2001 of Y161.3 billion compared to a loss of Y181.3 billion in the prior year. 5.B LIQUIDITY AND CAPITAL RESOURCES Historically, Toyota has funded its capital expenditures and research and development activities primarily through cash generated by operations. Toyota expects to fund its capital expenditures and research and development activities in fiscal 2003 primarily through cash and cash equivalents on hand, operating cash flow and issuance of debt instruments. See '- Business Overview - Capital Expenditures and Divestitures' for information regarding Toyota's material commitments for capital expenditures and divestitures from April 1, 1999 to June 30, 2002 and information concerning Toyota's principal capital expenditures and divestitures currently in progress. Toyota funds its financing programs for customers and dealers, including leasing programs, from both operating cash flow and through borrowings by its finance subsidiaries. Toyota seeks to expand its ability to raise funds locally in markets throughout the world by expanding its network of finance subsidiaries. Net cash provided by operating activities was Y1,532.7 billion for fiscal 2002, compared to Y1,428.0 billion for the prior year. The increase in net cash provided by operating activities resulted primarily from increased operating income that was partially offset by changes in operating assets and liabilities. Net cash used in investing activities was Y1,810.8 billion for fiscal 2002, compared to Y1,318.7 billion for the prior year. The increase in net cash used in investing activities resulted primarily from increased investment in financing receivables, increased investment in vehicles and equipment on operating leases and increased capital expenditures. These increases were partially offset by lower net purchases of marketable securities. Net cash provided by financing activities was Y392.1 billion for fiscal 2002, compared to net cash used in financing activities of Y166.7 billion for the prior year. The increase in net cash provided by financing activities resulted primarily from increased proceeds from issuance of long-term debt. Total capital expenditures for property, plant and equipment, excluding vehicles and equipment on operating leases, were Y940.5 billion during fiscal 2002, an increase of 23.4% over the Y762.3 billion in expenditures for the prior year. The increase in capital expenditures resulted primarily from the impact of the consolidation of Hino, the completion of several overseas plant expansions in conjunction with the localization of production and property, plant and equipment for the development of new models, vehicles safety, new vehicles energy and environmental technologies. Total expenditures for vehicles and equipment on operating leases were Y608.0 billion during fiscal 2002, an increase of 38.5% over the Y439.1 billion in expenditures in the prior year. The change resulted primarily from a shifting from finance leases to operating leases. Toyota expects capital expenditures for property, plant and equipment, excluding vehicles leased to others, to increase to approximately Y980 billion during fiscal 2003. Toyota's expected capital expenditures include approximately Y60 billion for the continued expansion of overseas investments as part of Toyota's localization of its production activities. Based on currently available information, Toyota does not expect environmental matters to have a material impact on its financial position, results of operations, liquidity or cash flow during fiscal 2003. Cash and cash equivalents were Y1,657.2 billion at March 31, 2002. Most of cash and cash equivalents are held in Japanese yen. In addition, time deposits were Y20.0 billion and marketable securities were Y600.7 billion at March 31, 2002. Liquid assets, which Toyota defines as cash and cash equivalents, time deposits, marketable debt securities and its investment in monetary trust funds, increased during fiscal 2002 by Y190.2 billion, or 6.4%, to Y3,145.0 billion. Trade accounts and notes receivable, net increased during fiscal 2002 by Y185.1 billion, or 14.6%, to Y1,456.9 billion, reflecting the impact of the consolidation of Hino and the change in foreign currency translation rates. Inventories increased during fiscal 2002 by Y85.6 billion, or 9.8%, to Y961.8 billion, reflecting the impact of the consolidation of Hino and the change in foreign currency translation rates. Finance receivables, net increased during fiscal 2002 by Y989.9 billion, or 26.7%. The change resulted primarily from the continuing increase in the portion of sales by dealers that are being financed through Toyota's financial services operations and the change in foreign currency transaction rates. As of March 31, 2002, finance receivables were geographically distributed as follows: in North America 71.4%, in Japan 15.5%, in Europe 7.1% and in all other markets 6.0%. Toyota maintains programs to sell finance receivables through limited purpose subsidiaries and sold finance receivables under these programs totaling Y613.8 billion during fiscal 2002. Toyota regularly accesses the international capital markets to finance its vehicle sales and lease financing programs. Marketable securities and other securities investment including those included in current assets decreased during fiscal 2002 by Y218.6 billion, or 9.3%, to Y 2,131.9 billion, reflecting a decline in market values at March 31, 2002 compared to the prior year. Property, plant and equipment increased during fiscal 2002 by Y649.1 billion, or 14.6%, reflecting the impact of the consolidation of Hino, an increase of capital expenditures and the change in foreign currency translation rates. Accounts payable increased during fiscal 2002 by Y130.5 billion, or 10.1%, reflecting the impact of the consolidation of Hino and the change in foreign currency translations rates partially offset by the timing of payments. Accrued expenses increased during fiscal 2002 by Y114.0 billion, or 14.0%, reflecting the increase in sales related expenses, the impact of the consolidation of Hino and the change in foreign currency translation rates. Income taxes payable increased during fiscal 2002 by Y75.5 billion, or 29.9 %, principally as a result of the increase in current income taxes during fiscal 2002 compared with that of fiscal 2001. Toyota's total borrowings increased during fiscal 2002 by Y1,440.1 billion, or 27.3%. Toyota's short-term borrowings consist of loans with a weighted-average fixed interest rate of 1.44% and commercial paper with a weighted-average fixed interest rate of 2.19%. Short-term borrowings increased during fiscal 2002 by Y 356.6 billion, or 24.3%, to Y1,825.6 billion. Toyota's long-term debt consists of unsecured and secured loans, medium-term notes, unsecured notes and long-term capital lease obligations with fixed interest rates ranging from 0.03% to 17.00%, with maturity dates ranging from 2002 to 2032. Toyota's long-term debt also consists of unsecured convertible bonds of consolidated subsidiaries and notes payable related to securitized finance receivables structured as collateralized borrowings. The current portion of long-term debt increased during fiscal 2002 by Y444.1 billion, or 62.1%, to Y1,158.8 billion and the non-current portion increased by Y639.4 billion, or 20.7%, to Y3,722.7 billion. These increases reflect borrowings to fund finance receivables, borrowings included as the result of the consolidation of Hino and the change in foreign currency translations rates. At March 31,2002, approximately 47% of long-term debt was denominated in U.S. dollars, 27% in Japanese yen and 26% in other currencies. Toyota hedges fixed rate exposure by entering into interest rate swaps. There are no material seasonal variations in Toyota's borrowing requirements. As of March 31, 2002, Toyota's total financial debt was 92.3% of total shareholders' equity, compared to 74.4% as of March 31, 2001. At March 31, 2002, Toyota had an unfunded pension liability of Y1,141.4 billion that related primarily to the parent company and its Japanese subsidiaries. The unfunded amounts are primarily funded on the retirement date of each covered employee. In conjunction with enforcement of the Defined Benefit Pension Plan Law, the parent company received approval from the Minister of Health, Labor and Welfare for exemption from the obligation of the future benefit payment regarding substituted portions of employee pension funds (the parent company received approval on April 1, 2002). See Note 18 to the consolidated financial statements. Toyota's long-term debt was rated 'AAA' by Standard & Poor's Ratings Group and ' Aa1' by Moody's Investors Services as of March 31, 2002. These ratings represent Standard and Poor's highest long-term debt rating and Moody's second highest rating. A credit rating is not a recommendation to buy, sell or hold securities. A credit rating may be subject to withdrawal or revision at any time. Each rating should be evaluated separately of any other rating. Toyota's treasury policy is to maintain controls on all exposures, to adhere to stringent counterparty credit standards, and to actively monitor marketplace exposures. Toyota centralized and is pursuing global efficiency of its financial services operations through Toyota Financial Services Corporation. The key element of Toyota's financial policy is maintaining a strong financial position that will allow Toyota to fund its research and development initiatives, capital expenditures and financing operations on a cost effective basis even if earnings experience short-term fluctuation. Toyota believes that it maintains sufficient liquidity for its present requirements and that by maintaining high credit ratings, it will continue to be able to access funds from external sources in large amounts and at relatively low costs. Toyota's ability to maintain its high credit ratings is subject to a number of factors, some of which are not in Toyota's control. These factors include general economic conditions in Japan and the other major markets in which Toyota does business, as well as Toyota's successful implementation of its business strategy. Off-Balance Sheet Activities Toyota's securitization program involves selling discrete pools of finance receivables or interests in lease receivables to wholly-owned bankruptcy remote Special Purpose Entities ('SPEs'), which in turn sell the receivables to separate securitization trusts in exchange for the proceeds from securities issued by the trust. The securities issued by the trust, usually notes or certificates of various maturities and interest rates, are secured by collections on the sold receivables. These securities, commonly referred to as asset-backed securities, are structured into senior and subordinated classes. Generally, the senior classes have priority over the subordinated classes in receiving collections from the sold receivables. As of March 31, 2002, outstanding debt from asset-backed securitizations and notes payable related to securitized finance receivables structured as collateralized borrowings totaled approximately Y573.0 billion and Y138.1 billion, respectively. On any payment date, the priority of payments made from available collections and amounts withdrawn from existing reserve funds or revolving liquidity notes, are as follows: servicing fee, noteholder interest, allocation of principal, reserve fund account deposit, and finally, excess amounts. Therefore, the interests of noteholders are subordinate to the servicer, but have priority over any deposits in a reserve fund, any draws against existing revolving liquidity notes, or any excess amounts. In addition, in most cases, noteholders holding senior classes of notes are paid prior to any existing subordinate class (some transactions are structured so that the subordinate tranche is released pro rata with certain senior tranches). Toyota may enter into swap agreements with the securitization trusts so that interest rate exposure remains with Toyota, and not the securitization trusts. This exposure may or may not be mitigated by other swap arrangements entered into by Toyota, and this is determined by Toyota's management. The Company's general exposure every month, is the notional balance of the security multiplied by the rate differential. However, in the case of a default by the securitization trust, the Company's maximum exposure would be the interest due based on the outstanding notional value of underlying securities paid at the rate inherent in the swap agreement. For the year ended March 31, 2002, the following table summarizes certain cash flows received from and paid to the securitization trusts: Yen in millions Retail Leases Proceeds from new Y596,246 Y- securitizations............................................... Servicing fees 7,258 675 received.................................................................. Excess interest received from interest only strips..................... 22,438 225 Repurchases of delinquent (187) (38,893) receivables...................................... Reimbursements of servicer 862 2,337 advances........................................ Reimbursements of maturity advances....................................... - 8,623 Contractual Obligations and Commitments For information regarding debt obligations, capital lease obligations, operating leases, and other obligations, including amounts maturing in each of the next five years, see notes 10, 13, 21 and 22 to the consolidated financial statements. In addition, as part of Toyota's normal business practices, Toyota enters into long-term arrangements with suppliers for purchases of certain raw materials, components and services. These arrangements may contain fixed/minimum quantity purchase requirements. Toyota enters into such arrangements to facilitate adequate supply of these materials and services. The following table summarizes Toyota's contractual obligations and commercial commitments as of March 31, 2002: Payments Due by Period Less than Total 1 year 1 to 5 After 5 years years Contractual Obligations: Yen in millions Short-term borrowings (note 13).................. Loans........................................ Y874,416 Y874,416 Commercial paper............................. 951,148 951,148 Long-term debt (note 13)......... 4,881,520 1,158,814 Y2,585,846 Y1,136,860 Non-cancelable operating lease obligations (note 21)......... 44,694 10,324 23,569 10,801 Total Amount of Commitments Yen in millions Commercial Commitments: (note 22) Commitments for the purchase of property, plant and equipment and other Y54,822 assets.......................... Contingent liabilities for guaranties given in the ordinary course of 806,899 business..................................... Related Party Transactions Toyota does not have any significant related party transactions other than transactions with affiliated companies in the ordinary course of business. See note 12 to the consolidated financial statements. Legislation Regarding End-of-Life Vehicles In September 2000, the European Union approved a directive that requires member states to promulgate regulations implementing the following by April 21, 2002: â€¢ manufacturers are to be financially responsible for taking back end-of-life vehicles put on the market after July 1, 2002 and dismantling and recycling those vehicles. Beginning January 1, 2007, manufacturers are additionally responsible for vehicles put on the market before July 1, 2002; â€¢ manufacturers may not use certain hazardous materials in vehicles to be sold after July 2003; and â€¢ 95% of parts of vehicles sold as of a specified date to be determined in a future directive must be re-usable and recoverable. In addition, under this directive member states must take measures to ensure that car manufacturers, distributors and other auto-related businesses establish adequate used vehicle disposal facilities and to ensure that hazardous materials and recyclable parts are removed from vehicles prior to scrapping. This directive impacts Toyota's vehicles sold in the European Union. Toyota has provided for its estimated liability related to covered vehicles in existence at March 31, 2002. However, Toyota is continuing to assess the impact of this future legislation on its results of operations, cash flows and financial position. Recent Accounting Pronouncements in the United States In June 2001, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standard (FAS) No. 141, 'Business Combinations'. FAS No. 141 requires that the purchase method of accounting be used for all business combinations initiated after June 30, 2001. This statement specifies that certain acquired intangible assets in a business combination be recognized as assets separately from goodwill and that existing intangible assets and goodwill be evaluated for these new separation requirements. Management does not expect this statement to have a material impact on Toyota's consolidated financial position or results of operations. In June 2001, the FASB issued FAS No. 142, 'Goodwill and Other Intangible Assets '. FAS No. 142 changes the accounting for goodwill from an amortization method to an impairment-only approach. Amortization of goodwill, including goodwill recorded in past business combinations, will cease upon adoption of this statement. In addition, this statement requires that goodwill be tested for impairment at least annually at the reporting unit level. Toyota adopted FAS No 142 on April 1, 2002. At March 31, 2002, the amount of unamortized goodwill is insignificant and management does not expect this statement to have a material impact on Toyota's consolidated financial position or results of operations. In June 2001, the FASB issued FAS No. 143, 'Accounting for Asset Retirement Obligations'. This statement addresses financial accounting and reporting for obligations associated with the retirement of tangible long-lived assets and the associated asset retirement costs. Toyota is required to implement FAS No. 143 on April 1, 2003. Management does not expect this statement to have a material impact on Toyota's consolidated financial position or results of operations. In August 2001, the FASB issued FAS No. 144, 'Accounting for the Impairment or Disposal of Long-Lived Assets.' This statement supersedes FAS No. 121, ' Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed of'. The statement retains the previously existing accounting requirements related to the recognition and measurement of the impairment of long-lived assets to be held and used while expanding the measurement requirements of long-lived assets to be disposed of by sale to include discontinued operations. It also expands the previously existing reporting requirements for discontinued operations to include a component of an entity that either has been disposed of or is classified as held for sale. Toyota implemented FAS No. 144 on April 1, 2002. Management does not expect this statement to have a material impact on Toyota's consolidated financial position or results of operations. Critical Accounting Policies The consolidated financial statements of Toyota are prepared in conformity with accounting principles generally accepted in the United States of America. The preparation of these financial statements requires the use of estimates, judgments and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the periods presented. Toyota believes that of its significant accounting policies, the following may involve a higher degree of judgments, estimates and complexity: Warranty Toyota generally warrants its products against certain manufacturing and other defects. Product warranties are provided for specific periods of time and/or usage of the product and vary depending upon the nature of the product, the geographic location of its sale and other factors. All product warranties are consistent with commercial practices. Toyota provides a provision for estimated product warranty costs as a component of cost of sales at the time the related sale is recognized. The accrued warranty costs represent management's best estimate at the time of sale of the total costs that Toyota will incur to repair or replace product parts that fail while still under warranty. The amount of accrued estimated warranty costs is primarily based on historical experience as to product failures as well as current information on repair costs. The amount of warranty costs accrued also contains an estimate as to warranty claim recoveries from suppliers. The foregoing evaluations are inherently uncertain, as they require material estimates and some products' warranty extend for several years. Consequently, actual warranty costs will differ from the estimated amounts and could require additional warranty provisions. If these factors require a significant increase in Toyota's accrued estimated warranty costs, it would negatively affect future operating results of the automotive operations. Allowance for Doubtful Accounts and Credit Losses Sales financing and finance lease receivables consist of retail installment sales contracts secured by passenger cars and commercial vehicles. Collectibility risks include consumer and dealer insolvencies and insufficient collateral values (less costs to sell) to realize the full carrying values of these receivables. As a matter of policy, Toyota maintains an allowance for doubtful accounts and credit losses representing Toyota's management's estimate of the amount of asset impairment in the portfolios of finance, trade and other receivables. Toyota determines the allowance for doubtful accounts and credit losses based on a systematic, ongoing review and evaluation performed as part of the credit-risk evaluation process, historical loss experience, the size and composition of the portfolios, current economic events and conditions, the estimated fair value and adequacy of collateral and other pertinent factors. This evaluation is inherently judgmental and requires material estimates, including the amounts and timing of future cash flows expected to be received, which may be susceptible to significant change. Although management considers the allowance for doubtful accounts and credit losses to be adequate based on information currently available, additional provisions may be necessary due to (i) changes in management estimates and assumptions about asset impairment, (ii) information that indicates changes in the expected future cash flows, or (iii) changes in economic and other events and conditions. A prolonged economic downturn in North America and Western Europe could increase the likelihood of credit losses exceeding current estimates. To the extent that sales incentives remain an integral part of sales promotion with the effect of reducing new vehicle prices, resale prices of used vehicles and, correspondingly, the collateral value of Toyota's sales financing and finance lease receivables could experience further downward pressure. If these factors require a significant increase in Toyota's allowance for doubtful accounts and credit losses, it could negatively affect future operating results of the financial services operations. Investment in Operating Leases Vehicles on operating leases, where Toyota is the lessor, is valued at acquisition cost and depreciated over its estimated useful life using the straight-line method to its estimated residual value. Toyota utilizes industry published information and its historical experience to determine estimated residual values for these vehicles. Toyota evaluates the recoverability of the carrying values of its leased vehicles for impairment when there are indications of declines in residual values. In recent years, the resale values of returned vehicles have been depressed, primarily because of an increased supply of used vehicles in the market that has depressed market prices. In addition, to the extent that sales incentives remain an integral part of sales promotion (reducing new vehicle prices), resale prices of used vehicles and, correspondingly, the carrying value of Toyota's leased vehicles could be subject to further downward pressure. If resale prices of used vehicles decline, future operating results of the financial services operations are likely to be adversely affected by incremental charges to reduce estimated residual values. Impairment of Long-Lived Assets Toyota periodically reviews the carrying value of its long-lived assets held and used and assets to be disposed of, including goodwill and other intangible assets, when events and circumstances warrant such a review. This review is performed using estimates of future cash flows. If the carrying value of a long-lived asset is considered impaired, an impairment charge is recorded for the amount by which the carrying value of the long-lived asset exceeds its fair value. Management believes that the estimates of future cash flows and fair value are reasonable; however, changes in estimates of such cash flows and fair value would affect the evaluations and negatively affect future operating results of the automotive operations Employee Costs Pension and other postretirement benefits costs and obligations and post-employment benefit costs are dependent on assumptions used in calculating such amounts. These assumptions include discount rates, health care cost trend rates, benefits earned, interest cost, expected return on plan assets, mortality rates and other factors. Actual results that differ from the assumptions are accumulated and amortized over future periods and, therefore, generally affect recognized expense and the recorded obligation in future periods. While management believes that the assumptions used are appropriate, differences in actual experience or changes in assumptions may affect Toyota's pension and other postretirement costs and obligations and post-employment benefit costs. Derivatives and Other Contracts at Fair Value Toyota uses derivatives in the normal course of business to manage its exposure to foreign currency exchange rates and interest rates. The accounting is complex and continues to evolve. In addition, there are the significant judgments and estimates involved in the estimating of fair value in the absence of quoted market values. These estimates are based upon valuation methodologies deemed appropriate in the circumstances; however, the use of different assumptions may have a material effect on the estimated fair value amounts. Marketable Securities Toyota's accounting policy is to record a write-down of such investments to realizable value when a decline in fair value below carrying value is other than temporary. In determining if a decline in value is other than temporary, Toyota considers the length of time and the extent to which the fair value has been less than the carrying value, the financial condition and prospects of the company and Toyota's ability and intent to retain its investment in the company for a period of time sufficient to allow for any anticipated recovery in market value. 5.C RESEARCH AND DEVELOPMENT, PATENTS AND LICENSES Toyota's research and development activities focus on the environment, vehicle safety, information technology and product development. Toyota's environmental research and development activities focus on: â€¢ Improving existing vehicle power train systems through the development of light weight and more fuel-efficient engines and transmissions. These technologies include the direct injection four-stroke gasoline engine, the nitrous oxide storage reduction catalytic system and the common rail direct injection diesel engine. â€¢ Developing alternative fuel powering systems for commercial sale. This includes developing vehicles powered by advanced nickel-metal hydride batteries and hybrid electric vehicles, such as the Prius. Toyota began marketing a nickel-metal hydride battery-powered RAV4-EV sport-utility vehicle in the United States in 1998, and commenced sales of the Prius in North America in June 2000. Other Toyota efforts in this area include the development of vehicles fueled by compressed natural gas and the development of a fuel cell hybrid vehicle. Toyota has formed a research and development alliance with General Motors Corporation to develop future power systems. â€¢ Recycling of vehicle parts through the development of recycling technologies. Work in this area includes developing uses for shredder residue, the recycling of nickel-metal hydride batteries and the development of vehicles constructed with a high proportion of recyclable parts. Toyota's work in the area of vehicle safety is focused on the development of technologies designed to prevent accidents in the first instance, as well as the development of technologies that protect vehicle occupants and reduce the damage on impact if an accident does occur. Safety technologies in development include: â€¢ a system that recognizes an imminent collision and activates the vehicle's safety features in advance of the collision to reduce damage on impact, and â€¢ the research, development and implementation of intelligent transport systems-based technology. Toyota has already incorporated many of these technologies into its Advanced Safety Vehicle. The Advanced Safety Vehicle is a prototype car developed to showcase an array of future-generation safety technologies. Toyota plans to gradually include these safety features on its commercially available vehicles. Some of Toyota's most recent models, including the Lexus LS430 and LX470, already employ some of these new safety technologies. Toyota's product development program uses a series of methods which are generally intended to promote shorter development times and lower development costs. These methods include: â€¢ reducing the number of vehicle platforms, â€¢ sharing parts and components among multiple vehicles, â€¢ shortening the time for development and production preparation by the simultaneous study of design and production engineering processes, and â€¢ using computers for production design and its evaluation. Toyota agreed to a business tie-up in March 2000 with Yamaha Motor Co. Ltd., a manufacturer of motorcycles and other two-wheel vehicles, to develop and manufacture engines for vehicles. In July 2001, Toyota also agreed to work with PSA Peugeot Citroen on the development of a new vehicle platform for low-cost, fuel-efficient and environment-friendly vehicles. Toyota's research and development expenditures were approximately Y589 billion in fiscal 2002, Y476 billion in fiscal 2001 and Y451 billion in fiscal 2000. Worldwide, approximately 22,000 employees are involved in Toyota's research and development activities. Toyota does not consider any one group of patents or licenses to be so important that their expiration or termination would materially affect Toyota's business. For a further discussion of Toyota's intellectual property, see 'Information on the Company - Business Overview - Intellectual Property'. 5.D TREND INFORMATION For a discussion of the trends that affect Toyota's business and operating results, see '- Operating Results' and '- Liquidity and Capital Resources'. ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES 6.A DIRECTORS AND SENIOR MANAGEMENT Name Age Title Date First Elected to Board or as Auditor Hiroshi Okuda 69 Chairman of the Board; July 1982 Representative Director Iwao Isomura 69 Vice Chairman of the Board; September 1984 Representative Director Kosuke Ikebuchi 65 Vice Chairman of the Board; September 1988 Representative Director Fujio Cho 65 President; September 1988 Representative Director Noritaka Shimizu 64 Executive Vice President; September 1990 Representative Director Yoshio Uesaka 64 Executive Vice President; September 1990 Representative Director Akihiko Saito 62 Executive Vice President; September 1991 Representative Director Ryuji Araki 62 Executive Vice President; September 1992 Representative Director Yoshio Ishizaka 62 Executive Vice President; September 1992 Representative Director Kosuke Shiramizu 61 Executive Vice President; September 1992 Representative Director Katsuaki Watanabe 60 Executive Vice President; September 1992 Representative Director Kazushi Iwatsuki 61 Executive Vice President; June 1999 Representative Director Yasuhito Yamauchi 60 Senior Managing Director June 1995 Zenji Yasuda 60 Senior Managing Director June 1996 Takashi Kamio 59 Senior Managing Director June 1996 Hiroyuki Watanabe 59 Senior Managing Director June 1996 Katsuhiro Nakagawa 60 Senior Managing Director June 2001 Akio Matsubara 60 Managing Director June 1996 Tokuichi Uranishi 60 Managing Director June 1996 Tsutomu Tomita 58 Managing Director June 1996 Yoshito Kato 58 Managing Director June 1996 Kazuo Okamoto 58 Managing Director June 1996 Shoji Kondo 59 Managing Director June 1997 Kyoji Sasazu 58 Managing Director June 1997 Mitsuo Kinoshita 56 Managing Director June 1997 Teruyuki Minoura 58 Managing Director June 1998 Toshio Mizushima 58 Managing Director June 1998 Yasuhiko Fukatsu 57 Managing Director June 1998 Takeshi Uchiyamada 56 Managing Director June 1998 Masatami Takimoto 56 Managing Director June 1999 Akio Toyoda 46 Managing Director June 2000 Shoichiro Toyoda 77 Honorary Chairman; Director July 1952 Toshiaki Taguchi 61 Director September 1994 Yoshimi Inaba 56 Director June 1997 Shuhei Toyoda 55 Director June 1998 Shokichi Yasukawa 55 Director June 1999 Tetsuo Hattori 55 Director June 1999 Hiroaki Yoshida 55 Director June 1999 Kiyoshi Nakanishi 57 Director June 2000 Yukitoshi Funo 55 Director June 2000 Takeshi Suzuki 54 Director June 2000 Atsushi Niimi 55 Director June 2000 Hajime Wakayama 56 Director June 2001 Hiroshi Takada 55 Director June 2001 Teiji Tachibana 55 Director June 2001 Shinichi Sasaki 55 Director June 2001 Kazutoshi Minami 54 Director June 2001 Shin Kanada 54 Director June 2001 Hironobu Ono 55 Director June 2001 Akira Okabe 54 Director June 2001 Yoshio Shirai 54 Director June 2001 Yoichiro Ichimaru 53 Director June 2001 Shoji Ikawa 52 Director June 2001 Masuji Arai 54 Director June 2002 Koichi Ina 54 Director June 2002 Yoshikazu Amano 53 Director June 2002 Shinichi Kawashima 52 Director June 2002 Kunio Komada 52 Director June 2002 Terukazu Inoue 66 Full-time Corporate Auditor June 1996 Hideaki Miyahara 60 Full-time Corporate Auditor June 2000 Yoshiaki Muramatsu 60 Full-time Corporate Auditor June 2001 Yoshitoshi Toyoda 76 Corporate Auditor September 1982 Yasutaka Okamura 73 Corporate Auditor June 1997 Hiromu Okabe 65 Corporate Auditor June 2002 The term of each director listed above expires in June 2004. Biographies Hiroshi Okuda has served as a Director of Toyota Motor Corporation since 1982 and as the Chairman of the Board since 1999. Mr. Okuda served as the President of Toyota from 1995 to 1999. Mr. Okuda also serves as a Director of KDDI Corporation. Mr. Okuda joined Toyota in 1955. Iwao Isomura has served as a Director of Toyota Motor Corporation since 1984 and as the Vice Chairman of the Board since 1996. Mr. Isomura served as an Executive Vice President of Toyota from 1992 to 1996. Mr. Isomura also serves as a Director of Central Japan Railway Company and as a Director of UFJ Holdings, Inc. Mr. Isomura joined Toyota in 1956. Kosuke Ikebuchi has served as a Director of Toyota Motor Corporation since 1988 and as the Vice Chairman of the Board since 2001. Mr. Ikebuchi served as an Executive Vice President of Toyota from 1999 to 2001. Mr. Ikebuchi also serves as a Director of New United Motor Manufacturing, Inc. Mr. Ikebuchi joined Toyota in 1960. Fujio Cho has served as a Director of Toyota Motor Corporation since 1988 and as the President of Toyota since 1999. Mr. Cho served as an Executive Vice President of Toyota from 1998 to 1999 and as the President of Toyota Motor Manufacturing, U.S.A., Inc. from 1988 to 1994. Mr. Cho also serves as a Director of Aioi Insurance Co., Ltd. Mr. Cho joined Toyota in 1960. Noritaka Shimizu has served as a Director of Toyota Motor Corporation since 1990 and as an Executive Vice President since 1999. Mr. Shimizu served as a Senior Managing Director of Toyota from 1998 to 1999. Mr. Shimizu joined Toyota in 1961. Yoshio Uesaka has served as a Director of Toyota Motor Corporation since 1990 and as an Executive Vice President since 2001. Mr. Uesaka served as a Senior Managing Director of Toyota from 1998 to 2001. Mr. Uesaka joined Toyota in 1962. Akihiko Saito has served as a Director of Toyota Motor Corporation since 1991 and as an Executive Vice President since 2001. Mr. Saito has also served as the General Manager at the Design Center since 2001. Mr. Saito also serves as a Director of Toyoda Boshoku Corporation. Mr. Saito joined Toyota in 1968. Ryuji Araki has served as a Director of Toyota Motor Corporation since 1992 and as an Executive Vice President since 2001. Mr. Araki has also served as the Chairman of Toyota Finance Corporation since 2001. Mr. Araki also serves as Director of New United Motor Manufacturing, Inc. Mr. Araki joined Toyota in 1962. Yoshio Ishizaka has served as a Director of Toyota Motor Corporation since 1992 and as an Executive Vice President since 2001. Mr. Ishizaka has also served as the President of Toyota Motor Sales, U.S.A., Inc. between 1996 and 1999 and as the Chairman of N.V. Toyota Motor Europe Marketing and Engineering S.A. since 2001. Mr. Ishizaka joined Toyota in 1964. Kosuke Shiramizu has served as a Director of Toyota Motor Corporation since 1992 and as an Executive Vice President since 2001. Mr. Shiramizu has also served as the Chairman of Toyota Motor Technical Center (China) since 1998, the Chairman of Tianjin Toyota Forging Co., Ltd. and Tianjin Fengjin Auto Parts Co., Ltd. since 1999, and the Vice Chairman of Tianjin Toyota Motor Engine Co., Ltd. since 2001. Mr. Shiramizu also serves as a Director of Salvador Caetano I.M.V.T., S.A. Mr. Shiramizu joined Toyota in 1963. Katsuaki Watanabe has served as a Director of Toyota Motor Corporation since 1992 and as an Executive Vice President since 2001. Mr. Watanabe served as a Senior Managing Director of Toyota from 1999 to 2001. Mr. Watanabe also serves as a Director of Koyo Seiko Co., Ltd. and as a Vice Chairman of Gamagori Marine Development Co., Ltd. Mr. Watanabe joined Toyota in 1964. Kazushi Iwatsuki has served as a Senior Managing Director of Toyota Motor Corporation since 1999 and as an Executive Vice President since 2001. Mr. Iwatsuki has also served as the President of TACTI Corporation since 2000. Mr. Iwatsuki joined Toyota in 1964. Yasuhito Yamauchi has served as a Director of Toyota Motor Corporation since 1995 and as a Senior Managing Director since 2001. Mr. Yamauchi served as a Managing Director of Toyota from 1999 to 2001. Mr. Yamauchi joined Toyota in 1968. Zenji Yasuda has served as a Director of Toyota Motor Corporation since 1996 and as a Senior Managing Director since 2001. Mr. Yasuda served as the General Manager of the Overseas Marketing Division between 1996 and 1999. Mr. Yasuda joined Toyota in 1965. Takashi Kamio has served as a Director of Toyota Motor Corporation since 1996 and as a Senior Managing Director since 2001. Mr. Kamio served as the General Manager of the Public Affairs Division between 1992 and 1996. Mr. Kamio joined Toyota in 1965. Hiroyuki Watanabe has served as a Director of Toyota Motor Corporation since 1996 and as a Senior Managing Director since 2001. Mr. Watanabe has also served as the General Manager of the Fuel Cell System Development Center since 2002. Mr. Watanabe joined Toyota in 1967. Katsuhiro Nakagawa has served as a Managing Director of Toyota Motor Corporation since 2001 and as a Senior Managing Director since 2002. Mr. Nakagawa served as the Executive Advisor of The Tokio Marine and Fire Insurance Co., Ltd. between 1998 and 2001. Mr. Nakagawa was the Deputy Director-General of the Industrial Policy Bureau at the former Japanese Ministry of International Trade and Industry before joining The Tokio Marine and Fire Insurance Co., Ltd. Mr. Nakagawa joined Toyota in 2001. Akio Matsubara has served as a Director of Toyota Motor Corporation since 1996 and as a Managing Director since 2001. Mr. Matsubara joined Toyota in 1966. Tokuichi Uranishi has served as a Director of Toyota Motor Corporation since 1996 and as a Managing Director since 2001. Mr. Uranishi has also served as the General Manager of the Europe & Africa Operations Center since 2001. Mr. Uranishi joined Toyota in 1966. Tsutomu Tomita has served as a Director of Toyota Motor Corporation since 1996 and as a Managing Director since 2001. Mr. Tomita has also served as the General Manager of the Power Train Development Center since 2001 and as the Chairman of the Toyota Motorsport GmbH since 2000. Mr. Tomita joined Toyota in 1969. Yoshito Kato has served as a Director of Toyota Motor Corporation since 1996 and as a Managing Director since 2001. Mr. Kato has also served as the General Manager of the Kinuura Plant since 2000. Mr. Kato joined Toyota in 1969. Kazuo Okamoto has served as a Director of Toyota Motor Corporation since 1996 and as a Managing Director since 2001. Mr. Okamoto has also served as the Vice Chairman of Toyota Motor Technical Center (China) Co., Ltd. since 1998 and as the General Manager of the Component & System Development Center since 2002. Mr. Okamoto joined Toyota in 1967. Shoji Kondo has served as a Director of Toyota Motor Corporation since 1997 and as a Managing Director since 2001. Mr. Kondo joined Toyota in 1965. Kyoji Sasazu has served as a Director of Toyota Motor Corporation since 1997 and as a Managing Director since 2001. Mr. Sasazu has also served as the General Manager of the Vista channel Operations Center since 1999. Mr. Sasazu joined Toyota in 1967. Mitsuo Kinoshita has served as a Director of Toyota Motor Corporation since 1997 and as a Managing Director since 2001. Mr. Kinoshita has also served as the General Manager of the Tahara Plant since 2002. Mr. Kinoshita joined Toyota in 1968. Teruyuki Minoura has served as a Director of Toyota Motor Corporation since 1998 and as a Managing Director since 2002. Mr. Minoura has also served as the President of Toyota Motor Manufacturing North America, Inc. between 1998 and 2002 and as the General Manager of the Global Purchasing Center since 2002. Mr. Minoura joined Toyota in 1967. Toshio Mizushima has served as a Director of Toyota Motor Corporation since 1998 and as a Managing Director since 2001. Mr. Mizushima has also served as the Chairman of Toyota Motor Manufacturing (UK) Ltd. in 2001, and as the General Manager of the Takaoka Plant and Miyoshi Plant since 2001. Mr. Mizushima joined Toyota in 1967. Yasuhiko Fukatsu has served as a Director of Toyota Motor Corporation since 1998 and as a Managing Director since 2001. Mr. Fukatsu has also served as the General Manager of the Toyota channel Operations Center and Domestic After Market Operations Center since 2001. Mr. Fukatsu joined Toyota in 1968. Takeshi Uchiyamada has served as a Director of Toyota Motor Corporation since 1998 and as a Managing Director since 2001. Mr. Uchiyamada has also served as the General Manager of the Vehicle Development Center 1 since 2002. Mr. Uchiyamada joined Toyota in 1969. Masatami Takimoto has served as a Director of Toyota Motor Corporation since 1999 and as a Managing Director since 2002. Mr. Takimoto has also served as the General Manager of the Drive Train Engineering Division 1 of the Power Train Development Center between 2001 and 2002. Mr. Takimoto joined Toyota in 1970. Akio Toyoda has served as a Director of Toyota Motor Corporation since 2000 and as a Managing Director since 2002. Mr. Toyoda has also served as the General Manager of the Asia & China Operations Center, and the Chairman of Toyota Motor (China) Limited and the Chairman of Toyota Motor Asia Pacific Pte. Ltd. since 2001. Mr. Toyoda joined Toyota in 1984. Shoichiro Toyoda has served as a Director of Toyota Motor Corporation since 1952. Dr. Toyoda is currently the Honorary Chairman of Toyota Motor Corporation. Dr. Toyoda joined Toyota in 1952. Toshiaki Taguchi has served as a Director of Toyota Motor Corporation since 1994. Mr. Taguchi has also served as the President of Toyota Motor North America, Inc. and the President of Toyota Motor Personnel Services, U.S.A., Inc. since 2000. Mr. Taguchi joined Toyota in 1964. Yoshimi Inaba has served as a Director of Toyota Motor Corporation since 1997. Mr. Inaba has also served as the President of Toyota Motor Sales, U.S.A. Inc. since 1999. Mr. Inaba joined Toyota in 1968. Shuhei Toyoda has served as a Director of Toyota Motor Corporation since 1998. Mr. Toyoda has also served as the President of Toyota Motor Europe Manufacturing S.A. and the Chairman of Toyota Motor Manufacturing (UK) Ltd. since 2001, and the President of Toyota Motor Europe S.A./N.V. since 2002. Mr. Toyoda joined Toyota in 1977. Shokichi Yasukawa has served as a Director of Toyota Motor Corporation since 1999. Mr. Yasukawa has also served as the General Manager of the Global Strategic Production Planning Division between 2000 and 2001 and as the General Manager of the Kamigo Plant, the Myochi Plant and the Shimoyama Plant since 2002. Mr. Yasukawa joined Toyota in 1969. Tetsuo Hattori has served as a Director of Toyota Motor Corporation since 1999. Mr. Hattori has also served as the General Manager of the Chassis System Development Division of the Component & System Development Center since 2002. Mr. Hattori joined Toyota in 1971. Hiroaki Yoshida has served as a Director of Toyota Motor Corporation since 1999. Mr. Yoshida has also served as the General Manager of the IT & Telecom Business Division since 1998. Mr. Yoshida joined Toyota in 1970. Kiyoshi Nakanishi has served as a Director of Toyota Motor Corporation since 2000. Mr. Nakanishi has also served as the General Manager of the Power Train Engineering Division 2 of the Power Train Development Center since 2001. Mr. Nakanishi joined Toyota in 1970. Yukitoshi Funo has served as a Director of Toyota Motor Corporation since 2000. Mr. Funo has also served as the General Manager of The Americas Operations Center since 2000. Mr. Funo joined Toyota in 1970. Takeshi Suzuki has served as a Director of Toyota Motor Corporation since 2000. Mr. Suzuki has also served as the General Manager of the Finance Division since 2000. Mr. Suzuki joined Toyota in 1970. Atsushi Niimi has served as a Director of Toyota Motor Corporation since 2000. Mr. Niimi has also served as the President of Toyota Motor Manufacturing North America, Inc. since 2002. Mr. Niimi joined Toyota in 1971. Hajime Wakayama has served as a Director of Toyota Motor Corporation since 2001. Mr. Wakayama has also served as the Deputy General Manager of the Global Purchasing Center since 2001 and the General Manager of the Purchasing Division since 2002. Mr. Wakayama joined Toyota in 1969. Hiroshi Takada has served as a Director of Toyota Motor Corporation since 2001. Mr. Takada has also served as the General Manager of the Toyopet channel Operations Center since 2001. Mr. Takada joined Toyota in 1969. Teiji Tachibana has served as a Director of Toyota Motor Corporation since 2001. Mr. Tachibana has also served as the General Manager of the Housing Planning Division since 2001. Mr. Tachibana joined Toyota in 1969. Shinichi Sasaki has served as a Director of Toyota Motor Corporation since 2001. Mr. Sasaki has also served as the General Manager of the Hirose Plant since 2001. Mr. Sasaki joined Toyota in 1970 Kazutoshi Minami has served as a Director of Toyota Motor Corporation since 2001. Mr. Minami has also served as the General Manager of the Vehicle Development Center 3 since 2002. Mr. Minami joined Toyota in 1970. Shin Kanada has served as a Director of Toyota Motor Corporation since 2001. Mr. Kanada has also served as the General Manager of the Public Affairs Division since 1998. Mr. Kanada joined Toyota in 1970. Hironobu Ono has served as a Director of Toyota Motor Corporation since 2001. Mr. Ono has also served as the General Manager of the Electronics Engineering Division 1 of the Component & System Development Center since 2001 and the General Manager of the Overseas Customer Service Operations Center since 2002. Mr. Ono joined Toyota in 1971. Akira Okabe has served as a Director of Toyota Motor Corporation since 2001. Mr. Okabe has also served as the General Manager of the Oceania, Middle East & Southwest Asia Operations Center since 2001. Mr. Okabe joined Toyota in 1971. Yoshio Shirai has served as a Director of Toyota Motor Corporation since 2001. Mr. Shirai has also served as the General Manager of the Vehicle Development Center 2 since 2001 and the General Manager of the Shibetsu Vehicle Evaluation & Advanced Engineering Division since 2002. Mr. Shirai joined Toyota in 1973. Yoichiro Ichimaru has served as a Director of Toyota Motor Corporation since 2001. Mr. Ichimaru has also served as the General Manager of the Corolla channel Operations Center since 2001. Mr. Ichimaru joined Toyota in 1971. Shoji Ikawa has served as a Director of Toyota Motor Corporation since 2001. Mr. Ikawa has also served as the General Manager of the Production Engineering Planning Division since 2000 and as the General Manager of the Teiho Plant since 2001. Mr. Ikawa joined Toyota in 1975. Masuji Arai has served as a Director of Toyota Motor Corporation since 2002. Mr. Arai has also served as the General Manager of the Tsutsumi Plant since 2002. Mr. Arai joined Toyota in 1970. Koichi Ina has served as a Director of Toyota Motor Corporation since 2002. Mr. Ina has also served as the General Manager of the Motomachi Plant and the General Manager of the Honsha Plant since 2002. Mr. Ina joined Toyota in 1973. Yoshikazu Amano has served as a Director of Toyota Motor Corporation since 2002. Mr. Amano has also served as the General Manager of the Corporate IT Division since 2000. Mr. Amano joined Toyota in 1972. Shinichi Kawashima has served as a Director of Toyota Motor Corporation since 2002. Mr. Kawashima has also served as the General Manager of the Netz channel Operations Center since 2002. Mr. Kawashima joined Toyota in 1972. Kunio Komada has served as a Director of Toyota Motor Corporation since 2002. Mr. Komada has also served as the General Manager of the Overseas Planning Division since 2002. Mr. Komada joined Toyota in 1972. Terukazu Inoue has served as a Full-time Corporate Auditor of Toyota Motor Corporation since 1996. From 1986 to 1996, Mr. Inoue served as a Director of Toyota. Mr. Inoue joined Toyota in 1958. Hideaki Miyahara has served as a Full-time Corporate Auditor of Toyota Motor Corporation since 2000. From 1996 to 2000, Mr. Miyahara served as a Director of Toyota. Mr. Miyahara joined Toyota in 1965. Yoshiaki Muramatsu has served as a Full-time Corporate Auditor of Toyota Motor Corporation since 2001. Mr. Muramatsu joined Toyota in 1964. Yoshitoshi Toyoda has served as a Corporate Auditor of Toyota Motor Corporation since 1982. Mr. Toyoda is the Honorary Chairman of Toyota Industries Corporation. Yasutaka Okamura has served as a Corporate Auditor of Toyota Motor Corporation since 1997. Mr. Okamura is an attorney at the Okamura Legal Offices. Mr. Okamura has been practicing law since 1994. Hiromu Okabe has served as a Corporate Auditor of Toyota Motor Corporation since 2002. Mr. Okabe is the President and Representative Director of Denso Corporation. Akio Toyoda is Shoichiro Toyoda's son. Yoshitoshi Toyoda is Shuhei Toyoda's uncle. There are no other family relationships between directors and corporate auditors. None of the persons listed above was selected as a director, corporate auditor or member of senior management pursuant to an arrangement or understanding with Toyota's major shareholders, customers, suppliers or others. 6.B COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS The aggregate amount of remuneration, including bonuses but excluding stock options, paid to all directors and corporate auditors as a group by Toyota for services in all capacities during fiscal 2002 was Y2,282 million. Directors and corporate auditors of Toyota Motor Corporation receive year-end bonuses, the aggregate amount of which is approved at Toyota Motor Corporation's annual general meeting of shareholders and is based on Toyota Motor Corporation's financial performance for the fiscal year. The amounts of the bonuses paid to individual directors and corporate auditors are then determined at a meeting of Toyota Motor Corporation's board of directors and the meeting of corporate auditors. Toyota Motor Corporation also granted to its directors 545,000 stock options during fiscal 2002 under its stock option plan. For a detailed description of the stock options and the stock option plan, see '- Share Ownership'. In accordance with customary Japanese business practice, when a director or corporate auditor of Toyota Motor Corporation retires, a proposal to pay a lump sum retirement allowance is submitted to a general meeting of shareholders for approval. The amount of the retirement allowance for a director or corporate auditor generally reflects his position at the time of retirement, the length of his service as a director or corporate auditor and his contribution to Toyota Motor Corporation's performance. No reserves are accumulated for payment of these allowances. During fiscal 2002, Toyota paid retirement allowances aggregating Y770 million to retiring directors and corporate auditors. 6.C BOARD PRACTICES Toyota's articles of incorporation provide for a board of directors of not more than 60 members and for not more than seven corporate auditors. Shareholders elect the directors and corporate auditors at general meetings of shareholders. The normal term of office of a director is two years and of a corporate auditor is three years (four years for corporate auditors elected in or after June 2003). Directors and corporate auditors may serve any number of consecutive terms. The board of directors may elect one Chairman of the Board, one President and one or more Vice Chairmen of the Board, Executive Vice Presidents, Senior Managing Directors and Managing Directors. The board of directors elects, pursuant to its resolutions, one or more Representative Directors. Each Representative Director represents Toyota generally in the conduct of its affairs. The board of directors has the ultimate responsibility for the administration of Toyota's affairs. None of Toyota's directors is party to a service contract with the company that provides for benefits upon termination of employment. Under Japan's Commercial Code, Toyota must have at least three corporate auditors. At least one must be an outside corporate auditor. Together, these corporate auditors form a board of corporate auditors. The corporate auditors have the duty to examine the financial statements and business reports which are submitted by the board of directors to the general meeting of shareholders. The corporate auditors also supervise the administration of Toyota's affairs by the directors. Corporate auditors are not required to be, and Toyota's corporate auditors are not, certified public accountants. They are required to participate in meetings of the board of directors but are not entitled to vote. Toyota does not have a remuneration committee. 6.D EMPLOYEES The total number of Toyota employees, on a consolidated basis, as reported in Toyota's annual Japanese securities report filed with the director of the Kanto Local Finance Bureau was 246,702 at March 31, 2002, 215,648 at March 31, 2001 and 210,709 at March 31, 2000. The following tables set forth a breakdown of persons employed by business segment and by geographic location at March 31, 2002. Segment Number of Employees Location Number of Employees Automotive.......... 219,163 Japan.................... 180,273 Financial services...... 5,093 North America..................... 27,721 All other 17,568 Europe.................... 11,894 Unallocated .............. 4,878 Other foreign countries...... 26,814 Total company........... 246,702 Total company.................... 246,702 As a result of Toyota's business plan to further localize its global operations, the number of Toyota's employees in the countries in which Toyota operates has generally been growing over the last several years. Most regular employees of Toyota Motor Corporation and its consolidated subsidiaries in Japan, other than management, are required to become members of the labor unions that comprise the FEDERATION OF ALL TOYOTA WORKERS' UNIONS. Approximately 90% of Toyota Motor Corporation's regular employees in Japan are members of this union. In Japan, basic wages and other working conditions are negotiated annually. In addition, in accordance with Japanese national custom, each employee is also paid a semiannual bonus. Bonuses are negotiated at the time of wage negotiations and are based on Toyota's financial results, prospects and other factors. The average wage increases per employee, excluding bonuses, in Japan have been approximately 2.2% per year for the past five fiscal years. In North America, Toyota's workers at its facilities in California are unionized. The collective bargaining agreement for these workers expires in July 2004. Toyota's workers at its joint venture with General Motors are also unionized. The collective bargaining agreement for these workers expires in August 2005. In general, Toyota considers its labor relations with all of its workers to be good. However, Toyota is currently a party to, and otherwise from time to time experiences, labor disputes in some of the countries in which it operates. Toyota does not expect any disputes to which it is currently a party to materially affect Toyota's consolidated financial position. During fiscal 2002, Toyota averaged 3,721 part-time employees at the end of each month. 6.E SHARE OWNERSHIP The following table sets forth information with respect to the number of shares of Toyota's common stock held by each director and corporate auditor as of June 2002. Name Number of Shares Hiroshi Okuda......................................................................... 54,963 Iwao Isomura........................................................................... 20,300 Kosuke Ikebuchi..................................................................... 13,080 Fujio Cho................................................................................. 22,105 Noritaka Shimizu..................................................................... 34,508 Yoshio Uesaka........................................................................ 10,521 Akihiko Saito........................................................................... 116,757 Ryuji Araki............................................................................... 108,293 Yoshio Ishizaka....................................................................... 8,810 Kosuke Shiramizu................................................................... 10,000 Katsuaki Watanabe................................................................ 11,171 Kazushi Iwatsuki.................................................................... 12,110 Yasuhito Yamauchi................................................................ 10,936 Zenji Yasuda........................................................................... 19,675 Takashi Kamio........................................................................ 15,100 Hiroyuki Watanabe................................................................ 5,315 Katsuhiro Nakagawa.............................................................. 5,000 Akio Matsubara...................................................................... 11,844 Tokuichi Uranishi................................................................... 15,333 Tsutomu Tomita..................................................................... 36,143 Yoshito Kato........................................................................... 6,700 Kazuo Okamoto...................................................................... 9,764 Shoji Kondo............................................................................ 8,195 Kyoji Sasazu............................................................................ 9,792 Mitsuo Kinoshita................................................................... 7,970 Teruyuki Minoura.................................................................. 6,116 Toshio Mizushima.................................................................. 5,035 Yasuhiko Fukatsu................................................................... 6,657 Takeshi Uchiyamada.............................................................. 8,464 Masatami Takimoto................................................................ 5,100 Akio Toyoda........................................................................... 229,891 Shoichiro Toyoda................................................................... 15,136,193 Toshiaki Taguchi.................................................................... 11,259 Yoshimi Inaba......................................................................... 15,000 Shuhei Toyoda....................................................................... 122,993 Shokichi Yasukawa................................................................ 4,034 Tetsuo Hattori......................................................................... 5,526 Hiroaki Yoshida...................................................................... 5,000 Kiyoshi Nakanishi.................................................................. 5,000 Yukitoshi Funo....................................................................... 5,248 Takeshi Suzuki........................................................................ 5,076 Atsushi Niimi.......................................................................... 6,038 Hajime Wakayama.................................................................. 8,635 Hiroshi Takada........................................................................ 4,050 Teiji Tachibana....................................................................... 5,200 Shinichi Sasaki........................................................................ 4,010 Kazutoshi Minami.................................................................. 6,800 Shin Kanada............................................................................ 6,578 Hironobu Ono......................................................................... 5,600 Akira Okabe............................................................................. 5,000 Yoshio Shirai........................................................................... 5,000 Yoichiro Ichimaru................................................................... 5,068 Shoji Ikawa.............................................................................. 8,736 Masuji Arai.............................................................................. 8,281 Koichi Ina................................................................................ 5,000 Yoshikazu Amano.................................................................. 5,368 Shinichi Kawashima............................................................... 5,868 Kunio Komada........................................................................ 6,653 Terukazu Inoue....................................................................... 14,433 Hideaki Miyahara................................................................... 19,620 Yoshiaki Muramatsu.............................................................. 4,771 Yoshitoshi Toyoda................................................................ 1,512,766 Yasutaka Okamura.................................................................. - Hiromu Okabe....... ................................................................. - Total......................................................................................... 17,814,452 _________________________ Each of the persons listed above owns less than one percent of the issued and outstanding shares of common stock of Toyota. The shares listed above do not include options held by Toyota's directors and corporate auditors that are exercisable for shares of Toyota's common stock. For a description of these options, see ' - Stock Options' below. None of Toyota's shares of common stock entitles the holder to any preferential voting rights. Stock Options Toyota has enacted stock option plans in each of the past five years. These plans were approved by Toyota's shareholders in June of 1998, 1999, 2000, 2001 and 2002. Under the plan enacted in 1998, Toyota issued options to purchase up to 455,000 shares of common stock to the individuals who were directors at the time the plan was approved. Under the plan enacted in 1999, Toyota issued options to purchase up to 465,000 shares of common stock to its directors. Under the plan enacted in 2000, Toyota issued options to purchase up to 455,000 shares of common stock to its directors. Under the plan enacted in 2001, Toyota issued options to purchase up to 1,361,000 shares of common stock to its directors and 408 other employees that held the two highest ranks at Toyota at the time the plan was approved. Under the plan enacted in 2002, Toyota issued stock acquisition rights, which are rights introduced as of April 2002 pursuant to the amendment to the Commercial Code, to purchase up to 1,876,000 shares of common stock to its directors and 496 officers and employees, including directors, officers and employees of its subsidiaries and one Toyota affiliate. Pursuant to the provisions of each plan enacted prior to 2002, options may be exercised during a two-year period that starts two years from the date first granted at an exercise price of 1.025 times the closing price of Toyota's common stock on the Tokyo Stock Exchange on the date of grant. Each plan provides that each director will be granted no more than 15,000 and no less than 5,000 options and the year 2001 plan provides that each eligible employee will be granted 2,000 options. Each option represents one share of common stock of Toyota. Pursuant to the provisions of the 2002 plan, stock acquisition rights may be exercised during a four-year period that starts two years from the date first granted at an exercise price of 1.025 times the closing price of Toyota's common stock on the Tokyo Stock Exchange on the date of grant. The 2002 plan provides that each director will be granted no more than 200 and no less than 100 stock acquisition rights, and each eligible officer or employee will be granted no more than 100 and no less than 20 stock acquisition rights. One hundred shares will be issued or delivered upon the exercise of each stock acquisition right. The options are granted on August 1 of each year. Each plan further provides that an option holder who retires while his options are still exercisable retains the right to exercise his options until the earlier of: (i) six months after his retirement, or (ii) four years (six years under the 2002 plan) after the date the options were first granted. An option holder's right to purchase common stock under each plan lapses automatically upon his death. The following table summarizes information for options outstanding and exercisable at March 31, 2002: Outstanding Exercisable Number Weighted- Weighted- Weighted- Number Weighted- Weighted- Exercise of average average average of average average Price shares exercise exercise remaining shares exercise exercise range price price life price price Yen Yen Dollars Years Yen Dollars Y3,639 - 4,838 2,281,800 Y4,238 $32 2.59 560,800 Y3,939 $30 During 2001, Toyota adopted an incentive plan with terms similar to its stock option plans described above. Under the plan, 58 directors, officers and employees of Toyota subsidiaries and one Toyota affiliate, each located outside Japan, are eligible to receive 2,000 options. ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS 7.A MAJOR SHAREHOLDERS As of March 31, 2002, 3,605,864,612 shares of Toyota's common stock were outstanding. Beneficial ownership of Toyota's common stock in the table below was prepared from publicly available records of the filings made by Toyota's shareholders regarding their ownership of Toyota's common stock under the Securities and Exchange Law of Japan. Under the Securities and Exchange Law of Japan, any person who becomes, beneficially and solely or jointly, a holder, including, but not limited to, a deemed holder who manages shares for another holder pursuant to a discretionary investment agreement, of more than 5% of the shares with voting rights of a company listed on a Japanese stock exchange (including ADSs representing such shares) must file a report concerning the shareholding with the Director of the relevant local finance bureau. A similar report must be filed, with certain exceptions, if the percentage of shares held by a holder, solely or jointly, of more than 5% of the total issued shares of a company increases or decreases by 1% or more, or if any change to a material matter set forth in any previously filed reports occurs. Based on publicly available information, the following table sets forth the beneficial ownership of holders of more than 5% of Toyota's common stock as of the dates indicated in the reports described below. Percentage of Name of Beneficial Owner Number of Shares Shares Outstanding UFJ Bank Limited...................................................... 284,817,058 7.90 Toyota Industries Corporation............................... 187,115,312 5.19 Sumitomo Mitsui Banking Corporation................. 186,315,239 5.17 The number of shares owned by UFJ Bank Limited (a successor in interest to The Sanwa Bank, Limited and The Tokai Bank, Limited that was created by a merger between the two banks as of January 15, 2002) is based on a report filed under the Securities and Exchange Law of Japan stating that UFJ Bank Limited and its related entities held or were deemed to hold beneficially, as of April 30, 2002, 284,817,058 shares of Toyota's common stock. The number of shares owned by Toyota Industries Corporation (formerly, Toyoda Automatic Loom Works, Ltd.) is based on a report filed under the Securities and Exchange Law of Japan stating that Toyota Industries Corporation held or was deemed to hold beneficially, as of November 13, 1995, 187,115,312 shares of Toyota's common stock. The number of shares owned by Sumitomo Mitsui Banking Corporation is based on a report filed under the Securities and Exchange Law of Japan stating that Sumitomo Mitsui and its related entity held or were deemed to hold beneficially, as of April 30, 2001, 186,315,239 shares of Toyota's common stock. Based on information made publicly available on or after January 1, 1999, the following table describes transactions resulting in significant changes in the percentage ownership held by major beneficial owners of Toyota's common stock. Shares Owned Number of Shares Owned Name of Shareholder Date of Prior to Percentage Shares Changed After the Percentage Transaction Transaction of Shares Transaction of Shares Issued Issued The Sanwa Bank, Limited October 31, and its joint holders 2000 - - - 192,402,730 5.14 The Sanwa Bank, Limited and its joint holders* April 2, 2001 191,706,330 5.12 225,519,895 417,226,225 11.31 Sumitomo Mitsui Banking Corporation and its joint holder April 30, 2001 - - - 186,315,239 5.06 The Sanwa Bank, Limited, The Tokai Bank, Limited and their joint holders May 17, 2001 417,226,225 11.31 (37,414,900) 379,811,325 10.31 The Sanwa Bank, Limited, The Tokai Bank, Limited and their joint holders October 31, 2001 378,027,758 10.26 (45,710,200) 332,317,558 9.10 UFJ Bank Limited** and its joint holders January 31, 2002 332,317,558 9.10 (38,857,900) 293,459,658 8.04 ________________________ * The Tokai Bank, Limited became a joint holder as of April 2, 2001. ** Created by a merger between The Sanwa Bank, Limited and The Tokai Bank, Limited on January 15, 2002. The percentage holding of shares issued by UFJ Bank Limited and its joint holders was changed to 7.80 as of April 30, 2002. According to The Bank of New York, depositary for Toyota's ADSs, as of March 31, 2002, 15,047,714 shares of Toyota's common stock were held in the form of ADRs and there were 1,943 ADR holders of record in the United States. According to Toyota's register of shareholders, as of March 31, 2002, there were 260,471 holders of common stock of record worldwide. As of March 31, 2002, there were 254 record holders of Toyota's common stock with addresses in the United States, whose shareholdings represented approximately 5.1% of the outstanding common stock on that date. Because some of these shares were held by brokers or other nominees, the number of record holders with addresses in the United States might not fully show the number of beneficial owners in the United States. None of Toyota's shares of common stock entitles the holder to any preferential voting rights. Toyota knows of no arrangements the operation of which may at a later time result in a change of control. 7.B RELATED PARTY TRANSACTIONS Business Relationships Toyota purchases materials, supplies and services from numerous suppliers throughout the world in the ordinary course of business, including Toyota's equity-method affiliates and those firms with which certain members of Toyota's board of directors are affiliated. Toyota purchased materials, supplies and services from these affiliated entities in the amount of Y3,439.2 billion in fiscal 2002. Toyota also sells its products and services to Toyota's equity-method affiliates and firms with which certain members of Toyota's board of directors are affiliated. Toyota sold products and services to these affiliated entities in the amount of Y749.8 billion in fiscal 2002. Toyota believes all of these purchase and sale transactions were arm's-length transactions. See note 12 of Toyota's consolidated financial statements for additional information regarding Toyota's investments in and transactions with affiliated companies. Toyota increased its ownership interest in Hino Motors, Ltd. from 36.7% to 50.2%. Under the agreement, the total purchase price for the additional shares of Hino's common stock was Y66.3 billion. On April 1, 2001, Toyota sold its industrial equipment business to Toyota Industries Corporation (formerly, Toyoda Automatic Loom Works, Ltd.), an affiliate of Toyota. Loans Toyota regularly has trade accounts and other receivables payable by, and accounts payable to, Toyota's equity-method affiliates and firms with which certain members of Toyota's board of directors are affiliated. Toyota had outstanding trade accounts and other receivables payable by these affiliated entities in the amount of Y201.5 billion as of March 31, 2002. Toyota had accounts payable to these affiliated entities in the amount of Y466.9 billion as of March 31, 2002. Toyota held convertible debt securities issued by Toyota's equity-method affiliates and firms with which certain members of Toyota's board of directors are affiliated in the amount of Y54.0 billion as of March 31, 2002. The debt securities have interest rates ranging between 0.35% and 2.00%. The maturities of these debt securities range from three to six years. Toyota, from time to time, provides short- to medium-term loans to its affiliates. As of March 31, 2002, no loans were outstanding to its equity-method affiliates. As of March 31, 2002, an aggregate amount of /3.2 billion in loans was outstanding to those of its affiliates not accounted for under the equity method, which are 20% to 50% owned by Toyota. As of March 31, 2002, the largest single loan outstanding to any such affiliate was a long-term loan of /1.2 billion at a floating interest rate for capital expenditure purposes. Toyota believes that each of these loans was entered into in the ordinary course of business. 7.C INTERESTS OF EXPERTS AND COUNSEL Not applicable. ITEM 8. FINANCIAL INFORMATION 8.A CONSOLIDATED STATEMENTS AND OTHER FINANCIAL INFORMATION 1-3. Consolidated Financial Statements. Toyota's audited consolidated financial statements are included under 'Item 18 - Financial Statements'. Except for Toyota's consolidated financial statements included under Item 18, no other information in this annual report has been audited by Toyota's auditors. 4. Not applicable. 5. Not applicable. 6. Export Sales. See 'Operating and Financial Review and Prospects - Operating Results - Overview - Geographical Breakdown'. 7. Legal and Arbitration Proceedings. See 'Information on the Company - Business Overview - Legal Proceedings'. 8. Dividend Policy. See 'Selected Financial Data - Dividends'. 8.B SIGNIFICANT CHANGES Except as disclosed in this annual report, there have been no significant changes since the date of Toyota's latest annual financial statements. ITEM 9. THE OFFER AND LISTING 9.A LISTING DETAILS The following table sets forth for the periods shown the reported high and low sales prices of the common stock on the Tokyo Stock Exchange and the ADSs on the Nasdaq SmallCap Market (through September 28, 1999) and the New York Stock Exchange (from September 29, 1999). Tokyo Stock Exchange Nasdaq New York Stock Exchange Price per Share Price per ADS Price per ADS High Low High Low High Low Fiscal Year Ending March 31, 1998.................................................... 4,030 3,050 1999.................................................... 3,630 2,530 $58 3/4 $40 15/16 2000.................................................... 5,500 3,150 104 52 3/8 $104 $60.875 2001.................................................... 5,800 3,370 108.25 58.20 2002.................................................... 4,450 2,665 71.50 46.60 Financial Quarter Ending June 30, 2000...................................... 5,800 4,380 108.25 83.1875 September 30, 2000............................ 5,030 4,050 94.00 76.1875 December 31, 2000............................. 4,580 3,620 83.40 62.76 March 31, 2001.................................. 4,710 3,370 75.64 58.20 June 30, 2001...................................... 4,450 3,940 71.50 65.10 September 30, 2001............................ 4,440 2,665 71.44 46.60 December 31, 2001............................. 3,420 2,970 56.70 47.02 March 31, 2002.................................. 3,920 3,210 60.00 48.75 June 30, 2002...................................... 3,790 2,995 57.45 49.25 September 30, 2002 (through August 20, 3,230 2,690 53.00 47.00 2002)............................................. Month Ending February 28, 2002.............................. 3,660 3,210 54.75 48.75 March 31, 2002.................................. 3,920 3,410 60.00 51.30 April 30, 2002.................................... 3,790 3,500 56.90 54.39 May 31, 2002..................................... 3,640 3,360 57.45 53.01 June 30, 2002...................................... 3,420 2,995 55.00 49.25 July 31, 2002...................................... 3,230 2,690 53.00 47.00 9.B PLAN OF DISTRIBUTION Not applicable. 9.C MARKETS The primary trading market for Toyota's common stock is the Tokyo Stock Exchange. The common stock is also listed on the Nagoya Stock Exchange and three other regional stock exchanges in Japan. Since September 29, 1999, American Depositary Shares, each equal to two shares of Toyota's common stock and evidenced by American Depositary Receipts, have been traded and listed on the New York Stock Exchange through a sponsored ADR facility operated by The Bank of New York, as depositary. Prior to that time, Toyota's ADSs were listed on the Nasdaq SmallCap Market through five unsponsored ADR facilities. Toyota's common stock is also listed on the London Stock Exchange. 9.D SELLING SHAREHOLDERS Not applicable. 9.E DILUTION Not applicable. 9.F EXPENSES OF THE ISSUE Not applicable. ITEM 10. ADDITIONAL INFORMATION 10.A SHARE CAPITAL Not applicable. 10.B MEMORANDUM AND ARTICLES OF ASSOCIATION Set forth below is information relating to Toyota's common stock, including brief summaries of the relevant provisions of Toyota's articles of incorporation and share handling regulations, as currently in effect, and of the Commercial Code of Japan and related legislation. General Toyota's authorized share capital as of March 31, 2002 is 9,780,185,400 shares, of which 3,649,997,492 shares were issued. Under the Commercial Code, shares must be registered and are transferable by delivery of share certificates. In order to assert shareholders' rights against Toyota, a shareholder must have its name and address registered on Toyota's register of shareholders, in accordance with Toyota's share handling regulations. The registered beneficial holder of deposited shares underlying the ADSs is the depositary for the ADSs. Accordingly, holders of ADSs will not be able directly to assert shareholders' rights. A holder of shares may choose, at its discretion, to participate in the central clearing system for share certificates under the Law Concerning Central Clearing of Share Certificates and Other Securities of Japan. Participating shareholders must deposit certificates representing all of the shares to be included in this clearing system with Japan Securities Depository Center, Inc. If a holder is not a participating institution in the Securities Center, it must participate through a participating institution, such as a securities company or bank having a clearing account with the Securities Center. All shares deposited with the Securities Center will be registered in the name of the Securities Center on Toyota's register of shareholders. Each participating shareholder will in turn be registered on Toyota's register of beneficial shareholders and be treated in the same way as shareholders registered on Toyota's register of shareholders. For the purpose of transferring deposited shares, delivery of share certificates is not required. Entry of the share transfer in the books maintained by the Securities Center for participating institutions, or in the book maintained by a participating institution for its customers, has the same effect as delivery of share certificates. The registered beneficial owners may exercise the rights attached to the shares, such as voting rights, and will receive dividends (if any) and notices to shareholders directly from Toyota. The shares held by a person as a registered shareholder and those held by the same person as a registered beneficial owner are aggregated for these purposes. Beneficial owners may at any time withdraw their shares from deposit and receive share certificates. Objects and Purposes Article 2 of the Articles of Incorporation of Toyota states that its purpose is to engage in the following businesses: â€¢ the manufacture, sale, leasing and repair of: â€¢ motor vehicles, industrial vehicles, ships, aircraft, other transportation machinery and apparatus, space machinery and apparatus, and parts thereof; â€¢ industrial machinery and apparatus, other general machinery and apparatus, and parts thereof; â€¢ electrical machinery and apparatus, and parts thereof; and â€¢ measuring machinery and apparatus, medical machinery and apparatus, and parts thereof; â€¢ the manufacture and sale of ceramics and synthetic resin products, and materials thereof; â€¢ the manufacture, sale and repair of construction materials and equipment, and machinery and apparatus relating to residential buildings; â€¢ the planning, designing, supervision, execution and undertaking of construction work, civil engineering work, land development, urban development and regional development; â€¢ the sale, purchase, leasing, brokerage and management of real estate; â€¢ information processing , information communications and information supply services, and the development, sale and leasing of software; â€¢ the design and development of product sales systems that utilize networks such as the Internet; â€¢ the sale, leasing and maintenance of product sales systems that utilize networks, and sales of products through the use of such systems; â€¢ the inland transportation, marine transportation, air transportation, stevedoring, warehousing and tourism businesses; â€¢ the printing, publishing, advertising and publicity, general leasing, security and temporary staffing businesses; â€¢ credit card operations, the purchase and sale of securities, investment consulting, investment trust operations, and other financial services; â€¢ the operation and management of facilities, such as parking lots, showrooms, educational facilities, medical care facilities, sports facilities, marinas, airfields, food and drink stands and restaurants, lodging facilities, retail stores and others; â€¢ the non-life insurance agency business and the life insurance agency business; â€¢ the production and processing through the use of biotechnology of agricultural products, including trees, and the sale of such products; â€¢ the sale of goods related to each of the preceding items and mineral oil; and â€¢ conducting engineering, consulting and research and inventing products related to each of the preceding items and the utilization of such inventions and research, and any businesses incidental to or related to any of the preceding businesses. Dividends Under its articles of incorporation, Toyota's financial accounts will be closed on March 31 of each year and dividends, if any, will be paid to shareholders of record as of that date. In addition to year-end dividends, the board of directors may by resolution declare an interim cash dividend to shareholders of record as of September 30 of each year. Under the Commercial Code, however, Toyota cannot declare or pay dividends unless specified financial criteria are met based on the amount of its stated capital and legal reserves. Under its articles of incorporation, Toyota is not obligated to pay any dividends which are left unclaimed for a period of three years after the date on which they first became payable. Capital Accounts and Stock Splits Under the Commercial Code, the entire amount of the issue price of new shares is required to be accounted for as stated capital, although Toyota may account for an amount not exceeding one-half of the issue price as additional paid-in capital. Toyota may at any time transfer the whole or any part of its additional paid-in capital and legal reserve to stated capital by resolution of the board of directors. Toyota may also reduce the sum of its legal reserve and additional paid-in capital to one-quarter or more of its stated capital by resolution of a general meeting of shareholders. The whole or any part of retained earnings which may be distributed as year-end dividends may also be transferred to stated capital by resolution of an ordinary general meeting of shareholders. Toyota may at any time split the outstanding shares into a greater number of shares by resolution of the board of directors. Toyota must give public notice of the stock split, specifying a record date for the stock split, not less than two weeks prior to the record date. In addition, promptly after the stock split takes effect, Toyota must give notice to each shareholder specifying the number of shares to which the shareholder is entitled by virtue of the stock split. Japanese Unit Share System General. Consistent with the requirements of the Commercial Code, Toyota's articles of incorporation provide that 100 shares constitute one 'unit'. Although the number of shares constituting a unit is included in the articles of incorporation, any amendment to the articles of incorporation reducing (but not increasing) the number of shares constituting a unit or eliminating the provisions for the unit of shares may be made by resolution of the board of directors rather than by a special shareholders resolution, which is otherwise required for amending the articles of incorporation. The number of shares constituting one unit, however, cannot exceed the lesser of 1,000 shares and one-two hundredths (1/200) of the number of all issued shares. Voting Rights under the Unit Share System. Under the unit share system, shareholders have one voting right for each unit of shares that they hold. Any number of shares less than a full unit will carry no voting rights. Share Certificate for Less Than a Full Unit of Shares. Toyota's articles of incorporation provide that generally no share certificate for any number of shares less than a unit will be issued. As the transfer of shares normally requires delivery of share certificates, any fraction of a unit for which share certificates are not issued will not be transferable. Repurchase by Toyota of Shares Constituting Less Than a Unit. A holder of shares constituting less than a full unit may require Toyota to purchase those shares at their market value in accordance with the provisions of Toyota's share handling regulations. Surrender of American Depositary Shares. As a result of the unit share system, ADR holders will only be permitted to surrender ADRs and withdraw underlying shares constituting whole units. If a holder surrenders an ADR representing shares that do not constitute an integral number of whole units, the depositary will deliver to that holder only those shares which constitute a whole unit. The depositary will then issue to the holder a new ADR representing the remaining shares. Holders of an ADR that represents less than a whole unit of underlying shares will be unable to withdraw the underlying shares. As a result, those holders will be unable to require Toyota to purchase their underlying shares to the extent those shares constitute less than one whole unit. Voting Rights Toyota holds its ordinary general meeting of shareholders in June of each year in or near Toyota City or in Nagoya City, Japan. In addition, Toyota may hold an extraordinary general meeting of shareholders whenever necessary by giving at least two weeks' advance notice. Under the Commercial Code, notice of any shareholders' meeting must be given to each shareholder having voting rights or, in the case of a non-resident shareholder, to his resident proxy or mailing address in Japan in accordance with Toyota's share handling regulations, at least two weeks prior to the date of the meeting. A holder of shares constituting one or more whole units is generally entitled to one vote per unit of shares subject to the limitations on voting rights set forth in this paragraph. In general, under the Commercial Code, a resolution can be adopted at a general meeting of shareholders by a majority of the shares having voting rights represented at the meeting. The Commercial Code and Toyota's articles of incorporation require a quorum for the election of directors and corporate auditors of not less than one-third of the total number of outstanding shares having voting rights. Toyota's shareholders are not entitled to cumulative voting in the election of directors. A corporate shareholder whose outstanding shares are in turn more than one-quarter directly or indirectly owned by Toyota does not have voting rights. Shareholders may exercise their voting rights through proxies, provided that those proxies are also shareholders who have voting rights. The Commercial Code provides that a quorum of the majority of outstanding shares with voting rights must be present at a shareholders' meeting to approve any material corporate actions such as: â€¢ amendment of the articles of incorporation, â€¢ the removal of a director or corporate auditor, â€¢ a dissolution, merger, consolidation or split-up of Toyota, â€¢ the transfer of the whole or an important part of Toyota's business, â€¢ the taking over of the whole of the business of any other corporation, â€¢ any issuance of new shares (including transfer of treasury stock) at a specially favorable price (or any issuance of stock acquisition rights with specially favorable conditions or of bonds with stock acquisition rights with specially favorable conditions) to persons other than shareholders, and â€¢ share exchange or share transfer for the purpose of establishing 100% parent-subsidiary relationships. At least two-thirds of the shares having voting rights represented at the meeting must approve these actions. The voting rights of holders of ADSs are exercised by the depositary based on instructions from those holders. Subscription Rights Holders of shares have no preemptive rights under Toyota's articles of incorporation. Under the Commercial Code, the board of directors may, however, determine that shareholders be given subscription rights in connection with a particular issue of new shares, stock acquisition rights or bonds with stock acquisition rights. In this case, such rights must be given on uniform terms to all shareholders as of a specified record date by at least two weeks' prior public notice to shareholders of the record date. Public or individual notice must be given to each of these shareholders at least two weeks prior to the date of expiration of the subscription rights. Rights to subscribe for new shares may be transferable or nontransferable and may be made substantially below the market price of shares. Accordingly, rights offerings can result in substantial dilution or can result in rights holders not being able to realize the economic value of those rights. Liquidation Rights In the event of a liquidation of Toyota, the assets remaining after payment of all debts, liquidation expenses and taxes will be distributed among the shareholders in proportion to the respective number of shares they own. Liability to Further Calls or Assessments All of Toyota's currently outstanding shares, including shares represented by the ADSs, are fully paid and nonassessable. Transfer Agent UFJ Trust Bank Limited is the transfer agent for the shares. UFJ Trust's office is located at 4-3, Marunouchi 1-chome, Chiyoda-ku, Tokyo, 100-0005 Japan. UFJ Trust maintains Toyota's register of shareholders and records transfers of record ownership upon presentation of share certificates. Record Date The close of business on March 31 is the record date for Toyota's year-end dividends, if paid. A holder of shares constituting one or more whole units who is registered as a holder on Toyota's register of shareholders or register of beneficial ownership at the close of business as of March 31 is also entitled to exercise shareholders' voting rights at the ordinary general meeting of shareholders with respect to the fiscal year ending on March 31. The close of business on September 30 of each year is the record date for interim dividends, if paid. In addition, Toyota may set a record date for determining the shareholders entitled to other rights and for other purposes by giving at least two weeks' public notice. The shares generally trade ex-dividend or ex-rights in the Japanese stock exchanges on the third business day before a record date (or if the record date is not a business day, the fourth business day prior thereto), for the purpose of dividends or rights offerings. Repurchase by Toyota of Shares Toyota may acquire its own shares (i) through a stock exchange on which such shares are listed or by way of tender offer (pursuant to an ordinary resolution of an ordinary general meeting of shareholders), (ii) by purchase from a specific party (pursuant to a special resolution of an ordinary general meeting of shareholders) or (iii) from a subsidiary of Toyota (pursuant to a resolution of the board of directors). When such acquisition is made by Toyota from a specific party other than a subsidiary of Toyota, any other shareholder may make a demand to a representative director, more than five calendar days prior to the relevant shareholders' meeting, that Toyota also purchase the shares held by such shareholder. Any such acquisition of shares must satisfy certain requirements, including that the total amount of the purchase price may not exceed the amount of the retained earnings available for dividend payments after taking into account any reduction, if any, of the stated capital, additional paid-in capital or legal reserve (if such reduction of the stated capital, additional paid-in capital or legal reserve has been authorized pursuant to a resolution of the relevant ordinary general meeting of shareholders), minus the amount to be paid by way of appropriation of retained earnings for the relevant fiscal year and the amount to be transferred to stated capital. However, if it is anticipated that the net assets on the balance sheet as at the end of the immediately following fiscal year will be less than the aggregate amount of the stated capital, additional paid-in capital and certain other items, Toyota may not acquire such shares. Shares acquired by Toyota may be held by it for any period or may be cancelled by resolution of the board of directors. Toyota may also transfer to any person the shares held by it, subject to a resolution of the board of directors, and subject also to other requirements similar to those applicable to the issuance of new shares. Toyota may also utilize its treasury stock for the purpose of transfer to any person upon exercise of stock acquisition rights or for the purpose of acquiring another company by way of merger, share exchange or corporate split through exchange of treasury stock for shares or assets of the acquired company. The Commercial Code generally prohibits any subsidiary of Toyota from acquiring shares of Toyota. Acquisition or Disposition of Shares or ADS Under the Foreign Exchange and Foreign Trade Law and the cabinet orders and ministerial ordinances thereunder (collectively, the 'Foreign Exchange Regulations'), all aspects of regulations on foreign exchange and foreign trade transactions are, with minor exceptions relating to inward direct investments (which are not generally applicable to Toyota's shares), only subject to post transaction reporting requirements. Acquisitions and dispositions of shares of common stock or ADS by non-residents of Japan (including foreign corporations not resident in Japan) are generally not subject to this reporting requirement. However, the Minister of Finance has the power to impose a licensing requirement for transactions in limited circumstances. Report of Substantial Shareholdings The Securities and Exchange Law of Japan and regulations under the Law require any person who has become a holder (together with its related persons) of more than 5% of the total issued shares of a company listed on any Japanese stock exchange or whose shares are traded on the over-the-counter market (including ADSs representing such shares) to file with the Director of a competent Local Finance Bureau, within five business days, a report concerning those shareholdings. A similar report must also be filed to reflect any change of 1% or more in any shareholding or any change in material matters set out in reports previously filed. Copies of any report must also be furnished to the company and to all Japanese stock exchanges on which the company's shares are listed or, in the case of shares traded on the over-the-counter market, the Japan Securities Dealers Association. For this purpose, shares issuable to a 5% or greater shareholder upon exercise of stock acquisition rights are taken into account in determining both the number of shares held by that holder and the company's total issued share capital. 10.C MATERIAL CONTRACTS All contracts concluded by Toyota during the two years preceding this filing were entered into in the ordinary course of business. 10.D EXCHANGE CONTROLS Under the Foreign Exchange and Foreign Trade Law dividends paid on, and the proceeds of sales in Japan of, shares held by non-residents of Japan may in general be converted into any foreign currency and repatriated abroad. Under the terms of the deposit agreement pursuant to which Toyota's ADSs are issued, the Depositary is required, to the extent that in its judgment it can convert yen on a reasonable basis into dollars and transfer the resulting dollars to the United States, to convert all cash dividends that it receives in respect of deposited shares into dollars and to distribute the amount received (after deduction of applicable withholding taxes) to the holder of ADSs. 10.E TAXATION The discussion below is intended for general information only and does not constitute a complete analysis of all tax consequences relating to ownership of shares of common stock or the ADSs. Prospective purchasers of shares of common stock or the ADSs should consult their own tax advisors concerning the tax consequences of their particular situations. The following is a general summary of the principal U.S. federal income and Japanese tax consequences of the acquisition, ownership and disposition of shares of common stock or ADSs by an investor that holds those shares or ADSs as capital assets within the meaning of Section 1221 of the Internal Revenue Code of 1986, as amended (the 'Code'). This summary does not purport to address all material tax consequences that may be relevant to holders of shares of common stock or ADSs, and does not take into account the specific circumstances of any particular investors, some of which (such as tax-exempt entities, banks, insurance companies, broker-dealers, partnerships and other pass-through entities, investors liable for alternative minimum tax, investors that own or are treated as owning 10% or more of Toyota's voting stock, investors that hold shares of common stock or ADSs as part of a straddle, hedge, conversion transaction or other integrated transaction and U.S. Holders (as defined below) whose functional currency is not the U.S. dollar) may be subject to special tax rules. This summary is based on the tax laws of the United States and Japan, judicial decisions, published rulings, administrative pronouncements, and United States Treasury Regulations, all as in effect on the date hereof, as well as on the current income tax convention between the United States and Japan (the ' Treaty'), all of which are subject to change (possibly with retroactive effect), and to differing interpretations. In addition, this summary is based in part upon the representations of the depositary and the assumption that each obligation in the deposit agreement, and in any related agreement, will be performed in accordance with its terms. For purposes of this discussion, a 'U.S. Holder' is any beneficial owner of shares of common stock or ADSs that is for U.S. federal income tax purposes: 1. an individual citizen or resident of the United States, 2. a corporation (or other entity taxable as a corporation for U.S. federal income tax purposes) organized in or under the laws of the United States, any state thereof, or the District of Columbia, 3. an estate the income of which is subject to U.S. federal income tax without regard to its source, or 4. a trust that is subject to the primary supervision of a U.S. court and the control of one or more U.S. persons, or that has a valid election in effect under applicable Treasury regulations to be treated as a U.S. person. An 'Eligible U.S. Holder' is a U.S. Holder that: 1. is a resident of the United States for purposes of the Treaty, 2. does not maintain a permanent establishment or fixed base in Japan to which shares of common stock or ADSs are attributable and through which the U.S. Holder carries on or has carried on business (or, in the case of an individual, performs or has performed independent personal services), and 3. is not otherwise ineligible for benefits under the Treaty with respect to income and gain derived in connection with the shares of common stock or ADSs. A 'Non-U.S. Holder' is any beneficial owner of shares of common stock or ADSs that is not a U.S. Holder. If a partnership holds shares of common stock or ADSs, the U.S. federal income tax treatment of a partner generally will depend upon the status of the partner and the activities of the partnership. Partners of a partnership holding shares of common stock or ADSs should consult their own tax advisors. This summary does not address any aspects of U.S. federal tax law other than income taxation, and does not discuss any aspects of Japanese tax law other than income taxation, inheritance and gift taxation and securities transfer taxation. Investors are urged to consult their tax advisors regarding the U.S. federal, state and local and Japanese and other tax consequences of acquiring, owning and disposing of shares of common stock or ADSs. In particular, where relevant, investors are urged to confirm their status as Eligible U.S. Holders with their tax advisors and to discuss with their tax advisors any possible consequences of their failure to qualify as Eligible U.S. Holders. In general, taking into account the earlier assumptions, for purposes of the Treaty and for U.S. federal income and Japanese tax purposes, owners of ADRs evidencing ADSs will be treated as the owners of the shares of common stock represented by those ADSs, and exchanges of shares of common stock for ADSs, and exchanges of ADSs for shares of common stock, will not be subject to U.S. federal income or Japanese tax. Japanese Taxation The statements regarding Japanese tax laws set forth below are based on the laws in force and as interpreted by the Japanese taxation authorities as of the date hereof and are subject to changes in the applicable Japanese laws or double taxation conventions occurring after that date. This summary is not exhaustive of all possible tax considerations which may apply to a particular investor, and potential investors are advised to satisfy themselves as to the overall tax consequences of the acquisition, ownership and disposition of shares of common stock or ADSs, including specifically the tax consequences under Japanese law, the laws of the jurisdiction of which they are resident and any tax treaty between Japan and their country of residence, by consulting their own tax advisors. Generally, a non-resident of Japan (whether an individual or a corporation) is subject to Japanese withholding tax on dividends paid by Japanese corporations. Stock splits are not subject to Japanese income tax. In the absence of any applicable tax treaty, convention or agreement reducing the maximum rate of withholding tax, the rate of Japanese withholding tax applicable to dividends paid by Japanese corporations to non-residents of Japan or non-Japanese corporations is 20%. At the date of this annual report, Japan has income tax treaties, conventions or agreements whereby the above mentioned withholding tax rate is reduced, in most cases to 15% for portfolio investors with, among other countries, Australia, Belgium, Canada, Denmark, Finland, France, Germany, Ireland, Italy, Luxembourg, The Netherlands, New Zealand, Norway, Singapore, Spain, Sweden, Switzerland, the United Kingdom and the United States. Under the Treaty, as currently in force, the maximum rate of Japanese withholding tax which may be imposed on dividends paid to an Eligible U.S. Holder generally is limited to 15% of the gross amount actually distributed. A non-resident holder who is entitled to a reduced rate of Japanese withholding tax on payment of dividends by Toyota is required to submit an Application Form for Income Tax Convention regarding Relief from Japanese Income Tax on Dividends in advance through Toyota to the relevant tax authority before payment of dividends. A standing proxy for a non-resident holder may provide this application service. With respect to ADSs, this reduced rate is applicable if the depositary or its agent submits two Application Forms for Income Tax Convention (one before payment of dividends, the other within eight months after Toyota's fiscal year-end). To claim this reduced rate, a non-resident holder of ADSs will be required to file proof of taxpayer status, residence and beneficial ownership (as applicable) and to provide other information or documents as may be required by the depositary. A non-resident holder who does not submit an application in advance will be entitled to claim the refund of withholding taxes withheld in excess of the rate of an applicable tax treaty from the relevant Japanese tax authority. Gains derived from the sale outside Japan of shares or ADSs by a non-resident of Japan, or from the sale of common stock within Japan by a non-resident of Japan not having a permanent establishment in Japan, are generally not subject to Japanese income tax. Japanese inheritance and gift taxes at progressive rates may be payable by an individual who has acquired common stock or ADSs as legatee, heir or donee even though neither the individual nor the deceased nor the donor is a Japanese resident. Holders of shares of common stock or ADSs should consult their tax advisors regarding the effect of these taxes and, in the case of U.S. Holders, the possible application of the Estate and Gift Tax Treaty between the United States and Japan. U.S. Federal Income Taxation U.S. Holders Taxation of Dividends Under U.S. federal income tax law, the gross amount of any distribution made by Toyota in respect of shares of common stock or ADSs (without reduction for Japanese withholding taxes) will constitute a taxable dividend to the extent paid out of current or accumulated earnings and profits, as determined for U.S. federal income tax purposes. That dividend generally will be included in the gross income of a U.S. Holder, as ordinary income, when the dividend is actually or constructively received by the U.S. Holder, in the case of shares of common stock, or by the depositary, in the case of ADSs. The dividend will not be eligible for the dividends-received deduction generally allowed to U.S. corporations in respect of dividends received from other U.S. corporations. A dividend paid in Japanese yen will be included in gross income in a U.S. dollar amount based on the Japanese yen/U.S. dollar exchange rate in effect on the date that the dividend is included in the gross income of the U.S. Holder, regardless of whether the payment is converted into U.S. dollars. Generally, any gain or loss resulting from currency exchange fluctuations during the period from the date the dividend payment is included in the gross income of a U.S. Holder through the date that payment is converted into U.S. dollars (or otherwise disposed of) will be treated as U.S. source ordinary income or loss. To the extent, if any, that the amount of any distribution received by a U.S. Holder in respect of shares of common stock or ADSs exceeds Toyota's current and accumulated earnings and profits, as determined for U.S. federal income tax purposes, the distribution first will be treated as a tax-free return of the U.S. Holder's adjusted tax basis in those shares or ADSs, and any balance in excess of that adjusted tax basis will be treated as capital gain. Distributions of additional shares of common stock that are made to U.S. Holders with respect to their shares of common stock or ADSs, and that are part of a pro rata distribution to all of Toyota's shareholders, generally will not be subject to U.S. federal income tax. For U.S. foreign tax credit purposes, dividends included in gross income by a U.S. Holder in respect of shares of common stock or ADSs will constitute income from sources outside the United States, and generally will be treated separately, together with other items of 'passive income' (or, in the case of some holders, 'financial services income'), in computing foreign tax credit limitations. Subject to generally applicable limitations under U.S. federal income tax law and the Treaty, any Japanese withholding tax imposed in respect of a Toyota dividend may be claimed as a credit against the U.S. federal income tax liability of a U.S. Holder (or as a deduction from that U.S. Holder's taxable income, if that U.S. Holder elects). Special rules apply to individuals whose foreign source income during the taxable year consists entirely of ' qualified passive income' and whose creditable foreign taxes paid or accrued during the taxable year do not exceed $300 ($600 in the case of a joint return). Further, under some circumstances, a U.S. Holder that: (i) has held shares of common stock or ADSs for less than a specified minimum period during which it is not protected from risk of loss, (ii) is obligated to make payments related to Toyota dividends, or (iii) holds the shares of common stock or ADSs in an arrangement in which the holder's expected economic return, after non-U.S. taxes, is insubstantial, will not be allowed a foreign tax credit for foreign taxes imposed on Toyota dividends. Investors are urged to consult their tax advisors regarding the availability of the foreign tax credit under their particular circumstances. The IRS has expressed concern that parties to whom ADSs are released may be taking actions that are inconsistent with the claiming of foreign tax credits by U.S. Holders of ADSs. Accordingly, investors should be aware that the discussion above regarding the creditability of Japanese withholding tax on dividends could be affected by future actions that may be taken by the IRS. Taxation of Capital Gains A U.S. Holder's tax basis in a share of common stock or an ADS generally will equal the U.S. Holder's cost of that common share or ADS. In general, upon a sale or other disposition of shares of common stock or ADSs, a U.S. Holder will recognize gain or loss for U.S. federal income tax purposes in an amount equal to the difference between the amount realized and the U.S. Holder's adjusted tax basis in those shares or ADSs. That gain or loss generally will be capital gain or loss and, if the U.S. Holder's holding period for those shares or ADSs exceeds one year, will be long-term capital gain or loss. Some U.S. Holders, including individuals, are eligible for preferential rates of U.S. federal income tax in respect of long-term capital gain. Under U.S. federal income tax law, the deduction of capital losses is subject to limitations. Any gain or loss recognized by a U.S. Holder in respect of the sale or other disposition of shares of common stock or ADSs generally will be treated as U.S. source income or loss for U.S. foreign tax credit purposes. Passive Foreign Investment Companies A non-U.S. corporation will be classified as a passive foreign investment company (a 'PFIC') for U.S. federal income tax purposes in any taxable year in which, after applying look-through rules, either (1) at least 75% of its gross income is passive income, or (2) on average at least 50% of the gross value of its assets is attributable to assets that produce passive income or are held for the production of passive income. Passive income for this purpose generally includes dividends, interest, royalties, rents and gains from commodities and securities transactions. The PFIC determination is made annually and is based on the value of a foreign corporation's assets (including goodwill) and composition of income. Toyota does not believe that it is a PFIC for U.S. federal income tax purposes, and intends to continue its operations in such a manner that it will not become a PFIC in the future. If Toyota becomes a PFIC, U.S. Holders could be subject to additional U.S. federal income taxes on gain recognized with respect to the shares of common stock or ADSs and on certain distributions. In addition, an interest charge may apply to certain taxes treated as having been deferred by the U.S. Holder under the PFIC rules. Toyota will inform U.S. Holders if it believes that it will be classified as a PFIC in any taxable year. Prospective investors should consult their own tax advisors regarding the potential application of the PFIC rules to shares of common stock or ADSs. Non-U.S. Holders Subject to the discussion below under 'Backup Withholding and Information Reporting', a Non-U.S. Holder generally will not be subject to any U.S. federal income or withholding tax on distributions received in respect of shares of common stock or ADSs unless the Non-U.S. Holder conducts a trade or business within the United States and the distributions are effectively connected with that trade or business. Subject to the discussion below under 'Backup Withholding and Information Reporting', a Non-U.S. Holder generally will not be subject to U.S. federal income tax in respect of gain recognized on a sale or other disposition of shares of common stock or ADSs, unless (i) the gain is effectively connected with a trade or business conducted by the Non-U.S. Holder within the United States, or (ii) the Non-U.S. Holder is an individual who was present in the United States for 183 or more days in the taxable year of the disposition and other conditions are met. Backup Withholding and Information Reporting In general, information reporting requirements will apply to dividends paid to a U.S. Holder in respect of shares of common stock or ADSs, and to the proceeds received upon the sale, exchange or redemption of the shares of common stock or ADSs within the United States by U.S. Holders. Furthermore, a backup withholding tax may apply to those amounts (currently at a 30% rate) if a U.S. Holder fails to provide an accurate tax identification number, to certify that such holder is not subject to backup withholding or to otherwise comply with the applicable requirements of the backup withholding requirements. The amount of backup withholding imposed on a payment to a U.S. Holder generally may be claimed as a credit against the holder's U.S. federal income tax liability provided that the required information is properly furnished to the IRS. Dividends paid to a Non-U.S. Holder in respect of shares of common stock or ADSs, and proceeds received in the sale, exchange or redemption of shares of common stock or ADSs by a Non-U.S. Holder, generally are exempt from information reporting and backup withholding under current U.S. federal income tax law. However, a Non-U.S. Holder may be required to provide certification to ensure that exemption. Persons required to establish their exempt status generally must provide such certification on IRS Form W-9, entitled Request for Taxpayer Identification Number and Certification, in the case of U.S. persons, and on IRS Form W-8BEN, entitled Certificate of Foreign Status (or other appropriate IRS Form W-8), in the case of non-U.S. persons. U.S. Treasury regulations have generally expanded the circumstances under which information reporting and backup withholding may apply unless the holder provides the information described above. Investors should consult their tax advisors regarding the application of the information reporting and backup withholding rules to their particular situation. 10.F DIVIDENDS AND PAYING AGENTS Not applicable. 10.G STATEMENT BY EXPERTS Not applicable. 10.H DOCUMENTS ON DISPLAY Toyota files annual reports on Form 20-F and reports on Form 6-K with the SEC. You may read and copy this information at the SEC's Public Reference Room at 450 Fifth Street, N.W., Washington, D.C. 20549. You can also request copies of the documents, upon payment of a duplicating fee, by writing to the Public Reference Section of the SEC. Please call the SEC at 1-800-SEC-0330 for further information on the operation of the Public Reference Room. In addition, Toyota's reports, proxy statements and other information may be inspected at the offices of the New York Stock Exchange, 20 Broad Street, New York, New York 10005. Copies of the documents referred to herein may also be inspected at Toyota's offices by contacting Toyota at 1 Toyota-cho, Toyota City, Aichi Prefecture 471-8571, Japan, attention: Financial Reporting Department, Accounting Division, telephone number: 81-565-28-2121. 10.I SUBSIDIARY INFORMATION Not applicable. ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Toyota is exposed to market risk from changes in foreign currency exchange rates, interest rates and certain commodity and equity security prices. In order to manage the risk arising from changes in foreign currency exchange rates and interest rates, Toyota enters into a variety of derivative financial instruments. A description of Toyota's accounting policies for derivative instruments is included in note 2 to the consolidated financial statements and further disclosure is provided in note 19 and 20 to the consolidated financial statements. Toyota monitors and manages these financial exposures as an integral part of its overall risk management program, which recognizes the unpredictability of financial markets and seeks to reduce the potentially adverse effect on Toyota's operating results. The financial instruments included in the market risk analysis consist of all of Toyota's cash and cash equivalents, marketable securities, finance receivables, securities investments, long-term and short-term debt and all derivative financial instruments. Toyota's portfolio of derivative financial instruments consists of foreign exchange forward contracts, foreign currency options, interest rate swaps, interest rate currency swaps agreements and interest rate options. Anticipated transactions denominated in foreign currencies that are covered by Toyota's derivative hedging are not included in the market risk analysis. Although operating leases are not required to be included, Toyota has included these instruments in determining interest rate risk. Foreign Currency Exchange Rate Risk Toyota has foreign currency exposures related to buying, selling and financing in currencies other than the local currencies in which it operates. Toyota is exposed to foreign currency risk related to future earnings or assets and liabilities that are exposed due to operating cash flows and various financial instruments that are denominated in foreign currencies. Toyota's most significant foreign currency exposures relate to the United States and Western European countries. Toyota uses a value-at-risk analysis ('VAR') to evaluate its exposure to changes in foreign currency exchange rates. The value-at-risk of the combined foreign exchange position represents a potential loss in pre-tax earnings that are estimated to be Y25.2 billion as of March 31, 2001 and Y24.0 billion as of March 31, 2002. Based on Toyota's overall currency exposure (including derivative positions), the risk during the year ended March 31, 2002 to pre-tax cash flow from currency movements was on average Y25.0 billion, with a high of Y26.7 billion and a low of Y22.9 billion. The value-at-risk was estimated by using a variance/covariance model and assumed a 95% confidence level on the realization date and a 10-day holding period. Toyota changed the model used for calculation of value-at-risk from 'variance/ covariance' method to 'Monte Carlo Simulation' method because Toyota introduced a new system which Toyota considers more effective for risk management purposes. The prior year amounts have been restated to the fiscal 2002 presentation. Interest Rate Risk Toyota is subject to market risk from exposure to changes in interest rates based on its financing, investing and cash management activities. Toyota enters into various financial instrument transactions to maintain the desired level of exposure to the risk of interest rate fluctuations and to minimize interest expense. Certain exchange traded future and option contracts, interest rate caps and floors, along with various investments, have been entered into to reduce the interest rate risk related to these activities. The potential decrease in fair value resulting from a hypothetical 100 basis point upward shift in interest rates would be approximately Y38.3 billion as of March 31, 2001 and Y28.3 billion as of March 31, 2002. There are certain shortcomings inherent to the sensitivity analyses presented. The model assumes interest rate changes are instantaneous parallel shifts in the yield curve; however, in reality, changes are rarely instantaneous. Although certain assets and liabilities may have similar maturities or periods to repricing, they may not react correspondingly to changes in market interest rates. Also, the interest rates on certain types of assets and liabilities may fluctuate with changes in market interest rates, while interest rates on other types of assets may lag behind changes in market rates. Finance receivables are less susceptible to prepayments when interest rates change and, as a result, Toyota's model does not address prepayment risk for automotive related finance receivables. However, in the event of a change in interest rates, actual loan prepayments may deviate significantly from assumptions used in the model. Commodity Price Risk Commodity price risk is the possibility of higher or lower costs due to changes in the prices of commodities, such as non-ferrous (e.g., aluminum), precious metals (e.g., palladium, platinum and rhodium) and ferrous alloys (e.g., steel), which Toyota uses in the production of motor vehicles. Toyota does not use derivative instruments to hedge the price risk associated with the purchase of those commodities and controls its commodity price risk by holding minimum stock levels. Equity Price Risk Toyota holds investments in various available-for-sale securities which are subject to price risk. The fair value of available-for-sale securities was approximately Y718.6 billion as of March 31, 2001 and the fair value of available-for-sale equity securities was approximately Y564.4 billion as of March 31, 2002. The potential change in the fair value of these investments, assuming a 10% change in prices, would be approximately Y71.9 billion as of March 31, 2001 and Y56.4 billion as of March 31, 2002. ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES Not applicable. PART II ITEM 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES None. ITEM 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS None. ITEM 15. (RESERVED) ITEM 16. (RESERVED) PART III ITEM 17. FINANCIAL STATEMENTS Not applicable. ITEM 18. FINANCIAL STATEMENTS The following financial statements are filed as part of this annual report on Form 20-F. ITEM 19. EXHIBITS Index to Exhibits 1.1 Amended and Restated Articles of Incorporation of the Registrant (English translation) 1.2 Amended and Restated Regulations of the Board of Directors of the Registrant (English translation) 1.3 Amended and Restated Regulations of the Board of Corporate Auditors of the Registrant (English translation) 2.1 Amended and Restated Share Handling Regulations of the Registrant (English translation) 2.2 Form of Deposit Agreement among the Registrant, The Bank of New York, as depositary, and the owners and beneficial owners from time to time of American Depositary Receipts, including the form of American Depositary Receipt (incorporated by reference to Exhibit 4.2 to Toyota's Registration Statement on Form F-1 (file no. 333-10768)) 2.3 Form of ADR (included in Exhibit 2.2) 8.1 List of Principal Subsidiaries (See 'Organizational Structure' in 'Item 4. Information on the Company') SIGNATURES The registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorized the undersigned to sign this annual report on its behalf. TOYOTA MOTOR CORPORATION By: /s/ Takeshi Suzuki Name: Takeshi Suzuki Title: Director Date: August 23, 2002 -------------------------- This information is provided by RNS The company news service from the London Stock Exchange NRUVRWUAR

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