Annual Report & Accounts Pt 2
Toyota Motor Corporation
23 August 2002
6. Marketable securities and other securities investments:
Marketable securities and other securities investments include debt and equity
securities for which the aggregate fair value, gross unrealized gains and losses
and cost are as follows:
Yen in millions
March 31, 2001
Gross Gross
unrealized unrealized
gains losses Fair
Cost
value
Available-for-sale
Debt securities JPY1,330,994 JPY 50,076 JPY 9,630 JPY1,371,440
Equity securities 664,894 270,183 216,487 718,590
Total JPY1,995,888 JPY320,259 JPY226,117 JPY2,090,030
Securities not practicable to fair value
Debt securities JPY244,874
Equity securities 15,581
Total JPY260,455
Yen in millions
March 31, 2002
Gross Gross
unrealized unrealized
gains losses Fair
Cost Value
Available-for-sale
Debt securities JPY1,443,392 JPY33,656 JPY 9,743 JPY1,467,305
Equity securities 481,478 88,196 5,260 564,414
Total JPY1,924,870 JPY121,852 JPY15,003 JPY2,031,719
Securities not practicable to fair value
Debt securities JPY 12,629
Equity securities 87,515
Total JPY100,144
U.S. dollars in millions
March 31, 2002
Gross Gross
unrealized unrealized
gains losses Fair
Cost Value
Available-for-sale
Debt securities $10,832 $253 $ 73 $11,012
Equity securities 3,613 662 39 4,236
Total $14,445 $915 $112 $15,248
Securities not practicable to fair value
Debt securities $ 95
Equity securities 656
Total $751
At March 31, 2001 and 2002, debt securities classified as available-for-sale
mainly consist of Japanese government and municipal bonds and corporate debt
securities with maturities from 1 to 10 years.
For the year ended March 31, 2000, the net unrealized gains on
available-for-sale securities included as a component of accumulated other
comprehensive income, net of applicable taxes, increased by JPY82,870 million.
For the year ended March 31, 2001 and 2002, the net unrealized gains decreased
by JPY304,995 and JPY3,576 million ($27 million), respectively.
Proceeds from sales of available-for-sale securities were JPY447,925 million,
JPY234,608 million and JPY147,722 million ($1,109 million) for the years ended
March 31, 2000, 2001 and 2002, respectively. On those sales, gross realized
gains were JPY35,696 million, JPY41,134 million and JPY8,885 million ($67
million) and gross realized losses were JPY64 million, JPY81 million and JPY7
million ($0 million), respectively.
During the year ended March 31, 2001, Toyota contributed certain marketable
equity securities, not including those of its subsidiaries and affiliated
companies, to an employee retirement benefit trust, with no cash proceeds
thereon. The fair value of these securities at the time of contribution was
JPY269,700 million. The securities held in this trust are qualified as plan
assets. Upon contribution of these marketable securities, a net unrealized gain
of JPY161,151 million was realized and included in 'Other income (loss), net' in
the accompanying consolidated statement of income. Since the unrealized gain,
net of tax, had already been recorded as accumulated other comprehensive income,
the contribution itself did not impact the amount of comprehensive income.
During the year ended March 31, 2002, Toyota recognized a pretax loss of
JPY212,909 million ($1,598 million) for other than temporary decline in market
value of its 13.3% ownership interest in KDDI which is included in 'Other income
(loss), net' in the accompany consolidated statements of income.
In the ordinary course of business, Toyota maintains long-term investment
securities, included in 'Marketable securities and other securities
investments', issued by a number of non-public companies which are recorded at
cost, as their fair values were not readily determinable. Toyota's management
employs a systematic methodology to assess the recoverability of such
investments by reviewing the financial viability of the underlying companies and
the prevailing market conditions in which these companies operate to determine
if Toyota's investment in each individual company is impaired and whether the
impairment is other than temporary. If the impairment is determined to be other
than temporary, the cost of the investment is written-down by the impaired
amount and is recognized currently as a realized loss.
7. Finance receivables:
Finance receivables consist of the following:
Yen in millions U.S. dollars
in millions
March 31 March 31,
2001 2002 2002
Retail JPY 1,900,537 JPY 2,723,834 $ 20,442
Finance leases 1,223,340 1,391,924 10,446
Wholesale and other dealer loans 895,968 952,260 7,146
4,019,845 5,068,018 38,034
Unearned income (279,538) (323,897) (2,431)
Allowance for credit losses (38,292) (52,170) (392)
Finance receivables, net 3,702,015 4,691,951 35,211
Less - Current portion (1,633,247) (2,020,491) (15,163)
Noncurrent finance receivables, net JPY 2,068,768 JPY 2,671,460 $ 20,048
The contractual maturities of retail receivables, the future minimum lease
payments on finance leases and wholesale and other dealer loans at March 31,
2002 are summarized as follows:
Yen in millions U.S. dollars in millions
Wholesale Wholesale
and other and other
Year ending Finance dealer Finance dealer
March 31: loans lease loans
Retail lease Retail
2003 JPY 815,587 JPY 307,428 JPY874,928 $ 6,121 $2,307 $6,566
2004 692,768 236,048 10,718 5,199 1,772 81
2005 557,726 190,141 14,304 4,186 1,427 107
2006 403,677 212,959 15,509 3,029 1,598 116
2007 212,234 71,878 23,896 1,593 539 179
Thereafter 41,842 249 12,905 314 2 97
JPY2,723,834 JPY1,018,703 JPY952,260 $20,442 $7,645 $7,146
Finance leases consist of the following:
U.S. dollars
in millions
Yen in millions
March 31 March 31,
2001 2002 2002
Minimum lease payments JPY 907,992 JPY1,018,703 $ 7,645
Estimated unguaranteed residual values 315,348 373,221 2,801
1,223,340 1,391,924 10,446
Less - Unearned income (233,653) (185,219) (1,390)
Less - Allowance for credit losses (13,761) (14,087) (106)
Finance leases, net JPY 975,926 JPY1,192,618 $ 8,950
Toyota maintains programs to sell retail finance receivables and interests
finance lease receivables through limited purpose subsidiaries. Toyota services
securitized receivables and is paid a servicing fee of 1% of the total principal
balance of the securitizations. In a subordinated capacity, the limited purpose
subsidiaries retain excess servicing cash flows, certain cash deposits and other
related amounts which are held as restricted assets subject to limited recourse
provisions. These restricted assets are not available to satisfy any
obligations of Toyota. The investors have recourse to the interest-only strips,
restricted cash held by the securitization trusts, and any subordinated retained
interest. The investors do not have recourse to other assets held by Toyota for
failure of debtors to pay when due.
At March 31, 2001 and 2002, Toyota's retained interest and investments relating
to these securitizations included interest in trusts of JPY65,826 million and
JPY68,076 million ($511 million), respectively, interest only strips of
JPY16,072 million and JPY14,971 million ($112 million), respectively, and other
receivables of JPY21,975 million and JPY6,427 million ($48 million),
respectively.
Toyota sold finance receivables under these programs of JPY125,791 million,
JPY502,765 million and JPY613,765 million ($4,606 million) and recognized a
pretax gain resulting from these sales of JPY1,246 million, JPY5,046 million and
JPY10,628 million ($80 million) for the years ended March 31, 2000, 2001 and
2002, respectively, after providing an allowance for estimated credit and
residual value losses. The gain on sale recorded depends on the carrying amount
of the assets at the time of the sale. The carrying amount is allocated between
the assets sold and the retained interests based on their relative fair values
at the date of the sale. The fair value of retained interests was estimated by
discounting expected cash flows using management's best estimates of key
assumptions. Key economic assumptions used in measuring the fair value of
retained interests at the date of securitization for securitizations completed
during the year ended March 31, 2002 were as follows:
Collateral prepayment speed 1.0% - 1.5%
Weighted average life (in years) 1.26 - 1.50
Collateral expected credit losses (per annum) 0.59% - 0.70%
Discount rate used on residual cash flows 8.0% - 24.5%
Discount rate used on the subordinated tranch 5.0% - 8.0%
The following table summarizes certain cash flows received from and paid to the
securitization trusts for the year ended March 31, 2002:
Yen in millions U.S. dollars in millions
Retail Leases Retail Leases
Proceeds from new securitizations JPY596,246 JPY - $4,475 $ -
Servicing fees received 7,258 675 54 5
Excess interest received from interest only strips 22,438 225 168 2
Repurchases of delinquent receivables (187) (38,893) (1) (292)
Reimbursement of servicer advances 862 2,337 6 18
Reimbursements of maturity advances - 8,623 - 65
During the years ended March 31, 2001 and 2002, servicing fee assets in the
amounts of JPY3,221 million and JPY1,999 million ($15 million), respectively,
were recorded in conjunction with retail loan securitizations executed. The
amortized balance of servicing fee assets at March 31, 2001 and 2002, amounted
to approximately JPY2,230 million and JPY2,265 million ($17 million),
respectively. No servicing fee assets were recorded during the year ended March
31, 2000.
The outstanding balance of retail finance receivables sold through
securitizations which Toyota continues to service totaled JPY525,146 million and
JPY658,127 million ($4,939 million) at March 31, 2001 and 2002, respectively.
The outstanding balance of interests in lease finance receivables sold through
securitizations which Toyota continues to service totaled JPY140,379 million at
March 31, 2001. No such outstanding balance of interests in lease finance
receivables existed as at March 31, 2002.
Toyota recorded an adjustment to other receivables totaling JPY3,683 million,
JPY9,393 million, and JPY8,748 million ($66 million) for the years ended March
31, 2000, 2001 and 2002, respectively. These impairments were recognized when
the future undiscounted cash flows of the assets were estimated to be
insufficient to recover the related carrying values resulting from higher return
rates and an increase in vehicle disposition loss assumptions.
Toyota evaluates the key economic assumptions used in the initial valuation of
the retained assets and performs subsequent review of those assumptions on a
quarterly basis. The assumptions reviewed include prepayment speed, loss
severity, and discount rate. The retained assets are not considered to have a
ready available market value. Toyota records its retained assets at fair value
estimated using quoted market prices or discounted cash flow analysis.
Unrealized gains, net of income taxes, related to the retained assets are
included in comprehensive income. If management deems the excess between the
carrying value and the fair value to be unrecoverable, the asset is written down
through earnings.
Historical amounts as of March 31, 2001 and 2002 and delinquency amounts for the
years ended March 31, 2001 and 2002 for the managed portfolio for all
receivables owned and securitized are as follows:
Yen in millions
March 31, 2001
Retail Leases
Principal amount outstanding JPY1,743,472 JPY1,803,961
Number of contracts outstanding 1,107,442 702,952
Number of delinquent contracts over 60 days 3,388 1,470
Credit losses (net of recoveries) JPY 6,356 JPY 8,521
Residual value losses - 37,243
Comprised of:
Receivables held in portfolio JPY1,218,264 JPY1,663,494
Receivables securitized 525,208 140,391
Yen in millions U.S. dollars in millions
March 31, 2002 March 31, 2002
Retail Leases Retail Leases
Principal amount outstanding JPY2,534,753 JPY1,806,017 $19,023 $13,554
Number of contracts outstanding 1,411,992 620,258
Number of delinquent contracts over 8,403 5,296
60 days
Credit losses (net of recoveries) JPY12,393 JPY12,248 $ 93 $ 92
Residual value losses - 48,541 - 364
Comprised of:
Receivables held in portfolio JPY1,876,572 JPY1,655,031 $14,083 $12,420
Receivables securitized 658,181 150,986 4,939 1,133
Static pool losses are calculated by summing the actual and projected future
losses and dividing the sum by the original balance of each pool of assets.
Actual to date and expected static pool credit losses for the retail loan
securitizations were 0.18% and 0.52%, respectively, as of March 31, 2001, and
0.42% and 0.60%, respectively, as of March 31, 2002. Actual to date and
expected static pool credit losses for the lease securitizations were 1.64% and
0.12%, respectively, as of March 31, 2001 and 1.74% and 0%, respectively, as of
March 31, 2002. Actual to date and expected residual value losses for the lease
securitizations were 3.75% and 2.72%, respectively, as of March 31, 2001 and
5.95% and 0%, respectively, as of March 31, 2002.
At March 31, 2002, the key economic assumptions and the sensitivity of the
current fair value of the residual cash flows to an immediate 10 and 20 percent
adverse change in those economic assumptions are presented below.
Yen in millions U.S. dollars
in millions
Retail Retail
Balance Sheet carrying amount/fair value JPY49,228 $369
of retained interests
Prepayment speed assumption (annual rate) 1.0 - 1.6%
Impact on fair value of 10% adverse change JPY(1,386) $(10)
Impact on fair value of 20% adverse change (2,786) (21)
Residual cash flows discount rate (annual rate) 5.0 - 15.0%
Impact on fair value of 10% adverse change JPY(558) $(4)
Impact on fair value of 20% adverse change (1,100) (8)
Expected credit losses (annual rate) 0.5 - 0.6%
Impact on fair value of 10% adverse change JPY(665) $(5)
Impact on fair value of 20% adverse change (1,331) (10)
This hypothetical scenario does not reflect expected market conditions and
should not be used as a prediction of future performance. As the figures
indicate, changes in the fair value may not be linear. Also, in this table, the
effect of a variation in a particular assumption on the fair value of the
retained interest is calculated without changing any other assumption; in
reality, changes in one factor may result in changes in another, which might
magnify or counteract the sensitivities. Actual cash flows may drastically
differ from the above analysis.
8. Other receivables:
Other receivables relate to arrangements with certain component manufacturers
whereby Toyota procures inventory for these component manufactures and is
reimbursed for the related purchases.
9. Inventories:
Inventories consist of the following:
Yen in millions U.S. dollars
in millions
March 31 March 31,
2001 2002 2002
Finished goods JPY601,839 JPY653,959 $4,908
Raw materials 110,668 152,712 1,146
Work in process 126,143 113,195 849
Supplies and other 37,602 41,974 315
JPY876,252 JPY961,840 $7,218
10. Vehicles and equipment on operating leases:
Vehicles and equipment on operating leases consist of the following:
Yen in millions U.S. dollars
in millions
March 31 March 31,
2001 2002 2002
Vehicles JPY1,492,901 JPY1,556,297 $11,680
Equipment and other 41,167 38,747 291
Less - Allowance for credit losses (8,904) (10,883) (82)
1,525,164 1,584,161 11,889
Less - Accumulated depreciation (372,369) (356,243) (2,674)
Vehicles and equipment on
operating leases, net
JPY1,152,795 JPY1,227,918 $ 9,215
Rental income from vehicles and equipment on operating leases were JPY277,426
million, JPY289,550 million and JPY314,626 million ($2,361 million) for the
years ended March 31, 2000, 2001 and 2002, respectively. Future minimum rentals
from vehicles and equipment on operating leases are due in installments as
follows:
U.S. dollars
Yen in millions in millions
Year ending March 31:
2003 JPY250,288 $1,878
2004 169,311 1,271
2005 94,759 711
2006 39,579 297
2007 5,439 41
The future minimum rentals as shown above should not be considered indicative of
future cash collections.
11. Allowance for doubtful accounts and credit losses:
An analysis of activity within the allowance for doubtful accounts relating to
trade accounts and notes receivable for the years ended March 31, 2000, 2001 and
2002 is as follows:
U.S. dollars
in millions
Yen in millions
March 31 March 31,
2000 2001 2002 2002
Allowance for doubtful accounts
at beginning of year JPY 57,525 JPY 59,423 JPY40,601 $305
Provision for doubtful accounts 19,077 5,616 3,728 28
Write-offs (17,726) (12,089) (2,052) (15)
Other 547 (12,349) 17,587 131
Allowance for doubtful accounts
at end of year JPY 59,423 JPY 40,601 JPY59,864 $449
The other amount includes the impact of additional ownership interest acquired
in affiliated companies, disposal of ownership interest in Toyota's
telecommunication subsidiary and currency translation adjustment during the
years ended March 31, 2000, 2001 and 2002.
A portion of the allowance for doubtful accounts balance at March 31, 2001 and
2002 relates to non-current notes receivable balances reported as other assets
totaling JPY7,551 million and JPY31,682 million ($238 million), respectively.
An analysis of the allowance for credit losses relating to finance receivables
and vehicles and equipment on operating leases for the years ended March 31,
2000, 2001 and 2002 is as follows:
Yen in millions U.S. dollars
in millions
March 31 March 31,
2000 2001 2002 2002
Allowance for credit losses
at beginning of year
JPY 45,537 JPY 39,680 JPY 47,196 $ 354
Provision for credit losses 14,678 21,515 40,679 305
Charge-offs, net of recoveries (11,639) (18,315) (29,628) (222)
Other (8,896) 4,316 4,806 37
Allowance for credit losses
at end of year
JPY 39,680 JPY 47,196 JPY 63,053 $ 474
The other amount primarily includes the impact of currency translation
adjustment during the years ended March 31, 2000, 2001 and 2002.
12. Investments in and transactions with affiliated companies:
Summarized financial information for affiliated companies accounted for by the
equity method is shown below:
Yen in millions U.S. dollars
in millions
March 31 March 31,
2001 2002 2002
Current assets JPY3,533,094 JPY3,234,930 $24,277
Noncurrent assets 5,373,996 6,360,853 47,736
Total assets JPY8,907,090 JPY9,595,783 $72,013
Current liabilities JPY2,777,992 JPY2,493,933 $18,716
Long-term liabilities 1,998,497 2,846,732 21,364
Shareholders' equity 4,130,601 4,255,118 31,933
Total liabilities and shareholders' equity JPY8,907,090 JPY9,595,783 $72,013
Toyota's share of shareholders' equity JPY1,308,654 JPY1,332,458 $10,000
Number of affiliated companies at end of period 60 58
U.S. dollars
in millions
Yen in millions
For the year
ended
March 31,
For the year ended March 31
2000 2001 2002 2002
Net revenues JPY8,891,362 JPY9,841,869 JPY10,492,823 $78,745
Gross profit JPY933,570 JPY1,009,400 JPY1,037,455 $7,786
Net income JPY90,781 JPY269,745 JPY224,287 $1,683
Entities comprising a significant portion of Toyota's investment in affiliated
companies include Denso Corporation; Aioi Insurance Co., Ltd.; Toyota Industries
Corporation; Toyota Tsusho Corporation; and Aisin Seiki Co., Ltd.
Certain affiliated companies accounted for by the equity method with carrying
amounts of JPY1,077,493 million and JPY1,088,588 million ($8,170 million) at
March 31, 2001 and 2002, respectively, were quoted on various established
markets at an aggregate value of JPY1,438,592 million and JPY1,150,032 million
($8,631 million), respectively.
Account balances and transactions with affiliated companies are presented below:
U.S. dollars
in millions
Yen in millions
March 31 March 31,
2001 2002 2002
Trade accounts and other receivables JPY155,973 JPY201,527 $1,512
Accounts payable 466,852 461,569 3,464
U.S. dollars
in millions
Yen in millions
For the year
ended
March 31,
For the year ended March 31
2000 2001 2002 2002
Sales of products JPY 697,801 JPY 682,317 JPY 749,830 $ 5,627
Purchases 2,886,648 3,006,546 3,439,208 25,810
Dividends from affiliated companies accounted for by the equity method for the
years ended March 31, 2000, 2001 and 2002 were JPY12,452 million, JPY13,871
million and JPY14,530 million ($109 million), respectively.
Toyota has convertible debt securities issued by affiliated companies in amount
of JPY57,096 million and JPY54,033 million ($406 million) as of March 31, 2001
and 2002, respectively, which were included in 'Investments and other assets -
affiliated companies' in the consolidated balance sheet at cost. Fair value of
those securities as of March 31, 2001 and 2002 were JPY80,060 million and
JPY67,978 million ($510 million), respectively. Maturities of these convertible
debt securities range from 3 to 6 years.
At March 31, 2001, Toyota had a 49.9% ownership interest in The Chiyoda Fire and
Marine Insurance Company ('Chiyoda'), which was accounted for using the equity
method of accounting, and a 19.3% ownership interest in Dai-Tokyo Fire and
Marine Insurance Company Limited ('Dai-Tokyo'), which was accounted for as a
marketable security investment. On April 1, 2001, Chiyoda and Dai-Tokyo merged
with Dai-Tokyo being the surviving corporation and Dai-Tokyo changed its name to
Aioi Insurance Co., Ltd. ('Aioi'). Toyota's ownership interest in Aioi at the
merger was 33.4% and Toyota is accounting for its ownership in Aioi using the
equity method of accounting.
13. Short-term borrowings and long-term debt:
Short-term borrowings at March 31, 2001 and 2002 consisted of the following:
U.S. dollars
in millions
Yen in millions
March 31 March 31,
2001 2002 2002
Loans, principally from banks, with a weighted-average
interest at March 31, 2001 of 2.96% per annum and at March
31, 2002 of 1.44% per annum, respectively JPY 664,440 JPY 874,416 $ 6,562
Commercial paper with a weighted-average interest at March
31, 2001 of 5.65% per annum and at March 31, 2002 of 2.19%
per annum, respectively 804,567 951,148 7,138
JPY1,469,007 JPY1,825,564 $13,700
At March 31, 2002, Toyota had unused lines of credit amounting to JPY2,739,575
million ($20,560 million) of which JPY873,658 million ($6,557 million) related
to commercial paper programs. Under these programs, Toyota is authorized to
obtain short-term financing at prevailing interest rates for periods not in
excess of 360 days.
Long-term debt at March 31, 2001 and 2002 comprises the following:
Yen in millions U.S.
dollars
in millions
March 31 March 31,
2001 2002 2002
Unsecured loans, representing obligations principally to banks,
due 2001 to 2031 in 2001 and due 2002 to 2032 in 2002 with
interest ranging from 0.10% to 21.20% per annum in 2001 and from
0.09% to 17.00% per annum in 2002 JPY 416,425 JPY 562,231 $ 4,219
Secured loans, representing obligations principally to banks, due
2001 to 2019 in 2001 and due 2002 to 2019 in 2002 with interest
ranging from 0.55% to 8.50% per annum in 2001 and from 0.35% to
4.70% per annum in 2002 12,794 61,290 460
Medium-term notes of consolidated subsidiaries, due 2001 to 2011
in 2001 and due 2002 to 2012 in 2002 with interest ranging from
0.30% to 8.13% per annum in 2001 and from 0.03% to 8.13% per
annum in 2002 2,006,449 2,632,323 19,755
Unsecured 0.45% convertible bonds of consolidated subsidiaries,
due 2003, convertible at JPY672 ($5) for one common share,
redeemable before due date 13,308 13,308 100
Unsecured notes of parent company, due 2002 to 2018 in 2001 and
due 2002 to 2018 in 2002 with interest ranging from 1.40% to
6.25% per annum in 2001 and from 1.40% to 6.25% per annum in 2002 523,900 514,750 3,863
Unsecured notes of consolidated subsidiaries, due 2001 to 2008 in
2001 and due 2002 to 2008 in 2002 with interest ranging from
0.72% to 7.00% per annum in 2001 and from 0.52% to 7.00% per
annum in 2002 680,391 871,142 6,538
Notes payable related to securitized finance receivables
structured as collateralized borrowings - 138,103 1,036
Long-term capital lease obligations, due 2001 to 2017 in 2001 and
due 2002 to 2017 in 2002, with interest ranging from 0.95% to
9.33% per annum in 2001 and from 0.95% to 9.33% per annum in 2002 144,751 88,373 663
3,798,018 4,881,520 36,634
Less - Current portion due within one year (714,674) (1,158,814) (8,696)
JPY3,083,344 JPY3,722,706 $27,938
At March 31, 2002, property, plant and equipment with a book value of JPY127,230
million ($955 million) was pledged as collateral by consolidated subsidiaries
for certain debt obligations. In addition, other assets aggregating JPY232,384
million ($1,744 million) was pledged as collateral by consolidated subsidiaries
for certain debt obligations including 'Notes payable related to securitized
finance receivables structured as collateralized borrowings'.
At March 31, 2002, approximately 47%, 27% and 26% of long-term debt is
denominated in U.S. dollars, Japanese yen and other currencies, respectively.
The aggregate amounts of annual maturities of long-term debt during the next
five years are as follows:
Year ending March 31: U.S. dollars
Yen in millions in millions
2003 JPY1,158,814 $8,696
2004 1,090,072 8,181
2005 722,774 5,424
2006 565,211 4,242
2007 207,789 1,559
Standard agreements with certain banks in Japan include provisions that
collateral (including sums on deposit with such banks) or guarantees will be
furnished upon the banks' request and that any collateral furnished, pursuant to
such agreements or otherwise, will be applicable to all present or future
indebtedness to such banks.
14. Income taxes:
The components of income before income taxes comprise the following:
Yen in millions U.S. dollars
in millions
For the year
ended
For the year ended March 31
March 31,
2000 2001 2002 2002
Income before income taxes:
Parent company and domestic
subsidiaries JPY703,614 JPY 920,823 JPY706,795 $5,304
Foreign subsidiaries 177,066 186,466 265,306 1,991
JPY880,680 JPY1,107,289 JPY972,101 $7,295
The provision for income taxes consisted of the following:
Yen in millions U.S. dollars
in millions
For the year
ended
For the year ended March 31
March 31,
2000 2001 2002 2002
Current income tax expense:
Parent company and domestic
subsidiaries JPY255,503 JPY371,797 JPY 467,891 $ 3,511
Foreign subsidiaries 78,822 102,754 97,709 734
Total current 334,325 474,551 565,600 4,245
Deferred income tax expense
(benefit):
Parent company and domestic
subsidiaries 87,063 58,391 (157,152) (1,179)
Foreign subsidiaries 1,343 (9,066) 14,341 107
Total deferred 88,406 49,325 (142,811) (1,072)
Total provision JPY422,731 JPY523,876 JPY422,789 $ 3,173
Toyota is subject to a number of different income taxes which, in the aggregate,
indicate a statutory rate in Japan of approximately 41.3% in 2000, 2001 and
2002. Reconciliation of the differences between the statutory tax rate and the
effective income tax rate is as follows:
For the year ended March 31
2000 2001 2002
Statutory tax rate 41.3% 41.3% 41.3%
Increase (reduction) in taxes resulting from:
Non-deductible expenses 0.9 0.7 0.7
Tax on equity earnings in affiliated companies 1.5 2.2 1.0
Valuation allowance 2.2 1.5 1.2
Other 2.1 1.6 (0.7)
Effective income tax rate 48.0% 47.3% 43.5%
The significant components of deferred tax assets and liabilities are as
follows:
Yen in millions U.S. dollars
in millions
March 31 March 31,
2001 2002 2002
Deferred tax assets:
Accrued severance costs JPY 254,427 JPY 269,834 $ 2,025
Warranty reserves and accrued expenses 92,684 128,344 963
Other accrued employees' compensation 62,751 81,331 610
Operating loss carryforwards for tax purposes 63,186 94,700 711
Inventory adjustments 55,126 45,586 342
Property, plant and equipment and other assets 78,109 92,369 693
Other 113,618 154,657 1,161
Gross deferred tax assets 719,901 866,821 6,505
Less - Valuation allowance (73,339) (103,211) (774)
Total deferred tax assets 646,562 763,610 5,731
Deferred tax liabilities:
Unrealized gain on securities (45,237) (13,494) (101)
Undistributed earnings of affiliates accounted (307,571) (287,073) (2,154)
for by the equity method
Basis difference of acquired assets (15,350) (17,777) (135)
Lease transactions (211,298) (239,900) (1,800)
Gain on securities contribution to employee retirement (66,523) (499)
benefit trust (66,523)
Gain on disposition of ownership interest in (74,696) - -
telecommunication subsidiaries
Other (73,497) (78,456) (589)
Gross deferred tax liabilities (794,172) (703,223) (5,278)
Net deferred tax assets (liabilities) JPY(147,610) JPY 60,387 $ 453
The valuation allowance mainly relates to deferred tax assets of the
consolidated subsidiaries with operating loss carryforwards for tax purposes
that are not expected to be realized. The net changes in the total valuation
allowance for deferred tax assets for the years ended March 31, 2000, 2001 and
2002 consisted of the following:
Yen in millions U.S. dollars
in millions
March 31 March 31,
2000 2001 2002 2002
Valuation allowance at beginning of year JPY45,825 JPY 72,437 JPY 73,339 $ 550
Additions 28,164 27,857 27,976 210
Deductions (5,014) (9,561) (16,089) (121)
Other 3,462 (17,394) 17,985 135
Valuation allowance at end of year JPY72,437 JPY 73,339 JPY103,211 $ 774
The other amount includes the impact of additional ownership interest of
acquired affiliated companies, changes in the statutory tax rates and currency
translation adjustment during the years ended March 31, 2000, 2001 and 2002. In
addition, the other amount during the year ended March 31, 2001, includes the
impact of the disposal of ownership interest in Toyota's telecommunication
subsidiary.
Net deferred tax liabilities are included in the consolidated balance sheets as
follows:
Yen in millions U.S. dollars
in millions
March 31 March 31,
2001 2002 2002
Deferred tax assets:
Deferred income taxes (Current assets) JPY 355,051 JPY 433,524 $ 3,253
Investments and other assets - other 55,092 101,342 761
Deferred tax liabilities:
Other current liabilities (4,487) (7,418) (56)
Deferred income taxes (Long-term liabilities) (553,266) (467,061) (3,505)
Net deferred tax assets (liabilities) JPY(147,610) JPY 60,387 $ 453
Management of Toyota intends to reinvest certain undistributed earnings of their
foreign subsidiaries for an indefinite period of time. As a result, no
provision for income taxes has been made on undistributed earnings of these
subsidiaries not expected to be remitted in the foreseeable future aggregating
JPY1,282,199 million ($9,623 million) as of March 31, 2002. Toyota estimates an
additional tax provision of JPY86,217 million ($647 million) would be required
at such time if the full amount of these accumulated earnings became subject to
Japanese taxes.
Operating loss carryforwards for tax purposes of consolidated subsidiaries at
March 31, 2002 amounted to approximately JPY238,393 million ($1,789 million) and
are available as an offset against future taxable income of such subsidiaries.
These carryforwards expire in years 2003 to 2007, with the exception of
JPY116,645 million ($875 million) which are not subject to expiration.
15. Other payables:
Other payables are mainly related to purchases of property, plant and equipment
and non-manufacturing purchases.
16. Shareholders' equity:
Changes in the number of shares of common stock issued have resulted from the
following:
For the year ended March 31
2000 2001 2002
Common stock issued:
Balance at beginning of year 3,760,650,129 3,749,405,129 3,684,997,492
Issuance during the year - 588,963 -
Retirement (11,245,000) (64,996,600) (35,000,000)
Balance at end of year 3,749,405,129 3,684,997,492 3,649,997,492
The Japanese Commercial Code provides that an amount equal to at least 10% of
cash dividends and other distributions from retained earnings paid by the parent
company and its Japanese subsidiaries be appropriated as a legal reserve. No
further appropriation is required when total amount of the legal reserve and
capital surplus equals 25% of stated capital. Legal reserve included in
retained earnings as of March 31, 2001 and 2002 were JPY121,405 million and
JPY127,100 million ($954 million) and are restricted to be used as dividends.
The amounts of unrestricted consolidated retained earnings pursuant to
accounting principles generally accepted in Japan were JPY6,038,471 million and
JPY6,398,695 million ($48,020 million) as of March 31, 2001 and 2002,
respectively.
In accordance with customary practice in Japan, the appropriations are not
accrued in the financial statements for the period to which they relate, but are
recorded in the subsequent accounting period after shareholders' approval has
been obtained. Retained earnings at March 31, 2002 includes amounts
representing final cash dividends of JPY54,088 million ($406 million), JPY15.0
($0.11) per share, which were approved at the shareholders' meeting held on June
26, 2002.
Retained earnings at March 31, 2002 includes JPY569,812 million ($4,276 million)
relating to equity in undistributed earnings of companies accounted for by the
equity method.
On June 26, 1997, the shareholders of the parent company approved a stock
repurchase policy in accordance with the Japanese Commercial Code. Under the
stock repurchase policy, the shareholders authorized Toyota's repurchase,
subject to the approval of the Board of Directors, of up to 370 million shares
of its common stock without the limitation of time. In accordance with this
plan, the parent company repurchased shares approximately 11 million, 65 million
and 77 million during the years ended March 31, 2000, 2001 and 2002,
respectively. The results of repurchases and retirement of common stock reduced
retained earnings for the years ended March 31, 2000, 2001 and 2002 by JPY45,457
million, JPY263,596 million and JPY129,218 million ($970 million), respectively.
As of March 31, 2001 and 2002, Toyota's unused authorized shares for the
repurchase of shares of common stock under the policy were 245.7 million shares
and 169.1 million shares, respectively. In October 2001, the Japanese
Commercial Code has been modified. The new Japanese Commercial Code allows the
company to purchase treasury stock at any reason at any time by the resolution
of the Board of Directors up to the limitation approved by the Shareholders'
meeting. On June 26, 2002, the shareholders of the parent company approved to
purchase treasury stock up to 170 million shares and up to JPY600,000 million
during the period up to the resolution of next Ordinary General Shareholders'
Meeting which would be held in June 2003.
In years prior to 1997, Toyota had made free distributions of shares to its
shareholders for which no accounting entry is required in Japan. Had the
distributions been accounted for in a manner used by companies in the United
States of America, JPY2,576,606 million ($19,337 million) would have been
transferred from retained earnings to the appropriate capital accounts.
Detailed components of accumulated other comprehensive income at March 31, 2001
and 2002 and the related changes, net of taxes for the years ended March 31,
2000, 2001 and 2002 consist of the following:
Yen in millions
Foreign Unrealized Minimum pension Net losses on Accumulated
currency liability derivative other
translation gains adjustment instruments comprehensive
adjustments (losses) income (loss)
on securities
Balance at March 31, 1999 JPY(286,352) JPY 259,448 JPY (7,251) JPY - JPY (34,155)
Other comprehensive income (181,313) 82,870 7,251 - (91,192)
(loss)
Balance at March 31, 2000 (467,665) 342,318 - (125,347)
Other comprehensive income 161,280 (304,995) (13,429) - (157,144)
(loss)
Balance at March 31, 2001 (306,385) 37,323 (13,429) - (282,491)
Other comprehensive income 133,897 (3,576) (114,344) (790) 15,187
(loss)
Balance at March 31, 2002 JPY(172,488) JPY 33,747 JPY(127,773) JPY(790) JPY(267,304)
U.S. dollars in millions
Foreign Unrealized Minimum Net losses on Accumulated
currency pension derivative other
translation gains (losses) liability instruments comprehensive
adjustments adjustment income (loss)
on securities
Balance at March 31, 2001 $(2,299) $280 $(101) $ - $(2,120)
Other comprehensive income 1,005 (27) (858) (6) 114
(loss)
Balance at March 31, 2002 $(1,294) $253 $(959) $(6) $(2,006)
Tax effects allocated to each component of other comprehensive income for the
years ended March 31, 2000, 2001 and 2002 are as follows:
Yen in millions
Pre-tax Tax Net-of-tax
amount expense amount
(benefit)
For the year ended March 31, 2000:
Foreign currency translation adjustments JPY(182,910) JPY1,597 JPY(181,313)
Unrealized gains on securities:
Unrealized holding gains arising during period 163,896 (67,657) 96,239
Less: reclassification adjustment for gains included in net income (22,768) 9,399 (13,369)
Minimum pension liability adjustment 12,346 (5,095) 7,251
Other comprehensive loss JPY(29,436) JPY(61,756) JPY(91,192)
For the year ended March 31, 2001:
Foreign currency translation adjustments JPY 163,100 JPY(1,820) JPY 161,280
Unrealized losses on securities:
Unrealized holding losses arising during period (322,266) 147,804 (174,462)
Less: reclassification adjustment for gains included in net income (86,805) 35,833 (50,972)
Less: reclassification adjustment for realized gains on securities (161,151) 81,590 (79,561)
contribution to employee retirement benefit trust
Minimum pension liability adjustment (22,869) 9,440 (13,429)
Other comprehensive income (loss) JPY(429,991) JPY272,847 JPY(157,144)
For the year ended March 31, 2002:
Foreign currency translation adjustments JPY 136,250 JPY (2,353) JPY 133,897
Unrealized losses on securities:
Unrealized holding losses arising during period (166,570) 68,686 (97,884)
Less: reclassification adjustment for losses included in net 160,606 (66,298) 94,308
income
Minimum pension liability adjustment (194,727) 80,383 (114,344)
Net losses on derivative instruments (1,074) 284 (790)
Other comprehensive income (loss) JPY(65,515) JPY80,702 JPY 15,187
U.S. dollars in millions
Pre-tax Tax Net-of-tax
amount expense amount
(benefit)
For the year ended March 31, 2002:
Foreign currency translation adjustments $ 1,022 $ (17) $1,005
Unrealized losses on securities:
Unrealized holding losses arising during period (1,250) 515 (735)
Less: reclassification adjustment for losses included in net 1,205 (497) 708
income
Minimum pension liability adjustment (1,461) 603 (858)
Net losses on derivative instruments (8) 2 (6)
Other comprehensive income (loss) $ (492) $606 $ 114
This information is provided by RNS
The company news service from the London Stock Exchange
Latest directors dealings
- 2 days ago Cambridge Cognition Holdings
- 2 days ago Shell
- 2 days ago Centrica
- 2 days ago Optima Health
- 2 days ago Centrica