Detailed Interim Results 2/5
Toyota Motor Corporation
24 December 2002
Notes to Consolidated Financial Statements
Significant Matters for Preparation of Semi-Annual Consolidated Financial
Statements
FY2002 semi-annual consolidated FY2003 semi-annual consolidated FY2002 consolidated
April 1, 2001 through April 1, 2002 through April 1, 2001 through
September 30, 2001 September 30, 2002 March 31, 2002
1. Scope of Consolidation 1. Scope of Consolidation 1. Scope of Consolidation
Number of consolidated subsidiaries: 551 Number of consolidated subsidiaries: 579 Number of consolidated subsidiaries:
564
(1) Number of consolidated subsidiaries (1) Number of consolidated subsidiaries (1) Number of consolidated
subsidiaries
in Japan: 353 in Japan: 354 in Japan: 355
Tokyo Toyota Motor Co., Ltd. Tokyo Toyota Motor Co., Ltd. Tokyo Toyota Motor Co., Ltd.
Tokyo Toyo-Pet Motor Sales Co., Ltd. Tokyo Toyo-Pet Motor Sales Co., Ltd. Tokyo Toyo-Pet Motor Sales Co., Ltd.
Osaka Toyopet Co., Ltd. Osaka Toyopet Co., Ltd. Osaka Toyopet Co., Ltd.
Toyota Tokyo Corolla Co., Ltd. Toyota Tokyo Corolla Co., Ltd. Toyota Tokyo Corolla Co., Ltd.
Hino Motors, Ltd. Hino Motors, Ltd. Hino Motors, Ltd.
Toyota Motor Kyushu, Inc. Toyota Motor Kyushu, Inc. Toyota Motor Kyushu, Inc.
Daihatsu Motor Co., Ltd. Daihatsu Motor Co., Ltd. Daihatsu Motor Co., Ltd.
Toyota Motor Hokkaido, Inc. Toyota Motor Hokkaido, Inc. Toyota Motor Hokkaido, Inc.
Toyota Auto Body Co., Ltd. Toyota Auto Body Co., Ltd. Toyota Auto Body Co., Ltd.
Kanto Auto Works, Ltd. Kanto Auto Works, Ltd. Kanto Auto Works, Ltd.
Araco Corporation Araco Corporation Araco Corporation
Toyota Financial Services Corporation Toyota Financial Services Corporation Toyota Financial Services
Corporation
Toyota Finance Corporation Toyota Finance Corporation Toyota Finance Corporation
Others Others Others
(2) Number of consolidated subsidiaries (2) Number of consolidated subsidiaries (2) Number of consolidated
subsidiaries outside Japan: 198 outside Japan: 225 outside Japan: 209
Toyota Motor North America, Inc. Toyota Motor North America, Inc. Toyota Motor North America, Inc.
Toyota Motor Sales, U.S.A., Inc. Toyota Motor Europe n.v./s.v. Toyota Motor Sales, U.S.A., Inc.
Toyota Motor Europe Marketing & Toyota Motor Sales, U.S.A., Inc. Toyota Motor Europe Marketing &
Engineering n.v./s.a. Engineering n.v./s.a.
Toyota Deutschland G.m.b.H. Toyota Motor Marketing Europe n.v./s.a. Toyota Deutschland G.m.b.H.
Toyota (GB) PLC Toyota Deutschland G.m.b.H. Toyota (GB) PLC
Toyota Motor Manufacturing, North Toyota (GB) PLC Toyota Motor Manufacturing, North
America, Inc. Toyota Motor Manufacturing, North America, Inc.
America, Inc.
Toyota Motor Manufacturing, Kentucky, Toyota Motor Manufacturing, Kentucky, Toyota Motor Manufacturing,
Inc. Inc. Kentucky, Inc.
Toyota Motor Manufacturing, Indiana, Inc. Toyota Motor Manufacturing, Indiana, Inc. Toyota Motor Manufacturing, Indiana,
Inc.
Toyota Motor Manufacturing Canada Inc. Toyota Motor Manufacturing Canada Inc. Toyota Motor Manufacturing Canada
Inc.
Toyota Motor Europe Manufacturing n.v./ Toyota Motor Engineering & Manufacturing Toyota Motor Europe Manufacturing
s.a. Europe n.v./s.a. n.v./ s.a.
Toyota Motor Manufacturing (UK) Ltd. Toyota Motor Manufacturing (UK) Ltd. Toyota Motor Manufacturing (UK)
Ltd.
Toyota Motor Thailand Co., Limited Kuozui Motors Ltd. Kuozui Motors Ltd.
Toyota Motor Corporation Australia Ltd. Toyota Motor Thailand Co., Limited Toyota Motor Thailand Co., Limited
Toyota Motor Credit Corporation Toyota Motor Corporation Australia Ltd. Toyota Motor Corporation Australia
Ltd.
Toyota Credit Canada Inc. Toyota Motor Credit Corporation Toyota Motor Credit Corporation
Toyota Kreditbank G.m.b.H. Toyota Credit Canada Inc. Toyota Credit Canada Inc.
Toyota Motor Finance (Netherlands) B.V. Toyota Kreditbank G.m.b.H. Toyota Kreditbank G.m.b.H.
Toyota Financial Services (UK) PLC Toyota Motor Finance (Netherlands) B.V. Toyota Motor Finance (Netherlands)
B.V.
Toyota Finance Australia Limited Toyota Financial Services (UK) PLC Toyota Financial Services (UK) PLC
Others Toyota Finance Australia Limited Toyota Finance Australia Limited
Others Others
During this semi-annual period, 125 During this semi-annual period, 27 During this fiscal year, 146
companies, including Hino Motors, companies, including Toyota Motor companies, including Hino Motors,
Ltd., became subsidiaries of Toyota Europe n.v./s.v., became Ltd., became subsidiaries of Toyota
Motor Corporation ('TMC') and were subsidiaries of Toyota Motor Motor Corporation ('TMC') and were
added to the scope of consolidation. Corporation ('TMC') and were added added to the scope of consolidation.
Subsidiaries excluded from the scope to the scope of consolidation. Subsidiaries excluded from the scope
of consolidation included (i) 10 Subsidiaries excluded from the scope of consolidation included (i) 11
companies, including Toyota L&F Tokyo of consolidation included (i) 4 companies, including Toyota L&F
Co., that ceased to be subsidiaries companies, including Toyota Kyoei Tokyo Co., that ceased to be
of TMC due to a decrease in Service Co, Ltd., that ceased to be subsidiaries of TMC due to a
shareholding ratio resulting from the subsidiaries of TMC due to a decrease in shareholding ratio
sale of their respective voting decrease in shareholding ratio resulting from the sale of their
shares or other reasons; (ii) 6 resulting from the sale of their respective voting shares or other
companies, including Toyota respective voting shares or other reasons; (ii) 8 companies, including
Industrial Equipment Europe s.a.r.l., reasons; (ii) 3 companies, including Toyota Industrial Equipment Europe
in which TMC no longer holds any Toyota Media Station Inc., that were s.a.r.l., in which TMC no longer
voting stake as a result of the sale liquidated; and (iii) 5 companies, holds any voting stake as a result
of all of their shares; and (iii) 3 including Toyota Modellista Fukuoka of the sale of all of their shares;
companies, including Toyota Soft Corporation, that were merged into (iii) 5 companies, including
Engineering Inc., that were merged other consolidated subsidiaries. Istarsystems, Inc., that were
into other consolidated subsidiaries. liquidated; and (iv) 3 companies,
including Toyota Soft Engineering
Inc., that were merged into other
consolidated subsidiaries.
2. Application of the Equity Method 2. Application of the Equity Method 2. Application of the Equity Method
(1) Number of affiliates (1) Number of affiliates (1) Number of affiliates
accounted for under the equity accounted for under the equity accounted for under the equity
method: 49 method: 50 method : 50
(a) Number of affiliates accounted (a) Number of affiliates accounted (a) Number of affiliates accounted
for under the equity method in Japan: for under the equity method in for under the equity method in
35 Japan: 34 Japan: 35
Toyota Industries Corporation Toyota Industries Corporation Toyota Industries Corporation
Aichi Steel Corporation Aichi Steel Corporation Aichi Steel Corporation
Toyoda Machine Works, Ltd. Toyoda Machine Works, Ltd. Toyoda Machine Works, Ltd.
Toyota Tsusho Corporation Toyota Tsusho Corporation Toyota Tsusho Corporation
Aisin Seiki Co., Ltd. Aisin Seiki Co., Ltd. Aisin Seiki Co., Ltd.
Denso Corporation Denso Corporation Denso Corporation
Toyoda Gosei Co., Ltd. Toyoda Gosei Co., Ltd. Toyoda Gosei Co., Ltd.
Aisin AW Co., Ltd. Aisin AW Co., Ltd. Aisin AW Co., Ltd.
Aioi Insurance Co., Ltd. Aioi Insurance Co., Ltd. Aioi Insurance Co., Ltd.
Others Others Others
(b) Number of affiliates (b) Number of affiliates (b) Number of affiliates
accounted for under the equity method accounted for under the equity accounted for under the equity
outside Japan: 14 method outside Japan: 16 method outside Japan: 15
New United Motor Manufacturing, Inc. New United Motor Manufacturing, Inc. New United Motor Manufacturing, Inc.
Others Others Others
Effective from this semi-annual Effective from this semi-annual Effective from this fiscal year , 2
period, Taiho Kogyo Co., Ltd. was period, 2 affiliates, including affiliates, including Taiho Kogyo
accounted for under the equity method Tianjin Toyota Motor Co.,Ltd., were Co., Ltd. were accounted for under
in consideration of its materiality. accounted for under the equity the equity method in consideration
In addition, 3 companies previously method in consideration of their of their materiality. In addition, 3
accounted as equity method materiality. In addition, Toyota companies previously accounted as
affiliates, including Hino Motors, Espana S.L., which was previously equity method affiliates, including
Ltd., became subsidiaries of TMC and accounted as an equity method Hino Motors, Ltd., have become
were consequently included in the affiliate, became a subsidiary of subsidiaries of TMC and have
scope of consolidation. TMC and was consequently included in consequently been included in the
the scope of consolidation. Jeco scope of consolidation.
Co.,Ltd. was excluded from the scope
of application of the equity method
as TMC no longer exerts significant
influence on it as a result of the
sale of its shares.
(2) Number of unconsolidated (2) Number of unconsolidated (2) Number of unconsolidated
subsidiaries and affiliates not subsidiaries and affiliates not subsidiaries and affiliates not
accounted for under the equity method accounted for under the equity accounted for under the equity
method method
Affiliates: 190, including Aisin Affiliates: 184, including Affiliates: 189, including
Takaoka Co., Ltd Aisin Takaoka Co., Ltd. Aisin Takaoka Co., Ltd.
(3) Affiliates not accounted for
under the equity method are all (3) Affiliates not accounted for (3) Affiliates not accounted for
insignificant in terms of their under the equity method are all under the equity method are all
semi-annual net income (loss), legal insignificant in terms of their insignificant in terms of their net
reserve and retained earnings, and semi-annual net income (loss), legal income (loss), legal reserve and
impact on the Semi-Annual reserve and retained earnings, and retained earnings, and impact on the
Consolidated Financial Statements was impact on the Semi-Annual Consolidated Financial Statements
immaterial. Consolidated Financial Statements was immaterial.
was immaterial.
3. Semi-Annual Period Ends of 3. Semi-Annual Period Ends of 3. Fiscal Year Ends of
Consolidated Subsidiaries Consolidated Subsidiaries Consolidated Subsidiaries
(1) The semi-annual period ends of (1) The semi-annual period ends of (1) The fiscal year ends of the
the following consolidated the following consolidated following consolidated subsidiaries
subsidiaries are different from the subsidiaries are different from the are different from the one of TMC
one of TMC (September 30). one of TMC (September 30). (March 31). During this fiscal year,
A total of 130 subsidiaries follow a A total of 40 subsidiaries follow a 94 subsidiaries, including Toyota
calendar year whose semi-annual calendar year whose semi-annual Motor Europe Manufacturing
period end on June 30, including: period end on June 30, including: n.v./s.a., changed their fiscal year
Toyota Motor Europe Marketing & Toyota Motor Italia S.p.A. ends from December 31 to March 31.
Engineering n.v./s.a. OOO Toyota Motor As a result, the fiscal years of
Toyota Deutschland G.m.b.H. Toyota Motor Thailand Co., Limited these subsidiaries lasted 15 months.
Toyota (GB) PLC Tianjin Toyota Forging Co., Ltd. The impact, however, on the
Toyota Motor Europe Manufacturing Tianjin Fengjin Auto Parts Co., Ltd. consolidated financial statements,
n.v./s.a. was immaterial.
Toyota Motor Manufacturing (UK) Ltd. Toyota Motor (China) Investment Co., A total of 34 subsidiaries follow a
Toyota Motor Thailand Co., Limited Ltd. calendar year whose fiscal year ends
Toyota Motor Corporation Australia Toyota Motor Technical Center on December 31, including:
Ltd. (China) Co., Ltd. Toyota Motor Italia S.p.A.
Toyota Credit Canada Inc. Toyota Motorsport GmbH OOO Toyota Motor
Toyota Kreditbank G.m.b.H. Toyota Motor Thailand Co., Limited
Toyota Financial Services (UK) PLC In addition, the following Siam Toyota Manufacturing Co., Ltd.
Toyota Finance Australia Limited subsidiaries follow fiscal calendars Tianjin Toyota Forging Co., Ltd.
whose semi-annual periods end on the Tianjin Fengjin Auto Parts Co., Ltd.
date specified in parentheses:
Itagaki Kousan Co., Ltd. (March 31) Toyota Motor (China) Investment Co.,
Fahren Miyagi Co., Ltd. (October 31) Ltd.
Itagaki Syouji Co., Ltd. (December Toyota Motor Technical Center
31) (China) Co., Ltd.
Toyota Motorsport GmbH
(2) Of the above subsidiaries, 130 (2) Of the above subsidiaries, (2) Of the above subsidiaries, 13
subsidiaries whose semi-annual Itagaki Kousan Co., Ltd (whose subsidiaries whose fiscal years end
periods end on June 30, including semi-annual period ends on March on December 31, including Toyota
Toyota Motor Europe Marketing & 31), Fahren Miyagi Co., Ltd (whose Motor Thailand Co., Limited, were
Engineering n.v./s.a., were semi-annual period ends on Octorber consolidated based on the amounts
consolidated based on their 31), Itagaki Syouji Co., Ltd (whose for a year ended March 31 prepared
respective semi-annual financial semi-annual period ends on December for the purpose of consolidation. In
statements as the difference in 31) and 12 other subsidiaries whose addition, 21 subsidiaries, including
semi-annual period ending dates did semi-annual periods end on June 30, OOO Toyota Motor, were consolidated
not exceed 3 months. including Toyota Motor Thailand Co., based on their respective financial
Limited, were consolidated based on statements.
the amounts for six month period
ended September 30 prepared for the
purpose of consolidation. In
addition, 28 subsidiaries, including
OOO Toyota Motor, were consolidated
based on their respective
semi-annual financial statements.
4. Significant Accounting Policies 4. Significant Accounting Policies 4. Significant Accounting Policies
(1) Valuation of Assets (1) Valuation of Assets (1) Valuation of Assets
(a) Securities (a) Securities (a) Securities
Securities with fair value Securities with fair value Securities with fair value
Principally stated at fair value Principally stated at fair value Principally stated at fair value
based on market prices at end of based on market prices at end of based on market prices at end of
semi-annual period. (Unrealized semi-annual period. (Unrealized fiscal year. (Unrealized holding
holding gains and losses are holding gains and losses are gains and losses are accounted for
accounted for as a component of accounted for as a component of as a component of shareholders'
shareholders' equity; cost of sales shareholders' equity; cost of sales equity; cost of sales is determined
is determined using the moving is determined using the moving using the moving average method.)
average method.) average method.)
Securities not practicable to fair Securities not practicable to fair Securities not practicable to fair
value value value
Principally stated at cost using the Principally stated at cost using the Principally stated at cost using the
moving average method. moving average method. moving average method.
(b) Derivatives (b) Derivatives (b) Derivatives
Principally stated at fair value. Principally stated at fair value. Principally stated at fair value.
(c) Money trusts for trading purposes (c) Money trusts for trading (c) Money trusts for trading
Stated at fair value. purposes purposes
Stated at fair value. Stated at fair value.
(d)Inventories (d)Inventories (d)Inventories
TMC and domestic consolidated TMC and domestic consolidated TMC and domestic consolidated
subsidiaries subsidiaries subsidiaries
Principally stated at cost, as Principally stated at cost, as Principally stated at cost, as
determined using the periodic average determined using the periodic determined using the periodic
method or the specific identification average method or the specific average method or the specific
method. identification method. identification method.
Overseas consolidated subsidiaries Overseas consolidated subsidiaries Overseas consolidated subsidiaries
Principally stated at the lower Principally stated at the lower Principally stated at the lower
of cost or market value based on the of cost or market value based on the of cost or market value based on the
specific identification method, specific identification method, specific identification method,
first-in-first-out method or first-in-first-out method or first-in-first-out method or
last-in-first-out method. last-in-first-out method. last-in-first-out method.
(2) Depreciation and amortization (2) Depreciation and amortization (2) Depreciation and amortization
(a) Depreciation of property, (a) Depreciation of property, (a) Depreciation of property,
plant and equipment plant and equipment plant and equipment
TMC and domestic consolidated TMC and domestic consolidated TMC and domestic consolidated
subsidiaries: subsidiaries: subsidiaries:
Principally computed using the
declining balance method. The Principally computed using the Principally computed using the
determination of useful life and declining balance method. The declining balance method. The
residual value is based on the same determination of useful life and determination of useful life and
standards as in the Corporation Tax residual value is based on the same residual value is based on the same
Laws of Japan. standards as in the Corporation Tax standards as in the Corporation Tax
Laws of Japan. Laws of Japan.
However, buildings and structures,
machinery and equipment, vehicles and However, buildings and structures, However, buildings and structures,
delivery equipment and other machinery and equipment, vehicles machinery and equipment, vehicles
property, plant and equipment of TMC and delivery equipment and other and delivery equipment and other
is depreciated to their actual property, plant and equipment of TMC property, plant and equipment of TMC
residual value after they have been is depreciated to their actual is depreciated to their actual
depreciated to their depreciable residual value after they have been residual value after they have been
limit under the Corporation Tax Laws depreciated to their depreciable depreciated to their depreciable
of Japan. limit under the Corporation Tax Laws limit under the Corporation Tax Laws
of Japan. of Japan.
Overseas consolidated subsidiaries:
Principally computed using the Overseas consolidated subsidiaries: Overseas consolidated subsidiaries:
straight-line method. Principally computed using the Principally computed using the
straight-line method. straight-line method.
(b) Amortization of intangible (b) Amortization of intangible (b) Amortization of intangible
fixed assets fixed assets fixed assets
Software for internal use is Software for internal use is Software for internal use is
amortized over its estimated useful amortized over its estimated useful amortized over its estimated useful
life of 5 years using the life of 5 years using the life of 5 years using the
straight-line method. straight-line method. straight-line method.
(3) Accounting of deferred assets (3) Accounting of deferred assets (3) Accounting of deferred assets
Organization expense, business Organization expense, business Organization expense, business
commencement expense, share issuance commencement expense, share issuance commencement expense, share issuance
expense, bond issuance expense and expense, bond issuance expense and expense, bond issuance expense and
bond discount are expensed when paid. bond discount are expensed when bond discount are expensed when
paid. paid.
(4) Significant Allowances (4) Significant Allowances (4) Significant Allowances
(a) Allowance for doubtful (a) Allowance for doubtful (a) Allowance for doubtful
accounts accounts accounts
TMC: TMC: TMC:
To prepare for credit losses on To prepare for credit losses on To prepare for credit losses on
receivables, allowance for doubtful receivables, allowance for doubtful receivables, allowance for doubtful
accounts is provided in an amount accounts is provided in an amount accounts is provided in an amount
equivalent to the maximum limit equivalent to the maximum limit equivalent to the maximum limit
deductible for tax purposes which is deductible for tax purposes which is deductible for tax purposes which is
determined by the Corporation Tax determined by the Corporation Tax determined by the Corporation Tax
Laws or an amount determined by Laws or an amount determined by Laws or an amount determined by
considering the collectibility of considering the collectibility of considering the collectibility of
receivable. receivable receivable
Consolidated subsidiaries: Consolidated subsidiaries:
Principally computed based on the Consolidated subsidiaries: Principally computed based on the
maximum limit deductible for tax Principally computed based on the maximum limit deductible for tax
purposes which is determined by the maximum limit deductible for tax purposes which is determined by the
Corporation Tax Laws or the purposes which is determined by the Corporation Tax Laws or the
historical loss experience. Corporation Tax Laws or the historical loss experience.
historical loss experience.
(b) Allowance for product (b) Allowance for product
warranties (b) Allowance for product warranties
To prepare for expenses related to warranties To prepare for expenses related to
after-sale services, allowance for To prepare for expenses related to after-sale services, allowance for
product warranty is provided based on after-sale services, allowance for product warranty is provided based
the terms of the warranties and product warranty is provided based on the terms of the warranties and
historical experience. on the terms of the warranties and historical experience.
historical experience.
(c) Allowance for employee (c) Allowance for employee
bonuses bonuses
To provide for employee bonuses, some (c) Allowance for employee To provide for employee bonuses,
of the consolidated subsidiaries bonuses some of the consolidated
accrue part of the estimated bonus To provide for employee bonuses, subsidiaries accrue part of the
payments for the following fiscal some of the consolidated estimated bonus payments for the
period which are attributed to the subsidiaries accrue part of the following fiscal year which are
current semi-annual period. estimated bonus payments for the attributed to the current fiscal
following fiscal period which are year.
(d) Allowance for retirement attributed to the current
benefits semi-annual period. (d) Allowance for retirement
Principally to provide for the benefits
retirement benefits for employees, (d) Allowance for retirement Principally to provide for the
including those already retired, benefits retirement benefits for employees,
allowance for retirement benefits Principally to provide for the including those already retired,
obligations deemed to have been retirement benefits for employees, allowance for retirement benefits
incurred during the current including those already retired, obligations deemed to have been
semi-annual period is stated based on allowance for retirement benefits incurred during the current fiscal
estimated retirement benefit obligations deemed to have been year is stated based on estimated
obligations and estimated pension incurred during the current retirement benefit obligations and
assets at the end of the fiscal year. semi-annual period is stated based estimated pension assets at the end
on estimated retirement benefit of the fiscal year.
obligations and estimated pension
assets at the end of the fiscal
year.
(5) Accounting for Lease (5) Accounting for Lease (5) Accounting for Lease
Transactions Transactions Transactions
Finance lease transactions not Finance lease transactions not Finance lease transactions not
involving a transfer of title to the involving a transfer of title to the involving a transfer of title to the
lessee are accounted in the same way lessee are accounted in the same way lessee are accounted in the same way
as usual operating lease as usual operating lease as usual operating lease
transactions. transactions. transactions.
(6) Accounting for Hedges (6) Accounting for Hedges (6) Accounting for Hedges
Gains or losses arising from changes Gains or losses arising from changes Gains or losses arising from changes
in fair value of the derivatives in fair value of the derivatives in fair value of the derivatives
designed as 'hedging instruments' are designed as 'hedging instruments' designed as 'hedging instruments'
deferred as assets or liabilities, or are deferred as assets or are deferred as assets or
those derivatives are used for liabilities, or those derivatives liabilities, or those derivatives
valuating hedged assets or are used for valuating hedged assets are used for valuating hedged assets
liabilities. or liabilities. or liabilities.
TMC and its consolidated subsidiaries TMC and its consolidated TMC and its consolidated
enter into the following hedge subsidiaries enter into the subsidiaries enter into the
transactions: (i) foreign exchange following hedge transactions: (i) following hedge transactions: (i)
forward contracts and currency option foreign exchange forward contracts foreign exchange forward contracts
contracts, primarily to hedge against and currency option contracts, and currency option contracts,
exchange rate fluctuation risks primarily to hedge against exchange primarily to hedge against exchange
related to accounts receivable rate fluctuation risks related to rate fluctuation risks related to
denominated in foreign currencies, accounts receivable denominated in accounts receivable denominated in
primarily the U.S. dollar; (ii) foreign currencies, primarily the foreign currencies, primarily the
interest rate options, primarily to U.S. dollar; (ii) interest rate U.S. dollar; (ii) interest rate
hedge against interest rate options, primarily to hedge against options, primarily to hedge against
fluctuation risks related to interest rate fluctuation risks interest rate fluctuation risks
floating-rate liabilities; and (iii) related to floating-rate related to floating-rate
interest-currency swaps and interest liabilities; and (iii) liabilities; and (iii)
rate swaps, primarily to hedge interest-currency swaps and interest interest-currency swaps and interest
against currency and interest rate rate swaps, primarily to hedge rate swaps, primarily to hedge
fluctuation risks related to the against currency and interest rate against currency and interest rate
principal and coupon of bond fluctuation risks related to the fluctuation risks related to the
portfolios denominated in foreign principal and coupon of bond principal and coupon of bond
currencies and bonds issued in portfolios denominated in foreign portfolios denominated in foreign
foreign currencies. currencies and bonds issued in currencies and bonds issued in
The evaluation of hedge effectiveness foreign currencies. foreign currencies.
is conducted by comparing the The evaluation of hedge The evaluation of hedge
accumulated fluctuation in fair value effectiveness is conducted by effectiveness is conducted by
or cash flow of the hedged item and comparing the accumulated comparing the accumulated
the hedge instrument between the fluctuation in fair value or cash fluctuation in fair value or cash
start date of the hedge and the day flow of the hedged item and the flow of the hedged item and the
of evaluation. hedge instrument between the start hedge instrument between the start
TMC believes that its exposure to date of the hedge and the day of date of the hedge and the day of
credit risk is immaterial as the evaluation. evaluation.
counterparties of the transactions TMC believes that its exposure to TMC believes that its exposure to
entered into by TMC and its credit risk is immaterial as the credit risk is immaterial as the
subsidiaries are diversified among counterparties of the transactions counterparties of the transactions
financial institutions with strong entered into by TMC and its entered into by TMC and its
credit profiles. The execution and subsidiaries are diversified among subsidiaries are diversified among
management of hedge transactions is financial institutions with strong financial institutions with strong
conducted by the financial department credit profiles. The execution and credit profiles. The execution and
of each company upon obtaining management of hedge transactions is management of hedge transactions is
approval from directors overseeing conducted by the financial conducted by the financial
the accounting and financial department of each company upon department of each company upon
operations. The status of these obtaining approval from directors obtaining approval from directors
transactions is periodically reported overseeing the accounting and overseeing the accounting and
to the overseeing directors. financial operations. The status of financial operations. The status of
these transactions is periodically these transactions is periodically
reported to the overseeing reported to the overseeing
directors. directors.
(7) Accounting of consumption (7) Accounting of consumption (7) Accounting of consumption
taxes taxes taxes
Consumption tax is computed using the Consumption tax is computed using Consumption tax is computed using
net-of-tax method. the net-of-tax method. the net-of-tax method.
5. Definition of funds on 5. Definition of funds on 5. Definition of funds on
semi-annual consolidated statements semi-annual consolidated statements consolidated statements of cash
of cash flows of cash flows flows
Funds (cash and cash equivalents) on Funds (cash and cash equivalents) on Funds (cash and cash equivalents) on
the semi-annual consolidated the semi-annual consolidated the consolidated statements of cash
statements of cash flows include cash statements of cash flows include flows include cash on hand,
on hand, immediately accessible bank cash on hand, immediately accessible immediately accessible bank
deposits, and short-term investments bank deposits, and short-term deposits, and short-term investments
with an original maturity of 3 months investments with an original with an original maturity of 3
or less that are readily convertible maturity of 3 months or less that months or less that are readily
into cash and that bear low are readily convertible into cash convertible into cash and that bear
fluctuation risks. and that bear low fluctuation risks. low fluctuation risks.
Change in Presentation
FY2002 semi-annual consolidated FY2003 semi-annual consolidated
April 1, 2001 through April 1, 2002 through
September 30, 2001 September 30, 2002
'Commercial paper' is presented as a separate line item in the semi-annual
consolidated balance sheet because it exceeded 5% of the total of liabilities,
minority interests and shareholders' equity as of the end of the semi-annual
-------- period.
The line item 'Other' under 'Current liabilities' in the semi-annual
consolidated balance sheet of the previous semi-annual period included
commercial paper in the amount of JPY616,901 million.
Additional Information
FY2002 semi-annual consolidated FY2003 semi-annual consolidated FY2002 consolidated
April 1, 2001 through April 1, 2002 through April 1, 2001 through
September 30, 2001 September 30, 2002 March 31, 2002
1. In conjunction with enforcement of the Defined
Benefit Enterprise Pension Plan Law, TMC and some of
its domestic consolidated subsidiaries and domestic
affiliates accounted for under the equity method
received approval from the Minister of Health, Labor
and Welfare, for exemption from payment of future
benefit regarding the substituted portion of the
employee pension fund (TMC received approval on April
1, 2002).
TMC and these subsidiaries and affiliates applied
the transitional accounting treatment specified in
paragraph 47-2 of the 'Practical Guidelines of --------
-------- Accounting for Retirement Benefits (Interim Report)'
(Accounting Committee Report No. 13 issued by the
Japanese Institute of Certified Public Accountants),
and recognized an extinguishment of retirement benefit
obligation with respect to such substituted portion as
of the date of the approval.
As a result, JPY30,301 million was recognized as
'Equity in earnings of affiliates' under 'Non-operating
income', and JPY186,050 million was recognized as
'Gains on return of substituted portion of employee
pension fund' under 'Extraordinary gains' in this
semi-annual period.
The value of the returned portion as of the end of
this semi-annual period was JPY354,083 million.
2. From this consolidated semi-annual period, TMC
and its subsidiaries has adopted the new standard
'Accounting Standard for Treasury Stock and Reduction
of Legal Reserve' (Financial Accounting Standards No.
1). The adoption of the new standard had no material
impact on the results of this semi-annual period.
In connection with the amendment of the
Regulations Regarding Interim Financial Statements,
etc., shareholders' equity in the semi-annual
consolidated balance sheet and the semi-annual
consolidated statements of retained earnings of this
semi-annual period have been prepared in accordance
with the amended regulations.
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