Notice of Convocation FY2004

Toyota Motor Corporation 07 June 2004 June 7, 2004 To All Shareholders: President Fujio Cho TOYOTA MOTOR CORPORATION 1, Toyota-cho, Toyota City, Aichi Prefecture Notice of Convocation of FY2004 Ordinary General Shareholders' Meeting (Unless otherwise stated, all financial information has been prepared in accordance with generally accepted accounting principles in Japan) English translation from the original Japanese-language document Dear Shareholder, Please refer to the following for information about the upcoming FY2004 Ordinary General Shareholders' Meeting. We hope that you will be able to attend this meeting. If you are unable to attend the meeting, it would be appreciated if you could find the time from your busy schedule to vote 'yes' or 'no' on the enclosed ballot form, sign the form, and return it to us after reviewing the enclosed documents no later than Tuesday, June 22, 2004. Thank you very much for your cooperation. 1. Date and time: 10:00 a.m., Wednesday, June 23, 2004 2. Venue: Toyota Head Office, 1, Toyota-cho, Toyota City, Aichi Prefecture 3. Meeting Agenda Report: Reports on business review, unconsolidated balance sheet and statement of income for the FY2004 term (April 1, 2003 through March 31, 2004) Resolutions: Proposed Resolution 1: Approval of Proposed Appropriation of Retained Earnings for the FY2004 Term Proposed Resolution 2: Amendment of the Articles of Incorporation A summary of this resolution appears among the 'Reference Documents Pertaining to Exercise of Voting Rights,' on page 29 to follow. Proposed Resolution 3: Election of 27 Directors Proposed Resolution 4: Issue of Stock Acquisition Rights without Consideration to Directors, Managing Officers and Employees, etc., of Toyota Motor Corporation and its Affiliates A summary of this resolution appears among the 'Reference Documents Pertaining to Exercise of Voting Rights,' on pages 36 - 38 to follow. Proposed Resolution 5: Repurchase of Shares A summary of this resolution appears among the 'Reference Documents Pertaining to Exercise of Voting Rights,' on page 39 to follow. Proposed Resolution 6: Award of Bonus Payments to Mr. Iwao Isomura (deceased), Former Representative Director and Vice Chairman, and to Retiring Directors Proposed Resolution 7: Proposed Appropriation of Retained Earnings A summary of this resolution appears among the 'Reference Documents Pertaining to Exercise of Voting Rights,' on page 40 to follow. Proposed Resolution 8: Amendment of the Articles of Incorporation (Part 1) A summary of this resolution appears among the 'Reference Documents Pertaining to Exercise of Voting Rights,' on page 41 to follow. Proposed Resolution 9: Amendment of the Articles of Incorporation (Part 2) A summary of this resolution appears among the 'Reference Documents Pertaining to Exercise of Voting Rights,' on page 42 to follow. Note: If you attend the meeting in person, please submit the enclosed voting ballot to the reception desk as your admission pass. (Attachment) Business Review (Fiscal Year under review: April 1, 2003 through March 31, 2004) 1. Outlook on Operation (1) Progress and Achievement in Operation Taking a broad look at the economic environment for the fiscal year ended March 2004, the domestic economy began to show signs of recovery, including increase in consumer spendings as well as capital expenditures and exports. Overseas, despite the impact from the outbreak of the war in Iraq and SARS, economies, particularly in the United States of America, are undergoing a moderate recovery. Given this kind of economic environment, Toyota Motor Corporation ('TMC') has been making an effort to develop attractive products in order to satisfy its customers worldwide. During FY2004, Toyota introduced the new SIENTA, a seven-passenger compact minivan and conducted complete redesigns of the Raum, a next-generation vehicle that incorporates universal design, and the Crown, Toyota's traditional brand that leads the Japanese luxury class segment. In addition, we completely updated the Hybrid Synergy Drive concept that promotes both ecology and power aspects in the Prius, which Toyota launched in 1997 as the world's first mass-produced hybrid passenger car. Domestic vehicle sales increased by 41 thousand units (or 2.4%) to 1,765 thousand units in FY2004 compared with FY2003 as a result of the active introduction of new products that met customer needs and strong sales efforts of domestic dealers. The domestic market share, excluding mini-vehicles, rose by 0.6% to 42.9% in FY2004 compared with FY2003. Meanwhile, vehicle exports increased by 25 thousand units (or 1.3%) to 1,860 thousand units. With respect to TMC's overseas activities, in North America, new plant construction is proceeding well in Mexico and Texas, and Toyota Motor Manufacturing Canada Inc. has started production of Lexus brand vehicles. In China, joint local production of the VIOS began with China FAW Group Corporation, followed by the Corolla, etc. In addition, FAW Toyota Motor Sales Co., Ltd. was established to strengthen sales and service structures and to enhance brand image. Toyota is also expanding its business in China through the establishment of Guangqi Toyota Engine Ltd., a production base created as a joint venture with Guangzhou Automobile Group Co., Ltd. Through such active business operations, TMC's overseas production output during FY2004 reached a record high of 2,739 thousand units, increasing by 524 thousand units (or 23.6%), compared with FY2003. As a result of this global development of business, the total number of Toyota vehicles sold worldwide reached a record high of 6,270 thousand, with an increase of 632 thousand units , or 11.2%, compared to the previous fiscal year, making this the first year that Toyota has exceeded the 6 million mark as the ' year of steady growth.' Sales in North America were 2,132 thousand units, exceeding 2 million vehicles for the first time, and sales in Europe reached 903 thousand units which achieved our original plan ahead of schedule, thanks to strong sales of the locally-produced Avensis, Corolla and Yaris. In order to respond comprehensively to the diversified automobile needs of customer, TMC is actively developing businesses in such field as information and telecommunications and financial services. In the information and telecommunications area, we have increased the number of models compatible with the G-BOOK vehicle information network service and have enhanced services. With regard to financial services, we have expanded business globally as a stable source of revenues for the automobile business by expanding the number of countries with bases of operations to 27 and preparing for the establishment of a sales finance company in China. In the housing business, Toyota Housing Corporation, our housing sales company, began operations and is developing the structures to plan and provide products that meet customers' needs in a timely manner. Alongside such business efforts, TMC considers environmental protection as one of the continuing top priorities in management issues. We are developing new systems with hybrid technology in particular positioned as a 'core technology of the 21st century.' In the future, we will increase the range of vehicles equipped with Toyota Hybrid System (THS II), adopted by the new Prius, and will work to promote the widespread use of hybrid vehicles. In addition, we have developed the Toyota FCHV, a fuel cell vehicle that can be referred to as the ultimate eco-car, and are conducting limited marketing in Japan and the U.S. to work towards practical application of such vehicles. Based on our strong conviction that 'without environmental initiatives, the automobile has no future,' we will engage in development of a broad range of environmental technologies. Due to TMC's efforts to improve overall management efficiency and reduce costs, in addition to strong sales initiatives, net sales have increased to 8,963.7 billion yen, by 224.4 billion yen (or 2.6%), and ordinary income increased to 915.7 billion yen, by 23.1 billion yen (or 2.6%) compared to FY 2003. In addition, net income in FY2004 decreased to 581.4 billion yen, by 52.6 billion yen (or 8.3%) compared to FY2003. Unit: million yen FY2004 FY2003 Increase (Decrease) (April 2003 through (April 2002 through March 2004) March 2003) Domestic 3,103,190 2,966,471 136,719 <4.6> Vehicles Export 3,925,151 3,856,434 68,717 <1.8> Total 7,028,341 6,822,905 205,436 <3.0> Parts & Export 828,088 863,148 (35,060) <-4.1> components for overseas production Domestic 340,440 318,995 21,445 <6.7> Parts Export 198,294 198,937 (643) <-0.3> Total 538,734 517,933 20,801 <4.0> Domestic 149,511 153,015 (3,504) <-2.3> Others Export 419,035 382,308 36,727 <9.6> Total 568,547 535,323 33,224 <6.2> Domestic 3,593,141 3,438,482 154,659 <4.5> Grand total Export 5,370,570 5,300,828 69,742 <1.3> Total 8,963,712 8,739,310 224,402 <2.6> While company-wide efforts were made to improve capital investment efficiency, investments were made to respond to social demands, such as those related to the environmental protection, in developing new technologies and new products, and renewing production equipment. As a result, capital investments for FY2004 amounted to 266.4 billion yen. (2) Trends in Unconsolidated Income and Assets Unit: million yen otherwise noted FY2001 FY2002 FY2003 FY2004 (April 2000 through (April 2001 through (April 2002 through (April 2003 through March 2001) March 2002) March 2003) March 2004) Net sales 7,903,580 8,284,968 8,739,310 8,963,712 Ordinary income 621,760 768,920 892,676 915,728 Net income 333,516 470,239 634,059 581,470 Net income per share 90.50 130.40 178.12 171.08 (yen) Net assets 5,666,247 5,662,158 5,703,321 5,984,675 Total assets 8,293,450 8,467,930 8,592,823 8,817,164 Notes: 1. Effective from FY2003, TMC adopted 'Accounting Standards for Earnings Per Share' and calculates 'Net income per share.' As a result of the adoption, 'Net income per share' decreased by 5.57 yen per share compared to the previous calculation. Up to FY2002, 'Net income per share' was calculated based on the number of shares issued at the fiscal year-end (for FY2002, the total number of shares excluding treasury stock). 2. As for FY2003, TMC accounted for 162,457 million yen as 'Gains on return of the substitutional portion of employee pension fund' in 'Extraordinary gains.' As a result, 'Net income' increased by 95,395 million yen. 3. As for FY2004, TMC accounted for 23,231 million yen as 'Losses on returned assets of substitutional portion of employee pension fund' in 'Extraordinary losses.' As a result, 'Net income' decreased by 13,957 million yen. (3) Issues for TMC Our outlook on the global economy is generally bullish, but there is still some uncertainly concerning the prospects for the economy in the U.S. The Japanese economy is also showing signs of recovery, but deflationary pressures have not entirely been lifted and there are concerns that the recent appreciation of the yen may put a damper on the recovery. In the automobile industry, we are facing intense development competition to secure leadership in next-generation technology areas such as responses to energy issues and environmental regulation. We have truly entered a period of intense global competition that will put our very existence at risk. The entire group will work together to address the following issues in order to come out on top of this fierce competition and for our continuous growth in the future. An immediate issue is the steady implementation of priority domestic and overseas projects. In Japan, we are promoting product deployment suitable for the identity of each sales channel and reinforcing domestic sales networks including dealers through the creation of the new Netz dealers and the introduction of the Lexus brand. Overseas, we are putting our full efforts into the efficient launch of the IMV Project, for manufacturing facilities mainly in the ASEAN region to mutually complement one another in the manufacture of key parts, for the production of pickup trucks and multi-purpose vehicles, and the joint-venture project with Peugeot Citroen Automobiles SA in the Czech Republic. Various auto manufacturers are rapidly expanding business in China, which is exhibiting amazing growth, and TMC is building strong relationships with its local business partners and is developing the firm foundations for all aspects of business from development to procurement, production and sales. Medium- to long-term issues include, first, reinforcing our development of environmental technologies and developing and supplying products that anticipate customer needs. Next, in the pursuit of compatibility between growth and efficiency, is the maintenance of the world's highest levels of quality, and reinforcement of cost competitiveness as well as the efficient utilization of group resources to create globally balanced business systems. Last, based on the idea that the source of corporate competitiveness is in human development, we are promoting the development of human resources that can pass on Toyota's technologies and skills and that have shared values concerning manufacturing. By addressing these issues, we will seek increases in shareholder value and work to become a company that can successfully compete on a global scale and continue to grow in the 21st century as well as a global company that contributes to the development of a prosperous society and is trusted worldwide. In addition, we reaffirm our commitment to corporate ethics starting with strict compliance with the law and will fulfill our corporate social responsibility in areas including safety, quality, and the environment in the pursuit, with sincerity and humility, of growth that is in harmony with society. We thank our shareholders for their continuing support. 2. Company Outline (as of March 31, 2004) (1) Main Business Business Main products Auto-mobile Passenger car Century, Celsior, Crown, Aristo, Brevis, Progres, Windom, Mark II, Verossa, Camry, Premio, Allion, Altezza, Avensis, Prius, Corolla, Platz, Soarer, Celica, MR-S, Opa, Allex, Raum, FunCargo, bB, WiLL CYPHA, ist, Vitz, Duet, Caldina, Succeed Wagon, WiLL VS, Probox Wagon, Estima, Estima Hybrid, Gaia, Ipsum, WISH, SIENTA, Alphard, Alphard Hybrid, Hiace Wagon, Noah, Voxy, Land Cruiser Wagon, Hilux Surf, Harrier, Kluger, RAV4, VOLTZ, Cami, Volkswagen vehicles, etc. Truck and bus Succeed Van, Probox Van, Hiace, Regiusace Van, Dyna, Toyoace, Townace, Liteace, Land Cruiser, Hilux, Coaster, etc. Parts & Various units and parts for overseas production components for overseas production Parts Various maintenance parts for both domestic and overseas use Housing Espacio GX, Espacio GR, Espacio EF Urban Wind, Espacio EF, Espacio EF Tradage, Since AIII, Since BIII, Since AII, Since Raison, Since Oak 21, Since Oak 21-W, Since Smart Stage-f, Since Smart Stage-L, Since Smart Stage, Vie a, Vie a mia casa, Vie a Tradage (2) Main Sites and Plants Head Office: 1, Toyota-cho, Toyota City, Aichi Prefecture Tokyo Head Office: 1-4-18, Koraku, Bunkyo-ku Tokyo Name Location Name Location Nagoya Office Aichi Prefecture Tokyo Design Research & Tokyo Laboratory Osaka Office Osaka Prefecture Nisshin Training Center Aichi Prefecture Honsha Plant Aichi Prefecture Nagoya Wharf Center Aichi Prefecture Motomachi Plant Aichi Prefecture Tobishima Center Aichi Prefecture Kamigo Plant Aichi Prefecture Tokai Center Aichi Prefecture Takaoka Plant Aichi Prefecture Haruhi Parts Center Aichi Prefecture Miyoshi Plant Aichi Prefecture Inazawa Parts Center Aichi Prefecture Tsutsumi Plant Aichi Prefecture Oguchi Parts Center Aichi Prefecture Myochi Plant Aichi Prefecture Kamigo Logistics Center Aichi Prefecture Shimoyama Plant Aichi Prefecture Tobishima Logistics Center Aichi Prefecture Kinuura Plant Aichi Prefecture Kasugai Housing Works Aichi Prefecture Tahara Plant Aichi Prefecture Tochigi Housing Works Tochigi Prefecture Teiho Plant Aichi Prefecture Yamanashi Housing Works Yamanashi Prefecture Hirose Plant Aichi Prefecture Taiwan Office Taipei, Taiwan Higashi-Fuji Technical Center Shizuoka Prefecture China Office Beijing, China Shibetsu Proving Ground Hokkaido (3) Status of shares 1. Total number of shares authorized 9,740,185,400 shares 2. Total number of shares issued 3,609,997,492 shares 3. Number of shareholders 339,549 4. Major Shareholders (top 10) (unit: thousands of shares otherwise noted) Name Number of Toyota Voting rights Toyota's share Toyota's voting shares held ratio (%) holdings rights ratio (%) The Master Trust Bank of Japan, 282,670 8.60 - - Ltd. Japan Trustee Services Bank, Ltd. 273,159 8.31 - - Toyota Industries Corporation 196,725 5.99 76,600 24.38 Nippon Life Insurance Co. 134,438 4.09 - - Trust & Custody Services Bank, Ltd. 105,248 3.20 - - Shinsei Bank, Ltd. 100,506 3.06 - - UFJ Bank Ltd. 80,000 2.43 - - Mitsui Sumitomo Insurance Co., Ltd. 75,166 2.29 15,410 1.07 Sumitomo Mitsui Banking Corp. 73,699 2.24 - - The Tokio Marine and Fire Insurance 70,464 2.14 - - Co., Ltd. Notes: 1. In addition to the above, TMC owns 279,527 thousand treasury stocks. 2. The percentage of voting rights is calculated based on the total number of shares with voting rights at the end of the fiscal year. 3. TMC owns 137 thousand shares, for 2.71% of voting rights, in UFJ Holdings, Inc., a holding company of UFJ Bank Ltd. 4. TMC owns 53 thousand shares, for 0.94% of voting rights, in Sumitomo Mitsui Financial Group, Inc., a holding company of Sumitomo Mitsui Banking Corp. 5. TMC owns 6 thousand shares, for 0.35% of voting rights, in Millea Holdings, Inc., a holding company of The Tokio Marine and Fire Insurance Co., Ltd. (4) Repurchase, disposal and holding of shares 1. Shares repurchased Common shares 121,147,328 shares Total value of shares repurchased 399,093,744,280 yen 2. Disposed Shares Not applicable. 3. Shares for which retirement procedures were implemented Not applicable. 4. Shares held at the end of the fiscal year Common shares 279,527,175 shares (5) Status of Employees Number of employees (changes from end of prior FY) Average age Average length of service 74,789 (+ 3,155) 36.9 15.4 years (6) Main Subsidiaries and Others 1. Status of main subsidiaries Company Name Capital/ Voting Main Business subscription rights ratio million yen % Tokyo Toyota Motor Co., Ltd. 7,537 100.00* Sales of automobiles Tokyo Toyo-pet Motor Sales Co., Ltd. 7,822 100.00* Sales of automobiles Osaka Toyopet Co., Ltd. 4,025 100.00 Sales of automobiles Toyota Tokyo Corolla Co., Ltd. 7,179 100.00* Sales of automobiles Hino Motors, Ltd. 72,717 50.46* Manufacture and sales of automobiles Toyota Motor Kyushu, Inc. 45,000 100.00 Manufacture and sales of automobile bodies Daihatsu Motor Co., Ltd. 28,404 51.58* Manufacture and sales of automobiles Toyota Motor Hokkaido, Inc. 27,500 100.00 Manufacture and sales of automobile parts Toyota Auto Body Co., Ltd. 8,871 50.21* Manufacture and sales of automobile bodies Kanto Auto Works, Ltd. 6,850 50.57* Manufacture and sales of automobile bodies Araco Corporation 3,188 81.35* Manufacture and sales of automobile bodies & parts Toyota Financial Services Corporation 75,025 100.00 Management of domestic and overseas financial companies Toyota Finance Corporation 16,500 100.00* Finance of automobile sales, card business Currencies in thousands Toyota Motor North America, Inc. USD 933,600 100.00 Public relations, and surveys of overall North America Toyota Motor Sales, U.S.A., Inc. USD 365,000 100.00* Sales of cars Toyota Motor Manufacturing North America, USD 1,958,949 100.00* Management of manufacturing Inc. subsidiaries in North America Toyota Motor Manufacturing, Kentucky, USD 1,180,000 100.00* Manufacture and sales of Inc. automobiles Toyota Motor Manufacturing, Indiana, Inc. USD 620,000 100.00* Manufacture and sales of automobiles Toyota Motor Manufacturing Canada Inc. CAD 680,000 100.00 Manufacture and sales of automobiles Toyota Motor Credit Corporation USD 915,000 100.00* Finance of automobile sales Toyota Credit Canada Inc. CAD 60,000 100.00* Finance of automobile sales Toyota Motor Europe S.A./N.V. EUR 2,406,611 100.00 Public relations of overall Europe Toyota Motor Marketing Europe S.A./N.V EUR 864,067 100.00* Sales of automobiles Toyota Deutschland G.m.b.H EUR 5,726 100.00* Sales of automobiles Toyota (GB) PLC GBP 2,600 100.00* Sales of automobiles Toyota France S.A. EUR 2,123 100.00* Sales of automobiles Toyota Motor Italia S.p.A. EUR 38,958 100.00* Sales of automobiles Toyota Motor Engineering Manufacturing EUR 1,943,948 100.00* Management of manufacturing Europe S.A./N.V subsidiaries in Europe Toyota Motor Manufacturing (UK) Ltd. GBP 830,000 100.00* Manufacture and sales of automobiles Toyota Kreditbank G.m.b.H. EUR 30,000 100.00* Finance of automobile sales Toyota Motor Finance (Netherlands) B.V. EUR 908 100.00* Finance of overseas TMC related companies Toyota Financial Services (UK) PLC GBP 94,000 100.00* Finance of automobile sales Toyota Motor Asia Pacific Pte Ltd. SGD 6,000 100.00 Sales of cars Toyota Motor Corporation Australia Ltd. AUD 481,100 100.00 Manufacture and sales of automobiles Toyota Motor Thailand Co., Ltd. THB 7,520,000 86.43 Manufacture and sales of automobiles Toyota Finance Australia Ltd., etc. AUD 120,000 100.00* Finance of automobile sales Toyota Leasing (Thailand), Co., Ltd. THB 3,000,000 75.87* Finance of automobile sales Toyota South Africa Motors (Pty) Ltd. ZAR 50 100.00* Manufacture and sales of automobiles Notes: 1. * indicates the ratio of voting rights including voting rights held by subsidiaries. 2. The ratio of voting rights is calculated based on the total number of voting rights at the end of the fiscal year. 2. Status of main affiliates Company Name Capital TMC voting rights Main business ratio subscription million yen % Toyota Industries Corporation 80,462 *24.38 Manufacture and sales of spinning and weaving machines, industrial vehicles, and automobiles Aichi Steel Corp. 25,016 *24.77 Manufacture and sales of specialty steel and forged steel products Toyoda Machine Works, Ltd. 24,805 *24.62 Manufacture and sales of work machine tools and automobile parts Toyota Tsusho Corporation 26,748 *23.94 Trading and export/import of various products Aisin Seiki Co., Ltd. 45,049 *23.33 Manufacture and sales of automobiles parts and household appliances Denso Corporation 187,456 *24.78 Manufacture and sales of automobile parts Toyoda Gosei Co., Ltd. 28,027 *43.09 Manufacture and sales of automobile parts Notes: 1. * indicates the ratio of voting rights including voting rights held by subsidiaries. 2. The ratio of voting rights is calculated based on the total number of voting rights at the end of the fiscal year. 3. Results of consolidation l TMC has 554 consolidated subsidiaries and there are 53 companies accounted for under the equity method. l Consolidated revenues for FY2004 were 17,294.7 billion yen and consolidated net income was 1,162.0 billion yen. (Note: Our consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States of America.) 4. Status of business alliances l October 1966 Reached business with Hino Motors, Ltd. l November 1967 Reached business with Daihatsu Motor Co., Ltd. 5. Status of important joint ventures l February 1984 Established New United Motor Manufacturing, Inc. for joint production of passenger cars in the U.S. with GM. l January 2002 Concluded a joint venture contract with Peugeot Citroen Automobiles SA for joint production of compact cars. l August 2002 Basic agreement signed with China FAW Group Corporation regarding joint automobile operations in China. 6. Status of important sales alliances l July 1991 Reached a basic agreement with Volkswagen AG and its Japanese subsidiary for selling all VW vehicles in the Japanese market. (7) Board of Directors and Corporate Auditors Name Position Main areas of responsibility ( ) indicates position Hiroshi Okuda *Chairman of the Board Kosuke Ikebuchi *Vice Chairman Fujio Cho *President Akihiko Saito *Executive Vice President Product Management Area / Research & Development Area / Quality Area / Motor Sports Div. Ryuji Araki *Executive Vice President Corporate Planning Area / Research Area / Legal Area / General Administration & Human Resources Area / Finance & Accounting Area / Information Systems Area / Finance & Accounting Group (Chief Finance & Accounting Officer) Yoshio Ishizaka *Executive Vice President Overseas Operations Groups Kosuke Shiramizu *Executive Vice President Production & Transportation Area / Production Engineering Area / TQM Promotion Area / Environmental Affairs Area / Operations Management Consulting Div. Katsuaki Watanabe *Executive Vice President Business Development Area / IT & ITS Area / Housing Area / Government & Public Affairs Area / Purchasing Area / Tokyo Head Office / e-TOYOTA Area Kazushi Iwatsuki *Executive Vice President Domestic Sales Operations Area Katsuhiro Nakagawa *Executive Vice President International Government & Industrial Affairs Area / Overseas Planning Operation Group Yasuhito Yamauchi Senior Managing Director Production Engineering Group (Chief Production Engineering Officer) / Manufacturing Group (Chief Manufacturing Officer) / TQM Promotion Div. Zenji Yasuda Senior Managing Director Overseas Planning Operations Group (Chief Overseas Planning Operations Officer) / Overseas Customer Service Operations Group (Chief Overseas Customer Service Operations Officer) Senior Managing Director Government & Public Affairs Group (Chief Government & Public Affairs Officer) Takashi Kamio Hiroyuki Watanabe Senior Managing Director IT&ITS Group (Chief IT&ITS Officer) / Quality Control Group (Chief Quality Control Officer) / Environmental Affairs Div. Akio Matsubara Senior Managing Director General Administration & Human Resources Group (Chief General Administration & Human Resources Officer) / Information Systems Group (Chief Information Systems Officer) / Corporate Planning Div. / Research Div. / Product Management Div. / Legal Div. / BR Compliance Support Dept. / Tokuichi Uranishi Senior Managing Director Europe & Africa Operations Group (Chief Europe & Africa Operations Officer) Senior Managing Director Design Group (Chief Design Officer) / Product Development Group (Chief Product Development Officer) / R&D Management Div. / Kazuo Okamoto Intellectual Property Div. / Prototype Production Div. / EQ Planning & Development Div. Kyoji Sasazu Senior Managing Director Domestic Sales Operations Group (Chief Domestic Sales Operations Officer) Mitsuo Kinoshita Senior Managing Director Production Control & Logistics Group (Chief Production Control & Logistics Officer) / Safety & Health Promotion Div. / Plant Engineering Div. Yoshimi Inaba Senior Managing Director The Americas Operations Group (Chief The Americas Operations Officer) / Oceania, Middle East & Southwest Asia Operations Group (Chief Oceania, Middle East & Southwest Asia Operations Officer) Teruyuki Minoura Senior Managing Director Business Development Group (Chief Business Development Officer) / Purchasing Group (Chief Purchasing Officer) / Housing Group (Chief Housing Officer) Takeshi Uchiyamada Senior Managing Director Vehicle Engineering Group (Chief Vehicle Engineering Officer) / Technical Administration Div. / Toyota Technical Center, U.S.A. Inc. / Engineering Administration Div. / Tokyo Engineering Div / Higashifuji Technical Administration Div. / Future Project Div. Senior Managing Director Power Train Development Group (Chief Power Train Development Officer) / Fuel Cell System Development Group (Chief Fuel Cell Masatami Takimoto System Development Officer) Akio Toyoda Senior Managing Director Asia & China Operations Group (Chief Asia & China Operations Officer) / e-TOYOTA Div. (General Manager) / Taiwan Office / China Office Shoichiro Toyoda Honorary Chairman and Director Shuhei Toyoda Director President of Toyota Motor Engineering Manufacturing Europe S.A./ N.V. / President of Toyota Motor Europe S.A./N.V. Hideaki Miyahara Full-time Corporate Auditor Yoshiro Hayashi Full-time Corporate Auditor Chiaki Yamaguchi Full-time Corporate Auditor Yasutaka Okamura Corporate Auditor Lawyer Hiromu Okabe Corporate Auditor Vice Chairman and C.E.O. of Denso Corporation Yoichi Kaya Corporate Auditor Assistant Director of Research Institute of Innovative Technology for the Earth Tadashi Ishikawa Corporate Auditor President of Toyota Industries Corporation Notes: 1. * indicates that the person can represent the company. 2. Mr. Yasutaka Okamura, Mr. Hiromu Okabe, Mr Yoichi Kaya and Mr. Tadashi Ishikawa satisfy the qualifications of outside Corporate Auditors as provided in Article 18 Paragraph 1 of 'Special Law of the Commercial Code Concerning the Audit, etc. of Stock Corporations(Kabushiki-Kaisha).' 3. Vice Chairman Iwao Isomura passed away on January 20, 2004. 4. The following 31 Directors have resigned following the FY2003 Ordinary General Shareholders' Meeting on June 26, 2003. Name Position Name Position Noritaka Shimizu Executive Vice President Hiroshi Takada Director Yoshio Uesaka Executive Vice President Teiji Tachibana Director Tsutomu Tomita Managing Director Shinichi Sasaki Director Yoshito Kato Managing Director Kazutoshi Minami Director Shoji Kondo Managing Director Shin Kanada Director Toshio Mizushima Managing Director Hironobu Ono Director Yasuhiko Fukatsu Managing Director Akira Okabe Director Toshiaki Taguchi Director Yoshio Shirai Director Shokichi Yasukawa Director Yoichiro Ichimaru Director Tetsuo Hattori Director Shoji Ikawa Director Hiroaki Yoshida Director Masuji Arai Director Kiyoshi Nakanishi Director Koichi Ina Director Yukitoshi Funo Director Yoshikazu Amano Director Takeshi Suzuki Director Shinichi Kawashima Director Atsushi Niimi Director Kunio Komada Director Hajime Wakayama Director 5. Full-time Corporate Auditor Terukazu Inoue and Corporate Auditor Yoshitoshi Toyoda have retired upon the expiration of their term of office following FY2003 Ordinary General Shareholders' Meeting on June 26, 2003. 6. Full-time Corporate Auditor Yoshiaki Muramatsu has resigned following FY2003 Ordinary General Shareholders' Meeting on June 26, 2003. (8) Compensation paid to directors and corporate auditors Category No. of Amount paid Remarks persons (million yen) Directors 26 1,013 Directors' compensation: 130 million yen or less per month Auditors' compensation: 13 million yen or less per month Corporate 7 99 Auditors Director's compensation does not include compensation paid for service as an employee. (Decided by resolution at an extraordinary general Total 33 1,112 shareholders' meeting held on May 13, 1982.) Notes: 1. The numbers of persons are as of the end of the fiscal year. 2. The number of directors was 58 until the conclusion of the FY2003 Ordinary General Shareholders' Meeting held on June 26, 2003. 3. In addition to the above, the amounts indicated below were also paid. (1) Bonuses for service as an employee: 153 million yen (2) Executive bonuses (decided by resolution at FY2003 Ordinary General Shareholders' Meeting held on June 26, 2003) Directors 660 million yen Corporate Auditors 51 million yen (3) Special service bonuses paid to retiring executives (decided by resolution at FY2003 Ordinary General Shareholders' Meeting held on June 26, 2003) Directors 1,938 million yen Corporate Auditors 264 million yen (9) Status of Stock Acquisition Rights 1. Stock Acquisition Rights Issued and outstanding (1) Number of Stock Acquisition Rights issued: 38,340 (The number of shares to be issued or transferred upon exercise of one Stock Acquisition Right is 100) (2) Type and Number of Shares to be Issued or Transferred upon Exercise of Stock Acquisition Rights 3,834,000 shares of common stock of TMC (3) Issue Price of Stock Acquisition Rights No consideration shall be paid at the time of issuance of the Stock Acquisition Rights 2. Stock Acquisition Rights Issued Under Especially Preferential Conditions to Persons Other Than Shareholders during the Current Fiscal Year (1) Number of Stock Acquisition Rights issued: 19,580 (The number of shares to be issued or transferred upon exercise of one Stock Acquisition Right is 100) (2) Type and Number of Shares to be Issued or Transferred upon Exercise of Stock Acquisition Rights 1,958,000 shares of common stock of TMC (3) Issue Price of Stock Acquisition Rights No consideration shall be paid at the time of issuance of the Stock Acquisition Rights (4) Amount to be Paid per share upon the Exercise of Stock Acquisition Rights 3,116.00 yen (5) Conditions of Exercise of Stock Acquisition Rights (i) The exercise period of the Stock Acquisition Rights is from August 1, 2005 to July 31, 2009. (ii) No Stock Acquisition right may be partially exercised. (iii) The grantees of the Stock Acquisition Rights must, at the time of exercise of such rights, be a Director, Managing Officer, an employee or in other similar position of the company at the time such right is granted, unless he/she voluntarily retires, retires due to attaining retirement age or change in employment, during the exercise period. (iv) Stock Acquisition Rights may not be inherited. (v) Other exercise conditions shall be provided for in the contract of Grant of Stock Acquisition Rights between TMC and the grantees of the Stock Acquisition Rights. (6) Events and Conditions of Cancellation of Stock Acquisition Rights (i) Stock Acquisition Rights may be cancelled without consideration upon approval by a General Shareholders' Meeting of an agendum on a merger agreement in which TMC is a company to be dissolved, or an agendum on a share exchange agreement or a share transfer in or by which TMC will become a wholly-owned subsidiary of another company. (ii) TMC may cancel the Stock Acquisition Rights without consideration if a grantee of the Stock Acquisition Rights becomes no longer qualified to exercise such rights pursuant to the provision provided for in (iii) or (v) of (5) above. (7) Details of Preferential Conditions TMC will issue Stock Acquisition Rights without consideration to directors, managing officers and employees, etc., of TMC and its affiliates. (8) Names of Persons Granted and Number of Stock Acquisition Rights Granted Directors of TMC Name Number of Stock Name Number of Stock Acquisition Rights Acquisition Rights Hiroshi Okuda 200 Hiroyuki Watanabe 150 Iwao Isomura 200 Akio Matsubara 150 Kosuke Ikebuchi 200 Tokuichi Uranishi 150 Fujio Cho 200 Kazuo Okamoto 150 Akihiko Saito 200 Kyoji Sasazu 150 Ryuji Araki 200 Mitsuo Kinoshita 150 Yoshio Ishizaka 200 Yoshimi Inaba 150 Kosuke Shiramizu 200 Teruyuki Minoura 150 Katsuaki Watanabe 200 Takeshi Uchiyamada 150 Kazushi Iwatsuki 200 Masatami Takimoto 150 Katsuhiro Nakagawa 200 Akio Toyoda 150 Yasuhito Yamauchi 150 Shoichiro Toyoda 200 Zenji Yasuda 150 Shuhei Toyoda 150 Takashi Kamio 150 Managing Officers of TMC Name Number of Stock Name Number of Stock Acquisition Rights Acquisition Rights Shokichi Yasukawa 100 Shinichi Kawashima 100 Tetsuo Hattori 100 Kunio Komada 100 Hiroaki Yoshida 100 Akira Sasaki 100 Kiyoshi Nakanishi 100 Takeshi Yoshida 100 Yukitoshi Funo 100 Hiroshi Kawakami 100 Takeshi Suzuki 100 Hitoshi Nishiyama 100 Atsushi Niimi 100 Iwao Nihashi 100 Hajime Wakayama 100 Shinzo Kobuki 100 Hiroshi Takada 100 Tadashi Arashima 100 Teiji Tachibana 100 Masamoto Maekawa 100 Shinichi Sasaki 100 Mamoru Furuhashi 100 Shin Kanada 100 Satoshi Ozawa 100 Hironobu Ono 100 Seiichi Sudo 100 Akira Okabe 100 Yasuhiko Ichihashi 100 Yoshio Shirai 100 Tadashi Yamashina 100 Yoichiro Ichimaru 100 Takashi Hata 100 Shoji Ikawa 100 James E. Press 100 Masuji Arai 100 Gary L. Convis 100 Koichi Ina 100 Alan J. Jones 100 Yoshikazu Amano 100 Executive Technical Advisor of TMC Name Number of Stock Acquisition Rights Hiroshi Ginya 100 Norihiko Nakamura 100 Nanpachi Hayashi 100 Employees of TMC's Affiliates Company Name Number of stock acquisition rights Toyota Canada Inc. Harold B. Hayward 20 Toyota Canada Inc. Karl H. Schlicht 20 Toyota Canada Inc. Anthony J. Wearing 20 Employees of TMC, and Employees and Directors of TMC's Subsidiaries (top 10) Company Name Number of Stock Acquisition Rights Toyota Motor North America, Inc. James R. Olson 50 Toyota Motor North America, Inc. Douglas M. West 50 Toyota Motor Sales, U.S.A., Inc. Donald V. Esmond 50 Toyota Motor Sales, U.S.A., Inc. J. Davis Illingworth 50 Toyota Motor Manufacturing Canada Inc. Real C. Tanguay 50 Toyota Motor Credit Corporation George E. Borst 50 Toyota Motor Marketing Europe S.A./N.V. Panayiotis J. Athanasopoulos 50 Toyota Motor Marketing Europe S.A./N.V. Thierry P. H. B. Dombreval 50 Toyota Motor Manufacturing (UK) Ltd. Bryan S. Jackson 50 Toyota Motor Corporation Keiji Aoki 20 (9) Breakdown of Stock Acquisition Rights Granted to Employees of TMC, and Directors, Corporate Auditors, and Employees of TMC's Subsidiaries Number of Stock Type and Number of Shares to be Total Number of Acquisition Rights Issued or Transferred upon Exercise Persons Granted Rights of Stock Acquisition Rights (Common stock) Employees of TMC 9,120 912,000 shares 456 Directors of TMC's 750 75,000 shares 30 subsidiaries Auditors of TMC's 0 0 shares 0 subsidiaries Employees of TMC's 800 80,000 shares 34 subsidiaries UNCONSOLIDATED BALANCE SHEET (Million yen; amounts less than one million yen are omitted.) FY2004 FY2004 (As of (As of March 31, 2004) March 31, 2004) Assets Liabilities Current assets 3,358,189 Current liabilities 1,970,407 Cash and deposits 87,052 Trade notes payable 932 Trade accounts receivable 1,037,717 Trade accounts payable 837,241 Marketable securities 995,893 Other payables 378,831 Finished goods 113,465 Income taxes payable 127,807 Raw materials 13,615 Accrued expenses 409,709 Work in process 70,877 Deposits received 197,750 Supplies 7,639 Allowance for EXPO 2005 Aichi 2,548 Short-term loans 354,616 Others 15,585 Deferred income taxes 244,726 Long-term liabilities 862,081 Others 437,584 Bonds 500,600 Less: allowance for doubtful (5,000) Allowance for retirement benefits 292,493 accounts Fixed assets 5,458,975 Others 68,988 Property, plant and equipment 1,260,728 Total liabilities 2,832,489 Buildings 360,374 Shareholders' equity Structures 40,770 Common stock 397,049 Machinery and equipment 323,619 Capital surplus 416,970 Vehicle and delivery equipment 10,973 Capital reserve 416,970 Tools, furniture and fixtures 84,473 Retained earnings 5,731,342 Land 394,616 Legal reserve 99,454 Construction in progress 45,899 Reserve for losses on overseas 254 investments Investments and other assets 4,198,247 Reserve for special depreciation 1,498 Investments in securities 2,160,160 Reserve for reduction of 5,382 acquisition cost of fixed assets Investments in subsidiaries 1,367,445 General reserve 4,640,926 Long-term loans 388,914 Unappropriated retained earnings at 983,826 end of year Deferred income taxes 135,922 Net unrealized gains on other 305,725 securities Others 166,404 Less: treasury stock (866,413) Less: allowance for doubtful (20,600) Total shareholders' equity 5,984,675 accounts Total assets 8,817,164 Total liabilities and shareholders' 8,817,164 equity Notes: 1. Short-term receivable from subsidiaries: 1,043,610 million yen 2. Long-term receivable from subsidiaries: 298,283 million yen 3. Short-term payable to subsidiaries: 462,317 million yen 4. Accumulated depreciation for property, plant and equipment: 3,447,778 million yen 5. Assets pledged as collateral: 10,086 million yen as investments in securities 6. Guarantees: 135,854 million yen 7. Export bill discounted: 3,742 million yen 8. Balance of bonds with warrants issued Details of bonds with warrants (balance, exercise price, and shares to be issued) in accordance with the provisions of the former Commercial Code Article 341-8 Name Balance Exercise price Shares to be issued First series of unsecured bonds 489 million yen 4,203.00 yen Common stock with warrants, due 2005 9. The increase of net assets due to stating fair value of certain assets in accordance with the Commercial Code Enforcement Regulation (Article 124 Item 3). 10. The retirement benefit trust is established to appropriate the retirement benefits of the corporate pension plan, no portion of the trust offsetting the severance indemnity plan. 11. Allowance for Expo 2005 Aichi is an allowance specified in the provisions of the Enforcement Regulations of the Commercial Code Article 43. UNCONSOLIDATED STATEMENT OF INCOME (Million yen; amounts less than one million yen are omitted.) FY2004 (April 2003 through March 2004) Net sales 8,963,712 Cost of sales 7,186,182 Selling general and administrative expenses 943,738 Operating income 833,791 Non-operating income 180,108 Interest income 16,492 Dividend income 57,867 Other non-operating income 105,748 Non-operating expenses 98,170 Interest expenses 10,847 Other non-operating expenses 87,323 Ordinary income 915,728 Extraordinary losses 23,231 Losses on returned assets of substitutional 23,231 portion of employee pension fund Income before income taxes 892,496 Income taxes - current 300,300 Income taxes - deferred 10,726 Net income 581,470 Unappropriated retained earnings brought 470,341 forward Interim cash dividends 67,984 Unappropriated retained earnings at end of year 983,826 Notes: 1. Sales to subsidiaries: 4,972,449 million yen 2. Purchases from subsidiaries: 1,490,891 million yen 3. Non-operating transaction with subsidiaries: 98,611 million yen 4. Net income per share: 171.08 yen 5. In conjunction with enforcement of the Contribution Benefit Enterprise Pension Plan Law, TMC received approval on April 1, 2002 from the Minister of Health, Labor and Welfare for exemption from the payments of the benefits related to future employee services relating to the Substitutional Portion of the Employee Pension Fund, and applied the transitional provision stipulated in paragraph 47-2 of the 'Practical Guidelines of Accounting for Retirement Benefits (Interim Report)'and recognized an extinguishment of retirement benefit obligation and plan assets (equivalent to government- specified portion) relating to the Substitutional Portion as of the date of the approval. On September 1, 2003, TMC also received approval from the Minister of Health, Labor and Welfare for the past employee services, and completed the transfer of the plan assets of the Substitutional Portion to the government during the year ended March 31, 2004. TMC reported 23,231 million yen of loss, as an extraordinary loss, incurred for the portion of the plan assets equivalent to assets to be transferred in managing those assets during the period between the date of approval for an exemption from the payment of the benefits related to future employee services and the date of the transfer. SIGNIFICANT ACCOUNTING POLICIES 1. Valuation of securities: Stocks of subsidiaries are stated at cost determined using the moving average method. Other securities: Other securities with fair value are stated at fair value based on market prices, etc., at end of year. Other securities not practicable to fair value are stated at cost determined using the moving average method. 2. Valuation of inventories: Finished goods, work in process, and supplies are principally stated at cost, as determined by the periodic average method. Raw materials are stated at the lower of cost or market value, as determined by last-in-first-out method. 3. Depreciation of property, plant and equipment is computed by the declining balance method. 4. Significant reserves: Allowance for doubtful accounts: To prepare for losses from bad debt, allowance for doubtful accounts is provided in an amount which is determined by considering the historical loss experience and the collectibility of receivables. Allowance for retirement benefits: Principally to provide for the retirement benefits for employees, including those already retired, allowance for retirement benefits is stated based on estimated retirement benefit obligations and estimated pension assets at the end of the year and an amount incurred is changed to income. 5. Consumption taxes are computed based on the net-of-tax method. Proposed Appropriation of Unconsolidated Retained Earnings Amount (yen) Unappropriated retained earnings at end of year 983,826,785,777 Reversal of reserve for losses on overseas investments 2,272,754 Total 983,829,058,531 The proposed appropriation is as follows: Cash dividends 83,261,757,925 per share 25 Bonus to Directors 598,000,000 Bonus to Corporate Auditors 50,000,000 Reserve for special depreciation 959,090,844 Reserve for reduction of acquisition cost of fixed assets 1,092,866,877 General reserve 400,000,000,000 Unappropriated retained earnings to be carried forward 497,867,342,885 Note: An interim dividend of 20 yen per share amounting to 67,984,904,220 yen was paid on November 26, 2003, to shareholders (including the beneficial shareholders notified by Japanese Securities Depository Center) or registered pledgee of record as of September 30, 2003. Independent Auditors' Report (Certified Copy) (English Translation) April 30, 2004 To the Board of Directors Toyota Motor Corporation ChuoAoyama PricewaterhouseCoopers Kazunori Tajima , CPA Representative and Engagement Partner Masaki Horie , CPA Representative and Engagement Partner Koji Hatsukawa , CPA Representative and Engagement Partner Fusahiro Yamamoto , CPA Representative and Engagement Partner We have audited, pursuant to Article 2, Paragraph 1 of the 'Special Law of the Commercial Code Concerning the Audit, etc. of Stock Corporations (Kabusiki-Kaisya)' of Japan, the financial statements, which consist of the unconsolidated balance sheet, unconsolidated statement of income, business review(limited to the accounting figures included therein) and the proposed appropriation of retained earnings, and supplementary schedules (limited to the accounting figures included therein) of Toyota Motor Corporation (hereinafter referred to as the 'Company') for the 100th fiscal year from April 1, 2003 to March 31, 2004. The portion of the business report and supplementary schedules subject to our audit are those derived from the accounting books and records of the Company. These financial statements and supplementary schedules are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements and supplementary schedules based on our audit. We conducted our audit in accordance with auditing standards generally accepted in Japan. Those standards require that we obtain reasonable assurance about whether the financial statements and supplementary schedules are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements and supplementary schedules. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. Our audit included auditing procedures applied to subsidiaries of the Company as were considered necessary. As a result of our audit, it is our opinion that: (1) The unconsolidated balance sheet and unconsolidated statement of income present fairly the financial position and results of operation of the Company in conformity with the applicable laws and regulations of Japan and the Articles of Incorporation. (2) The business review of the Company (limited to the accounting figures included therein) presents fairly the Company's affairs in conformity with the applicable laws and regulations of Japan and the Articles of Incorporation. (3) The proposed appropriation of retained earnings is presented in conformity with the applicable laws and regulations of Japan and the Articles of Incorporation. (4) There is nothing in respect of the supplementary schedules (limited to the accounting figures included therein) that is required to be mentioned by the provisions of the Commercial Code of Japan. We have no interest in or relationship with the Company which is required to be disclosed pursuant to the provisions of the Certified Public Accountant Law of Japan. Notice to Readers: The original financial statements, which consist of unconsolidated balance sheet, unconsolidated statement of income, business review and proposed appropriation of retained earnings, and supplementary schedules, are written in Japanese. Supplementary schedules have been omitted in the accompanying financial statements. Board of Corporate Auditors' Report (Certified Copy) Audit Report The Board of Corporate Auditors has prepared this Audit Report based on reports from each of the Corporate Auditors on the auditing methods and results pertaining to the conduct of duties by the Directors of Toyota Motor Corporation during FY2004 extending from April 1, 2003 through March 31, 2004, and report as follows. 1. Overview of Corporate Auditors' Auditing Method Based on auditing guidelines and the audit plan adopted by the Board, each of the Corporate Auditors obtained reports on operational matters from Directors and senior staff people who attended Directors' meetings and other important meetings. The Corporate Auditors also reviewed important documents, surveyed operations and assets at company head offices, production facilities, and business offices, and obtained reports from subsidiaries as needed. In addition, the Corporate Auditors received reports and explanations from the independent auditor to review financial statements and its supplemental information. With respect to 'kyogyo torihiki' (competitive transactions) by Directors, profit-contradictory transactions between Directors and the company, the granting by the company of benefits without consideration, non-regular transactions with subsidiaries or shareholders, acquisition and disposal of treasury stock, and other transactions, the situation of these transactions was reviewed in detail when necessary as well as being subjected to the above mentioned auditing method. 2. Result of Audit (1) The auditing methods employed by the ChuoAoyama PricewaterhouseCoopers, which was retained to conduct the audit, and the results of the audit are correct. (2) The Business Review accurately represents the company's operating situation as required by law. (3) The proposed appropriation of unconsolidated retained earnings is appropriate in light of the company's asset situation and other circumstances. (4) The supporting materials accurately represent the content listed, and contain nothing contrary to provisions of law. (5) The Directors engaged in no improprieties or violations of law or convention in their conduct of their duties including those duties in subsidiaries. Our audit found no 'kyogyo torihiki' by Directors, no profit-contradictory transactions between Directors and the company, no granting by the company of benefits without consideration, no non-regular transactions with subsidiaries or shareholders, no acquisition or disposal of treasury stock that violate Directors' duties. May 7, 2004 Toyota Motor Corporation Board of Corporate Auditors Full-time Corporate Auditor Hideaki Miyahara Full-time Corporate Auditor Yoshiro Hayashi Full-time Corporate Auditor Chiaki Yamaguchi Corporate Auditor Yasutaka Okamura Corporate Auditor Hiromu Okabe Corporate Auditor Yoichi Kaya Corporate Auditor Tadashi Ishikawa Note: Mr. Yasutaka Okamura, Mr. Hiromu Okabe, Mr. Yoichi Kaya and Mr. Tadashi Ishikawa satisfy the qualifications of outside corporate auditors as provided in Paragraph 1, Article 18 of 'Special Law of the Commercial Code Concerning the Audit, etc., of Stock Corporations.' Reference Documents Pertaining to Exercise of Voting Rights 1. Number of the voting rights of all the shareholders: 32,857,740 2. Proposed resolution and reference information < Resolutions 1 to 6 Proposed by the Company > Proposed resolutions 1 through 6 are TMC proposals. Proposed Resolution 1: Approval of Proposed Appropriation of Retained Earnings for the FY2004 Term The proposal calls for profit distribution as described in the appended document (p. 25). TMC regards shareholders' return as one of our most important management goals, and we actively conduct the company's business in such a way as to solidify and enhance the well-being of the company as a whole. We hope to meet shareholders' expectations in terms of dividends, based on the principle of dividend consistency and giving overall consideration to company performance and payout ratio. We would like to offer a dividend of 25 yen per share for year-end dividend. Combined with the interim dividend, this will result in a total shareholder dividend for the fiscal year ended March 31, 2004 of 45 yen per share, representing a payout ratio of 26.0%. Proposed Resolution 2: Amendment of the Articles of Incorporation (Summary of the Proposed Resolution and Reason for the Amendment) In conjunction with the coming into effect of the Partial Revision to the Special Law of the Commercial Code Concerning the Audit, etc., of Stock Corporations (Law No. 132 of 2003), a provision will be added to the Articles of Incorporation (Article 6 of the proposed revised Articles) to allow the Company to repurchase shares of the Company upon approval by the Board of Directors by resolution, thereby enabling the Company to implement dynamic capital measures according to the business environment, and the current Article 6 and subsequent articles will be increased in number by 1. The content of the proposed amendments appears below. (Amended parts are underlined.) Current Provisions Proposed Amendment CHAPTER II. SHARES CHAPTER II. SHARES (Repurchase of Shares) ______________________ (Newly established) Article 6 _________ The Company may repurchase its own shares _________________________________________ upon approval by the Board of Directors by resolution _____________________________________________________ in accordance with the provisions of the Commercial ___________________________________________________ Code Article 211-3 Paragraph 1 Item 2. ______________________________________ Articles 6 to 28 Articles 7 to 29 _ __ (Omitted) _ __ (No change) Proposed Resolution 3: Election of 27 Directors All the Directors will retire upon the expiration of their term of office at the end of this shareholders' meeting. Accordingly, please elect a total of 27 Directors. The candidates for Directors are as follows: Following are the nominees no. Name Main occupation Brief career summary No. of TMC (birth date) shares owned 1 Hiroshi Okuda TMC Chairman Apr. 1955 Joined Toyota Motor Sales Co., Ltd. 64,963 (12/29/1932) Jul. 1982 TMC Director Sep. 1987 TMC Managing Director Sep. 1988 TMC Senior Managing Director Sep. 1992 TMC Executive Vice President Aug. 1995 TMC President Jun. 1999 TMC Chairman 2 Kosuke Ikebuchi TMC Vice Chairman Apr. 1960 Joined TMC 17,080 (3/4/1937) Sep. 1988 TMC Director Sep. 1994 TMC Managing Director Jun. 1996 TMC Senior Managing Director Jun. 1999 TMC Executive Vice President Jun. 2001 TMC Vice Chairman Fujio Cho TMC President Apr. 1960 Joined TMC 25,105 3 (2/2/1937) Sep. 1988 TMC Director Dec. 1988 Toyota Motor Manufacturing, U.S.A., Inc. President Sep. 1994 TMC Managing Director Oct. 1994 Retired from Toyota Motor Manufacturing, U.S.A., Inc. Jun. 1996 TMC Senior Managing Director Jun. 1998 TMC Executive Vice President Jun. 1999 TMC President 4 Akihiko Saito TMC Executive Vice Apr. 1968 Joined TMC 116,757 President (7/24/1940) Sep. 1991 TMC Director Jun. 1996 TMC Managing Director Jun. 1998 TMC Senior Managing Director Jun. 2001 TMC Executive Vice President 5 Ryuji Araki TMC Executive Vice Apr. 1962 Joined TMC 108,293 President (1/29/1940) Sep. 1992 TMC Director (Chief Finance & Accounting Officer) Jun. 1997 TMC Managing Director Jun. 1999 TMC Senior Managing Director Jun. 2001 TMC Executive Vice President (Non-TMC Executive Duties) Chairman of Toyota Finance Finland Oy Chairman of Toyota Credit Canada Inc. Chairman of Toyota Financial Services (UK) PLC Chairman of Toyota Finance Australia Ltd. 6 Yoshio Ishizaka TMC Executive Vice Mar. 1964 Joined Toyota Motor Sales Co., Ltd. 14,310 President (1/9/1940) Sep. 1992 TMC Director Jun. 1996 Toyota Motor Sales, U.S.A. Inc. President Jun. 1999 Retired from Toyota Motor Sales, U.S.A. Inc. Jun. 1999 TMC Senior Managing Director Jun. 2001 TMC Executive Vice President (Non-TMC Executive Duties) Chairman of Toyota Motor Marketing Europe S.A./N.V. Managing Director of Toyota Motor Finance (Netherlands) B.V. 7 Kosuke Shiramizu TMC Executive Vice Apr. 1963 Joined TMC 10,000 President (8/28/1940) Sep. 1992 TMC Director Jun. 1997 TMC Managing Director Jun. 1999 TMC Senior Managing Director Jun. 2001 TMC Executive Vice President (Non-TMC Executive Duties) Chairman of Toyota Motor Technical Center (China) Co., Ltd. 8 Katsuaki Watanabe TMC Executive Vice Apr. 1964 Joined TMC 12,171 President (2/13/1942) Sep. 1992 TMC Director Jun. 1997 TMC Managing Director Jun. 1999 TMC Senior Managing Director Jun. 2001 TMC Executive Vice President (Non-TMC Executive Duties) Vice Chairman of Gamagori Marine Development Co., Ltd. 9 Kazushi Iwatsuki TMC Executive Vice Apr. 1964 Joined Toyota Motor Sales Co., Ltd. 12,110 President (6/26/1941) Sep. 1994 TMC Director Jun. 1997 Retired from TMC Director Jun. 1997 Osaka Toyopet Co., Ltd. President Jun. 1999 Retired from Osaka Toyopet Co., Ltd. President Jun. 1999 TMC Senior Managing Director Jun. 2001 TMC Executive Vice President 10 Katsuhiro Nakagawa TMC Executive Vice Apr. 1965 Joined Ministry of International Trade 10,000 President and Industry (3/11/1942) Jul. 1997 Ministry of International Trade and Industry Vice-Minister for International Affairs Jun. 1998 Retired from Ministry of International Trade and Industry Vice-Minister for International Affairs Jun. 2001 TMC Managing Director Jun. 2002 TMC Senior Managing Director Jun. 2003 TMC Executive Vice President 11 Yasuhito Yamauchi TMC Senior Managing Apr. 1968 Joined TMC 12,936 Director (1/2/1942) Jun. 1995 TMC Director (Chief Production Engineering Officer Jun. 1999 TMC Managing Director / Chief Manufacturing Jun. 2001 TMC Senior Managing Director Officer) (Non-TMC Executive Duties) Chairman of Siam Toyota Manufacturing Co., Ltd. President of TERRA Corporation 12 Takashi Kamio TMC Senior Managing Apr. 1965 Joined TMC 15,100 Director (11/27/1942) Jun. 1996 TMC Director (Chief Government & Public Affairs Jun. 1999 TMC Managing Director Officer) Jun. 2001 TMC Senior Managing Director 13 Hiroyuki Watanabe TMC Senior Managing Apr. 1967 Joined TMC 7,315 Director (3/4/1943) Jun. 1996 TMC Director (Chief IT&ITS Officer / Chief Jun. 1999 TMC Managing Director Quality Control Officer) Jun. 2001 TMC Senior Managing Director 14 Akio Matsubara TMC Senior Managing Apr. 1966 Joined Toyota Motor Sales Co., Ltd. 14,044 Director (1/12/1942) Jun. 1996 TMC Director (Chief General Administration & Jun. 2001 TMC Managing Director Human Resources Officer / Chief Jun. 2003 TMC Senior Managing Director Information Systems Officer) 15 Tokuichi Uranishi TMC Senior Managing Apr. 1966 Joined TMC 15,333 Director (5/3/1942) Jun. 1996 TMC Director (Chief Europe & Africa Operations Jun. 2001 TMC Managing Director Officer) Jun. 2003 TMC Senior Managing Director 16 Kazuo Okamoto TMC Senior Managing Apr. 1967 Joined TMC 13,264 Director (2/20/1944) Jun. 1996 TMC Director (Chief Design Officer / Chief Jun. 2001 TMC Managing Director Product Development Officer ) Jun. 2003 TMC Senior Managing Director (Non-TMC Executive Duties) Vice President of Calty Design Research, Inc. 17 Kyoji Sasazu TMC Senior Managing Apr. 1967 Joined Toyota Motor Sales Co., Ltd. 14,092 Director (6/11/1944) Jun. 1997 TMC Director (Chief Domestic Sales Operations Jun. 2001 TMC Managing Director Officer) Jun. 2003 TMC Senior Managing Director 18 Mitsuo Kinoshita TMC Senior Managing Apr. 1968 Joined TMC 12,070 Director (1/1/1946) Jun. 1997 TMC Director (Chief Production Control & Logistics Jun. 2001 TMC Managing Director Officer) Jun. 2003 TMC Senior Managing Director (Non-TMC Executive Duties) Vice Chairman of Toyota Motor Technical Center (China) Co., Ltd. 19 Yoshimi Inaba TMC Senior Managing Apr. 1968 Joined Toyota Motor Sales Co., Ltd. 15,000 Director (2/24/1946) Jun. 1997 TMC Director (Chief The Americas Operations Officer Jun. 1999 Toyota Motor Sales, U.S.A., Inc. / Chief Oceania, President Middle East & Southwest Asia Jun. 2003 Retired from Toyota Motor Sales, Operations Officer) U.S.A., Inc. President Jun. 2003 TMC Senior Managing Director (Non-TMC Executive Duties) Vice President of Sociedad de Fabricacion de Automotores S.A. 20 Takeshi Uchiyamada TMC Senior Managing Apr. 1969 Joined TMC 12,464 Director (8/17/1946) Jun. 1998 TMC Director (Chief Vehicle Engineering Jun. 2001 TMC Managing Director Officer) Jun. 2003 TMC Senior Managing Director (Non-TMC Executive Duties) Chairman of Toyota Technical Center Asia Pacific Thailand Co. Ltd. Vice Chairman of Toyota Motor Technical Center (China) Co., Ltd. 21 Masatami Takimoto TMC Senior Managing Apr. 1970 Joined TMC 10,100 Director (1/13/1946) Jun. 1999 TMC Director (Chief Power Train Development Officer Jun. 2002 TMC Managing Director / Chief Fuel Cell System Development Jun. 2003 TMC Senior Managing Director Officer) 22 Akio Toyoda TMC Senior Managing Apr. 1984 Joined TMC 2,529,891 Director (5/3/1956) Jun. 2000 TMC Director (Asia & China Operations Center Jun. 2002 TMC Managing Director General Manager) Jun. 2003 TMC Senior Managing Director (Non-TMC Executive Duties) President of Digital Media Service Corporation Chairman of Toyota Motor Asia Pacific Pte. Ltd. Chairman of Toyota Motor (China) Ltd. Chairman of Toyota Motor Vietnam Co., Ltd. Chairman of Toyota Motor (China) Investment Co., Ltd. Vice Chairman of Tianjin FAW Toyota Motor Co., Ltd. Vice President of Sichuan Toyota Motor Co., Ltd. Vice Chairman of FAW Toyota Motor Sales Co., Ltd. Chairman of Toyota FAW (Tianjin) Dies Co., Ltd. Chairman of Guangqi Toyota Engine Ltd. Chairman of Digital Media Service (Thailand) Ltd. Vice Chairman of Tianjin Toyota Motor Engine Co., Ltd. Vice Chairman of FAW Toyota Changchun Engine Co.,Ltd. 23 Shoichiro Toyoda TMC Honorary Jul. 1952 Joined TMC 13,136,193 Chairman and (2/27/1925) Director Jul. 1952 TMC Director Jan. 1961 TMC Managing Director Oct. 1967 TMC Senior Managing Director Dec. 1972 TMC Executive Vice President Jun. 1981 TMC Director Jun. 1981 Toyota Motor Sales Co., Ltd. President Jul. 1982 TMC President Sep. 1992 TMC Chairman Jun. 1999 TMC Honorary Chairman and Director (Non-TMC Executive Duties) Director of Toyota Central Research & Development Laboratories, Inc. Director of Genesis Research Institute, Inc. Chairman of Towa Real Estate Co., Ltd. 24 Tetsuo Hattori TMC Managing Apr. 1971 Joined TMC 5,526 Officer (12/2/1946) Jun. 1999 TMC Director Jun. 2003 TMC Managing Officer 25 Yukitoshi Funo TMC Managing Apr. 1970 Joined Toyota Motor Sales Co., Ltd. 5,248 Officer (2/1/1947) Jun. 2000 TMC Director (Toyota Motor Sales, U.S.A., Inc. Jun. 2003 TMC Managing Officer President) Jun. 2003 Toyota Motor Sales, U.S.A., Inc. President (Non-TMC Executive Duties) President of Toyota Motor Sales, U.S.A., Inc. President of Toyota Logistics Services, Inc. Chairman of Quality Port Processors, Inc. Vice President of Calty Design Research, Inc. President of TMS Mexico Investment, Inc. 26 Takeshi Suzuki TMC Managing Apr. 1970 Joined Toyota Motor Sales Co., Ltd. 7,076 Officer (11/18/1947) Jun. 2000 TMC Director Jun. 2003 TMC Managing Officer (Non-TMC Executive Duties) Managing Director of Toyota Motor Finance (Netherlands) B.V. 27 Atsushi Niimi TMC Managing Apr. 1971 Joined TMC 7,038 Officer (7/30/1947) Jun. 2000 TMC Director (Toyota Motor Manufacturing North Jun. 2003 TMC Managing Officer America, Inc. President) Jun. 2003 Toyota Motor Manufacturing North America, Inc. President (Non-TMC Executive Duties) President of Toyota Motor Manufacturing North America, Inc. Chairman of Toyota Motor Manufacturing Canada Inc. President of TABC Inc. Vice President of TSSC, Inc. Note: There are no special interests between each nominee and the company. Proposed Resolution 4: Issue of Stock Acquisition Rights without Consideration to Directors, Managing Officers and Employees, etc., of Toyota Motor Corporation and its Affiliates Pursuant to Article 280-20 and Article 280-21 of the Commercial Code, we ask for authorization to issue Stock Acquisition Rights (as defined below) without consideration, for the purpose of granting stock options, to directors, managing officers and employees, etc., of TMC and its affiliates in accordance with the following terms and conditions. 1. Reason for Issue of Stock Acquisition Rights without Consideration TMC will issue rights ('Stock Acquisition Rights') to subscribe for or purchase shares of TMC to Directors, Managing Officers and employees, etc., of TMC and its affiliates in order to enhance enthusiasm and raise morale for improving business performance and thereby contribute to strengthen TMC's international competitiveness. 2. Summary of Terms of Issue of Stock Acquisition Rights (1) Grantees of the Stock Acquisition Rights Directors, Managing Officers and employees, etc., of TMC and its affiliates. (2) Type and Number of Shares to be Issued or Transferred upon Exercise of Stock Acquisition Rights Up to 2,300,000 shares of common stock of TMC. Provided, however, that if the number of shares to be issued or transferred upon exercise of each Stock Acquisition Right is adjusted in accordance with (3) below, such number of shares to be issued or transferred shall be adjusted to the number obtained by multiplying the number of shares after adjustment by the total number of Stock Acquisition Rights to be issued. (3) Total Number of Stock Acquisition Rights to be Issued Up to 23,000 The number of shares to be issued or transferred upon exercise of one Stock Acquisition Right shall be 100; provided, however, that if TMC splits or consolidates its shares, the number of shares to be issued or transferred upon exercise of each Stock Acquisition Right shall be adjusted according to the following formula. Number of shares after = Number of shares x Ratio of split adjustment before adjustment (or consolidation) The adjustment above shall be made only to those rights remaining unexercised at the relevant time. If any fraction less than one (1) share arises as a result of such adjustment, such fraction shall be discarded. (4) Issue Price of Stock Acquisition Rights No consideration shall be paid at the time of issuance of the Stock Acquisition Rights. (5) Amount to be Paid upon Exercise of Stock Acquisition Rights The amount to be paid per share issued or transferred upon exercise of each Stock Acquisition Right (the 'Exercise Price') shall be as follows. The amount obtained by multiplying the closing price of the TMC's common stock in regular trading on the Tokyo Stock Exchange on the issue date of the Stock Acquisition Rights (if there is no transaction made on that day, then the closing price of the latest date prior to the issue date of the Stock Acquisition Rights on which a transaction was made) by 1.025, and any fraction less than one (1) yen arising therefrom shall be rounded up to the nearest one (1) yen. In addition, the Exercise Price shall be adjusted as follows: (i) If TMC splits or consolidates its shares after the issue date of the Stock Acquisition Rights, the Exercise Price shall be adjusted according to the following formula, and any fraction less than one (1) yen arising therefrom shall be rounded up to the nearest one (1) yen. Exercise Price = Exercise Price x 1 after adjustment before adjustment ____________________ Ratio of split (or consolidation) (ii) If new shares are issued or treasury stock is sold at a price below the market price after the issue date of the Stock Acquisition Rights, the Exercise Price shall be adjusted according to the following formula, and any fraction less than one (1) yen arising therefrom shall be rounded up to the nearest one (1) yen. However, no adjustment shall be made in case of the exercise of Stock Acquisition Rights, transfer of treasury stock in accordance with a resolution of past Ordinary General Shareholders' Meetings pursuant to Paragraph 2, Article 210-2 of the former Commercial Code or exercise of the outstanding rights to subscribe for new shares. Exercise Price Exercise Price Number of + Number of shares X Amount to be after adjustment = before adjustment X outstanding shares newly issued paid per share ____________________________________ Market price ________________________________________________________________ Number of + Number of shares newly issued outstanding shares 'Number of outstanding shares' provided for in the above formula does not include the number of shares held by TMC as treasury stock and in the case where the treasury stock is to be sold 'Number of shares newly issued' shall be read as 'Number of shares of treasury stock to be sold.' (iii) In the case of a merger with any other company, corporate split or capital reduction of TMC, or in any other case similar thereto where an adjustment of the Exercise Price shall be required, in each case after the issue date of the Stock Acquisition Rights, the adjustment shall be made appropriately to the extent reasonable. (6) Exercise Period of the Stock Acquisition Rights From August 1, 2006 to July 31, 2010 (7) Conditions of Exercise of Stock Acquisition Rights (i) Each Stock Acquisition Right may not be partially exercised. (ii) The grantees of the Stock Acquisition Rights must, at the time of exercise of such rights, be a Director, Managing Officer or an employee, etc., of TMC or its affiliate to which he/she belongs at the time such right is granted, unless he/she voluntarily retires, retires due to attaining retirement age or change in employment, during the exercise period provided in (6) above. (iii) Stock Acquisition Rights may not be inherited. (iv) Other exercise conditions shall be provided for by the resolution of this Ordinary General Shareholders' Meeting and the resolution of a meeting of the Board of Directors. (8) Events and Conditions of Cancellation of Stock Acquisition Rights (i) Stock Acquisition Rights may be cancelled without consideration upon approval by a General Shareholders' Meeting of an agendum on a merger agreement in which TMC is a company to be dissolved, or an agendum on a share exchange agreement or a share transfer by which TMC will become a wholly-owned subsidiary of another company. (ii) TMC may cancel the Stock Acquisition Rights without consideration if a grantee of the Stock Acquisition Rights becomes no longer qualified to exercise such rights pursuant to the provision provided for in (7) above. (9) Restriction on Transfer of Stock Acquisition Rights Transfer of Stock Acquisition Rights shall be subject to an approval of the Board of Directors. Proposed Resolution 5: Repurchase of shares In order to improve capital efficiency and to implement flexible capital policies in accordance with the business environment, we ask for authorization to repurchase shares of TMC common stock, up to 65 million shares and to a maximum value of 250 billion yen, based on provisions of Article 210 of the Commercial Code, with the acquisition to occur between the conclusion of this Ordinary General Shareholders' Meeting and the conclusion of the next Ordinary General Shareholders' Meeting. Proposed Resolution 6: Award of Bonus Payments to Mr. Iwao Isomura (deceased), Former Representative Director and Vice Chairman, and to Retiring Directors In order to compensate the dedicated efforts of Senior Managing Director Zenji Yasuda, Senior Managing Director Teruyuki Minoura, and Director Shuhei Toyoda, who will be retiring upon the expiration of their term of office at the conclusion of this Ordinary General Shareholders' Meeting, and to make a condolence payment to the estate of Vice Chairman Iwao Isomura, who passed away on January 20, 2004, bonuses and a condolence payment in appropriate amounts will be provided in accordance with TMC's standards. The actual amounts and the timing and method of payment, etc. will be determined by the Board of Directors. The following is the brief career summary of the Directors. Name Brief career summary Iwao Isomura Sep. 1984 TMC Director Sep. 1988 TMC Managing Director Sep. 1990 TMC Senior Managing Director Sep. 1992 TMC Executive Vice President Jun. 1996 TMC Vice Chairman Jan. 2004 Passed away Zenji Yasuda Jun. 1996 TMC Director Jun. 1999 TMC Managing Director Jun. 2001 TMC Senior Managing Director Teruyuki Minoura Jun. 1998 TMC Director Jun. 2002 TMC Managing Director Jun. 2003 TMC Senior Managing Director Shuhei Toyoda Jun. 1998 TMC Director Jun. 2001 TMC Managing Director Sep. 2001 TMC Director Proposed resolutions 7 through 9 are shareholder proposals. The number of votes held by the proposing shareholders (21 persons) is 849. Proposed Resolution 7: Proposed Appropriation of Retained Earnings (Summary of Proposal) 1. Content of Proposal The proposed resolution concerns appropriation of retained earnings through the payment of a year-end dividend of 40 yen per share for the year ended March 2004. As an interim dividend of 20 yen per share was paid in September 2003, the total dividend for the year would be 60 yen per share. 2. Reasons for the Proposal Under the principles of management that emphasizes shareholders' interests, when the company realizes substantial profits, it must pay to its shareholders' appropriate dividends. The payment of low dividends may be considered as ignoring stockholder interests. Management that emphasizes shareholders' interests is essential from the perspective of corporate governance. The dividend payout ratio is proposed based on these principles. Over the past seven years, TMC's dividends per share have been 22 yen to 36 yen on an annual basis, and the dividend payout ratio has been in the 20.2% to 32.5% range. The dividend payout ratio for the term ended March 2003 was 20.2%. For more than 20 years, the dividend payout ratio of publicly traded companies in Japan (excluding companies in the financial and insurance sectors) has been more than 30%. Considering TMC's business results and financial position, it would not be a hardship for TMC to pay dividends of at least 30% of the publicly announced forecasted unconsolidated profits. For these reasons, the shareholders ask that the company pay an annual dividend this fiscal year of 60 yen per share (including a year-end dividend of 40 yen per share). The opinion of the Board of Directors concerning the proposed shareholder resolution The Board of Directors is opposed to this resolution. A dividend shall be declared and paid as described on page 28 based on the principle of a stable and continuing dividend and taking into consideration the company's financial results and dividend payouts, etc. Proposed Resolution 8: Amendment of the Articles of Incorporation (Part 1) (Summary of Proposal) 1. Content of Proposal (1) Compensation and bonuses paid to each Director and Corporate Auditor for each fiscal year shall be disclosed in the documentation included in the notice of convocation of the general shareholders' meeting for the fiscal year in question. (2) When proposals for retirement bonuses to be paid to Directors and Corporate Auditors are presented at a general shareholders' meeting, the amount to be paid to each Director and Corporate Auditor shall be disclosed. The above language shall be added to the Articles of Incorporation. 2. Reasons for the Proposal The Commercial Code provides that as a general principle, compensation and retirement bonuses paid to executives are to be determined at a general shareholders' meeting (excluding companies with a special committee for that purpose). In the case of TMC, however, compensation and retirement bonuses paid to executives are determined by the Board of Directors, etc. and the amount paid to each individual is not disclosed to shareholders. Just as it would be improper for the compensation of members of the Diet to be determined without the knowledge of voters and/or withheld from voters, it is improper for compensation and retirement bonuses paid to executives who are entrusted with the management of the company by the shareholders to be determined without the knowledge of the shareholders. TMC engages in global business activities and is one of the leading Japanese companies on the global scene. Disclosing compensation and retirement bonuses paid to executives ahead of other Japanese companies would enhance its international standing as a company with transparent management and a company that is serious about information disclosures. Responding to shareholder interests would also raise its corporate value. The opinion of the Board of Directors concerning the proposed shareholder resolution The Board of Directors is opposed to this resolution. With respect to compensation paid to Directors and Corporate Auditors, the general framework of monthly amounts paid is proposed and approved at the general shareholders' meeting. The amount of bonuses is disclosed in the proposal concerning the appropriation of retained earnings and also approved at the general shareholders' meeting. With respect to retirement bonuses, such bonuses are paid in accordance with the company's regulations on retirement bonuses and a proposal to give authorization to determine the specific amounts, timing of the payments, method of payment, etc., to the Board of Directors in the case of retiring Directors and to the Board of Corporate Auditors in the case of retiring Corporate Auditors, has been made and approved at the general shareholders' meeting. In addition, each of the total amounts of compensation, bonuses, and retirement bonuses paid to Directors and Corporate Auditors are disclosed in the Business Review in accordance with the laws and regulations. In light of applicable laws and regulations, and taking into consideration business practices in Japan, we believe that this method of disclosure is legal and appropriate and that it is not necessary to add the language of this proposal to the Articles of Incorporation. Proposed Resolution 9: Amendment of the Articles of Incorporation (Part 2) (Summary of Proposal) 1. Content of Proposal 'The Company shall not make any donations whatsoever to political parties or political fund-raising organizations relating to political activities.' The above language shall be added to the Articles of Incorporation. 2. Reasons for the Proposal The company and its group member companies donate at least 134.38 million yen (in year 2002) annually to the People's Political Association, a fund-raising organization for the Liberal Democratic Party. This type of large political contribution leads to collusive relations between companies and politics not condoned by shareholders and consumers. The above amount corresponds to 60 yen per vehicle of the 2.21 million vehicles that the Toyota Group sells in Japan annually. From the perspective of users of Toyota vehicles, political contributions are not based on their own will and political beliefs, and the inclusion of political contributions to one specific political party to a part of the vehicle purchase price cannot be consented to. TMC Chairman and Nippon Keidanren Chairman Hiroshi Okuda called on member companies to resume political contributions, which had been terminated 10 years earlier. Under these circumstances, for TMC to take the initiative in ceasing such payments and allocating an equal sum to social contribution activities that are supported by shareholders and users will serve to maintain sound and proper relations with political organizations and government and will enhance TMC's social worth. The opinion of the Board of Directors concerning the proposed shareholder resolution The Board of Directors is opposed to this resolution. TMC conducts political donations to carry out its social responsibilities towards achieving its policies through political means and the development of a sound parliamentary democracy in compliance with all applicable laws. Therefore the Board believes that it would be inappropriate to add this type of language to the Articles of Incorporation. This information is provided by RNS The company news service from the London Stock Exchange

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