Annual Repor t 2 0 0 9

The Right Way For ward

Year ended March 31, 2009
 Contents

1 Top Messages
1 Chairman’s Message Fujio Cho, Chairman
2 President’s Message Akio Toyoda, President
4 Message from the Executive Vice President Yoichiro Ichimaru, Executive Vice President
7 Toyota Management Team

8 Performance Overview

10 The Right Way For ward

Toyota is dedicated to excellence in manufacturing in order to provide high-quality
at affordable prices based on our commitment to the Customer First
and genchi genbutsu (on-site, hands-on experience) philosophies.
We will continue to focus on the challenge of making even better cars
that are appealing to customers around the world.

17 Business Overview
The Year in Review / Automotive Operations / Financial Services Operations /
Other Business Operations / Motorsports Activities

25 Management & Corporate Information

Corporate Philosophy / Corporate Governance / Risk Factors / R&D and Intellectual Property /
R&D Organization / Production Sites / Overseas Manufacturing Companies / Toyota Milestones

41 Financial Section

108 Investor Information

Cautionary Statement with Respect

to Forward-Looking Statements
This annual report contains forward-looking statements that reflect
Toyota’s plans and expectations. These forward-looking statements
are not guarantees of future performance and involve known and
unknown risks, uncertainties and other factors that may cause
Toyota’s actual results, performance, achievements or financial
position to be materially different from any future results,
performance, achievements or financial position expressed or
implied by these forward-looking statements. These factors include:
(i) changes in economic conditions and market demand affecting,
and the competitive environment in, the automotive markets in
Japan, North America, Europe, Asia and other markets in which
Toyota operates; (ii) fluctuations in currency exchange rates,
particularly with respect to the value of the Japanese yen, the U.S.
dollar, the euro, the Australian dollar, the Canadian dollar and the
British pound; (iii) Toyota’s ability to realize production efficiencies
and to implement capital expenditures at the levels and times
planned by management; (iv) changes in the laws, regulations and
government policies in the markets in which Toyota operates that
affect Toyota’s automotive operations, particularly laws, regulations
and government policies relating to trade, environmental protection,
vehicle emissions, vehicle fuel economy and vehicle safety, as well as
changes in laws, regulations and government policies that affect
Toyota’s other operations, including the outcome of future litigation
and other legal proceedings; (v) political instability in the markets in
which Toyota operates; (vi) Toyota’s ability to timely develop and
achieve market acceptance of new products; and (vii) fuel shortages
or interruptions in transportation systems, labor strikes, work
stoppages or other interruptions to, or difficulties in, the employment
of labor in the major markets where Toyota purchases materials,
components and supplies for the production of its products or where
its products are produced, distributed or sold.
A discussion of these and other factors which may affect Toyota’s
actual results, performance, achievements or financial position is
contained in Toyota’s annual report on Form 20-F, which is on file
with the United States Securities and Exchange Commission.

Redesigned Prius (May 2009)

 Top Messages

Chairman’s
Message
Chairman’s Message

“ Returning to the roots of the monozukuri philosophy

that have nurtured Toyota since its founding,
we are striving to create a new automotive paradigm
—one that contributes to a bountiful society

”
as it helps preserve the Earth’s environment.
Fujio Cho, Chairman

The unprecedented global economic crisis significantly impacted our bottom line in fiscal 2009,
ended March 31, 2009, resulting in an operating loss for only the second time in the Company’s
history. I sincerely regret the concern this has caused stakeholders—our shareholders and
investors, customers, business partners, and members of the local communities in which we
operate. I assure you that the speedy restoration of Toyota’s business vitality—and the laying
of strong foundations for future growth—are our top management priorities.
Today, the automobile industry is facing its toughest challenges ever. But as an industry
that affects society on a global scale, we have an exceptionally important role to play. Our first
responsibility, of course, is to provide customers around the world with the attractive and
appealing cars they truly want. To help us fulfill that responsibility while protecting the global
environment, we have greatly accelerated our development of hybrid vehicles and other
environmentally friendly technologies.
Toyota is rooted in local communities worldwide, and we will continue to do our utmost to
contribute to society, economic growth, and environmental protection in the countries in which
we operate. To that end, we are trying to provide jobs and develop human resources through
education and training programs, and have returned to the genchi genbutsu (on-site, hands-on
experience) roots of Toyota’s monozukuri philosophy—an all-encompassing approach to
manufacturing that results in added value for all stakeholders.
In June 2009, we introduced a new management team with a strong focus on on-site
operational management. As we continue to dedicate ourselves to the creation of better
automobiles, we are also strengthening our Groupwide efficiency and human resources
development efforts.
In closing, I would like to ask for the continued support of our shareholders and investors
in the days ahead. With your help—and the bold, resolute action of our committed
management team—I am confident that we can restore Toyota to stable growth and continue
to increase our corporate value for decades to come.

July 2009

Fujio Cho, Chairman

Annual Report 2009 1

 Top Messages

President’s
Message
President’s Message

“ Close to the customer,

and with a strong commitment to the genba*,

”
we will continue our quest to make better cars.
Akio Toyoda, President

Having been appointed president of Toyota Motor Corporation at the Ordinary General
Shareholders’ Meeting held on June 23, 2009, I would like to begin by expressing heartfelt
thanks for the warm, ongoing support of our stakeholders worldwide.
Today, the state of the global economy continues to have a devastating effect, not just on
automobile manufacturers, but also on parts suppliers and other smaller companies across the
entire automobile industry. At Toyota, both vehicle sales and production have fallen sharply,
severely impacting business results in fiscal 2009, ended March 31, 2009.
As our new management team sets sail under these stormy economic conditions, we feel a
deep sense of responsibility to our shareholders and investors.
Since Toyota’s founding, we have always made it our pledge to “make better cars and
contribute to society.” To fulfill this pledge, we have put the customer first, practiced genchi
genbutsu (on-site, hands-on experience), and dedicated ourselves to providing high-quality
vehicles at an affordable price. I believe it is these fundamental elements of Toyota’s DNA,
passed down over seven decades since our founding, that will enable us to overcome the
challenges we currently face.
To help us achieve our goals, we are implementing a stronger product-oriented
management model focused on making better cars. We have also taken a fresh look at what it
means to be an automobile manufacturer, and are redoubling our commitment to the
Customer First and genchi genbutsu philosophies that are an integral part of Toyota’s
corporate heritage. More specifically, we are reviewing every aspect of our business from the
customer’s point of view—including technological development, manufacturing, sales, and
service—so that we can develop new products, reduce costs and continue to offer customers
the cars they truly want at a price they can realistically afford. In addition, our renewed
emphasis on the genba enables us to better anticipate, as well as respond to, the needs of
customers and society.

* The place of engagement; on the front lines

2 TOYOTA MOTOR CORPORATION

 Management & Investor
Top Messages Performance Overview The Right Way Forward Business Overview Corporate Information Financial Section Information

Chairman’s Message President’s Message Message from Toyota

the Executive Vice President Management Team

In order to fully realize product-oriented management, we are also placing greater

emphasis on market needs. Based on our Customer First philosophy, we are developing a clear
regional vision that defines the best way to serve customers and society in each area of the
globe. Our new management structure reflects this emphasis with five regional executive vice
presidents that are rich with on-site experience who will provide the hands-on stewardship
needed to respond promptly to changing circumstances around the world.
I personally believe that cars should not just be a means of transportation, but also a vital
part of society, today and in the future. I also believe that they should bring excitement and joy
to the lives of the people who drive them. To help realize this dream, we are putting even
greater emphasis on the development of environmentally friendly technologies, and are
working on breakthrough technologies that will make driving even more fun and exciting in the
future.
No matter what the business environment, Toyota will never slow the pace of
technological development that drives its future growth, or of the productivity improvements
that keep it competitive. For a company to grow, its employees must grow, and we will
continue to strengthen our genba to improve technologies and skills at every level of the
organization. By doing so, we will not only become more competitive, but I believe we can also
lay the foundations of a strong, new Toyota that will lead the global automobile industry
forward into the future. Amid the current severe management environment, we have a deep
sense of gratitude for the support of our customers, business partners, and other stakeholders.
I and every other member of the Toyota family remain committed to rebuilding a strong,
vibrant company, dedicated to serving its customers and society.

July 2009

Akio Toyoda, President

Annual Report 2009 3

 Top Messages

Message from
the Executive
Message from the Executive Vice President
Responsible for Accounting*

Vice President
We are aiming for a quick recovery in sales
and earnings by accurately responding to structural shifts
in demand with profit improvement initiatives.
Yoichiro Ichimaru, Executive Vice President

Net Revenues Fiscal 2009 Business Results

(¥ Billion)
30,000 Fiscal 2009, ended March 31, 2009, was an extremely difficult period for Toyota. On a consolidated
basis, vehicles sales were down 1,346,000 units, to 7,567,000 units, and net revenues declined 21.9%, to
24,000 ¥20,529.5 billion. We recorded an operating loss of ¥461.0 billion, a decrease of ¥2,731.3 billion from
operating income in fiscal 2008, and a net loss of ¥437.0 billion, a decrease of ¥2,154.8 billion from net
income in fiscal 2008.
18,000
Factors contributing to the decline in operating income were the effects of marketing efforts of
¥1,480.0 billion, the effects of foreign exchange rates of ¥760.0 billion, and increases in expenses of
12,000 ¥491.3 billion. Vehicle sales worldwide were strongly damaged by a substantial contraction of the
automotive market, particularly in Europe and North America, caused by the rapid deterioration of the
6,000 world economy following the onset of the financial crisis last autumn. In addition, changes in the market
structure, including a marked shift toward small vehicles and low-priced vehicles, also greatly impacted
sales. With regard to foreign exchange rates, the rapid appreciation of the Japanese yen against the
0
U.S. dollar and the euro reduced the profitability of exports. Increases in expenses, such as valuation
FY ’05 ’06 ’07 ’08 ’09
losses from interest rate swaps, depreciation expenses, and capital expenditures, also contributed to
the decline in earnings. Though we had been promoting cost reduction efforts to address the situations
Operating Income (Loss) described above, the benefits of these efforts were unfortunately offset by the sharp rise in prices of raw
(¥ Billion) materials.
2,500
In response to such a severe business environment, we set up the Emergency Profit Improvement
Committee in November 2008 to improve our earnings for fiscal 2009 and fiscal 2010. During fiscal 2009,
2,000
we acted swiftly to deliver as many vehicles as possible to our customers by strengthening products,
including the introduction of new special edition models that adapt to the needs of each regional
1,500
market, and by expanding the destinations of our exports to include smaller countries. We enforced
further cost reduction efforts for each vehicle already being sold. We also continued usual cost
1,000
reduction efforts and reduced inventory by adjusting vehicle production and suspending, postponing,
and downsizing projects for new plants. Additionally, with the reduction of labor costs, and general and
500
administrative expenses, we managed to generate an earnings improvement of approximately ¥130.0
billion.
0

-500 Consolidated Results Outlook for Fiscal 2010

FY ’05 ’06 ’07 ’08 ’09
For fiscal 2010, ending March 31, 2010, we are forecasting vehicle sales of 6.5 million units, net revenues
of ¥16,500.0 billion, operating loss of ¥850.0 billion, and net loss of ¥550.0 billion on a consolidated basis.
This forecast assumes average exchange rates through the fiscal year of ¥95 per US$1 and ¥125 per 1.

* Responsibilities include accounting-related operational areas (see Toyota Management Team on page 7)

4 TOYOTA MOTOR CORPORATION

 Management & Investor
Top Messages Performance Overview The Right Way Forward Business Overview Corporate Information Financial Section Information

Chairman’s Message President’s Message Message from Toyota

the Executive Vice President Management Team

Vehicle Sales by Region Our forecast assumes that market conditions will remain extremely challenging. Factors
FY2009
contributing to the decrease in operating income prospects are ¥800.0 billion from a decrease in vehicle
unit sales and changes in the sales volume and mix, and ¥450.0 billion from the assumed exchange rate
of a stronger Japanese yen. Meanwhile, we will take our emergency profit improvement initiatives to an
even higher level in fiscal 2010, and are anticipating an enormous contribution of ¥800.0 billion due to
cost reduction efforts and decreases in fixed costs.
We aim to achieve cost reductions of ¥340.0 billion by expanding target models for cost reduction
activities, increasing cost reductions at manufacturing plants, and introducing cost reduction activities at
Japan 25.7 % the design stage.
North America 29.2 % With regard to the decrease of fixed costs, we anticipate a total reduction of ¥460.0 billion. We aim
Europe 14.0 %
to improve the efficiency of our capital expenditures by either postponing or freezing projects involving
Asia 12.0 %
Others 19.1 % properties and buildings and by maximizing the use of unemployed and idle facilities. We aim to reduce
labor costs significantly as well by combining employment security and labor cost efficiency through
such measures as implementation of work sharing at overseas operations. And we aim at significant
reduction of general and administrative expenses and sales expenses.
We view this cost reduction of ¥800.0 billion as merely the starting point and aim to improve more
efficiency to make greater progress in improving earnings.
In addition to such measures for cost reduction, we continue to deliver as many vehicles as
possible that are desired by customers. Recently, to encourage the purchasing of eco-friendly vehicles,
favorable government policies—such as scrapping incentives—have been launched in North America,
Europe, and Japan. We have an extensive lineup of eco-friendly vehicles, such as hybrid vehicles, and
aim to increase production and sales utilizing these government policies.

Financial Strategy Financial Strategy

1 The three key components of Toyota’s financial strategy are growth, efficiency, and stability. We believe
Growth that the balanced pursuit of these three priorities over the medium-to-long term will allow us to achieve
Sustainable growth steady and sustainable growth as well as increase corporate value.
through continuous
forward-looking investments
1. Growth: Sustainable growth through continuous forward-looking investments
2
Efficiency We believe that automotive markets worldwide will grow further in view of medium-to-long term
Improving profitability perspective. As they grow, we expect that the center of market growth will shift toward fuel-efficient
and capital efficiency
vehicles, such as hybrid vehicles and compact vehicles, in terms of products, and towards resource-rich
3 and emerging countries in terms of regions. We plan to invest actively in these areas in order to
Stability respond to structural shifts in demand and to ensure long-term sustainable growth. Concurrently, we
Maintaining a solid financial base
plan to accelerate our measures to provide high-quality, affordable, and attractive products that meet
customers’ needs in each country and region and to further the early commercialization of
next-generation technologies in the areas of the environment, energy, and safety.
Balanced implementation
of 1.–3. over the medium-
to-long term 2. Efficiency: Improving profitability and capital efficiency
As we expect customer demand for hybrid vehicles and compact vehicles to increase in the future, we
aim to provide high-quality vehicles at an affordable price and to improve profitability by accreting our
Sustainable growth measures for more cost reductions. And we also create a structure for efficient development,
production, and sales that can flexibly respond to changes in the external environment. With regard to
capital expenditures, we plan to improve capital efficiency by maximizing the use of unemployed and
idle facilities. Through these initiatives, we aim to generate positive free cash flows in every fiscal year.

Annual Report 2009 5

 Top Messages

3. Stability: Maintaining a solid financial base

We preserve a solid financial base by ensuring sufficient liquidity and stable shareholders’ equity. At the
end of fiscal 2009, liquid assets* were approximately ¥3,300.0 billion, while shareholders’ equity
amounted to ¥10,000.0 billion. Our sound financial position enables us to maintain the levels of capital
expenditures and investment in research and development even under such conditions as rises in prices
of raw materials and drastic changes in foreign exchange rates. And keeping the high credit ratings
enables us to enjoy low-cost and stable funding even during the current credit crunch. In view of
anticipated medium-to-long term growth in automotive markets worldwide, we believe that maintaining
adequate liquidity is essential for the implementation of forward-looking investment to improve
products and develop next-generation technologies, as well as to establish a structure for production
and sales in both the domestic and overseas markets.
* Excluding financial subsidiaries

Dividends and Share Acquisitions

Toyota deems the benefit of its shareholders as one of its priority management policies, and it is
working to implement reforms to establish a corporate structure that can achieve continuous growth in
order to enhance its corporate value. We will strive to continue to pay dividends while giving due
consideration to factors such as business results for each term, investment plans, and our cash reserves.
With respect to the dividends for fiscal 2009, we have determined that since we are facing the most
difficult business environment in our history, it is extremely difficult to maintain the level of dividends
paid in the previous fiscal year. We declared an annual dividend payment of ¥100 per share at the end
of fiscal 2009, which is a decrease of ¥40 from the previous fiscal year.
With respect to the repurchase of our own shares, of the shares authorized at the 104th Ordinary
General Shareholders’ Meeting in 2008, which were the lesser of 30 million shares or the number of
shares equivalent to ¥200 billion in cost of repurchase, 14.01 million shares were repurchased at a total
cost of ¥69.9 billion until the 105th Ordinary General Shareholders’ Meeting held in June 2009. In fiscal
2009, we repurchased 14.94 million shares at a total cost of ¥72.8 billion. Since we began repurchasing
shares in fiscal 1997, the cumulative number of shares repurchased as of the end of June 2009 was
736.98 million shares at a total cost of ¥2,868.8 billion.
In order to flexibly respond to the changing economic conditions, Toyota will utilize its internal
funds: to secure a solid management foundation; to improve product performance to meet customers’
needs; to further the early commercialization of next-generation technologies in the areas of the
environment, energy, and safety; and to establish a structure for efficient development, production, and
sales in both the domestic and overseas markets. We will not repurchase our own shares for the time
being, as we decided to prioritize securing our cash reserves under the present business environment.
We will decisively strive towards an earlier recovery of our performance in order to meet
shareholders’ expectations.

July 2009

Yoichiro Ichimaru, Executive Vice President

6 TOYOTA MOTOR CORPORATION

 Management & Investor
Top Messages Performance Overview The Right Way Forward Business Overview Corporate Information Financial Section Information

Toyota Chairman’s Message President’s Message Message from

the Executive Vice President
Toyota
Management Team

Management Team
Toyota Management Team
As of June 23, 2009

Under the leadership of a new management team, Toyota is taking on the challenges posed by today’s
difficult business climate with the goal of revitalizing operations to make Toyota even more powerful
than before.

Representative Directors Directors and Auditors

Chairman of the Board Senior Managing Directors, Toshio Furutani

Members of the Board Customer Service Operations Group /
Fujio Cho (Chief officer, Deputy chief officer, General manager, LEXUS Japan Sales & Marketing Div. /
or Overseas subsidiary of residence) LEXUS Product & Marketing Planning Div. /
LEXUS Development Center
Vice Chairmen of the Board Teiji Tachibana
Housing Group / Housing Planning Div. Takahiro Iwase
Katsuaki Watanabe Production Engineering Group /
Akira Okabe Manufacturing Group / Global Production Center /
Kazuo Okamoto Asia & Oceania Operations Group / Safety & Health Promotion Div. /
Middle East, Africa and Latin America Plant Engineering Div. /
Operations Group / Asia & Oceania Div. Production Engineering Innovation Div. /
Production Engineering Planning Div.
President, Member of the Board Shinzo Kobuki
Akio Toyoda
R&D Group 2 / R&D Management Div. / Yoshimasa Ishii
Higashifuji Technical Administration Div. / Operation Planning & Support Group /
Vehicle Control System Development Div. / Sales & Marketing Support Div. /
Advanced Vehicle Control System Development Div. / Sales Operation Planning Div. /
Executive Vice Presidents, Automotive Software Engineering Div. Product & Project Planning Div.
Members of the Board
(Main operational responsibilities) Akira Sasaki Takeshi Shirane
China Operations Group / Purchasing Group
Takeshi Uchiyamada Toyota Motor (China) Investment Co., Ltd.
Product Management / Research & Development
Tadashi Arashima Directors, Members of the Board
Yukitoshi Funo Europe Operations Group /
(Chief officer, Deputy chief officer, General manager,
Government & Public Affairs / China Operations / Toyota Motor Europe NV/SA
or Overseas subsidiary of residence)
Asia & Oceania Operations / Middle East Operations /
Africa and Latin America Operations / Mamoru Furuhashi Yoshimi Inaba
Operation Planning & Support Government & Public Affairs Group /
North America Operations Group /
Tokyo Secretarial Div.
Toyota Motor North America, Inc.
Atsushi Niimi
North America Operations / Satoshi Ozawa Nampachi Hayashi
Strategic Production Planning / General Administration & Human Resources Group /
Strategic Production Planning Group,
Production Engineering / Manufacturing Information Systems Group
responsible for Order-to-Delivery KAIZEN Promotion /
Production Engineering Group,
Shinichi Sasaki Iwao Nihashi responsible for TPS Supervising /
Corporate Planning / Business Development / Quality Group / TQM Promotion Div. Manufacturing Group,
IT & ITS / Information Systems / Purchasing / responsible for TPS Thorough promotion
Europe Operations / Customer Service / Quality Yasuhiko Ichihashi
Product Development Group / R&D Group 1
Yoichiro Ichimaru Full-Time Corporate Auditors
General Administration & Human Resources / Tadashi Yamashina
Accounting / Japan Sales Technical Administration Group / Motor Sports Div.
Yoshikazu Amano
Takahiko Ijichi Chiaki Yamaguchi
Accounting Group

Tetsuo Agata Masaki Nakatsugawa

Toyota Motor Engineering &
Manufacturing North America, Inc.
Corporate Auditors
Masamoto Maekawa
Japan Sales Operations Group / Yoichi Kaya
Tokyo metropolitan area
Yoichi Morishita
Yasumori Ihara
Business Development Group / IT & ITS Group / Akishige Okada
Corporate Planning Div. / Research Div. /
CSR & Environmental Affairs Div. / e-TOYOTA Div. Kunihiro Matsuo

Note: Mr. Yoichi Kaya, Mr. Yoichi Morishita, Mr. Akishige Okada, and Mr. Kunihiro Matsuo satisfy the qualifications of Outside Corporate Auditors as provided in Article 2,
Item 16 of the “Corporation Act.”

Annual Report 2009 7

 Performance Overview
Toyota Motor Corporation Fiscal years ended March 31

Consolidated Performance (U.S. GAAP)

Yen in millions U.S. dollars* in millions % change

2007 2008 2009 2009 2008vs2009

For the Year:

Net Revenues ................................. ¥23,948,091 ¥26,289,240 ¥20,529,570 $ 208,995 −21.9
Operating Income ......................... 2,238,683 2,270,375 (461,011) (4,693) —
Net Income .................................... 1,644,032 1,717,879 (436,937) (4,448) —
ROE ................................................. 14.7% 14.5% −4.0% — —

At Year-End:
Total Assets .................................... ¥32,574,779 ¥32,458,320 ¥29,062,037 $295,857 −10.5
Shareholders' Equity ..................... 11,836,092 11,869,527 10,061,207 102,425 −15.2

Yen U.S. dollars* % change

2007 2008 2009 2009 2008vs2009

Per Share Data:

Net Income (Basic) ......................... ¥ 512.09 ¥ 540.65 ¥ (139.13) $ (1.42) —
Annual Cash Dividends ................. 120.00 140.00 100.00 1.02 −28.6
Shareholders' Equity ..................... 3,701.17 3,768.97 3,208.41 32.66 −14.9

Stock Information (March 31):

Stock Price ...................................... ¥7,550 ¥4,970 ¥3,120 $31.76 −37.2
Market Capitalization .................... ¥27,255,481 ¥17,136,548 ¥10,757,752 $109,516 −37.2
(Yen in millions,
U.S. dollars in millions)

* U.S. dollar amounts have been translated at the rate of ¥98.23=US$1, the approximate current exchange rate at March 31, 2009.

Net Revenues by Regions

(¥ Billion)
16,000 Japan North America Europe Asia Other Regions

12,000

8,000

4,000

0
FY ’05 ’06 ’07 ’08 ’09 ’05 ’06 ’07 ’08 ’09 ’05 ’06 ’07 ’08 ’09 ’05 ’06 ’07 ’08 ’09 ’05 ’06 ’07 ’08 ’09

Note: Fiscal years ended March 31

8 TOYOTA MOTOR CORPORATION

 Management & Investor
Top Messages Performance Overview The Right Way Forward Business Overview Corporate Information Financial Section Information

Consolidated Vehicle Production and Sales

Thousands of units % change

2007 2008 2009 2008vs2009

Vehicle Production by Region:

Japan .................................................................................. 5,100 5,160 4,255 −17.5
Overseas Total ................................................................... 3,080 3,387 2,796 −17.4
North America ................................................................ 1,205 1,268 919 −27.5
Europe ............................................................................ 709 711 482 −32.2
Asia ................................................................................. 755 961 947 −1.5
Central and South America ........................................... 147 150 151 +0.7
Oceania .......................................................................... 117 149 130 −12.8
Africa ............................................................................... 147 148 167 +12.8

Consolidated Total ............................................................ 8,180 8,547 7,051 −17.5

Vehicle Sales by Region:

Japan .................................................................................. 2,273 2,188 1,945 −11.1
Overseas Total ................................................................... 6,251 6,725 5,622 −16.4
North America ................................................................ 2,942 2,958 2,212 −25.2
Europe ............................................................................ 1,224 1,284 1,062 −17.3
Asia ................................................................................. 789 956 905 −5.3
Central and South America ........................................... 284 320 279 −12.8
Oceania .......................................................................... 268 289 261 −9.7
Africa ............................................................................... 304 314 289 −8.0
Middle East .................................................................... 433 597 606 +1.5
Others ............................................................................. 7 7 8 +14.3

Consolidated Total ............................................................ 8,524 8,913 7,567 −15.1

Principal Market Data: Automotive Market (Sales)

(Thousands
of units)
20,000 Japan United States Europe Asia China

15,000

10,000

5,000

0
CY ’04 ’05 ’06 ’07 ’08 ’04 ’05 ’06 ’07 ’08 ’04 ’05 ’06 ’07 ’08 ’04 ’05 ’06 ’07 ’08 ’04 ’05 ’06 ’07 ’08

Source: Toyota Motor Corporation

Note: Market definitions Europe: Germany, France, the United Kingdom, Italy, Spain, the Netherlands, Belgium, Portugal, Denmark, Greece, Ireland, Sweden, Austria, Finland,
Switzerland, Norway, Poland, Hungary, and the Czech Republic
Asia: Indonesia, Thailand, the Philippines, Malaysia, Singapore, Vietnam, Taiwan, South Korea, and Brunei Darussalam
Japan: minivehicles included

Annual Report 2009 9

 The Right Way For ward

“Make Better Cars and Contribute to Society”

The right way forward for Toyota is defined by the Company’s founding mission
to “make better cars and contribute to society.”
It is also marked by a strong commitment to putting the customer first,
practicing genchi genbutsu, and providing high-quality vehicles at an affordable price,
so that customers around the world can enjoy the benefits of owning and driving better cars.
Since the latter half of last year, the global automobile industry has faced a difficult operating environment.
Although further major changes are also anticipated,
Toyota has overcome many challenges in its long history of making automobiles,
and will continue to do so in the future.

10 TOYOTA MOTOR CORPORATION

 Management & Investor
Top Messages Performance Overview The Right Way Forward Business Overview Corporate Information Financial Section Information

Local Roots, for Local Economic Growth

In 1938, just one year after the Company’s founding, Toyota opened its first mass production facility in
Koromo, Japan. It was a clear demonstration of Toyota’s desire to contribute to the economic growth of the
nation by pioneering the creation of a domestic automobile industry. This strong commitment to making
better cars and contributing to society through product creation still lives on at Toyota today.
Contributing to society means responding to the needs of society and enabling people to lead more
bountiful lives by providing them with better cars. And as a corporate citizen, it means putting down local
roots, paying taxes, and helping regional economies to prosper.
Toyota’s history shows this spirit of monozukuri product creation in action.
A B C

A A1 prototype passenger car produced by the Toyoda Automatic Loom Works, Ltd. Automobile Department
(currently Toyota Motor Corporation) in the year of its establishment
B G1 truck, Toyota’s first export vehicle, being loaded for shipment to China
C Production line at Toyota’s first mass production factory in Koromo, Japan (currently Honsha Plant)

Working Together to Overcome Obstacles

Toyota’s history is also a history of tribulations. We faced a management crisis in 1950, pollution problems and
oil crises in the 1970s, and trade issues and voluntary export controls in the 1980s. But whatever obstacles we
faced, we overcame them by working together with our suppliers and dealers, using imagination and creativity.
Along with our corporate culture of Customer First and the genba first, the Companywide emphasis on
technological development, and a healthy corporate environment in which people can teach and be taught—
continually learning from one other—it is this ability to work together that is one of our great strengths.
Beginning in fiscal 2003, we increased our production capacity by more than 500,000 vehicles a year.
Although this enabled us to meet our customers’ needs, in the end it did not allow us to capitalize on our
fundamental strengths. Now, when the entire automobile industry is threatened, it is more important than ever
for every employee to share a sense of emergency, and work together as a group to better serve customers
and society, realizing the full potential of our Toyota strengths to establish a solid foundation from which to
overcome the serious challenges we face.

Overcoming Challenges—Toyota Vehicle Sales Growth

(10 thousands of units)
900
800
700
Emission controls & Trade
600
oil crises friction
500
400
Trade
300
liberalization
Labor
200
dispute
100
0
1937 1940 1950 1960 1970 1980 1990 2000 2008

Source: Toyota Motor Corporation

Annual Report 2009 11

 Putting the Customer First, to Make Better Cars

For Toyota to establish this solid foundation, it is important not only to strengthen technological
development and productivity, but also to focus intently on the customer first monozukuri spirit
together with suppliers and dealers. The management team installed on June 23, 2009, has called for
making better cars through product-oriented management strengthened by market-oriented
management.
By focusing on the basic principles of product and market management, employees across the
Toyota Group can concentrate accumulated expertise in their respective fields. In addition,
management resources can be efficiently allocated to technology and product development. It is this
emphasis on the genba that will make it possible for us to create even more attractive and appealing
cars.
An attractive and appealing car is a car that is a joy to own, drive, and share good times in. It is
exciting and fun for everyone on board. This is the kind of car that product- and market-oriented
management allows us to provide.

A Management Team with Wide-Ranging Genba Experience

To provide the vehicles that customers truly want, and to ensure speedy implementation of
Customer First and genchi genbutsu philosophies, President Toyoda is supported by a new
management team of five executive vice presidents. In addition to their usual functions and
areas of responsibility, four of the management team members will oversee regional
operations, and the fifth will oversee new product management and technological
development. Maintaining close communication at all times, the management team will work
to clearly define the right way forward and implement effective product- and market-oriented
management.

“ Through strengthened communication aimed at addressing the issues we face,

I will strive to create a corporate culture and structure that enables all workers to understand
and implement Customer First, genchi genbutsu, and imagination and creativity.”
Yoichiro Ichimaru, Executive Vice President (Japan Sales)

“ Guided by genchi genbutsu thinking, I will listen to the opinions of on-site personnel
to get a firm grasp of the situation, and provide management that enables us
to build a monozukuri organization that can respond flexibly to changing circumstances.”
Atsushi Niimi, Executive Vice President (North America Operations)

“ In the highly competitive European market, I will work to refine Toyota’s strengths
in customer first quality and technology, and build the brand power
needed to ensure that customers continue to choose Toyota.”
Shinichi Sasaki, Executive Vice President (Europe Operations)

“ With an emphasis on communication, cooperation, and consideration, I will aggressively work

to increase sales of attractive and appealing commercial vehicles and family cars.”
Yukitoshi Funo, Executive Vice President
(Emerging Markets Operations, including China, Asia, and Central and South America)

“ In addition to strengthening and advancing the environmental and safety technologies

that are two of Toyota’s greatest strengths, I will take on the challenge of creating vehicles
that are truly exciting and fun to drive.”
Takeshi Uchiyamada, Executive Vice President (Product Management and Research & Development)

12 TOYOTA MOTOR CORPORATION

 Management & Investor
Top Messages Performance Overview The Right Way Forward Business Overview Corporate Information Financial Section Information

Focusing on Products

Product-oriented management enables Toyota to offer cars that meet the needs of customers in each
region, at a price those customers can truly be satisfied with.
Toyota is also bolstering its human resources and training programs to foster the growth of
employees who can work together as a team to identify emerging customer needs, and take the
customer’s point of view in every area of operations, from technological development and
manufacturing, to sales and service.
In addition, we are drawing on our genchi genbutsu skill and expertise to review product
development and materials costs.
The new Toyota Prius that went on sale in May 2009 combines world-beating, 38km/L* fuel
efficiency with driving performance that rivals that of a conventionally powered 2.4L car, further
consolidating the leadership position that has made our name synonymous with hybrid technology. In
addition, a 30% reduction in hybrid unit cost from the previous model makes the new Prius even more
affordable, so even more customers can enjoy the benefits it offers.
In Japan, we will introduce a total of four hybrid models in fiscal 2009, including the new Prius and
the HS250h, the first hybrid exclusive Lexus model. Overseas, we will introduce a total of three new
hybrid models. And in late fiscal 2009, in preparation for full commercial release, we will begin
lease-sales of approximately 500 units of a plug-in hybrid vehicle (PHV) worldwide. Based on the new
Prius and powered by lithium-ion batteries that can be recharged using conventional household AC
power, the new plug-in model will be offered to fleet owners around the world.
In addition, we are strengthening efforts aimed at mass production of compact electric vehicles,
development of next-generation batteries, adaptability to various alternative fuel issues—including
biofuel—development of fuel cell hybrid vehicles (FCHVs), and early commercial introduction of new
safety technologies.
* Measured using the 10–15 test cycle of the Japanese Ministry of Land, Infrastructure, Transport and Tourism (MLIT)
based on a conversion value of 61g/km CO2 emissions per kilometer (applicable to L grade vehicles only)

A B C

A HS250h, the first hybrid exclusive Lexus model

B PHV, to be introduced globally in late 2009 under a lease-sale program
C FT-EV, electric car concept model powered by lithium-ion batteries

Focusing on Markets

Market-oriented management enables us to meet the needs of individual countries and regions through
careful analysis of the role that we should play, and the presence we should strive for, in each market.
To respond to the needs of customers worldwide, our basic product strategy from 2000 to the
present has aimed to offer a full lineup of vehicles in all countries and regions. As of March 31, 2009, we
are rooted in communities worldwide, with 11 R&D facilities and 75 production facilities in Japan and
abroad, and a global sales network that covers over 170 countries and regions.
However, amid the severe automobile market conditions of today, it has become difficult to
expand in this manner and still fulfill our role as an automobile manufacturer that contributes to a
bountiful society, economic growth, and the future of the Earth’s environment.

Annual Report 2009 13

 For Toyota to implement optimal regional strategies under these conditions, we must identify
areas where we want to compete and areas where we need to move more carefully, and revitalize our
product development and lineup to better suit regional needs. To enable us to respond nimbly to
change and implement market-oriented management in a timely and thorough manner, we have
appointed five regional executive vice presidents who will watch markets closely, and apply their
expertise to the development of a regional vision that will guide regional strategy development.

Regional Vision to Create New Value

Signs of a medium-term recovery in global automobile demand can be seen in gradually improving
automobile financing operations, a greater number of vehicles being retired from service than are being
purchased, and continued growth in China, India, Brazil, and other emerging markets. But new fuel
controls aimed at environmental preservation are anticipated, and there is a strong likelihood that the
structure of markets will change. In addition, there is a need to grasp changes in regional markets as
quickly as possible.
Our regional vision is the foundation from which we can quickly grasp such changes and develop
strategies from the customers’ point of view.
Toyota’s regional vision recognizes that different regions are at different stages of economic
development, and that relationships with competing manufacturers differ in each country and region. It
allows us to identify the stance we should take, and to move from a full lineup product strategy in all
markets to one that is focused on the specific types of vehicles that are most appealing to customers in
each market. With this regional vision, Toyota can anticipate the needs of regional customers, propose
new lifestyles, and develop new types of cars for customers to enjoy.

[Regional Market Initiatives and Direction]

Japan: Customer-Oriented Product Characteristics and Variations
In Japan, new vehicle sales (including minivehicles) and used cars totals 12 million units annually. Of this,
new vehicle sales (excluding minivehicles) account for slightly under 3 million units annually. When we
consider that there are as many as 75 million registered vehicles in Japan, there are obviously still
considerable opportunities for growth. To take advantage of these opportunities, however, requires that
we strengthen our product characteristics and variations.
For example, rising customer environmental awareness and government vehicle scrappage
programs to replace older vehicles are helping to increase demand for environmentally friendly models.
And with the entire Japanese automobile industry placing greater emphasis on the environment and
energy, we will continue to aggressively promote the Prius and other hybrid models that incorporate
Toyota core technologies.
In addition, we are developing new concept cars that anticipate customer needs, and are
restructuring our lineup to provide the vehicles that customers truly want.

North America: Promoting Self-Sufficiency in Development and Production

The North American market is central to Toyota’s overseas strategies and has been a key driver of its
growth. Although now rapidly contracting, it is still a major market with some 250 million vehicles on the
road today. Given that the population of North America is forecast to grow in the future, it is clear that
the market will eventually recover. But when it does, it will no longer be focused on full-size models—it
will have a different structure, requiring a different product lineup.
To Toyota, North America remains an extremely important market. And to continue to offer
customers the cars they truly want, we will continue to strengthen our local roots and aim for greater
self-sufficiency in both development and production.

14 TOYOTA MOTOR CORPORATION

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Top Messages Performance Overview The Right Way Forward Business Overview Corporate Information Financial Section Information

Europe: A Strong Presence Defined by a Distinct Identity

Europe has many major car manufacturers, each with its own history and roots in national markets. For
Toyota, the right way forward is not simply to sell more cars or increase market share, but to establish a
strong presence defined by a distinct identity.
Europe continues to be an important region for Toyota, and with environmental regulations being
strengthened, we will take advantage of our signature hybrid technology and gradually shift to a more
hybrid-focused product mix to consolidate our presence in the market.

Emerging Markets: High-Quality Vehicles at an Affordable Price that Meet Regional Needs
China and other emerging markets in Asia and Central and South America promise to become a strong
engine for Toyota’s future growth. China’s market, in particular, is potentially as large as the U.S. market,
and needs to be addressed in a straightforward manner. We are establishing a business model that will
enable us to see things from the customer’s point of view, and will grow our business as the market
grows by introducing competitive models that meet people’s needs in a timely manner.
In the rest of Asia, South America, and other areas, there are still regions where Toyota’s share is
low, and further growth in demand is anticipated. In addition to manufacturing affordable, high-quality
vehicles that can ride the wave of regional motorization, we will also develop products that can rank
alongside the IMV* as key strategic models.
* IMV: An abbreviation for Innovative International Multipurpose Vehicle. Toyota uses an optimized procurement
and production system spread across Asia, Argentina, and South Africa to provide these multipurpose vehicles
to over 140 countries and regions worldwide.

Communicating the Appeal of Cars to Even More Stakeholders

Toyota’s strength lies not just in its ability to develop vehicles through innovative technology, but also in
the tight integration of its Group companies. Drawing on this strength, we are aggressively
implementing a variety of measures to increase customer interest in cars. We hold events to help
customers understand the constantly evolving performance and features of cars where everyone, from
children to adults, can experience the joy that cars offer, as well as the new automobile-related lifestyles
and services we propose and provide. In addition, we conduct activities to help dealership staff deepen
their knowledge of our products, so that we can invigorate the sites where we interact with customers.
A B C

A The Prius Cup (Eco-Run Automobile Race), where staff and engineers from dealerships throughout Japan
compete in events testing their maintenance and driving skills
B The Driving Kingdom, where customers can participate in programs designed to help them enjoy
and understand the benefits of technology and the experience of driving
C An experiential program for elementary school children aimed at deepening their understanding of cars
in a fun and exciting way

Annual Report 2009 15

 What Toyota aims for is

a goal shared by each and every Toyota employee

who works, humbly and seriously, believing in a brighter automotive future.

By valuing the philosophy of making better cars

and contributing to society that has been central to Toyota for 70 years,

we will strive to understand market needs from the customer’s point of view,

so that we can continue to provide products and services that respond to those needs.

By valuing the satisfaction and happiness of each and every stakeholder,

Toyota will continue to pursue the right way forward

to further growth.

16 TOYOTA MOTOR CORPORATION

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Business
Business Overview
18

20

22

23
Overview
The Year in Review

Automotive Operations

Financial Services Operations

Other Business Operations

24 Motorsports Activities

Annual Report 2009 17

 The Year in Review

Highlights of Toyota Highlights of the year

2008 Apr. • Toyota sets up Advanced Research Institute in North America

May • Worldwide Prius Sales Top One Million Mark

Worldwide cumulative sales of the Prius have passed the one million mark,
with approximately 1,028,000 units sold at the end of April 2008.
At the end of March 2009, cumulative sales were more than 1.25 million units.
The Prius debuted in 1997 as the world’s first mass-produced hybrid vehicle
and is currently sold in more than 40 countries and regions,
mainly Japan, Europe and North America.

• Tree-Planting Event Kicks Off Sustainable Plant Activities

Toyota is dedicated to creating production sites that are in harmony

with their natural surroundings. For this purpose, we implement a sustainable plant campaign
that is based on three objectives. First is achieving significant advances
in environmental performance by using innovative technologies and kaizen (improvement) activities.
Second is reducing CO2 emissions through the use of renewable energy,
including biomass and natural energy sources, such as solar power and wind power.
Third is interacting with communities and conserving the environment by planting trees
at and around factories. As part of this campaign, employees at the Tsutsumi Plant
and community members planted approximately 50,000 trees.
This enormous tree-planting event marked the start of other sustainable plant activities
at vehicle and component plants in Japan and overseas.

June • Toyota develops advanced Fuel Cell Hybrid Vehicle (FCHV-adv)

• Toyota strengthens initiatives for Low Carbon Society

July • Toyota announces changes in North American production • Price of crude oil reaches
all-time high of $147.27/barrel
on the New York Mercantile Exchange
• G8 Hokkaido Toyako Summit in Japan

Aug. • Beijing 2008 Olympic Games

Sept. • Toyota Announces TME Technical Centre Expansion • Collapse of Lehman Brothers triggers
turmoil in U.S. financial markets
Toyota Motor Europe NV/SA (TME), which manages Toyota’s European manufacturing
and engineering operations, announced plans to expand the TME Technical Centre,
a production engineering and research and development base, in Belgium.
The project is to be completed around 2010.
By further localizing technology development activities, the expansion will upgrade capabilities
for developing products that meet the needs of European customers.

18 TOYOTA MOTOR CORPORATION

 Management & Investor
Top Messages Performance Overview The Right Way Forward Business Overview Corporate Information Financial Section Information

Highlights of Toyota Highlights of the year

2008 Oct. • Grand Opening of TOYOTA METAPOLIS, • U.S. financial downturn develops
a Three-Dimensional Virtual City on the Internet into a global crisis

The grand opening in October 2008 of TOYOTA METAPOLIS, a three-dimensional virtual city,
gave Toyota a new platform for interacting with the public. This web site is designed primarily
to give younger customers more access to information about automobiles and the enjoyment
of driving. In TOYOTA METAPOLIS, visitors create characters that become residents of the city.
Virtual residents can test drive Toyota vehicles, attend new model announcements,
and participate in other events as well as enjoy communications with other users.
These functions provide a direct link between customers and Toyota.
As of the end of July 2009, a cumulative total of 750,000 people had visited this web site.

• Toyota to launch ultra-compact iQ in Japan

Nov.

Dec. • Toyota Peugeot Citroën Automobiles Czech, s.r.o. (TPCA),

produces one-millionth vehicle
at its manufacturing plant in Kolín, the Czech Republic

2009 Jan. • Toyota Features the New Prius, Lexus HS 250h, • Barack Obama becomes President
and Future Toyota-Electric Vehicle (FT-EV) Concept of the United States
at the 2009 North American International Auto Show • Seasonally Adjusted Annual Rate
(SAAR) of U.S. automobile sales fell to
approximately 9.6 million,
the first drop to below 10 million
since 1982

Toyota unveiled the all-new third-generation Prius

and Lexus unveiled the Lexus HS 250h, the world’s first dedicated luxury hybrid vehicle,
at the 2009 North American International Auto Show in Detroit.
Another highlight was the FT-EV concept for an electric vehicle powered by lithium-ion batteries.
Toyota is conducting research and development aimed at realization of an automotive society
or Sustainable Mobility that can coexist with people and the Earth.
We are also dedicated to increasing the use of these technologies by incorporating them
in vehicles sold worldwide.

• Lexus launches RX450h and RX350 in Japan

Feb.

Mar. • Toyota Develops World’s First Rear-Seat Center Airbag

Toyota has developed a Supplemental Restraint System rear-seat center airbag,
the first in the world. The airbag is designed to reduce the severity of rear-seat passenger injuries
in a side-on collision, such as when one passenger strikes another.
We remain committed to achieving more advances involving all aspects of vehicle safety.
This includes the development of even safer vehicles and more safety technologies,
participation in projects to create safe traffic environments,
and activities to teach people about safe driving practices.

• Toyota celebrates production of one-millionth vehicle in Turkey

• Toyota launches redesigned Crown Majesta in Japan

Annual Report 2009 19

 Business Overview

Automotive
Operations
Automotive Operations
Toyota retained a strong commitment to supplying vehicles with the goal of pleasing as many people
as possible amid difficult market conditions that brought down sales and earnings worldwide.

In fiscal 2009, Toyota’s consolidated vehicle North America

sales declined 1.35 million units, or 15.1%,
to 7.57 million units due to the steep Amid a prolonged slump in the North
downturn in the global economy. American market, Toyota’s consolidated
Consolidated vehicle production also vehicle sales declined 746 thousand
decreased 1.50 million units, or 17.5%, to vehicles, or 25.2%, to 2.21 million units.
7.05 million units. Fiscal 2009 performance However, our 2008 U.S. market share was
Alphard
was also impacted by higher operating 16.7%. Sales of the Lexus totaled
expenses and currency exchange approximately 250 thousand units.
fluctuations. As a result, net revenues Consolidated production was down
decreased 23.2% to ¥18.6 trillion and 27.5% to 919 thousand units. North
operating income fell ¥2.6 trillion to a loss American production totaled
of ¥394.8 billion. approximately 1.24 million units after
Performance by geographic segments including Toyota-brand vehicles built by
was as follows. unconsolidated subsidiary New United
iQ Motor Manufacturing, Inc. (NUMMI) and
Japan Subaru of Indiana Automotive, Inc. U.S.
plant (SIA).
Fiscal 2009 consolidated domestic sales As a result, net revenues decreased
declined 243 thousand units, or 11.1%, to ¥3.2 trillion, or 34.0%, to ¥6.2 trillion and
1.95 million units. Despite this decrease, operating income fell ¥695.5 billion to a
the market share of Toyota and Lexus loss of ¥390.2 billion.
vehicles (excluding minivehicles) reached a
record high of 46.0%. The market share Europe
Avensis
including minivehicles climbed to a record
42.4%. Lexus sales totaled approximately The rapid contraction of sales in Europe’s
20 thousand units in the fiscal year. major automobile markets caused
Consolidated domestic production consolidated sales to drop 222 thousand
decreased 17.5% to 4.26 million units. units, or 17.3%, to 1.06 million units.
Net revenues in Japan decreased ¥3.1 Toyota’s market share in the European
trillion, or 20.4%, to ¥12.2 trillion and market (25 countries) was 5.2%. Lexus sales
operating income was down ¥1.7 trillion to totaled about 40 thousand units.
Venza a loss of ¥237.5 billion. Consolidated production in Europe
decreased 32.2% to 482 thousand units.
Net revenues were down ¥980.3
billion to ¥3.0 trillion and operating income
was down ¥284.8 billion to a loss of ¥143.3
billion.

20 TOYOTA MOTOR CORPORATION

 Management & Investor
Top Messages Performance Overview The Right Way Forward Business Overview Corporate Information Financial Section Information

The Year in Review Automotive Operations Financial Services Operations Other Business Operations Motorsports Activities

Asia Central and South America,

Oceania, Africa, the Middle East,
In fiscal 2009, the sharp downturn in the etc.
Asian market in the second half caused
consolidated sales to decline 51 thousand Sales in the Middle East were stronger than
units, or 5.3%, to 905 thousand units. in the previous fiscal year, but stagnant
Consolidated production was down sales in all other regions caused a decrease
RX450h
1.5% to 947 thousand units. These declines of 84 thousand units, or 5.5%, to 1.44
resulted in a decrease in net revenues of million units in consolidated sales in
¥401.5 billion, or 12.9%, to ¥2.7 trillion, and Central and South America, Oceania,
a decline in operating income of ¥80.3 Africa, the Middle East and other regions.
billion, or 31.3%, to ¥176.1 billion. Consolidated production totaled 448
Sales in the rapidly expanding thousand units.
Chinese market totaled 598 thousand* Net revenues in Central and South
units, an increase of 17.0%, during the 2008 America, Oceania, Africa, the Middle East,
calendar year. and other regions decreased ¥411.2 billion, Crown Majesta
* Cumulative total of vehicles produced in China or 17.9%, to ¥1.9 trillion, and operating
and vehicles imported from Japan
income decreased ¥56.3 billion, or 39.1%,
to ¥87.6 billion.

Annual Report 2009 21

 Business Overview

Financial Services
Operations
Financial Services Operations
The central mission of financial services operations at Toyota is offering many forms of assistance for
customers, with particular emphasis on automotive financing.

Overview of Toyota’s In fiscal 2009, there was an operating loss TFS also provides credit cards, home
Financial Services Operations of ¥72.0 billion in financial services loans, bonds, investment trusts and other
operations because of the global economic investment products for individuals,
Total assets ¥13.6 trillion downturn. The increase in the outstanding insurance policies, and other financial
loan balance and improvement in the products and services to meet its goal to
Net revenues ¥1.4 trillion lending margin contributed to our provide customers with a full lineup of
earnings. However, our earnings were financial support, especially in Japan.
Operating loss ¥72.0 billion
reduced significantly overall due to an Overseas, TFS is rapidly expanding its
increase in allowance for credit and financial services operations in emerging
Operating areas 33 countries and
residual value losses in our finance services markets such as Russia and China. In the
regions worldwide
subsidiaries. In addition, there was an major markets of Europe and the United

No. of employees approx. 8,000 increase in valuation losses on interest rate States, TFS aims to further boost earnings
swaps and certain other instruments stated growth amid severe business conditions.
(As of March 31, 2009) at fair value in accordance with Statement Priorities include support for vehicle sales
of Financial Accounting Standards (FAS) while striking the proper balance among
No. 133 (as amended by FAS No. 138 and business risks, and working to secure
other guidance statements). lending margin and reducing costs.
Toyota financial services operations are Overall, in response to the challenges
primarily handled by Toyota Financial we face, TFS is working to improve funding,
Services Corporation (TFS), which has overall to rigorously manage credit risks by
control of financial services subsidiaries tightening loan approval standards and
worldwide. TFS provides financial services reviewing collection procedures, and to
primarily for vehicle purchases and leases to take decisive actions to raise profitability,
approximately 7.8 million customers in 33 including fixed expense reductions.
countries and regions worldwide.

Financial Services Operations Organization

Toyota Motor
33.42%
Corporation

Aioi Insurance
100%
Co., Ltd.

Toyota
Financial Services
Corporation

100% 100% 50% 50% 100%

Overseas Toyota Financial Toyota Toyota

Toyota Finance
Sales Finance Services Securities Asset Management Accounting Service
Corporation
Companies Corporation Co., Ltd. Co.

22 TOYOTA MOTOR CORPORATION

 Management & Investor
Top Messages Performance Overview The Right Way Forward Business Overview Corporate Information Financial Section Information

Other Business The Year in Review Automotive Operations Financial Services Operations Other Business Operations Motorsports Activities

Operations
Other Business Operations
Toyota uses technologies and expertise gained from automotive operations to operate a variety of
businesses that help people lead more fulfilling and enjoyable lives.

In fiscal 2009, net revenues of other business Information Technology and homebuilding industry. Furthermore, CO2
operations declined ¥162.0 billion, or 12.0%, to Telecommunications Business emissions from the house are about 52% less than
¥1.2 trillion and operating income decreased ¥23.1 for a conventional house constructed around 1990.
billion, or 70.0%, to ¥9.9 billion. This was due to Toyota is working on the planning and In addition, we started developing a Home
sales decreases in the information technology and commercialization of services that integrate Energy Management System (HEMS). We plan to
telecommunications business and other vehicles and cell phones. We also serve as a sales begin selling HEMS in 2011 to further reduce utility
businesses, although the number of home sales in agency for cell phones provided by KDDI costs as well as a home’s overall environmental
the housing business—a core business in this Corporation, a general telecommunications service impact. This demonstrates our commitment to
segment—remained at the same level as the provider. Toyota is enhancing the convenience and building environment-friendly homes that conserve
previous year. comfort of cars with car navigation system and create energy while having the durability to
Other business operations include the technology including Bluetooth® Audio, which last for many years.
intelligent transport systems, information allows the playback of songs that have been
Additional details available at: http://www.toyota.co.jp/
technology and telecommunications, e-TOYOTA, downloaded on a cell phone, and the Seamless en/more_than_cars/housing/index.html

housing, marine, and biotechnology and Navigation System, which allows users to enter a
afforestation businesses. In all these operations, we destination by transferring location data obtained Marine Business
are fostering a workplace culture that encourages with a cell phone.
creativity and entrepreneurship. Also, we are In the marine business, Toyota manufactures and
seeking ideas for new businesses outside the e-TOYOTA Business sells pleasure boats, marine engines and a variety
Toyota Group as another key aspect in order to of marine components. All products take full
create future core businesses. Toyota is initiating e-TOYOTA business operations advantage of our engine technologies and other
to provide the integration of IT services and advanced technologies cultivated during years of
Intelligent Transport Systems automobiles. On the Internet, we conceive and automotive manufacturing. In fiscal 2009, our newly
Business operate the GAZOO members-only automobile introduced PONAM-28L luxury fishing cruiser
portal site, a three-dimensional virtual city called received the first Japan Boat of the Year award.
Toyota is involved in the planning and TOYOTA METAPOLIS, as well as other services. In
Additional details available at: http://www.toyota.co.jp/
development of products and services for the field of telematics, we are developing G-BOOK en/more_than_cars/marine/index.html

Intelligent Transport Systems (ITS). We view this / G-Link, an information service for onboard
technology as a valuable way to link motor vehicles terminals. Other telematics services are planned Biotechnology and Afforestation
and transportation infrastructures, thereby for China and other countries. Business
contributing to sustainable economic
Additional details available at: http://www.toyota.co.jp/
development. en/more_than_cars/gazoo/index.html Toyota is making every effort to contribute to the
In February 2009, we participated in the creation of a resource recycling society through its
ITS-Safety 2010 public demonstration, which was Housing Business biotechnology and afforestation operations.
conducted in Japan by industry sectors and the In fiscal 2009, following previous afforestation
public. We are continuing work on the creation of Since Toyota entered the housing business in 1975, and forestry development projects in Australia, the
vehicle-infrastructure cooperative systems that we have grown its operations as “Toyota Home” Philippines and China, we initiated a new forest
support safe driving so that traffic accidents of the by providing homes that offer high durability and restoration model project in Japan. In addition, we
future can be prevented more effectively than earthquake resistance, as well as excellent security, continue to expand sweet potato cultivation and
current safety technologies allow. health, and environmental features. In 2009, we processing in Indonesia, and our floriculture, roof
began sales of environment-friendly homes with a gardening, and bio-plastic businesses in Japan.
Additional details available at: http://www.toyota.co.jp/
en/tech/its/index.html heat loss coefficient of 1.86 Q-value, which has one
Additional details available at: http://www.toyota.co.jp/
of the highest levels of thermal insulation in the en/more_than_cars/bio_afforest/index.html

Annual Report 2009 23

Business Overview

Motorsports
Activities
Motorsports Activities
Toyota views motorsports activities as a valuable component of the process of conceiving vehicles that
embody dreams and excitement.

In 2008, Toyota was a prominent F1 SUPER GT

participant at the highest levels of
automobile racing, including the Formula In 2009, Toyota is participating in F1 On the domestic racing scene, Toyota
One World Championship (F1) races championship racing for the 8th year. We Technocraft, Co., Ltd. (TRD), supported
around the globe, SUPER GT and Formula will start using the new TF109 car that teams running the Lexus SC430 vehicles
Nippon series races in Japan, and National boasts even better performance and participated in GT500 races, the top class
Association of Stock Car Auto Racing reliability. The TF109 has a wider front wing of SUPER GT. In the GT300 class, we
(NASCAR) races in the United States. In and other new exterior features in provided support for teams racing the
addition, we played a part in developing association with the revised F1 Lexus IS350 and Toyota Corolla Axio.
young drivers through activities that extend aerodynamic regulations. We will continue
to entry-level motorsports events. Our to rely on the driving team of Jarno Trulli Formula Nippon
most visible activity is the Toyota Young and Timo Glock as we pursue our first F1
Drivers Program (TDP), which aims to give victory in 2009. As in 2008, Toyota is again In Formula Nippon, the premier formula
young drivers the skills to compete at all supplying engines for cars of the AT&T racing category in Japan, Toyota supplied
levels. Motorsports activities also include Williams Team. RV8K V8 3.4-liter engines for eight cars
the development of racing-oriented hybrid driven by five racing teams. In 2009, we are
car technologies. NASCAR aiming for the fourth consecutive victory
In 2009, we take part in F1, SUPER GT, through a car powered by a Toyota engine.
Formula Nippon and NASCAR races even In the NASCAR Sprint Cup Series,
as we significantly cut expenses. Also, we NASCAR’s highest-ranking races, and in Toyota Young Drivers Program
will continue to conduct the TDP to foster the Nationwide Series, our goal is to (TDP)
the development of tomorrow’s capture the series championship with the
motorsports drivers. Toyota Camry, which won 10 times in the TDP enhances the skills of talented drivers
2008 Sprint Cup Series. The Toyota Tundra by providing the opportunity to participate
will again compete in the NASCAR in actual races, including F1, GP2, and F3
Camping World Truck Series (Craftsman racing. In 2009, the program has placed 10
Truck Series in prior years), in which we promising young candidates worldwide,
captured both the manufacturer’s and including Kazuki Nakajima, now in his
driver’s championships in 2008. second year as a full-time driver for the
AT&T Williams Team.

A B D
A Jarno Trulli finished third in
the F1 Australian Grand Prix
B Formula One World Championship (F1)

C SUPER GT
D Formula Nippon
E NASCAR
F The talented members of the TDP

C E F
 Management & Investor
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Management &
Management & Corporate Information
26

28
Corporate
Corporate Philosophy

Corporate Governance

Information
32 Risk Factors

34 R&D and Intellectual Property

36 R&D Organization

37 Production Sites

38 Overseas Manufacturing Companies

40 Toyota Milestones

Annual Report 2009 25

 Management & Corporate Information

Corporate
Philosophy
Corporate Philosophy
Since its foundation, Toyota has continuously strived to contribute to the sustainable development of
society through the manufacturing and provision of innovative and quality products and services that
lead the times. The foundations of these endeavors are the Guiding Principles at Toyota and the CSR*
Policy: Contribution towards Sustainable Development.
* CSR = Corporate Social Responsibility

Guiding Principles at Toyota CSR Policy: Contribution towards Sustainable

Development
The Guiding Principles at Toyota (adopted in 1992 and revised in
1997) reflect the kind of company that Toyota seeks to be in light CSR Policy: Contribution towards Sustainable Development
of the unique management philosophy, values, and methods that it (adopted in 2005 and revised in 2008) explains how we adapt the
has embraced since its foundation. Toyota hopes to contribute to Guiding Principles at Toyota with regards to social responsibilities
society through its corporate activities based on understanding to our stakeholders.
and sharing of the Guiding Principles at Toyota.
We, TOYOTA MOTOR CORPORATION and our subsidiaries, take
initiative to contribute to harmonious and sustainable
development of society and the earth through all business
1 Honor the language and spirit of the law of every
activities that we carry out in each country and region, based on
nation and undertake open and fair corporate
our Guiding Principles.
activities to be a good corporate citizen of the world.

2 Respect the culture and customs of every nation and We comply with local, national and international laws and
contribute to economic and social development regulations as well as the spirit thereof and we conduct our
through corporate activities in the communities. business operations with honesty and integrity.
3 Dedicate ourselves to providing clean and safe
products and to enhancing the quality of life In order to contribute to sustainable development, we believe that
everywhere through all our activities. management interacting with its stakeholders as described on the
following page is of considerable importance, and we will
4 Create and develop advanced technologies and
endeavor to build and maintain sound relationships with our
provide outstanding products and services that fulfill
stakeholders through open and fair communication.
the needs of customers worldwide.

5 Foster a corporate culture that enhances individual We expect our business partners to support this initiative and act
creativity and teamwork value, while honoring in accordance with it.
mutual trust and respect between labor and
management.

6 Pursue growth in harmony with the global

community through innovative management.

7 Work with business partners in research and creation

to achieve stable, long-term growth and mutual
benefits, while keeping ourselves open to new
partnerships.

26 TOYOTA MOTOR CORPORATION

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Corporate Corporate Risk R&D and R&D Production Overseas Toyota

Philosophy Governance Factors Intellectual Property Organization Sites Manufacturing Milestones
Companies

Customers • Based on our philosophy of “Customer First”, we develop and provide innovative, safe and outstanding
high quality products and services that meet a wide variety of customers’ demands to enrich the lives of
people around the world. (Guiding Principles 3 and 4)
• We will endeavor to protect the personal information of customers and everyone else we are engaged in
business with, in accordance with the letter and spirit of each country’s privacy laws. (Guiding Principles 1)

Employees • We respect our employees and believe that the success of our business is led by each individual’s creativity
and good teamwork. We stimulate personal growth for our employees. (Guiding Principles 5)
• We support equal employment opportunities, diversity and inclusion for our employees and do not
discriminate against them. (Guiding Principles 5)
• We strive to provide fair working conditions and to maintain a safe and healthy working environment for all
our employees. (Guiding Principles 5)
• We respect and honor the human rights of people involved in our business and, in particular, do not use or
tolerate any form of forced or child labor. (Guiding Principles 5)
• Through communication and dialogue with our employees, we build and share the value “Mutual Trust and
Mutual Responsibility” and work together for the success of our employees and the company. We
recognize our employees’ right to freely associate, or not to associate, complying with the laws of the
countries in which we operate. (Guiding Principles 5)
• Management of each company takes leadership in fostering a corporate culture, and implementing
policies, that promote ethical behavior. (Guiding Principles 1 and 5)

Business Partners • We respect our business partners such as suppliers and dealers and work with them through long-term
relationships to realize mutual growth based on mutual trust. (Guiding Principles 7)
• Whenever we seek a new business partner, we are open to any and all candidates, regardless of nationality
or size, and evaluate them based on their overall strengths. (Guiding Principles 7)
• We maintain fair and free competition in accordance with the letter and spirit of each country’s competition
laws. (Guiding Principles 1 and 7)

Shareholders • We strive to enhance corporate value while achieving a stable and long-term growth for the benefit of our
shareholders. (Guiding Principles 6)
• We provide our shareholders and investors with timely and fair disclosure on our operating results and
financial condition. (Guiding Principles 1 and 6)

Global Society/ Environment • We aim for growth that is in harmony with the environment by seeking to minimize the environmental
Local Communities impact of our business operations, such as by working to reduce the effect of our vehicles and operations
on climate change and biodiversity. We strive to develop, establish and promote technologies enabling the
environment and economy to coexist harmoniously, and to build close and cooperative relationships with a
wide spectrum of individuals and organizations involved in environmental preservation.
(Guiding Principles 3)

Community • We implement our philosophy of “respect for people” by honoring the culture, customs, history and laws
of each country. (Guiding Principles 2)
• We constantly search for safer, cleaner and superior technology that satisfy the evolving needs of society
for sustainable mobility. (Guiding Principles 3 and 4)
• We do not tolerate bribery of or by any business partner, government agency or public authority and
maintain honest and fair relationships with government agencies and public authorities.
(Guiding Principles 1)

Nurturing Society • Wherever we do business, we actively promote and engage, both individually and with partners, in
nurturing society activities that help strengthen communities and contribute to the enrichment of society.
(Guiding Principles 2)

Annual Report 2009 27

 Management & Corporate Information

Corporate
Governance
Corporate Governance

Toyota’s Basic Approach to Corporate Governance current system set a new non-board position of Managing Officers and
reduced the number of directors. Under the current system, with respect
Toyota’s top management priority is to steadily increase corporate value to various operational functions across the entire Company, in principle
over the long term. Further, our fundamental management philosophy is the Chief Officers, who are Directors, serve as the highest authorities of
to remain a trusted corporate citizen in international society through open their specific operational functions while non-board Managing Officers
and fair business activities that honor the language and spirit of the law of implement the actual operations. The distinctive feature of this system is
every nation. In order to put that philosophy into practice, Toyota builds that, based on Toyota’s philosophy of emphasizing developments on the
favorable relationships with all of its stakeholders, including shareholders, site, the Chief Officers serve as the link between management and on-site
customers, business partners, local communities, and employees. We are operations, instead of focusing exclusively on management. As a result,
convinced that providing products that fully cater to customer needs is this system enables the management to make decisions directly with
essential to achieve stable, long-term growth. That philosophy is outlined on-site operations by reflecting on-site personnel opinions on
in the “Guiding Principles at Toyota.” Further, to explain those principles management strategy and swiftly implementing management decisions
in more detailed terms, we prepared and issued the “Contribution into actual operations. (As of June 23, 2009)
towards Sustainable Development” statement in January 2005. Through
such initiatives, Toyota is taking concrete measures to reinforce its Systems for Ensuring Appropriate Management
corporate governance functions and to become an even more competitive
global company. As a system to ensure appropriate management, Toyota has convened
Specifically, we have introduced a unique management system meetings of its International Advisory Board (IAB) annually since 1996. The
focused on prompt decision making for developing our global strategy IAB consists of approximately 10 distinguished advisors from overseas with
and speeding up operations. Furthermore, we have a range of backgrounds in a wide range of fields, including politics, economics, the
long-standing in-house committees and councils responsible for environment, and business. Through the IAB, we receive advice on a
monitoring and discussing management and corporate activities from the diversity of business issues from a global perspective. In addition, Toyota
viewpoints of various stakeholders to ensure heightened transparency and has a wide variety of conferences and committees for deliberations and
the fulfillment of social obligations. the monitoring of management and corporate activities that reflect the
Ultimately, however, a well-developed awareness of ethics among views of a range of stakeholders, including the Labor-Management
individuals is the key to successful governance systems. Without such Council, the Joint Labor-Management Round Table Conference, the
awareness—regardless of the governance structure of a company— Toyota Environment Committee, and the Stock Option Committee.
corporate governance cannot function effectively. Toyota has a unique Moreover, Toyota established the CSR Committee by integrating the
corporate culture that places emphasis on problem solving and Corporate Ethics Committee and the Corporate Philanthropy Committee
preventative measures, such as problem solving based on the actual in October 2007.
situation on the site and highlighting problems by immediately flagging
and sharing them. In other words, because Toyota’s approach is to build in Accountability
quality through manufacturing processes, enhancing the quality of
everyday operations strengthens governance. Toyota’s management team Toyota has engaged in timely and fair disclosure of corporate and financial
and employees conduct operations and make decisions founded on that information as stated in “CSR Policy: Contribution towards Sustainable
common system of checks and balances and on high ethical standards. Development.” In order to ensure the accuracy, fairness, and timely
disclosure of information, Toyota has established the Disclosure
Toyota’s Management System Committee chaired by an officer of the Accounting Division. The
Committee holds regular meetings for the purpose of preparation,
Toyota introduced its current management system in 2003. The main reporting and assessment of its annual securities report, quarterly report
differences between the current system and the former system are that the under the Financial Instruments and Exchange Law of Japan and Form

28 TOYOTA MOTOR CORPORATION

 Management & Investor
Top Messages Performance Overview The Right Way Forward Business Overview Corporate Information Financial Section Information

Corporate Corporate Risk R&D and R&D Production Overseas Toyota

Philosophy Governance Factors Intellectual Property Organization Sites Manufacturing Milestones
Companies

20-F under the U.S. Securities Exchange Act, and also holds extraordinary To monitor the management, Toyota has adopted an auditor system
committee meetings from time to time whenever necessary. that is based on the Japanese Corporation Act. In order to increase
transparency of corporate activities, four of Toyota’s seven Corporate
Compliance Auditors are outside Corporate Auditors. Corporate Auditors support the
Company’s corporate governance efforts by undertaking audits in
To firmly establish corporate ethics and ensure strict compliance, Toyota’s accordance with the audit policies and plans determined by the Board of
CSR Committee, consisting of Directors at the executive vice president Corporate Auditors.
level and above as well as representatives of Corporate Auditors, to For internal audit, the management and a specialized independent
deliberate important issues and measures relating to corporate ethics, organization evaluate the effectiveness of internal controls over financial
compliance and risk management. reporting in accordance with Article 404 of the U.S. Sarbanes–Oxley Act,
Toyota has also created a number of facilities for employees to make applicable to Toyota from the year ended March 31, 2007 to establish a
inquiries concerning compliance matters, including the Compliance solid system. In addition, in accordance with Article 24-4-4-1 of the
Hotline, which enables them to consult with an outside attorney, and takes Financial Instruments and Exchange Law, which is applicable to Toyota
measures to ensure that Toyota is aware of significant information starting with the year ended March 31, 2009, there is an assessment
concerning legal compliance as quickly as possible. system to ensure that financial statements and other financial information
Toyota will implement the tenets of ethical business practice by are prepared properly. In order to enhance the reliability of the financial
further promoting the “Guiding Principles at Toyota” and the “Toyota reporting of Toyota, the three auditing functions, audit by Corporate
Code of Conduct” and by educating and training employees at all levels Auditors, internal audit, and accounting audit by Independent External
and in all areas of operations. Auditors, aid in conducting an effective and efficient audit through
meetings held periodically and as necessary to share information and
come to understandings through discussion on audit plans and results.

Toyota’s Corporate Governance

Emphasizing Frontline Operations + Multidirectional Monitoring

Appointment
Shareholders

International Advisory Board

Board of
Corporate Auditors Board of
Majority are outside
Directors Labor-Management Council
Joint Labor-Management
corporate auditors Round Table Conference

Senior Managing
Directors CSR Committee*
External
Accounting Auditor Managing Toyota Environment Committee
Audit for consolidated financial Officers
statements and internal control
over financial reporting
Stock Option Committee

Disclosure Committee Internal Auditing Department (internal control systems)

(As of June 23, 2009) * Review issues relating to corporate ethics, legal compliance, risk management, nurturing society and environmental management

Annual Report 2009 29

 Management & Corporate Information

Corporate Social Responsibility (3) Rules and systems related to the management of risk of loss
1) Toyota will properly manage the capital fund through its
To maintain stable, long-term growth in international society, companies budgeting system and other forms of control, conduct business
have to earn the respect and trust of society and individuals. Rather than operations, and manage the budget, based on the authorities
simply contributing to economic development through operational and responsibilities in accordance with the “Ringi” system
activities, growing in harmony with society is a must for good corporate (effective consensus-building and approval system). Significant
citizens. Mindful of the foregoing, Toyota has a range of committees that matters will be properly submitted and discussed at the Board
are tasked with monitoring corporate activities and management in meetings and other meetings of various bodies in accordance
relation to social responsibilities, including the CSR Committee and the with the standards stipulated in the relevant rules.
Toyota Environment Committee. 2) Toyota will ensure accurate financial reporting by issuing
documentation on the financial flow and the control system etc.,
Toyota’s Basic Approach to Internal Control System and by properly and promptly disclosing information through the
Disclosure Committee.
Based on the “Guiding Principles at Toyota” and the “Toyota Code of 3) Toyota will manage various risks relating to safety, quality, the
Conduct,” we, together with our subsidiaries, have created and environment and compliance by establishing rules or preparing
maintained a sound corporate climate. In our actual operations, we and delivering manuals, as necessary, in each relevant division.
integrate the principles of problems identification (“Mondai Hakken”) and 4) As a precaution against events such as natural disasters, Toyota
continuous improvements (“Kaizen”) into our business operation will prepare manuals, conduct emergency drills, arrange risk
processes and make continuous efforts to train our employees who put diversification and insurance as needed.
these principles into practice. (4) System to ensure that Directors exercise their duties efficiently
With the above understanding, internal control has been developed 1) Toyota will manage consistent policies by specifying the policies
under the following basic policies. at each level of the organization based on the medium- to
(1) System to ensure that the Directors execute their responsibilities in long-term management policies and the Company’s policies for
compliance with relevant laws and regulations and the Articles of each fiscal term.
Incorporation 2) The Chief Officer, as a liaising officer between the management
1) Toyota will ensure that Directors act in compliance with relevant and operational functions, will direct and supervise Managing
laws and regulations and the Articles of Incorporation, based on Officers based on the management policies and delegate the
the Code of Ethics and other explanatory documents that include executive authority over each division to the Managing Officers
necessary legal information, presented on occasions such as so that flexible and timely decision making can be achieved.
trainings for new Directors. 3) Toyota from time to time will make opportunities to listen to the
2) Toyota will make decisions regarding business operations after opinions of various stakeholders, including external experts, and
comprehensive discussions at the Board meetings and other reflect those opinions in Toyota’s management and corporate
meetings of various cross-sectional decision-making bodies. activities.
Matters to be decided are properly submitted and discussed at (5) System to ensure that employees conduct business in compliance
the meetings of those decision-making bodies in accordance with relevant laws and regulations and the Articles of Incorporation
with the relevant rules. 1) Toyota will clarify the responsibilities of each organization unit
3) Toyota will appropriately discuss significant matters and and maintain a basis to ensure continuous improvements in the
measures relating to issues such as corporate ethics, compliance, system.
and risk management at the CSR Committee and other meetings. 2) Toyota will continuously review the legal compliance and risk
Toyota will also discuss and decide at the meetings of various management framework to ensure effectiveness. For this
cross-sectional decision-making bodies policies and systems to purpose, each organization unit shall confirm the effectiveness by
monitor and respond to risks relating to organizational function. conducting self-checks among others, and report the result to
(2) System to retain and manage information relating to performance the CSR Committee.
of duties by Directors 3) Toyota will promptly obtain information regarding legal
Information relating to exercising duties by Directors shall be compliance and corporate ethics and respond to problems and
appropriately retained and managed by each division in charge questions related to compliance through its corporate ethics
pursuant to the relevant internal rules and laws and regulations. inquiry office and other channels.

30 TOYOTA MOTOR CORPORATION

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Corporate Corporate Risk R&D and R&D Production Overseas Toyota

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Companies

(6) System to ensure the appropriateness of business operations of the Toyota’s Basic Policy and Preparation towards the
corporation and the business group consisting of the parent Elimination of Antisocial Forces
company and subsidiaries
1) Toyota will expand the “Guiding Principles at Toyota” and the (1) Basic Policy for Elimination of Antisocial Forces
“Toyota Code of Conduct” to its subsidiaries as TMC’s common Based upon the “Guiding Principles at Toyota” and the “Toyota
charter of conduct, and develop and maintain a sound Code of Conduct”, Toyota’s basic policy is to have no relationship
environment of internal controls for TMC. Toyota will also with antisocial forces. Toyota will take resolute action as an
promote the “Guiding Principles at Toyota” and the “Toyota organization against any undue claims and actions by antisocial
Code of Conduct” through personal exchange. forces or groups, and has drawn the attention of such policy to its
2) Toyota will manage its subsidiaries in a comprehensive manner employees by means such as clearly stipulating it in the “Toyota
by clarifying the roles of the division responsible for the Code of Conduct.”
subsidiaries’ financing and management and the roles of the (2) Preparation towards Elimination of Antisocial Forces
division responsible for the subsidiaries’ business activities. 1) Establishment of Divisions Overseeing Measures
Those divisions will confirm the appropriateness and legality of Against Antisocial Forces and Posts in Charge of Preventing
the operations of the subsidiaries by exchanging information with Undue Claims
those subsidiaries, periodically and as needed. Toyota established divisions that oversee measures against
(7) System concerning employees who assist the Corporate Auditors antisocial forces (“Divisions Overseeing Measures Against
when required Antisocial Forces”) in its major offices as well as assigned persons
Toyota will establish a Corporate Auditors Department and assign a in charge of preventing undue claims. Toyota also established a
number of full-time staff to support this function. system whereby undue claims, organized violence and criminal
(8) Independence of the employees described in the preceding item activities conducted by antisocial forces are immediately
(7) from Directors reported to and consulted with Divisions Overseeing Measures
Any changes in personnel in the Corporate Auditors Department will Against Antisocial Forces.
require prior consent of the Board of Corporate Auditors or a 2) Liaising with Specialist Organizations
full-time Corporate Auditor selected by the Board of Corporate Toyota has been strengthening its liaison with specialist
Auditors. organizations by joining liaison committees organized by
(9) System for Directors and employees to report to Corporate specialists such as the police. It has also been receiving guidance
Auditors, and other relative systems on measures to be taken against antisocial forces from such
1) Directors, from time to time, will properly report to the Corporate committees.
Auditors any major business operations through the divisions in 3) Collecting and Managing Information concerning Antisocial
charge. If any fact that may cause significant damage to the Forces
Company is discovered, they will report the matter to the By liaising with experts and the police, Divisions Overseeing
Corporate Auditors immediately. Measures Against Antisocial Forces share up-to-date information
2) Directors, Managing Officers, and employees will report to the on antisocial forces and utilize such information to call Toyota’s
Corporate Auditors on the business upon requests by the employees’ attention to antisocial forces.
Corporate Auditors, periodically and as needed. 4) Preparation of Manuals
(10) Other systems to ensure that the Corporate Auditors conducted Toyota compiles cases concerning measures against antisocial
audits effectively forces and distributes them to each department within Toyota.
Toyota will ensure that the Corporate Auditors attend major Board 5) Training Activities
meetings, inspect important Company documents, and make Toyota promotes training activities to prevent damages caused
opportunities to exchange information between the Corporate by antisocial forces by sharing information on antisocial forces
Auditors and Accounting Auditor periodically and as needed, as well within the Company as well as holding lectures at Toyota and its
as appoint external experts. Group companies.

Regarding significant differences in corporate governance practices between Toyota and U.S. companies listed on the New York Stock Exchange, please
refer to the annual report on Form 20-F filed with the United States Securities and Exchange Commission. Form 20-F can be viewed at the Company’s
web site (http://www.toyota.co.jp/en/ir/library/sec/index.html).

Annual Report 2009 31

 Management & Corporate Information

Risk
Factors
Risk Factors
Operational and other risks faced by Toyota that could significantly influence the decisions of investors
are set out below. However, the following does not encompass all risks related to the operations of
Toyota. There are risk factors other than those given below. Any such risk factors could influence the
decisions of investors.

Industry and Business Risks downward price pressure and adversely affect Toyota’s financial condition and
results of operations.
The worldwide automotive market is highly competitive. Toyota’s future success depends on its ability to offer new
The worldwide automotive market is highly competitive. Toyota faces intense innovative, price competitive products that meet and satisfy
competition from automotive manufacturers in the respective markets in which customer demand on a timely basis.
it operates. Competition has intensified particularly as a result of the Meeting and satisfying customer demand with attractive new vehicles and
contraction of the automotive market, due to the worldwide deterioration in reducing the amount of time required for product development are critical
the economy stemming from the financial crisis unfolding since last fall. In elements to the success of automotive manufacturers. The timely introduction
addition, competition is likely to further intensify in light of continuing of new vehicle models, at competitive prices, meeting rapidly changing
globalization in the worldwide automotive industry, possibly resulting in customer preferences and demands is more fundamental to Toyota’s success
industry reorganization. Factors affecting competition include product quality than ever as the automotive market is rapidly transforming in light of the
and features, the amount of time required for innovation and development, deterioration in the world economy. There is no assurance, however, that
pricing, reliability, safety, fuel economy, customer service and financing terms. Toyota may adequately and appropriately perceive on a timely basis changing
Increased competition may lead to lower vehicle unit sales and increased customer preferences and demands with respect to quality, styling, reliability,
inventory, which may result in a further downward price pressure and adversely safety and other features in a timely manner. Even if Toyota succeeds in
affect Toyota’s financial condition and results of operations. Toyota’s ability to perceiving customer preferences and demands, there is no assurance that
adequately respond to the recent rapid changes in the automotive market and Toyota will be capable of developing and manufacturing new, price
to maintain its competitiveness will be fundamental to its future success in competitive products in a timely manner with its available technology,
existing and new markets and its market share. There can be no assurances intellectual property, sources of raw materials and parts and components, and
that Toyota will be able to compete successfully in the future. production capacity. Further, there is no assurance that Toyota will be able to
The worldwide automotive industry is highly volatile. implement capital expenditures at the level and times planned by
Each of the markets in which Toyota competes has been subject to management. Toyota’s inability to develop and offer products that meet
considerable volatility in demand. Demand for vehicles depends to a large customer demand in a timely manner could result in a lower market share and
extent on social, political and economic conditions in a given market and the reduced sales volumes and margins, and may adversely affect Toyota’s
introduction of new vehicles and technologies. As Toyota’s revenues are financial condition and results of operations.
derived from sales in markets worldwide, economic conditions in such markets Toyota’s ability to market and distribute effectively and maintain
are particularly important to Toyota. In reflection of the worldwide its brand image is an integral part of Toyota’s successful sales.
deterioration in the economy stemming from the financial crisis, the demand Toyota’s success in the sale of vehicles depends on its ability to market and
for automobiles in Japan, North America and Europe, which are Toyota’s main distribute effectively based on distribution networks and sales techniques
markets, declined substantially particularly since the latter half of 2008, tailored to the needs of its customers as well as its ability to maintain and
adversely affecting Toyota. Such decline in demand for automobiles and the further cultivate its brand image across the markets in which it operates. There
adverse effect on Toyota are currently ongoing, and it is unclear how long this is no assurance that Toyota will be able to develop sales techniques and
situation would continue or how it would transition in the future. Toyota’s distribution networks that effectively adapt to changing customer preferences
financial condition and results of operations may be affected adversely if the or changes in the regulatory environment in the major markets in which it
demand for automobiles remain weak or further weakens as a result of a operates. Nor is there assurance that Toyota will be able to cultivate and
further decline in the world economy. Demand may also be affected by factors protect its brand image. Toyota’s inability to maintain well developed sales
directly impacting vehicle price or the cost of purchasing and operating techniques and distribution networks or a positive brand image may result in
vehicles such as sales and financing incentives, prices of raw materials and decreased sales and market share and may adversely affect its financial
parts and components, cost of fuel and governmental regulations (including condition and results of operations.
tariffs, import regulation and other taxes). Volatility in demand may lead to
lower vehicle unit sales and increased inventory, which may result in a further

32 TOYOTA MOTOR CORPORATION

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Top Messages Performance Overview The Right Way Forward Business Overview Corporate Information Financial Section Information

Corporate Corporate Risk R&D and R&D Production Overseas Toyota

Philosophy Governance Factors Intellectual Property Organization Sites Manufacturing Milestones
Companies

The worldwide financial services industry is highly competitive. to pass all those costs on to its customers or require its suppliers to absorb
The worldwide financial services industry is highly competitive. Increased such costs.
competition in automobile financing may lead to decreased margins. A decline The downturn in the financial markets could adversely affect
in Toyota’s vehicle unit sales, an increase in residual value risk due to lower Toyota’s ability to raise capital.
used vehicle price, increase in the ratio of credit losses and increased funding Financial markets worldwide have been significantly disrupted in the wake of
costs are factors which may impact Toyota’s financial services operations. The the global financial crisis. A number of financial institutions and investors have
likelihood of these factors materializing has increased as a result of the been facing difficulties providing capital to the financial markets due to their
ongoing rapid worldwide economic deterioration, and competition in deteriorated financial conditions. As a result, there is a risk that companies may
automobile financing has intensified. If Toyota is unable to adequately not be able to raise capital under terms that they would expect to receive with
respond to the changes and competition in automobile financing, Toyota’s their creditworthiness. If Toyota is unable to raise the necessary capital under
financial services operations may adversely affect its financial condition and appropriate conditions on a timely basis, Toyota’s financial condition and
results of operations. results of operations may be adversely affected.

Financial Market and Economic Risks Political, Regulatory and Legal Risks

Toyota’s operations are subject to currency and interest rate The automotive industry is subject to various governmental
fluctuations. regulations.
Toyota is sensitive to fluctuations in foreign currency exchange rates and is The worldwide automotive industry is subject to various laws and
principally exposed to fluctuations in the value of the Japanese yen, the U.S. governmental regulations including those related to vehicle safety and
dollar and the euro and, to a lesser extent, the Australian dollar, the Canadian environmental matters such as emission levels, fuel economy, noise and
dollar and the British pound. Toyota’s consolidated financial statements, which pollution. Many governments also impose tariffs and other trade barriers, taxes
are presented in Japanese yen, are affected by foreign currency exchange and levies, and enact price or exchange controls. Toyota has incurred, and
fluctuations through both translation risk and transaction risk. Changes in expects to incur in the future, significant costs in complying with these
foreign currency exchange rates may affect Toyota’s pricing of products sold regulations. New legislation or changes in existing legislation may also subject
and materials purchased in foreign currencies. In particular, strengthening of Toyota to additional expenses in the future.
the Japanese yen against the U.S. dollar can have an adverse effect on Toyota may become subject to various legal proceedings.
Toyota’s operating results. The fluctuation of the Japanese yen against other As an automotive manufacturer, Toyota may become subject to legal
currencies including the U.S. dollar has been particularly great in the past year. proceedings in respect of various issues, including product liability and
If the Japanese yen further rapidly appreciates against other currencies, infringement of intellectual property, and Toyota is in fact currently subject to a
including the U.S. dollar, Toyota’s financial condition and results of operations number of pending legal proceedings. A negative outcome in one or more of
may be adversely affected. these pending legal proceedings could adversely affect Toyota’s future
Toyota believes that its use of certain derivative financial instruments financial condition and results of operations. For a further discussion of
including interest rate swaps and increased localized production of its governmental regulations, see “Information on the Company — Business
products have reduced, but not eliminated, the effects of interest rate and Overview — Governmental Regulation, Environmental and Safety Standards”
foreign currency exchange rate fluctuations. Nonetheless, a negative impact and for legal proceedings, please see “Information on the Company —
resulting from fluctuations in foreign currency exchange rates and changes in Business Overview — Legal Proceedings”.
interest rates may adversely affect Toyota’s financial condition and results of Toyota may be adversely affected by political instabilities, fuel
operations. For a further discussion of currency and interest rate fluctuations shortages or interruptions in transportation systems, natural
and the use of derivative financial instruments, see “Operating and Financial calamities, wars, terrorism and labor strikes.
Review and Prospects — Operating Results — Overview — Currency Toyota is subject to various risks associated with conducting business
Fluctuations”, “Quantitative and Qualitative Disclosures About Market Risk”, worldwide. These risks include political and economic instability, natural
and notes 20 and 21 to Toyota’s consolidated financial statements. calamities, fuel shortages, interruption in transportation systems, wars,
High prices of raw materials and strong pressure on Toyota’s terrorisms, labor strikes and work stoppages. The occurrence of any of these
suppliers could negatively impact Toyota’s profitability. events in the major markets in which Toyota purchases materials, parts and
Increase in prices for raw materials that Toyota and Toyota’s suppliers use in components and supplies for the manufacture of its products or in which its
manufacturing their products or parts and components such as steel, precious products are produced, distributed or sold, may result in disruptions and
metals, non-ferrous alloys including aluminum, and plastic parts, may lead to delays in the operations of Toyota’s business. Significant or prolonged
higher production costs for parts and components. This could, in turn, disruptions and delays in Toyota’s business operations may adversely affect
negatively impact Toyota’s future profitability because Toyota may not be able Toyota’s financial condition and results of operations.

Annual Report 2009 33

 Management & Corporate Information

R&D and
Intellectual Property
R&D and Intellectual Property
Toyota R&D is dedicated to the development of attractive, affordable, high-quality products for
customers worldwide. The intellectual property that R&D generates is a vital management resource
that Toyota utilizes and protects to maximize its corporate value.

R&D Expenses
(¥ Billion)
1,000 R&D Guiding Principles
904.0 • Providing clean and safe products and
800 enhancing the quality of life of people
everywhere through all our activities.

600 • Pursuing advanced technological development

in a wide range of fields, we pledge to provide
attractive products and services that respond
400
to the needs of customers worldwide.

200

R&D Activities
0
FY ’05 ’06 ’07 ’08 ’09
The overriding goal of Toyota’s technology and product
Note: Fiscal years ended March 31
development activities is to minimize the negative aspects of
driving, such as traffic accidents and the burden that automobiles
R&D Facilities have on the environment, and maximize the positive aspects, such
as driving pleasure, comfort, and convenience. By achieving these
sometimes conflicting goals to a high degree, we want to open the
door to the automobile society of the future.
To ensure efficient progress in R&D activities, we coordinate
Head Office Technical Center and integrate all phases, from basic research to forward-looking
(Toyota City, Aichi Prefecture,
Japan) technology and product development. With respect to such
basic research issues as energy, the environment, information
technology, telecommunications, and materials, projects are
regularly reviewed and evaluated in consultation with outside
Toyota Motor Engineering & experts to achieve efficient R&D cost control. And with respect to
Manufacturing North America, Inc. forward-looking, leading-edge technology and product
(Ann Arbor, Michigan, U.S.A.)
development, we establish cost-performance benchmarks on a
project-by-project basis to ensure efficient development
investment.

Toyota Motor Europe R&D/

Manufacturing
(Brussels, Belgium; Derby, U.K.)

Toyota Motor Asia Pacific

Engineering and Manufacturing
Co., Ltd. (Samutprakan, Thailand)

34 TOYOTA MOTOR CORPORATION

 Management & Investor
Top Messages Performance Overview The Right Way Forward Business Overview Corporate Information Financial Section Information

Corporate Corporate Risk R&D and R&D Production Overseas Toyota

Philosophy Governance Factors Intellectual Property Organization Sites Manufacturing Milestones
Companies

Basic Research Development theme discovery

Research on basic vehicle-related Intellectual Property Guiding Principle
technology
• Securing greater corporate flexibility and
maximizing corporate value through the
Forward-Looking Technological breakthroughs related to appropriate acquisition and utilization of
and Leading-Edge components and systems
Technology intellectual property.
Development Development of leading-edge components
and systems ahead of competitors

Product Primary responsibility for new model

Development development
Intellectual Property Activities
Development of all-new models and
existing-model upgrades Toyota’s competitiveness springs from the forward-looking R&D
stance that is instrumental to core strengths associated with
products and technologies. Underlying each new product that
R&D Expenditures emerges from R&D, there are always intellectual properties such as
inventions and expertise that we value as important management
In fiscal 2009, R&D expenditures totaled ¥904.0 billion, down 5.7% resources.
from the previous fiscal year, representing 4.4% of consolidated
net revenues. We worked closely with suppliers to develop Intellectual Property Systems
components and products more efficiently and took steps to
reduce our own R&D expenses. At the same time, we plan to R&D and intellectual property activities are organizationally linked
continue making substantial investments in R&D involving to enable us to focus on selected development themes and build
forward-looking, leading-edge technologies and the development a strong patent portfolio. We have established an Intellectual
of products associated with the environment, energy, and safety. Property Committee made up of individuals involved with
These investments are essential to preserving our competitive management, R&D, and intellectual property. This committee
edge in terms of technologies and products. acquires and utilizes important intellectual property that
contributes to business operations and helps determine policies
R&D Organization for management risks associated with intellectual property.

Toyota operates a global R&D organization with the primary goal Intellectual Property Strategies
of building automobiles that precisely meet the needs of
customers in every region of the world. Toyota carefully analyzes patents and the need for patents in each
In Japan, R&D operations are led by Toyota Central Research area of research to formulate more effective R&D strategies. We
& Development Laboratories, Inc., which works closely with identify R&D projects in which Toyota should acquire patents, and
Daihatsu Motor Co., Ltd., Hino Motors, Ltd., Toyota Auto Body file relevant applications as necessary to help build a strong global
Co., Ltd., Kanto Auto Works, Ltd., and many other Toyota Group patent portfolio.
companies. Overseas, we have a worldwide network of technical In addition, we want to contribute to sustainable mobility by
centers as well as design and motorsports R&D centers. promoting the spread of technologies with environmental and
safety benefits. This is why we take an open stance to patent
licensing, and grant licenses when appropriate terms are met.
A good example of this policy is the licensing to other companies
of patents in the area of hybrid technology, which is one of our
core technologies involving environmental energy.

Annual Report 2009 35

 Management & Corporate Information

R&D Organization
As of March 31, 2009

7 9
8 4
5
3
1
2 6

10

R&D 11

Organization
Japan
Company name Activities Location Establishment
1 Head Office Technical Center Planning and design of products, Toyota City, Aichi Prefecture 1954
prototypes manufacture, and vehicle evaluation
2 Toyota Central Research & Fundamental technical research Aichi County, Aichi Prefecture 1960
Development Laboratories, Inc. for the Toyota Group
3 Higashi-Fuji Technical Center Research and development of new vehicle Mishuku, Susono City, 1966
technology and new engine technology Shizuoka Prefecture
4 Shibetsu Proving Ground Testing and evaluation of automobiles under Onnebetsu, Shibetsu City, Hokkaido 1984
high speed and cold conditions

U.S.A.
Company name Activities Location Establishment
5 Toyota Motor Engineering & Vehicle development & evaluation, certification, Ann Arbor, York Township, 1977
Manufacturing North America, Inc.* collection of technical information Plymouth (Michigan), Torrance,
Gardena (California),
Wittmann (Arizona), Washington, D.C.
6 Calty Design Research, Inc. Exterior / Interior / Color design Newport Beach (California) 1973

Europe
Company name Activities Location Establishment
7 Toyota Motor Europe R&D/ Vehicle development & evaluation, certification, Brussels (Belgium), Derby (U.K.) 1987
Manufacturing collection of technical information
8 Toyota Europe Design Development Exterior / Interior / Color design Nice (France) 1998
9 Toyota Motorsport GmbH Development of Formula One race cars, Cologne (Germany) 1993
participation in F1 races

Asia Pacific
Company name Activities Location Establishment
10 Toyota Motor Asia Pacific Engineering Vehicle development, software development, Samutprakan Province (Thailand) 2003**
and Manufacturing Co., Ltd. evaluation, collection of technical information
11 Toyota Technical Center Asia Pacific Vehicle development, software development, Melbourne (Australia) 2003
Australia Pty., Ltd. evaluation, collection of technical information

* Toyota Motor Engineering & Manufacturing North America, Inc., is a consolidated R&D and manufacturing company in North America.
** The year shown is as at the establishment of Toyota Technical Center Asia Pacific Thailand Co., Ltd., which integrated with Toyota Motor Asia Pacific Co., Ltd.,
to establish Toyota Motor Asia Pacific Engineering and Manufacturing Co., Ltd., in April 2007.

36 TOYOTA MOTOR CORPORATION

 Management & Investor
Top Messages Performance Overview The Right Way Forward Business Overview Corporate Information Financial Section Information

Corporate Corporate Risk R&D and R&D Production Overseas Toyota

Philosophy Governance Factors Intellectual Property Organization Sites Manufacturing Milestones
Companies

Production
Production Sites 2

Sites
As of March 31, 2009

Toyota City
3
12
Tomei
Expressway Hirose
Plant

6 9 Toyota
7 5 Tomei City Miyoshi 11 Teiho Plant
8 4 Expressway Plant
10
Myochi 7
5 2 Motomachi Plant
1
Plant 8
4 1 Honsha Plant
6
9 Takaoka Shimoyama Plant
Tahara
Kinu-ura Plant Tsutsumi Plant
Plant
Plant 3
10
Kamigo Plant

Production Plants
Name Main products Start of
operations
1 Honsha Plant Forged parts, hybrid system parts 1938
2 Motomachi Plant Crown, Mark X, Estima 1959
3 Kamigo Plant Engines 1965
4 Takaoka Plant Corolla, Vitz, iQ, ist, Ractis, Scion xD 1966
5 Miyoshi Plant Transmission-related parts, cold-forged and sintered parts 1968
6 Tsutsumi Plant Prius, Camry, Premio, Allion, Scion tC 1970
7 Myochi Plant Suspension cast parts, suspension machine parts 1973
8 Shimoyama Plant Engines, turbochargers, catalytic converters 1975
9 Kinu-ura Plant Transmission-related parts 1978
10 Tahara Plant LS, GS, IS, IS F, GX, RAV4, Land Cruiser, Vanguard, Wish, engines 1979
11 Teiho Plant Mechanical equipment, moldings for forging and casting and resin-molding dies 1986
12 Hirose Plant Research and development and production of electronic control devices, Ics 1989

Manufacturing Subsidiaries and Vehicle Assembly Affiliates

Company name Main products Voting rights Capital Start of
ratio* (%) (¥ Million) operations
1 Toyota Motor Kyushu, Inc. IS, ES, RX, Harrier, Highlander, engines, hybrid system parts 100.00 45,000 1992
2 Toyota Motor Hokkaido, Inc. Automobile parts including automatic transmissions, transfers, 100.00 27,500 1992
aluminum wheels
3 Toyota Motor Tohoku Co., Ltd. Electronic Brake force Distribution, suspension system, accelerator, 100.00 5,300 1998
torque converter
4 Toyota Auto Body Co., Ltd. Land Cruiser, Coaster, Hiace, Estima, Ipsum, Regius Ace, Prius, Voxy, 56.48 10,371 1945
Noah, Alphard, Vellfire, LX
5 Kanto Auto Works, Ltd. Crown, Century, Comfort, Corolla, Corolla Fielder, Corolla Rumion, 50.83 6,850 1946
Belta, Isis, SC, BLADE, Auris, Scion xB
6 Central Motor Co., Ltd. Corolla Axio, Raum, Yaris 100.00 5,325 1950
7 Gifu Auto Body Industry Co., Ltd. Hiace, Himedic 100.00 1,175 1940
8 Daihatsu Motor Co., Ltd. bB, Probox, Succeed, Passo, Porte, Rush, SIENTA, Passo Sette 51.66 28,404 1907
9 Hino Motors, Ltd. Dyna, Dyna Diesel Hybrid, Toyoace, Toyoace Diesel Hybrid, Prado, 50.57 72,717 1942
FJ Cruiser, 4Runner
10 Toyota Industries Corporation Vitz, RAV4, Mark X ZiO 24.85 80,462 1926

* Including voting rights by the subsidiaries determined in accordance with U.S. GAAP
Note: The blue numbers show the locations of the Head Offices of manufacturing subsidiaries and vehicle assembly affiliates.

Annual Report 2009 37

 Management & Corporate Information

Overseas Manufacturing Companies

As of March 31, 2009 24
23 19
20
18 17 1 2

32
27-31,33 4 3 12 9
21 22 8
35 6 7 5
13 10
44 11
52 34,36
37
45
39 38 47-50
51 46
16
43 42

25 41
40

15
26
14
53

North America
Country/Area Company name Main products Voting rights Start of
ratio* (%) operations
Canada 1 Canadian Autoparts Toyota Inc. (CAPTIN) Aluminum wheels 100.00 1985
2 Toyota Motor Manufacturing Canada Inc. (TMMC) Corolla, Matrix, RX350, RAV4 100.00 1988
U.S.A. 3 TABC, Inc. Catalytic converters, steering columns, 100.00 1971
stamped parts
4 New United Motor Manufacturing, Inc. (NUMMI)** Corolla, Tacoma 50.00 1984
5 Toyota Motor Manufacturing, Kentucky, Inc. (TMMK) Camry, Camry Hybrid, Camry Solara, 100.00 1988
Avalon, VENZA/engines
6 Catalytic Component Products, Inc. (CCP) Catalytic converters — 1991
7 Bodine Aluminum, Inc. Aluminum castings 100.00 1993
8 Toyota Motor Manufacturing, West Virginia, Inc. (TMMWV) Engines, transmissions 100.00 1998
9 Toyota Motor Manufacturing, Indiana, Inc. (TMMI) Tundra, Sequoia, Sienna 100.00 1999
10 Toyota Motor Manufacturing, Alabama, Inc. (TMMAL) Engines 100.00 2003
11 Toyota Motor Manufacturing, Texas, Inc. (TMMTX) Tundra 100.00 2006
12 Subaru of Indiana Automotive, Inc. (SIA)** Camry — 2007***
Mexico 13 Toyota Motor Manufacturing de Baja California Tacoma/Truck beds 100.00 2004
S.de R.L.de C.V. (TMMBC)

Central and South America

Country/Area Company name Main products Voting rights Start of
ratio* (%) operations
Argentina 14 Toyota Argentina S.A. (TASA) Hilux, Fortuner 100.00 1997
Brazil 15 Toyota do Brasil Ltda. (TDB) Corolla, 100.00 1959
Corolla Fielder/Hilux underbody parts
Venezuela 16 Toyota de Venezuela Compania Anonima (TDV)** Corolla, Fortuner, Hilux, Dyna, 90.00 1981
Land Cruiser

Europe
Country/Area Company name Main products Voting rights Start of
ratio* (%) operations
Czech Republic 17 Toyota Peugeot Citroën Automobiles Czech, s. r. o. (TPCA)** Aygo 50.00 2005
France 18 Toyota Motor Manufacturing France S.A.S. (TMMF) Yaris/engines 100.00 2001
Poland 19 Toyota Motor Manufacturing Poland SP.zo.o. (TMMP) Engines, transmissions 94.40 2002
20 Toyota Motor Industries Poland SP.zo.o. (TMIP) Engines 60.00 2005
Portugal 21 Toyota Caetano Portugal, S.A. (TCAP) Coaster (Optimo), Dyna, Semibon 27.00 1968
Turkey 22 Toyota Motor Manufacturing Turkey Inc. (TMMT) Corolla Verso, Auris 90.00 1994
U.K. 23 Toyota Motor Manufacturing (UK) Ltd. (TMUK) Avensis, Auris/engines 100.00 1992
Russia 24 Limited Liability Company Camry 80.00 2007
“TOYOTA MOTOR MANUFACTURING RUSSIA” (TMMR)

38 TOYOTA MOTOR CORPORATION

 Management & Investor
Top Messages Performance Overview The Right Way Forward Business Overview Corporate Information Financial Section Information

Corporate Corporate Risk R&D and R&D Production Overseas Toyota

Philosophy Governance Factors Intellectual Property Organization Sites Manufacturing Milestones
Companies

Overseas
Africa
Country/Area Company name
Manufacturing Main products Voting rights
ratio* (%)
Start of
operations
Kenya 25 Associated Vehicle Assemblers Ltd. (AVA) Land Cruiser — 1977
South Africa 26 Toyota South Africa Motors (Pty) Ltd. (TSAM) Corolla, Hiace, Hilux, Fortuner, 100.00 1962
Dyna/Maniverter, exhaust manifold

Asia
Country/Area Company name Main products Voting rights Start of
ratio* (%) operations
China 27 Tianjin Jinfeng Auto Parts Co., Ltd. (TJAC) Steering, propeller shafts 30.00 1997
28 Tianjin Fengjin Auto Parts Co., Ltd. (TFAP) Constant velocity joints, axles, 90.00 1998
differential gear
29 Tianjin FAW Toyota Engine Co., Ltd. (TFTE) Engines 50.00 1998
30 Tianjin Toyota Forging Co., Ltd. (TTFC) Forged parts 100.00 1998
31 Tianjin FAW Toyota Motor Co., Ltd. (TFTM) VIOS, Corolla, Crown, REIZ 50.00 2002
32 FAW Toyota (Changchun) Engine Co., Ltd. (FTCE) Engines 50.00 2004
33 Toyota FAW (Tianjin) Dies Co., Ltd. (TFTD) Stamping dies for vehicles 90.00 2004
34 Guangqi Toyota Engine Co., Ltd. (GTE) Engines, engine parts 70.00 2005
35 Sichuan FAW Toyota Motor Co., Ltd. (SFTM)** Coaster, Land Cruiser, Prado, Prius 45.00 2000
36 Guangzhou Toyota Motor Co., Ltd. (GTMC) Camry, Yaris 50.00 2006
Taiwan 37 Kuozui Motors, Ltd. Camry, Corolla, WISH, VIOS, Yaris, 70.00 1986
Innova, Dyna/engines, stamped parts
India 38 Toyota Kirloskar Motor Private Ltd. (TKM) Corolla, Innova 89.00 1999
39 Toyota Kirloskar Auto Parts Private Ltd. (TKAP) Axles, propeller shafts, transmissions 64.30 2002
Indonesia 40 PT. Toyota Motor Manufacturing Indonesia (TMMIN) Innova, Fortuner, Dyna/engines 95.00 1970
41 P.T. Astra Daihatsu Motor (ADM)** AVANZA 61.75 2004***
Malaysia 42 Assembly Services Sdn. Bhd. (ASSB) Hiace, VIOS, Hilux, Innova, — 1968
Fortuner/engines
43 Perodua Manufacturing Sdn. Bhd. (PMSB)** AVANZA — 2005***
Pakistan 44 Indus Motor Company Ltd. (IMC)** Corolla, Hilux 25.00 1993
Philippines 45 Toyota Motor Philippines Corp. (TMP) Innova, VIOS 34.00 1989
46 Toyota Autoparts Philippines Inc. (TAP) Transmissions, constant velocity joints 95.00 1992
Thailand 47 Toyota Motor Thailand Co., Ltd. (TMT) Corolla, Camry, WISH, VIOS, Yaris, 86.43 1964
VIGO, Fortuner
48 Toyota Auto Body Thailand Co., Ltd. (TABT) Stamped parts 48.97 1979
49 Thai Auto Works Co., Ltd. (TAW) Fortuner 19.99 1988
50 Siam Toyota Manufacturing Co., Ltd. (STM) Engines, engine parts 96.00 1989
Vietnam 51 Toyota Motor Vietnam Co., Ltd. (TMV) Camry, Corolla, VIOS, Innova, Hiace 70.00 1996
Bangladesh 52 Aftab Automobiles Ltd.** Land Cruiser — 1982

Oceania
Country/Area Company name Main products Voting rights Start of
ratio* (%) operations
Australia 53 Toyota Motor Corporation Australia Ltd. (TMCA) Camry/engines 100.00 1963

Production Facilities where Operations are Planned

Country/Area Company name Main products Voting rights Start of
ratio* (%) operations
U.S.A. Toyota Motor Manufacturing, Mississippi, Inc. (TMMMS) Prius 100.00 TBD

* Including voting rights by the subsidiaries determined in accordance with U.S. GAAP
** Companies also produce brands other than Toyota and Lexus
*** First year of Toyota’s vehicle production
Note: Plants that manufacture or assemble Toyota- or Lexus-brand vehicles and component manufacturers established by Toyota

Annual Report 2009 39

 Toyota Milestones

Kiichiro Toyoda, the founder of Toyota Motor Corporation, was born in 1894. Inheriting the spirit of his father,
Sakichi Toyoda, an inventor of looms, Kiichiro devoted his life to automobile manufacturing, at the time an unknown
field in Japan. After a lot of painstaking work, he completed the A1 prototype passenger car in 1935, and the history
of Toyota Motor Corporation began.

A
1930s 1933 Automobile research begins at Toyota Automatic Loom Works, Ltd.
1935 Completion of A1 prototype passenger car Launch of G1 truck A

1936 Launch of AA passenger car

1937 Establishment of Toyota Motor Co., Ltd.
1938 Koromo plant (now Honsha plant) begins production B

A1 prototype passenger car

1940s 1947 Domestic production reaches 100 thousand vehicles
B
1950s 1950 Establishment of and transfer of sales operations
to Toyota Motor Sales Co., Ltd.
1955 Launch of the Toyopet Crown C

1957 Export of the first made-in-Japan passenger car

to the United States (the Crown)
Establishment of Toyota Motor Sales, U.S.A., Inc.
Koromo plant at the time of establishment
1960s 1961 Launch of the Publica
C
1966 Launch of the Corolla D

1970s 1972 Cumulative total domestic production reaches 10 million vehicles

1973 Establishment of Calty Design Research, Inc.
1977 Establishment of Toyota Technical Center, U.S.A., Inc. (now TEMA*)
* TEMA has overall control of R&D and production in North America.
First-generation Toyopet Crown
1980s 1982 Toyota Motor Co., Ltd., and Toyota Motor Sales Co., Ltd.,
merge to become Toyota Motor Corporation D
1984 Joint venture company (NUMMI) established with General Motors
begins production in the United States
1987 Establishment of Toyota Technical Center of Europe (now TME*)
1988 Kentucky plant (now TMMK) begins production in the United States
1989 Launch of Lexus in North America
* TME has overall control of operations in Europe. First-generation Corolla

1990s 1992 Establishment of Toyota Supplier Support Center in the United States E
U.K. plant (TMUK) begins production
1997 Launch of the Prius hybrid vehicle
1999 Toyota Motor Corporation lists on the New York
and London stock exchanges
Cumulative total domestic production reaches 100 million vehicles E

Cumulative domestic production reaches 100

2000s 2000 Sichuan FAW Toyota Motor Co., Ltd., begins production million vehicles

2002 Establishment of the Toyota Institute, a personnel training facility

F
Toyota Motor Corporation participates in F1,
the pinnacle of motorsports
2005 Joint venture company established with PSA Peugeot Citroën
begins production in the Czech Republic
Launch of Lexus in Japan
2007 Global cumulative sales of Toyota hybrid vehicles top one million
Hybrid vehicle, second-generation Prius
2008 Global cumulative sales of Prius hybrid vehicle top one million F

40 TOYOTA MOTOR CORPORATION

 Management & Investor
Top Messages Performance Overview The Right Way Forward Business Overview Corporate Information Financial Section Information

Financial Section Financial

42

44

45

46
Section
Selected Financial Summary (U.S. GAAP)

Consolidated Segment Information

Consolidated Quarterly Financial Summary

Management’s Discussion and Analysis of Financial Condition and Results of Operations

64 Consolidated Balance Sheets

66 Consolidated Statements of Income

67 Consolidated Statements of Shareholders’ Equity

68 Consolidated Statements of Cash Flows

69 Notes to Consolidated Financial Statements

106 Management’s Annual Report on Internal Control over Financial Reporting

107 Report of Independent Registered Public Accounting Firm

Annual Report 2009 41

 Financial Section

Selected Financial Summary (U.S. GAAP)

Toyota Motor Corporation
Fiscal years ended March 31

Yen in millions
2000 2001 2002 2003
For the Year:
Net Revenues:
Sales of Products....................................................... ¥11,892,900 ¥12,402,104 ¥13,499,644 ¥14,793,973
Financing Operations ............................................... 528,349 553,133 690,664 707,580
Total ....................................................................... ¥12,421,249 ¥12,955,237 ¥14,190,308 ¥15,501,553

Costs and Expenses:

Cost of Products Sold ............................................... ¥ 9,839,833 ¥10,218,599 ¥10,874,455 ¥11,914,245
Cost of Financing Operations .................................. 401,998 427,340 459,195 423,885
Selling, General and Administrative........................ 1,480,857 1,518,569 1,763,026 1,891,777
Total ....................................................................... ¥11,722,688 ¥12,164,508 ¥13,096,676 ¥14,229,907

Operating Income (Loss) .............................................. ¥ 698,561 ¥ 790,729 ¥ 1,093,632 ¥ 1,271,646

% of Net Revenues ................................................... 5.6% 6.1% 7.7% 8.2%
Income (Loss) before Income Taxes,
Minority Interest and Equity in
Earnings of Affiliated Companies .............................. 880,680 1,107,289 972,101 1,226,652
Provision for Income Taxes........................................... 422,731 523,876 422,789 517,014
Net Income (Loss) ......................................................... 481,936 674,898 556,567 750,942
ROE ................................................................................ 7.1% 9.6% 7.8% 10.4%

Net Cash Provided by Operating Activities ............... ¥ 1,098,925 ¥ 1,428,018 ¥ 1,532,079 ¥ 1,940,088
Net Cash Used in Investing Activities ......................... (1,388,517) (1,318,738) (1,810,230) (2,001,448)
Net Cash Provided by (Used in)
Financing Activities ..................................................... 550,267 (166,713) 392,148 37,675
R&D Expenses ............................................................... 451,177 475,716 589,306 668,404
Capital Expenditures for
Property, Plant and Equipment* ................................ 838,309 762,274 940,547 1,005,931
Depreciation.................................................................. 822,315 784,784 809,841 870,636

At Year-End:
Shareholders’ Equity..................................................... ¥ 6,912,140 ¥ 7,077,411 ¥ 7,264,112 ¥ 7,121,000
Total Assets ................................................................... 16,440,960 17,019,783 19,305,730 20,152,974
Long-Term Debt............................................................ 2,913,759 3,083,344 3,722,706 4,137,528
Cash and Cash Equivalents .......................................... 1,529,268 1,510,892 1,657,160 1,592,028
Ratio of Shareholders’ Equity ...................................... 42.0% 41.6% 37.6% 35.3%
Yen
2000 2001 2002 2003
Per Share Data:
Net Income (Loss) (Basic) ............................................. ¥ 128.27 ¥ 180.65 ¥ 152.26 ¥ 211.32
Annual Cash Dividends ................................................ 24 25 28 36
Shareholders’ Equity..................................................... 1,844.02 1,921.29 2,015.82 2,063.43

Stock Information (March 31):

Stock Price ..................................................................... ¥5,370 ¥4,350 ¥3,650 ¥2,635
Market Capitalization (Yen in millions) ........................ ¥20,134,306 ¥16,029,739 ¥13,332,491 ¥9,512,343
Number of Shares Issued (shares) ............................... 3,749,405,129 3,684,997,492 3,649,997,492 3,609,997,492
* Excluding vehicles and equipment of operating leases

42 TOYOTA MOTOR CORPORATION

 Management & Investor
Top Messages Performance Overview The Right Way Forward Business Overview Corporate Information Financial Section Information

Yen in millions % change

2004 2005 2006 2007 2008 2009 2008 vs 2009

¥16,578,033 ¥17,790,862 ¥20,059,493 ¥22,670,097 ¥24,820,510 ¥19,173,720 -22.8

716,727 760,664 977,416 1,277,994 1,468,730 1,355,850 -7.7
¥17,294,760 ¥18,551,526 ¥21,036,909 ¥23,948,091 ¥26,289,240 ¥20,529,570 -21.9

¥13,506,337 ¥14,500,282 ¥16,335,312 ¥18,356,255 ¥20,452,338 ¥17,468,416 -14.6

364,177 369,844 609,632 872,138 1,068,015 987,384 -7.5
1,757,356 2,009,213 2,213,623 2,481,015 2,498,512 2,534,781 +1.5
¥15,627,870 ¥16,879,339 ¥19,158,567 ¥21,709,408 ¥24,018,865 ¥20,990,581 -12.6

¥ 1,666,890 ¥ 1,672,187 ¥ 1,878,342 ¥ 2,238,683 ¥ 2,270,375 ¥ (461,011) —

9.6% 9.0% 8.9% 9.3% 8.6% -2.2% —

1,765,793 1,754,637 2,087,360 2,382,516 2,437,222 (560,381) —

681,304 657,910 795,153 898,312 911,495 (56,442) —
1,162,098 1,171,260 1,372,180 1,644,032 1,717,879 (436,937) —
15.2% 13.6% 14.0% 14.7% 14.5% -4.0% —

¥ 2,186,734 ¥ 2,370,940 ¥ 2,515,480 ¥ 3,238,173 ¥ 2,981,624 ¥ 1,476,905 -50.5

(2,216,495) (3,061,196) (3,375,500) (3,814,378) (3,874,886) (1,230,220) +68.3

242,223 419,384 876,911 881,768 706,189 698,841 -1.0

682,279 755,147 812,648 890,782 958,882 904,075 -5.7

945,803 1,068,287 1,523,459 1,425,814 1,480,570 1,364,582 -7.8

969,904 997,713 1,211,178 1,382,594 1,491,135 1,495,170 -0.3

¥ 8,178,567 ¥ 9,044,950 ¥10,560,449 ¥11,836,092 ¥11,869,527 ¥10,061,207 -15.2

22,040,228 24,335,011 28,731,595 32,574,779 32,458,320 29,062,037 -10.5
4,247,266 5,014,925 5,640,490 6,263,585 5,981,931 6,301,469 +5.3
1,729,776 1,483,753 1,569,387 1,900,379 1,628,547 2,444,280 +50.1
37.1% 37.2% 36.8% 36.3% 36.6% 34.6% —
Yen % change
2004 2005 2006 2007 2008 2009 2008 vs 2009

¥ 342.90 ¥ 355.35 ¥ 421.76 ¥ 512.09 ¥ 540.65 ¥ (139.13) —

45 65 90 120 140 100 -28.6
2,456.08 2,767.67 3,257.63 3,701.17 3,768.97 3,208.41 -14.9

¥3,880 ¥3,990 ¥6,430 ¥7,550 ¥4,970 ¥3,120 -37.2

¥14,006,790 ¥14,403,890 ¥23,212,284 ¥27,255,481 ¥17,136,548 ¥10,757,752 -37.2
3,609,997,492 3,609,997,492 3,609,997,492 3,609,997,492 3,447,997,492 3,447,997,492 —

Annual Report 2009 43

 Financial Section

Consolidated Segment Information

Toyota Motor Corporation
Fiscal years ended March 31

Yen in millions % change

2004 2005 2006 2007 2008 2009 2008 vs 2009
Business Segment:
Net Revenues:
Automotive ............................. ¥15,973,826 ¥17,113,535 ¥19,338,144 ¥21,928,006 ¥24,177,306 ¥18,564,723 -23.2
Financial Services ................... 736,852 781,261 996,909 1,300,548 1,498,354 1,377,548 -8.1
All Other ................................. 896,244 1,030,320 1,190,291 1,323,731 1,346,955 1,184,947 -12.0
Intersegment Elimination ...... (312,162) (373,590) (488,435) (604,194) (733,375) (597,648) —
Consolidated ...................... ¥17,294,760 ¥18,551,526 ¥21,036,909 ¥23,948,091 ¥26,289,240 ¥20,529,570 -21.9

Operating Income (Loss):

Automotive ............................. ¥1,518,954 ¥1,452,535 ¥1,694,045 ¥2,038,828 ¥2,171,905 ¥(394,876) —
Financial Services ................... 145,998 200,853 155,817 158,495 86,494 (71,947) —
All Other ................................. 15,247 33,743 39,748 39,679 33,080 9,913 -70.0
Intersegment Elimination ...... (13,309) (14,944) (11,268) 1,681 (21,104) (4,101) —
Consolidated ...................... ¥1,666,890 ¥1,672,187 ¥1,878,342 ¥2,238,683 ¥2,270,375 ¥(461,011) —

Geographic Segment:
Net Revenues:
Japan....................................... ¥11,589,987 ¥12,004,155 ¥13,111,457 ¥14,815,282 ¥15,315,812 ¥12,186,737 -20.4
North America ........................ 6,127,639 6,373,453 7,687,942 9,029,773 9,423,258 6,222,914 -34.0
Europe .................................... 2,164,341 2,479,427 2,727,409 3,542,193 3,993,434 3,013,128 -24.5
Asia.......................................... 1,243,521 1,625,422 2,042,806 2,225,528 3,120,826 2,719,329 -12.9
Other ....................................... 1,118,362 1,183,702 1,601,736 1,922,742 2,294,137 1,882,900 -17.9
Intersegment Elimination ...... (4,949,090) (5,114,633) (6,134,441) (7,587,427) (7,858,227) (5,495,438) —
Consolidated ...................... ¥17,294,760 ¥18,551,526 ¥21,036,909 ¥23,948,091 ¥26,289,240 ¥20,529,570 -21.9

Operating Income (Loss):

Japan....................................... ¥1,108,127 ¥ 987,242 ¥1,075,890 ¥1,457,246 ¥1,440,286 ¥(237,531) —
North America ........................ 390,977 447,559 495,638 449,633 305,352 (390,192) —
Europe .................................... 72,475 108,541 93,947 137,383 141,571 (143,233) —
Asia.......................................... 60,277 93,772 145,546 117,595 256,356 176,060 -31.3
Other ....................................... 36,636 47,454 67,190 83,497 143,978 87,648 -39.1
Intersegment Elimination ...... (1,602) (12,381) 131 (6,671) (17,168) 46,237 —
Consolidated ...................... ¥1,666,890 ¥1,672,187 ¥1,878,342 ¥2,238,683 ¥2,270,375 ¥(461,011) —

44 TOYOTA MOTOR CORPORATION

 Management & Investor
Top Messages Performance Overview The Right Way Forward Business Overview Corporate Information Financial Section Information

Consolidated Quarterly Financial Summary

Toyota Motor Corporation
Fiscal years ended March 31

Yen in billions
2008 2009
First Quarter Second Quarter Third Quarter Fourth Quarter First Quarter Second Quarter Third Quarter Fourth Quarter

Net Revenues ................................................ ¥6,522.6 ¥6,489.6 ¥6,709.9 ¥6,567.1 ¥6,215.1 ¥5,975.3 ¥4,802.8 ¥3,536.3
% Change .................................................. 15.7% 11.2% 9.2% 3.8% -4.7% -7.9% -28.4% -46.2%
Operating Income (Loss) .............................. 675.4 596.7 601.5 396.7 412.5 169.5 (360.6) (682.5)
% Change .................................................. 31.8% 2.7% 4.7% -30.5% -38.9% -71.6% —% —%
Operating Income Margin ........................... 10.4% 9.2% 9.0% 6.0% 6.6% 2.8% -7.5% -19.3%
Income (Loss) before Income Taxes,
Minority Interest and Equity in
Earnings of Affiliated Companies.............. 739.0 623.2 652.7 422.3 453.0 183.4 (282.1) (914.7)
% Change .................................................. 33.2% 1.9% 6.0% -29.7% -38.7% -70.6% —% —%
Net Income (Loss) ......................................... 491.5 450.9 458.6 316.8 353.6 139.8 (164.7) (765.8)
% Change .................................................. 32.3% 11.1% 7.5% -28.0% -28.1% -69.0% —% —%

Business Segment:
Net Revenues:
Automotive ............................................ ¥6,014.3 ¥5,925.3 ¥6,180.4 ¥6,057.3 ¥5,720.9 ¥5,439.8 ¥4,311.1 ¥3,092.9
Financial Services .................................. 378.6 406.7 391.7 321.3 363.1 374.6 346.6 293.2
All Other ................................................ 293.0 321.0 333.6 399.3 288.2 314.2 294.3 288.2
Intersegment Elimination ..................... (163.3) (163.4) (195.8) (210.8) (157.1) (153.3) (149.2) (138.0)
Consolidated ..................................... ¥6,522.6 ¥6,489.6 ¥6,709.9 ¥6,567.1 ¥6,215.1 ¥5,975.3 ¥4,802.8 ¥3,536.3

Operating Income (Loss):

Automotive ............................................ ¥622.1 ¥559.5 ¥567.8 ¥422.5 ¥332.3 ¥133.6 ¥(232.7) ¥(628.1)
Financial Services .................................. 48.3 29.5 20.9 (12.2) 79.1 28.1 (123.9) (55.4)
All Other ................................................ 4.1 6.0 11.8 11.1 2.9 8.9 0 (1.9)
Intersegment Elimination ..................... 0.9 1.7 1.0 (24.7) (1.8) (1.1) (4.0) 2.9
Consolidated ..................................... ¥675.4 ¥596.7 ¥601.5 ¥396.7 ¥412.5 ¥169.5 ¥(360.6) ¥(682.5)

Geographic Segment:
Net Revenues:
Japan...................................................... ¥ 3,662.9 ¥ 3,653.9 ¥ 3,984.8 ¥ 4,014.2 ¥ 3,660.8 ¥ 3,546.5 ¥ 3,014.1 ¥1,965.3
North America ....................................... 2,510.9 2,399.0 2,369.8 2,143.5 2,091.1 1,861.9 1,339.0 930.9
Europe ................................................... 1,019.0 1,001.6 983.1 989.7 916.2 867.7 660.5 568.7
Asia......................................................... 720.1 785.2 811.2 804.4 798.3 827.7 683.9 409.5
Other ...................................................... 559.7 569.2 641.2 524.0 628.7 592.7 381.5 280.0
Intersegment Elimination ..................... (1,950.0) (1,919.3) (2,080.2) (1,908.7) (1,880.0) (1,721.2) (1,276.2) (618.1)
Consolidated ..................................... ¥ 6,522.6 ¥ 6,489.6 ¥ 6,709.9 ¥ 6,567.1 ¥ 6,215.1 ¥ 5,975.3 ¥ 4,802.8 ¥3,536.3

Operating Income (Loss):

Japan...................................................... ¥396.6 ¥376.7 ¥389.4 ¥277.6 ¥217.1 ¥104.6 ¥(164.2) ¥(395.0)
North America ....................................... 160.2 93.9 63.6 (12.4) 69.1 (34.9) (247.4) (177.0)
Europe ................................................... 38.5 29.8 34.0 39.2 20.3 (11.5) (43.4) (108.7)
Asia......................................................... 49.6 67.1 64.3 75.4 69.3 67.8 40.5 (1.6)
Other ...................................................... 38.6 33.1 49.9 22.3 44.5 34.6 33.5 (25.1)
Intersegment Elimination ..................... (8.1) (3.9) 0.3 (5.4) (7.8) 8.9 20.4 24.9
Consolidated ..................................... ¥675.4 ¥596.7 ¥601.5 ¥396.7 ¥412.5 ¥169.5 ¥(360.6) ¥(682.5)

Annual Report 2009 45

 Financial Section

Management’s Discussion and Analysis

of Financial Condition and Results of Operations
All financial information discussed in this section is derived During fiscal 2009, however, Consolidated Vehicle Sales
from Toyota’s consolidated financial statements that Toyota and Lexus brands’ market (Thousands of units)
appear elsewhere in this annual report on Form 20-F. The share excluding mini-vehicles, 10,000
financial statements have been prepared in conformity and Toyota’s market share
with accounting principles generally accepted in the (including Daihatsu and Hino
8,000
United States of America. brands) including mini-vehicles
represented a record high reflect-
ing the sales efforts of domestic 6,000
dealers. Overseas vehicle unit
Overview
sales increased during fiscal
4,000
2008, but decreased during fiscal
The business segments of Toyota include automotive operations, 2009. During fiscal 2008, vehicle
financial services operations and all other operations. Automotive unit sales increased in North 2,000
operations is Toyota’s most significant business segment, America, Europe, Asia and Other
accounting for 88% of Toyota’s total revenues before the elimi- reflecting the expansion of pro-
nation of intersegment revenues for fiscal 2009. Toyota’s primary duction sites, the introduction of 0

markets based on vehicle unit sales for fiscal 2009 were: Japan vehicle models that effectively FY ’05 ’06 ’07 ’08 ’09

(26%), North America (29%), Europe (14%) and Asia (12%). met customer needs and the
implementation of various sales measures. During fiscal 2009,
Automotive Market Environment vehicle unit sales decreased, particularly in North America
The worldwide automotive market is highly competitive and vol- and Europe, where the contraction of automotive markets was
atile. The demand for automobiles is affected by a number of especially pronounced.
factors including social, political and general economic condi- Toyota’s share of total vehicle unit sales in each market is influ-
tions; introduction of new vehicles and technologies; and costs enced by the quality, price, design, performance, safety, reliabil-
incurred by customers to purchase and operate vehicles. These ity, economy and utility of Toyota’s vehicles compared with those
factors can cause consumer demand to vary substantially from offered by other manufacturers. The timely introduction of new
year to year in different geographic markets and for different or redesigned vehicles is also an important factor in satisfying
types of automobiles. customer needs. Toyota’s ability to satisfy changing customer
The automotive industry experienced a rapid contraction of preferences can affect its revenues and earnings significantly.
markets globally during fiscal 2009 due to a severe downturn in The profitability of Toyota’s automotive operations is affected
the economy stemming from a global financial crisis, and result- by many factors. These factors include:
ed in an extremely severe condition. Particularly in Japan, the • vehicle unit sales volumes,
United States, and Europe, the markets declined severely in the • the mix of vehicle models and options sold,
second half of fiscal 2009. The markets in resource-rich countries • the level of parts and service sales,
and emerging countries, which were growing continuously, • the levels of price discounts and other sales incentives and
encountered a sudden slowdown in growth. marketing costs,
The following table sets forth Toyota’s consolidated vehicle • the cost of customer warranty claims and other customer
unit sales by geographic market based on location of customers satisfaction actions,
for the past three fiscal years. • the cost of research and development and other fixed costs,
Thousands of units • the prices of raw materials,
Years ended March 31, • the ability to control costs,
2007 2008 2009 • the efficient use of production capacity, and
Japan ................................................. 2,273 2,188 1,945 • changes in the value of the Japanese yen and other currencies
North America .................................. 2,942 2,958 2,212 in which Toyota does business.
Europe ............................................... 1,224 1,284 1,062 Changes in laws, regulations, policies and other governmental
Asia .................................................... 789 956 905 actions can also materially impact the profitability of Toyota’s
Other* ................................................ 1,296 1,527 1,443 automotive operations. These laws, regulations and policies
Overseas total ................................... 6,251 6,725 5,622 include those attributed to environmental matters and vehicle
Total ................................................... 8,524 8,913 7,567 safety, fuel economy and emissions that can add significantly to
* “Other” consists of Central and South America, Oceania, Africa and the the cost of vehicles. The European Union has enforced a direc-
Middle East, etc. tive that requires manufacturers to be financially responsible for
taking back end-of-life vehicles and to take measures to ensure
Toyota’s consolidated vehicle unit sales in Japan decreased dur- that adequate used vehicle disposal facilities are established and
ing fiscal 2008 and 2009 as compared to each of the respective those hazardous materials and recyclable parts are removed
prior years reflecting a decline in the overall domestic market. from vehicles prior to scrapping. Please see “—Legislation

46 TOYOTA MOTOR CORPORATION

 Management & Investor
Top Messages Performance Overview The Right Way Forward Business Overview Corporate Information Financial Section Information

Regarding End-of-Life Vehicles,” “Information on the Company— Financial Services Operations

Business Overview—Governmental Regulation, Environmental The worldwide automobile finan- Total Assets by Financial
and Safety Standards” and note 23 to the consolidated financial cial services industry has become Services Operations
statements for a more detailed discussion of these laws, regula- highly competitive due to the (¥ Billion)
tions and policies. contraction of automotive mar- 16,000
Many governments also regulate local content, impose tariffs kets. As competition increases,
and other trade barriers, and enact price or exchange controls margins on financing transactions
that can limit an automaker’s operations and can make the repa- may decrease and market share 12,000
triation of profits unpredictable. Changes in these laws, regula- may also decline as customers
tions, policies and other governmental actions may affect the obtain financing for Toyota vehi-
production, licensing, distribution or sale of Toyota’s products, cles from alternative sources. 8,000
cost of products or applicable tax rates. Toyota is currently one of Toyota’s financial services
the defendants in purported national class actions alleging vio- operations mainly include loans
lations of the U.S. Sherman Antitrust Act. Toyota believes that and leasing programs for cus-
4,000
its actions have been lawful. In the interest of quickly resolving tomers and dealers. Toyota
these legal actions, however, Toyota entered into a settlement believes that its ability to provide
agreement with the plaintiffs at the end of February 2006. The financing to its customers is an
0
settlement agreement is pending the approval of the federal important value added service.
FY ’05 ’06 ’07 ’08 ’09
district court, and immediately upon approval the plaintiffs will, Therefore, Toyota has expanded
in accordance with the terms of the settlement agreement, its network of finance subsidiar-
withdraw all pending actions against Toyota in the federal dis- ies in order to offer financial services in many countries.
trict court as well as all state courts and all related actions will Toyota’s competitors for retail financing and retail leasing
be closed. For a more detailed description of these proceed- include commercial banks, credit unions and other finance
ings, see note 23 to the consolidated financial statements. companies. Meanwhile, commercial banks and other captive
The worldwide automotive industry is in a period of global automobile finance companies also provide competition for
competition which may continue for the foreseeable future, and Toyota’s wholesale financing activities.
in general the competitive environment in which Toyota operates Toyota’s financial assets decreased during fiscal 2009 primarily
is likely to intensify. Toyota believes it has the resources, strate- due to the impact of fluctuations in foreign currency translation
gies and technologies in place to compete effectively in the rates.
industry as an independent company for the foreseeable future.

The following table provides information regarding Toyota’s finance receivables and operating leases as of March 31, 2008 and 2009.

Yen in millions
March 31,
2008 2009
Finance Receivables
Retail .............................................................................................................................................................................. ¥ 6,959,479 ¥ 6,655,404
Finance leases ............................................................................................................................................................... 1,160,401 1,108,408
Wholesale and other dealer loans .............................................................................................................................. 2,604,411 2,322,721
10,724,291 10,086,533
Deferred origination costs ........................................................................................................................................... 106,678 104,521
Unearned income ......................................................................................................................................................... (437,365) (405,171)
Allowance for credit losses .......................................................................................................................................... (117,706) (238,932)
Total finance receivables, net .................................................................................................................................. 10,275,898 9,546,951
Less—Current portion .................................................................................................................................................. (4,301,142) (3,891,406)
Noncurrent finance receivables, net ....................................................................................................................... ¥ 5,974,756 ¥ 5,655,545
Operating Leases
Vehicles .......................................................................................................................................................................... ¥ 2,814,706 ¥ 2,729,713
Equipment ..................................................................................................................................................................... 107,619 107,168
2,922,325 2,836,881
Less—Accumulated depreciation ............................................................................................................................... (718,207) (795,767)
Vehicles and equipment on operating leases, net ................................................................................................ ¥ 2,204,118 ¥ 2,041,114

Annual Report 2009 47

 Financial Section

Toyota’s finance receivables are subject to collectibility risks. euro and, to a lesser extent, the Australian dollar, the Canadian
These risks include consumer and dealer insolvencies and insuf- dollar and the British pound. Toyota’s consolidated financial
ficient collateral values (less costs to sell) to realize the full carry- statements, which are presented in Japanese yen, are affected
ing values of these receivables. See discussion in the Critical by foreign currency exchange fluctuations through both transla-
Accounting Estimates section regarding “Allowance for Doubtful tion risk and transaction risk.
Accounts and Credit Losses” and note 11 to the consolidated Translation risk is the risk that Toyota’s consolidated financial
financial statements regarding the allowance for credit losses. statements for a particular period or for a particular date will be
Toyota continues to originate leases to finance new Toyota affected by changes in the prevailing exchange rates of the cur-
vehicles. These leasing activities are subject to residual value rencies in those countries in which Toyota does business com-
risk. Residual value risk could arise when the lessee of a vehicle pared with the Japanese yen. Even though the fluctuations of
does not exercise the option to purchase the vehicle at the end currency exchange rates to the Japanese yen can be substantial,
of the lease term. See discussion in the Critical Accounting and, therefore, significantly impact comparisons with prior peri-
Estimates section regarding “Investment in Operating Leases” ods and among the various geographic markets, the translation
and note 2 to the consolidated financial statements regarding risk is a reporting consideration and does not reflect Toyota’s
the allowance for residual values losses. underlying results of operations. Toyota does not hedge against
Toyota primarily enters into interest rate swap agreements translation risk.
and cross currency interest rate swap agreements to convert its Transaction risk is the risk that the currency structure of
fixed-rate debt to variable-rate functional currency debt. A por- Toyota’s costs and liabilities will deviate from the currency struc-
tion of the derivative instruments are entered into to hedge ture of sales proceeds and assets. Transaction risk relates primarily
interest rate risk from an economic perspective and are not to sales proceeds from Toyota’s non-domestic operations from
designated to specific assets or liabilities on Toyota’s consolidat- vehicles produced in Japan.
ed balance sheet and accordingly, unrealized gains or losses Toyota believes that the location of its production facilities in
related to derivatives that are not designated are recognized cur- different parts of the world has significantly reduced the level of
rently in operations. See discussion in the Critical Accounting transaction risk. As part of its globalization strategy, Toyota has
Estimates section regarding “Derivatives and Other Contracts at continued to localize production by constructing production
Fair Value”, further discussion in the Market Risk Disclosures facilities in the major markets in which it sells its vehicles. In cal-
section and note 20 to the consolidated financial statements. endar 2007 and 2008, Toyota produced 61.4% and 64.1% of
In addition, aggregated funding costs can affect the profit- Toyota’s non-domestic sales outside Japan, respectively. In
ability of Toyota’s financial services operations. Funding costs North America, 57.2% and 57.4% of vehicles sold in calendar
are affected by a number of factors, some of which are not in 2007 and 2008 were produced locally, respectively. In Europe,
Toyota’s control. These factors include general economic condi- 64.0% and 60.9% of vehicles sold in calendar 2007 and 2008
tions, prevailing interest rates and Toyota’s financial strength. were produced locally, respectively. Localizing production
Funding costs increased during fiscal 2008 as a result of an enables Toyota to locally purchase many of the supplies and
increase in borrowings. Funding costs decreased during fiscal resources used in the production process, which allows for a
2009 mainly as a result of lower interest rate. better match of local currency revenues with local currency
Toyota launched its credit card business in Japan at the expenses.
beginning of fiscal 2002. As of March 31, 2008, Toyota had 6.6 Toyota also enters into foreign currency transactions and
million cardholders, an increase of 0.5 million cardholders com- other hedging instruments to address a portion of its transac-
pared with March 31, 2007, and as of March 31, 2009, Toyota tion risk. This has reduced, but not eliminated, the effects of for-
had 7.1 million cardholders, an increase of 0.5 million cardhold- eign currency exchange rate fluctuations, which in some years
ers compared with March 31, 2008. The credit card receivables can be significant. See notes 20 and 21 to the consolidated
at March 31, 2008 increased by ¥24.5 billion from March 31, 2007 financial statements for additional information regarding the
to ¥225.7 billion. The credit card receivables at March 31, 2009 extent of Toyota’s use of derivative financial instruments to
decreased by ¥1.1 billion from March 31, 2008 to ¥224.6 billion. hedge foreign currency exchange rate risks.
Generally, a weakening of the Japanese yen against other cur-
Other Business Operations rencies has a positive effect on Toyota’s revenues, operating
Toyota’s other business operations consist of housing, including the income and net income. A strengthening of the Japanese yen
manufacture and sale of prefabricated homes; information technol- against other currencies has the opposite effect. In fiscal 2008,
ogy related businesses, including information technology and tele- the Japanese yen was on average and at the end of the fiscal
communications, intelligent transport systems, GAZOO; others. year stronger against the U.S. dollar in comparison to the prior
Toyota does not expect its other business operations to mate- fiscal year. In fiscal 2008, the Japanese yen was on average and
rially contribute to Toyota’s consolidated results of operations. at the end of the fiscal year weaker against the euro in compari-
son to the prior fiscal year. In fiscal 2009, the Japanese yen was
Currency Fluctuations on average and at the end of the fiscal year stronger against the
Toyota is sensitive to fluctuations in foreign currency exchange U.S. dollar and the euro in comparison to the prior fiscal year.
rates. In addition to the Japanese yen, Toyota is principally See further discussion in the Market Risk Disclosures section
exposed to fluctuations in the value of the U.S. dollar and the regarding “Foreign Currency Exchange Rate Risk”.

48 TOYOTA MOTOR CORPORATION

 Management & Investor
Top Messages Performance Overview The Right Way Forward Business Overview Corporate Information Financial Section Information

During fiscal 2008 and 2009, the average value of the Yen in millions
Japanese yen fluctuated against the major currencies including For the years ended March 31,
the U.S. dollar and the euro compared with the average value of 2007 2008 2009
the previous fiscal year, respectively. The operating results Japan .......................... ¥8,152,884 ¥8,418,620 ¥7,471,916
excluding the impact of currency fluctuations described in the North America ........... 8,771,495 9,248,950 6,097,676
“Results of Operations—Fiscal 2009 Compared with Fiscal Europe ........................ 3,346,013 3,802,814 2,889,753
2008” and the “Results of Operations—Fiscal 2008 Compared Asia ............................. 1,969,957 2,790,987 2,450,412
with Fiscal 2007,” show results of net revenues obtained by Other* ......................... 1,707,742 2,027,869 1,619,813
applying the Japanese yen’s average exchange rate in the previ- * “Other” consists of Central and South America, Oceania and Africa.
ous fiscal year to the local currency-denominated net revenues
for fiscal 2008 and 2009, respectively, as if the value of the
Japanese yen had remained constant for the comparable peri-
Results of Operations—
ods. Results excluding the impact of currency fluctuations year-
Fiscal 2009 Compared with Fiscal 2008
on-year are not on the same basis as Toyota’s consolidated
financial statements and do not conform with U.S. GAAP.
Furthermore, Toyota does not believe that these measures are a Net Revenues
substitute for U.S. GAAP measures. However, Toyota believes Toyota had net revenues for fiscal Net Revenues
that such results excluding the impact of currency fluctuations 2009 of ¥20,529.5 billion, a
(¥ Billion)
year-on-year provide additional useful information to investors decrease of ¥5,759.7 billion, or 30,000
regarding the operating performance on a local currency basis. 21.9%, compared with the prior
year. This decrease principally
24,000
Segmentation reflects the impact of decreased
Toyota’s most significant business segment is its automotive vehicle unit sales and changes in
operations. Toyota carries out its automotive operations as a sales mix, the unfavorable impact 18,000
global competitor in the worldwide automotive market. of fluctuations in foreign currency
Management allocates resources to, and assesses the perfor- translation rates, and decreased
mance of, its automotive operations as a single business seg- parts sales during fiscal 2009. 12,000
ment on a worldwide basis. Toyota does not manage any subset Eliminating the difference in the
of its automotive operations, such as domestic or overseas Japanese yen value used for 6,000
operations or parts, as separate management units. translation purposes, net reve-
The management of the automotive operations is aligned on nues would have been approxi-
a functional basis with managers having oversight responsibility mately ¥22,560.7 billion during 0

for the major operating functions within the segment. fiscal 2009, a 14.2% decrease FY ’05 ’06 ’07 ’08 ’09

Management assesses financial and non-financial data such as compared with the prior year.
units of sale, units of production, market share information, vehi- Toyota’s net revenues include net revenues from sales of prod-
cle model plans and plant location costs to allocate resources ucts that decreased by 22.8% during fiscal 2009 compared with
within the automotive operations. the prior year to ¥19,173.7 billion and net revenues from finan-
cial services operations that decreased by 7.7% during fiscal
2009 compared with the prior year to ¥1,355.8 billion.
Eliminating the difference in the Japanese yen value used for
Geographic Breakdown
translation purposes, net revenues from sales of products would
have been approximately ¥21,011.3 billion, a 15.3% decrease
The following table sets forth Revenues by Market during fiscal 2009 compared with the prior year, while net reve-
Toyota’s net revenues in each FY2009 nues from financial services operations would have been
geographic market based on the approximately ¥1,549.4 billion, a 5.5% increase during fiscal 2009
country location of the parent compared with the prior year. Geographically, net revenues for
company or the subsidiary that fiscal 2009 decreased by 11.2% in Japan, 34.1% in North
transacted the sale with the America, 24.0% in Europe, 12.2% in Asia and 20.1% in Other
external customer for the past compared with the prior year. Eliminating the difference in the
three fiscal years. Japanese yen value used for translation purposes, net revenues
in fiscal 2009 would have decreased by 11.2% in Japan, 24.9% in
North America, 13.1% in Europe, and 0.4% in Other and
increased by 0.9% in Asia compared with the prior year.
Japan 36.4% The following is a discussion of net revenues for each of
North America 29.7%
Toyota’s business segments. The net revenue amounts discussed
Europe 14.1%
Asia 11.9% are amounts before the elimination of intersegment revenues.
All Other Markets 7.9%

Annual Report 2009 49

 Financial Section

• Automotive Operations Segment Cost of products sold decreased Cost of Products Sold
Net revenues for Toyota’s automotive operations segment, by ¥2,984.0 billion, or 14.6%, to (¥ Billion) (%)
which constitute the largest percentage of Toyota’s net reve- ¥17,468.4 billion during fiscal 20,000 100
nues, decreased during fiscal 2009 by ¥5,612.6 billion, or 23.2% 2009 compared with the prior
compared with the prior year to ¥18,564.7 billion. The decrease year. This decrease (before the
16,000 80
resulted primarily from the approximate ¥3,400 billion impact elimination of intersegment
attributed to the decrease in vehicle unit sales and the changes amounts) reflects a decrease of
in sales mix, the ¥1,833.8 billion impact of fluctuations in foreign ¥2,939.2 billion, or 14.9%, for the 12,000 60
currency translation rates, and the decreased parts sales. automotive operations segment
Eliminating the difference in the Japanese yen value used for and a decrease of ¥131.2 billion,
8,000 40
translation purposes, net revenues for its automotive operations or 11.2%, for all other operations
segment would have been approximately ¥20,398.5 billion dur- segment. The decrease in cost of
ing fiscal 2009, a 15.6% decrease compared to the prior year. In products sold for automotive 4,000 20
fiscal 2009, net revenues in Japan were unfavorably impacted operations is primarily attributed
primarily by the decrease in vehicle unit sales in the export mar- to the decrease in vehicle unit
kets and the changes in sales mix compared to fiscal 2008. Net sales and the changes in sales 0 0

revenues in North America, Europe, Asia and Other were unfa- mix, the impact of fluctuations in FY ’05 ’06 ’07 ’08 ’09

vorably impacted primarily by the decrease in vehicle unit sales foreign currency translation rates, % of sales of products
and the impact of fluctuations in foreign currency translation the impact of the decrease in (Right scale)

rates. parts sales, and the decrease in

research and development expenses, partially offset by increas-
• Financial Services Operations Segment es in expenses. Cost of financing operations decreased by ¥80.6
Net revenues in fiscal 2009 for Toyota’s financial services opera- billion, or 7.5%, to ¥987.4 billion during fiscal 2009 compared
tions decreased by ¥120.8 billion, or 8.1% compared to the prior with the prior year. The decrease resulted primarily from the
year to ¥1,377.5 billion. This decrease resulted primarily from the impact of fluctuations in foreign currency translation rates, par-
impact of fluctuations in foreign currency translation rates, par- tially offset by an increase in allowance for residual value losses
tially offset by the impact of a higher volume of financings. and an increase in valuation losses on interest rate swaps stated
Eliminating the difference in the Japanese yen value used for at fair value.
translation purposes, net revenues for its financial services oper- Selling, general and administrative expenses increased by
ations would have been approximately ¥1,572.5 billion during ¥36.2 billion, or 1.5%, to ¥2,534.7 billion during fiscal 2009 com-
fiscal 2009, a 5.0% increase compared with the prior year. pared with the prior year. This increase mainly reflects an
increase for the financial services operations. The increase for
• All Other Operations Segment the financial services operations is primarily due to an increase
Net revenues for Toyota’s other operations segment decreased in provision for credit losses, net charge-offs.
by ¥162.0 billion, or 12.0%, to ¥1,184.9 billion during fiscal 2009 Research and development
compared with the prior year. expenses (included in cost of R&D Expenses
products sold and selling, gener-
(¥ Billion) %
Operating Costs and Expenses al and administrative expenses) 1,000 12
Operating costs and expenses decreased by ¥3,028.4 billion, or decreased by ¥54.8 billion, or
12.6%, to ¥20,990.5 billion during fiscal 2009 compared with the 5.7%, to ¥904.0 billion during fis-
prior year. This decrease resulted primarily from the approxi- cal 2009 compared with the prior 750 9
mate ¥2,100 billion impact on costs of products attributable to year. This decrease primarily
the decrease in vehicle unit sales and the changes in sales mix, relates to an overall decrease in
the ¥2,062.1 billion impact of fluctuations in foreign currency expenditures while maintaining a
500 6
translation rates, decreased costs corresponding to the decrease focus on the development of
in parts sales, and the ¥54.8 billion decrease in research and environmentally conscious tech-
development expenses, partially offset by increases in expenses. nologies including hybrid and
250 3
Cost reduction efforts were offset by increases in the prices of fuel-cell technology, and the
steel, precious metals, non-ferrous alloys including aluminum, developments in advanced tech-
plastic parts and other production materials and parts. These nologies relating to collision
cost reduction efforts related to ongoing value engineering and safety and vehicle stability con- 0 0

value analysis activities, the use of common parts that result in a trols to further build up competi- FY ’05 ’06 ’07 ’08 ’09

reduction of part types and other manufacturing initiatives tive strength in the future. % of sales of products
designed to reduce the costs of vehicle production. (Right scale)

50 TOYOTA MOTOR CORPORATION

 Management & Investor
Top Messages Performance Overview The Right Way Forward Business Overview Corporate Information Financial Section Information

Operating Income and Loss • Financial Services Operations Segment

Toyota’s operating income Operating Income (Loss) Operating income from Toyota’s financial services operations
decreased by ¥2,731.3 billion to decreased by ¥158.5 billion to an operating loss of ¥72.0 billion
(¥ Billion) (%)
an operating loss of ¥461.0 bil- 2,500 20 during fiscal 2009 compared with the prior year. This decrease
lion during fiscal 2009 compared was primarily due to the increases in the provision for credit
with the prior year. This operat- 2,000 16 losses, net charge-offs and allowance for residual value losses,
ing loss was unfavorably affected and the increase in valuation losses on interest rate swaps stated
by the decrease in vehicle unit 1,500 12
at fair value in sales finance subsidiaries, partially offset by the
sales, the changes in sales mix, impact of a higher volume of financing activities.
the increased expenses and the
1,000 8
impact of the decrease in parts • All Other Operations Segment
sales, partially offset by the Operating income from Toyota’s other operations segment
500 4
decrease in research and devel- decreased by ¥23.1 billion, or 70.0% to ¥9.9 billion during fiscal
opment expenses. 2009 compared with the prior year.
During fiscal 2009, operating 0 0

income (before the elimination of Other Income and Expenses

intersegment profits) for signifi- -500 -4 Interest and dividend income decreased by ¥27.3 billion, or
c a n t g e o g r a p h i c r e g i o n s FY ’05 ’06 ’07 ’08 ’09 16.4%, to ¥138.4 billion during fiscal 2009 compared with the
decreased by ¥1,677.8 billion in % of net revenues (Right scale) prior year mainly due to a decrease in interest income from mar-
Japan, decreased by ¥695.5 bil- ketable securities.
lion in North America, decreased Interest expense increased by ¥0.8 billion, or 1.7%, to ¥46.9
by ¥284.8 billion in Europe, decreased by ¥80.3 billion, or 31.3%, billion during fiscal 2009 compared with the prior year.
in Asia, and decreased by ¥56.3 billion, or 39.1% in Other com- Foreign exchange gains, net decreased by ¥11.0 billion to a
pared with the prior year. The decrease in Japan was mainly due loss of ¥1.8 billion during fiscal 2009 compared with the prior
to decreases in both production volume and vehicle unit sales in year. Foreign exchange gains and losses include the differences
the export markets, partially offset by the decrease in research between the value of foreign currency denominated sales trans-
and development expenses. The decrease in North America lated at prevailing exchange rates and the value of the sales
was mainly due to decreases in both production volume and amounts settled during the year, including those settled using
vehicle unit sales, the increases in the provision for credit losses, forward foreign currency exchange contracts.
net charge-offs and allowance for residual value losses in sales Other income, net decreased by ¥227.2 billion to a loss of
finance subsidiaries in the United States, partially offset by the ¥189.1 billion during fiscal 2009 compared with the prior year.
impact of the fluctuations in foreign currency translation rates. This decrease was mainly due to the recognition of impairment
The decrease in Europe was mainly due to decreases in both losses on available-for sale securities.
production volume and vehicle unit sales, partially offset by the
impact of fluctuations in foreign currency translation rates. The Income Taxes
decrease in Asia was mainly due to decreases in both produc- The provision for income taxes decreased by ¥968.0 billion to a
tion volume and vehicle unit sales, and the impact of the fluctu- tax benefit of ¥56.5 billion during fiscal 2009 compared with the
ations in foreign currency translation rates. The decrease in prior year primarily due to the decrease in income before
Other was primarily due to the decrease in vehicle unit sales. income taxes. The effective tax rate was 10.1%, which was lower
The following is a discussion of operating income for each of than its statutory tax rate in Japan primarily due to a recognition
Toyota’s business segments. The operating income amounts of valuation allowance for deferred tax assets at domestic and
discussed are before the elimination of intersegment profits. overseas subsidiaries.

• Automotive Operations Segment Minority Interest in Consolidated Subsidiaries and

Operating income from Toyota’s automotive operations Equity in Earnings of Affiliated Companies
decreased by ¥2,566.7 billion to an operating loss of ¥394.8 bil- Minority interest in consolidated subsidiaries decreased by
lion during fiscal 2009 compared with the prior year. This ¥102.2 billion to a loss of ¥24.2 billion during fiscal 2009 com-
decrease was primarily attributed to the decrease in vehicle unit pared with the prior year. This decrease was mainly due to a
sales, the changes in sales mix, the increased expenses, and the decrease in net income at consolidated subsidiaries.
impact of the decrease in parts sales, partially offset by the Equity in earnings of affiliated companies during fiscal 2009
decrease in research and development expenses. decreased by ¥227.4 billion, or 84.2%, to ¥42.7 billion compared
with the prior year. This decrease was due to a decrease in net
income at the affiliated companies.

Annual Report 2009 51

 Financial Section

Net Income and Loss in Asia and 18.7% in Other compared with the prior year.
Toyota’s net income decreased Net Income (Loss), Eliminating the difference in the Japanese yen value used for
by ¥2,154.8 billion to a loss of and ROE translation purposes, net revenues in fiscal 2008 would have
¥437.0 billion during fiscal 2009 (¥ Billion) % increased by 3.3% in Japan, 7.6% in North America, 6.8% in
compared with the prior year. 2,000 20 Europe, 34.2% in Asia, and 13.6% in Other compared with the
prior year.
Other Comprehensive The following is a discussion of net revenues for each of
1,500 15
Income and Loss Toyota’s business segments. The net revenue amounts discussed
Other comprehensive losses are amounts before the elimination of intersegment revenues.
decreased by ¥76.0 billion to 1,000 10
losses of ¥866.5 billion for fiscal • Automotive Operations Segment
2009 compared with the prior Net revenues from Toyota’s automotive operations segment,
500 5
year. This decrease in losses which constitute the largest percentage of Toyota’s net reve-
resulted primarily from favorable nues, increased during fiscal 2008 by ¥2,249.3 billion, or 10.3%
foreign currency translation 0 0 compared with the prior year to ¥24,177.3 billion. The increase
adjustments in fiscal 2009 to loss- resulted primarily from the approximate ¥1,600 billion impact
es of ¥381.3 billion compared attributed to the vehicle unit sales growth and changes in sales
-500 -5
with losses of ¥461.1 billion in the mix, the ¥277.5 billion impact of fluctuations in foreign currency
FY ’05 ’06 ’07 ’08 ’09
prior year, and a decrease in translation rates during fiscal 2008, and the impact of increased
unrealized holding losses on ROE (Right scale) parts sales. Eliminating the difference in the Japanese yen value
securities in fiscal 2009 to ¥293.1 used for translation purposes, automotive operations segment
billion compared with ¥347.8 bil- net revenues would have been approximately ¥23,899.8 billion
lion in the prior year. The decrease in unrealized holding losses during fiscal 2008, a 9.0% increase compared to the prior year. In
on securities was mainly due to the recognition of impairment fiscal 2008, net revenues in Japan were favorably impacted pri-
losses on available-for sale securities. marily by vehicle unit sales growth in the export markets, which
was partially offset by changes in sales mix compared to fiscal
2007. Net revenues in North America were favorably impacted
primarily by vehicle unit sales growth partially offset by fluctua-
Results of Operations—
tions in foreign currency translation rates during fiscal 2008. Net
Fiscal 2008 Compared with Fiscal 2007
revenues in Europe and Asia were favorably impacted primarily
by vehicle unit sales growth and fluctuations in foreign currency
Net Revenues translation rates during fiscal 2008. Net revenues in Other were
Toyota had net revenues for fiscal 2008 of ¥26,289.2 billion, an favorably impacted primarily by vehicle unit sales growth.
increase of ¥2,341.2 billion, or 9.8%, compared with the prior
year. This increase principally reflects the impact of increased • Financial Services Operations Segment
vehicle unit sales, increased financings operations, increased Net revenues in fiscal 2008 for Toyota’s financial services opera-
parts sales and the favorable impact of fluctuations in foreign tions increased by ¥197.8 billion or 15.2% compared to the prior
currency translation rates during fiscal 2008. Eliminating the differ- year to ¥1,498.3 billion. This increase resulted primarily from the
ence in the Japanese yen value used for translation purposes, net impact of a higher volume of financings mainly in North
revenues would have been approximately ¥26,011.5 billion during America, partially offset by the impact of fluctuations in foreign
fiscal 2008, an 8.6% increase compared with the prior year. currency translation rates during fiscal 2008. Eliminating the dif-
Toyota’s net revenues include net revenues from sales of prod- ference in the Japanese yen value used for translation purposes,
ucts that increased by 9.5% during fiscal 2008 compared with financial services operations net revenues would have been
the prior year to ¥24,820.5 billion and net revenues from financ- approximately ¥1,500.5 billion during fiscal 2008, a 15.4%
ing operations that increased by 14.9% during fiscal 2008 com- increase compared with the prior year.
pared with the prior year to ¥1,468.7 billion. Eliminating the
difference in the Japanese yen value used for translation pur- • All Other Operations Segment
poses, net revenues from sales of products would have been Net revenues for Toyota’s other businesses increased by ¥23.2
approximately ¥24,540.1 billion, an 8.2% increase during fiscal billion, or 1.8%, to ¥1,346.9 billion during fiscal 2008 compared
2008 compared with the prior year, while net revenues from with the prior year.
financing operations would have increased by approximately
15.1% during fiscal 2008 compared to the prior year to ¥1,471.4 Operating Costs and Expenses
billion. Geographically, net revenues for fiscal 2008 increased by Operating costs and expenses increased by ¥2,309.5 billion, or
3.3% in Japan, 5.4% in North America, 13.7% in Europe, 41.7% 10.6%, to ¥24,018.9 billion during fiscal 2008 compared with the

52 TOYOTA MOTOR CORPORATION

 Management & Investor
Top Messages Performance Overview The Right Way Forward Business Overview Corporate Information Financial Section Information

prior year. The increase resulted primarily from the approximate ronmentally conscious technologies including hybrid and fuel-
¥1,300 billion impact on costs of products attributed to vehicle cell technology, aggressive developments in advanced
unit sales growth and changes in sales mix, the ¥252.1 billion technologies relating to collision safety and vehicle stability con-
impact of fluctuations in foreign currency translation rates, the trols and the impact of expanding new models to promote
¥68.1 billion increase in research and development expenses, Toyota’s strength in a global market to further build up competi-
increased expenses in expanding business operations and tive strength in the future.
increased costs corresponding to the increase in parts sales.
These increases were partially offset by the approximate ¥120 Operating Income
billion impact attributed to the net impact of cost reduction Toyota’s operating income increased by ¥31.7 billion, or 1.4%, to
efforts, responding to the rise in prices of production materials ¥2,270.3 billion during fiscal 2008 compared with the prior year.
and parts in fiscal 2008. Operating income was favorably affected by the vehicle unit
Continued cost reduction efforts reduced operating costs and sales growth, the changes in sales mix, the impact of increased
expenses in fiscal 2008 by approximately ¥120 billion, partially parts sales, continued cost reduction efforts and the favorable
offset by increases in the prices of steel, precious metals, non- impact of fluctuations in foreign currency translation rates. These
ferrous alloys including aluminum, plastic parts and other pro- increases were partially offset by increases in research and devel-
duction materials and parts, over what would have otherwise opment expenses and the increases in expenses due to business
been incurred. These cost reduction efforts relate to ongoing expansion. As a result, operating income decreased to 8.6% as a
value engineering and value analysis activities, the use of com- percentage of net revenues for fiscal 2008 compared to 9.3% in
mon parts that result in a reduction of part types and other the prior year.
manufacturing initiatives designed to reduce the costs of vehicle During fiscal 2008, operating income (before the elimination
production. of intersegment profits) for significant geographic regions
Cost of products sold increased by ¥2,096.1 billion, or 11.4%, decreased by ¥16.9 billion, or 1.2%, in Japan, decreased by
to ¥20,452.4 billion during fiscal 2008 compared with the prior ¥144.3 billion, or 32.1%, in North America, increased by ¥4.2 bil-
year. This increase (before the elimination of intersegment lion, or 3.0% in Europe, increased by ¥138.8 billion, or 118.0%, in
amounts) reflects an increase of ¥2,107.7 billion, or 11.9%, for Asia, and increased by ¥60.4 billion, or 72.4% in Other com-
the automotive operations and an increase of ¥33.4 billion, or pared with the prior year. The decrease in Japan was mainly due
2.9%, for all other operations segment. The increase in cost of to an increase in expenses including research and development
products sold for automotive operations is primarily attributed expenses, partially offset by the vehicle unit sales growth in the
to the increased vehicle unit sales and changes in sales mix, the export markets and continued cost reduction efforts. The
impact of the increase in parts sales, the impact of the increase decrease in North America was mainly due to an increase in
in research and development expenses and the impact of fluc- valuation losses on interest rate swaps stated at fair value and
tuations in foreign currency translation rates during fiscal 2008, the impact of fluctuations in foreign currency translation rates
which were partially offset by the impact of continued cost reduc- partially offset by the increase in production volume and vehicle
tion efforts. The increase in cost of products sold for all other unit sales and continued cost reduction efforts in the manufac-
operations primarily related to the increase in net revenues. turing operations. The increases in Europe were mainly due to
Cost of financing operations increased by ¥195.9 billion, or the impact of an increase in production volume and vehicle unit
22.5%, to ¥1,068.0 billion during fiscal 2008 compared with the sales, continued cost reduction efforts in the manufacturing
prior year. The increase resulted primarily from the impact of operations and the favorable impact of fluctuations in foreign
increased interest expenses caused primarily by an increase in currency translation rates. The increases in Asia were mainly due
borrowings attributed to business expansion. The increase is to the impact of an increase in production volume and vehicle
also attributed to the impact of losses due to changes in the fair unit sales. The increase in Other was primarily due to the impact
value of derivative financial instruments that are not designated of the increase in production volume and vehicle unit sales.
as hedges and are marked-to-market at the end of each period. The following is a discussion of operating income for each of
Selling, general and administrative expenses increased by Toyota’s business segments. The operating income amounts
¥17.5 billion, or 0.7%, to ¥2,498.5 billion during fiscal 2008 com- discussed are before the elimination of intersegment profits.
pared with the prior year. This increase mainly reflects an
increase for the financial services operations. The increase for • Automotive Operations Segment
the financial services operations is primarily attributed to the Operating income from Toyota’s automotive operations
impact of increased expenses. increased by ¥133.1 billion, or 6.5%, to ¥2,171.9 billion during
Research and development expenses (included in cost of fiscal 2008 compared with the prior year. This increase is primari-
products sold and selling, general and administrative expens- ly attributed to the increase in vehicle unit sales, the increase in
es) increased by ¥68.1 billion, or 7.6%, to ¥958.8 billion during parts sales, the impact of continued cost reduction efforts and
fiscal 2008 compared with the prior year. This increase primarily the favorable impact of fluctuations in foreign currency transla-
relates to expenditures attributed to the development of envi- tion rates. This increase was partially offset by the increase in

Annual Report 2009 53

 Financial Section

research and development expenses and the increase in Net Income

expenses due to business expansion. Toyota’s net income increased by ¥73.8 billion, or 4.5%, to
¥1,717.8 billion during fiscal 2008 compared with the prior year.
• Financial Services Operations Segment
Operating income from Toyota’s financial services operations Other Comprehensive Income and Loss
decreased by ¥72.0 billion, or 45.4%, to ¥86.5 billion during fis- Other comprehensive income decreased by ¥1,115.5 billion, to
cal 2008 compared with the prior year. This decrease is primarily losses of ¥942.5 billion for fiscal 2008 compared with the prior
due to an increase in valuation losses on interest rate swaps year. This decrease resulted primarily from a decrease in foreign
stated at fair value, partially offset by the impact of a higher vol- currency translation adjustments in fiscal 2008 to losses of
ume of financing activities. ¥461.1 billion compared with gains of ¥130.7 billion in the prior
year and a decrease in unrealized holding gains on securities in
• All Other Operations Segment fiscal 2008 to losses of ¥347.8 billion reflecting the decline in the
Operating income from Toyota’s other businesses decreased by Japanese stock market compared with unrealized holding gains
¥6.6 billion, or 16.6% to ¥33.0 billion during fiscal 2008 com- of ¥38.8 billion in the prior year.
pared with the prior year.

Other Income and Expenses

Outlook
Interest and dividend income increased by ¥33.7 billion, or
25.6%, to ¥165.7 billion during fiscal 2008 compared with the
prior year mainly due to an increase in interest income reflecting Toyota perceives a risk of a further downturn in the world econ-
an increase in marketable securities. omy during fiscal 2010 resulting from a weakened economy
Interest expense decreased by ¥3.2 billion, or 6.5%, to ¥46.1 coupled with the financial crisis.
billion during fiscal 2008 compared with the prior year due to a Although Toyota expects that the automotive market is
decrease in borrowings in the automotive operations segment. expected to expand over the medium- to long-term particularly
Foreign exchange gains, net decreased by ¥23.8 billion, or in resource-rich countries and emerging countries, the automo-
72.2%, to ¥9.2 billion during fiscal 2008 compared with the prior tive market is currently undergoing a rapid contraction because
year. Foreign exchange gains and losses include the differences of the worldwide economic deceleration. In addition, the com-
between the value of foreign currency denominated sales trans- petition in the automotive market is more intense globally, as
lated at prevailing exchange rates and the value of the sales shown in the fierce competition with respect to compact cars
amounts settled during the year, including those settled using and low-price cars, and the acceleration in the development of
forward foreign currency exchange contracts. technologies and introduction of new products while environ-
Other income, net increased by ¥9.9 billion, or 35.1%, to ¥38.1 mental awareness is growing throughout the world. For purpos-
billion during fiscal 2008 compared with the prior year. es of this discussion, Toyota is assuming an average exchange
rate of ¥95 to the U.S. dollar and ¥125 to the euro. With the
Income Taxes foregoing external factors in mind, Toyota expects that net reve-
The provision for income taxes increased by ¥13.2 billion, or nues for fiscal 2010 will decrease compared with fiscal 2009 as a
1.5%, to ¥911.5 billion during fiscal 2008 compared with the result of a decrease in vehicle unit sales and the assumed
prior year primarily due to the increase in income before income exchange rate of a stronger Japanese yen against the U.S. dol-
taxes. The effective tax rate for fiscal 2008 remained relatively lar and the euro. Factors decreasing operating income include a
unchanged compared to the rate for fiscal 2007. decrease in vehicle unit sales and the assumed exchange rate of
a stronger Japanese yen against the U.S. dollar and the euro.
Minority Interest in Consolidated Subsidiaries The foregoing factors are partially offset by factors increasing
and Equity in Earnings of Affiliated Companies operating income including cost reduction efforts and decreas-
Minority interest in consolidated subsidiaries increased by ¥28.3 es in fixed costs and expenses. As a result, Toyota expects that
billion, or 56.9%, to ¥78.0 billion during fiscal 2008 compared operating loss will increase in fiscal 2010 compared with fiscal
with the prior year. This increase was mainly due to an increase 2009. Also, Toyota expects loss before income taxes and net
in net income attributable to favorable results of operations at loss will increase in fiscal 2010. Exchange rate fluctuations can
consolidated subsidiaries. materially affect Toyota’s operating results. In particular, a
Equity in earnings of affiliated companies during fiscal 2008 strengthening of the Japanese yen against the U.S. dollar can
increased by ¥60.6 billion, or 28.9%, to ¥270.1 billion compared have a material adverse effect on Toyota’s operating results.
with the prior year. This increase was mainly due to an increase Please see “Operating and Financial Review and Prospects—
in net income attributable to favorable results of operations at Operating Results—Overview—Currency Fluctuations.” for fur-
the affiliated companies. ther discussion.

54 TOYOTA MOTOR CORPORATION

 Management & Investor
Top Messages Performance Overview The Right Way Forward Business Overview Corporate Information Financial Section Information

The foregoing statements are forward-looking statements Net cash provided by financing activities was ¥698.8 billion for
based upon Toyota’s management’s assumptions and beliefs fiscal 2009, compared with ¥706.1 billion for the prior year. The
regarding exchange rates, market demand for Toyota’s prod- decrease in net cash provided by financing activities resulted
ucts, economic conditions and others. Please see “Cautionary primarily from an increase in payments of long-term debt, par-
Statement Concerning Forward-Looking Statements”. Toyota’s tially offset by a decrease in repurchase of common stock.
actual results of operations could vary significantly from those Total capital expenditures for property, plant and equipment,
described above as a result of unanticipated changes in the fac- excluding vehicles and equipment on operating leases, were
tors described above or other factors, including those described ¥1,364.5 billion during fiscal 2009, a decrease of 7.8% over the
in “Risk Factors”. ¥1,480.5 billion in total capital expenditures from the prior year.
The decrease in capital expenditures resulted primarily from a
decrease in investments by subsidiaries especially located in
Asia and North America.
Liquidity and Capital Resources
Total expenditures for vehicles and equipment on operating
leases were ¥960.3 billion during fiscal 2009, a decrease of 24.9%
Historically, Toyota has funded its capital expenditures and over the ¥1,279.4 billion in expenditures from the prior year.
research and development activities primarily through cash gen- The decrease in expenditures for vehicles and equipment on
erated by operations. In fiscal 2009, cash generated by opera- operating leases resulted primarily from a decrease in invest-
tions decreased due to a decrease in vehicle unit sales that was ments in the financial services operations.
attributed to the rapid contraction of the automotive market. Toyota expects investments in property, plant and equipment,
Therefore, Toyota funded cash partially through additional loans excluding vehicles and equipment on operating leases, to be
and issuance of notes. approximately ¥830.0 billion during fiscal 2010. Toyota’s expect-
In fiscal 2010, Toyota expects to sufficiently fund its capital ed investments include approximately ¥530.0 billion in Japan,
expenditures and research and development activities primarily ¥140.0 billion in North America, ¥50.0 billion in Europe, ¥70.0
through cash and cash equivalents on hand, cash generated by billion in Asia and ¥40.0 billion in Other.
operations, loans and issuance of notes. Toyota will use its funds Based on current available information, Toyota does not
for the development of environment technologies, maintenance expect environmental matters to have a material impact on its
and replacement of manufacturing facilities, and the introduc- financial position, results of operations, liquidity or cash flows
tion of new products. See “Information on the Company— during fiscal 2010. However, there exists a substantial amount of
Business Overview—Capital Expenditures and Divestitures” in uncertainty with respect to Toyota’s obligations under current
Toyota’s annual report on Form 20-F for information regarding and future environment regulations as described in “Information
Toyota’s material capital expenditures and divestitures for fiscal on the Company—Business Overview—Governmental Regulations,
2007, 2008 and 2009, and information concerning Toyota’s prin- Environmental and Safety Standards” in Toyota’s annual report
cipal capital expenditures and divestitures currently in progress. on Form 20-F.
Toyota funds its financing programs for customers and dealers, Cash and cash equivalents were ¥2,444.2 billion as of March
including loans and leasing programs, from both cash generated 31, 2009. Most of Toyota’s cash and cash equivalents are held in
by operations and borrowings by its finance subsidiaries. Toyota Japanese yen and in U.S. dollars. In addition, time deposits
seeks to expand its ability to raise funds locally in markets through- were ¥45.1 billion and marketable securities were ¥495.3 billion
out the world by expanding its network of finance subsidiaries. as of March 31, 2009.
Net cash provided by operating activities was ¥1,476.9 billion Liquid assets, which Toyota defines as cash and cash equiva-
for fiscal 2009, compared with ¥2,981.6 billion for the prior year. lents, time deposits, marketable debt securities and its invest-
The decrease in net cash provided by operating activities result- ment in monetary trust funds, decreased during fiscal 2009 by
ed primarily from a decrease in cash collection received from ¥251.8 billion, or 5.6%, to ¥4,229.1 billion.
sale of products due to a decrease in net revenue for the auto- Trade accounts and notes receivable, net decreased during
motive operations, partially offset by a decrease in cash pay- fiscal 2009 by ¥647.5 billion, or 31.7%, to ¥1,392.7 billion, reflect-
ments for cost of products sold within the automotive operations ing the impacts of decreased revenues and fluctuations in for-
and a decrease in cash payments for income taxes. eign currency translation rates.
Net cash used in investing activities was ¥1,230.2 billion for Inventories decreased during fiscal 2009 by ¥366.4 billion, or
fiscal 2009, compared with ¥3,874.8 billion for the prior year. The 20.1%, to ¥1,459.3 billion, reflecting the impacts of decreased
decrease in net cash used in investing activities resulted primari- volumes and fluctuations in foreign currency translation rates.
ly from a decrease in additions to finance receivables, a Total finance receivables, net decreased during fiscal 2009 by
decrease in purchases of marketable securities and security ¥728.9 billion, or 7.1%, to ¥9,546.9 billion. The decrease in finance
investments, and an increase in proceeds from sales of market- receivables, net resulted from a decrease in wholesale and other
able securities and security investments. dealer loans and the impact of fluctuations in foreign currency

Annual Report 2009 55

 Financial Section

translation rates. As of March 31, 2009, finance receivables were Short-term borrowings increased during fiscal 2009 by ¥64.9 bil-
geographically distributed as follows: in North America 63.6%, lion, or 1.8%, to ¥3,617.6 billion. Toyota’s long-term debt con-
in Japan 14.1%, in Europe 11.0%, in Asia 3.8% and in Other sists of unsecured and secured loans, medium-term notes,
7.5%. Although Toyota maintains programs to sell finance unsecured notes and long-term capital lease obligations with
receivables through special purpose entities, no sales of finance interest rates ranging from 0.17% to 31.50%, and maturity dates
receivables were made during fiscal 2009. ranging from 2009 to 2047. The current portion of long-term
Marketable securities and other securities investments, includ- debt increased during fiscal 2009 by ¥24.1 billion, or 0.9%, to
ing those included in current assets, decreased during fiscal ¥2,699.5 billion and the non-current portion increased by ¥319.5
2009 by ¥1,373.2 billion, or 34.6%, primarily reflecting sales of billion, or 5.3%, to ¥6,301.4 billion. The increase in total borrow-
marketable securities and security investments, and a decrease ings primarily resulted from funding obtained to maintain suffi-
in the fair values of these securities and investments. cient liquidity. As of March 31, 2009, approximately 28% of
Property, plant and equipment decreased during fiscal 2009 by long-term debt was denominated in U.S. dollars, 21% in
¥410.3 billion, or 5.3%, primarily reflecting the impacts of deprecia- Japanese yen, 15% in euros and 36% in other currencies. Toyota
tion charges during the year and fluctuations in foreign currency hedges fixed rate exposure by entering into interest rate swaps.
translation rates, partially offset by the capital expenditures. There are no material seasonal variations in Toyota’s borrowings
Accounts payable decreased during fiscal 2009 by ¥913.3 bil- requirements.
lion, or 41.3%, reflecting the impacts of a decrease in trading As of March 31, 2009, Toyota’s total interest bearing debt was
volumes and fluctuations in foreign currency translation rates. 125.4% of total shareholders’ equity, compared to 102.9% as of
Accrued expenses decreased during fiscal 2009 by ¥66.2 bil- March 31, 2008.
lion, or 4.1%, reflecting the impact of fluctuations in foreign cur- Toyota’s long-term debt was rated “AA” by Standard & Poor’s
rency translation rates. Ratings Group, “Aa1” by Moody’s Investors Services and “AAA”
Income taxes payable decreased during fiscal 2009 by ¥254.2 by Rating and Investment Information, Inc. as of May 31, 2009. A
billion, or 83.2%, primarily as a result of a decrease in income credit rating is not a recommendation to buy, sell or hold securi-
before income taxes. ties. A credit rating may be subject to withdrawal or revision at
Toyota’s total borrowings increased during fiscal 2009 by any time. Each rating should be evaluated separately of any
¥408.5 billion, or 3.3%. Toyota’s short-term borrowings consist of other rating.
loans with a weighted-average interest rate of 2.44% and com- Toyota’s unfunded pension liabilities increased during fiscal
mercial paper with a weighted-average interest rate of 1.52%. 2009 by ¥242.6 billion, or 59.0%, to ¥653.7 billion. The unfunded

Net Cash Provided by Capital Expenditures for Cash and Cash Equivalents Liquid Assets*
Operating Activities and Property, Plant and Equip- at End of Year
Free Cash Flow* ment* and Depreciation
(¥ Billion) (¥ Billion) (¥ Billion) (¥ Billion)
4,000 1,600 2,500 5,000

2,000 4,000
3,000 1,200

1,500 3,000

2,000 800

1,000 2,000

1,000 400
500 1,000

0 0 0 0
FY ’05 ’06 ’07 ’08 ’09 FY ’05 ’06 ’07 ’08 ’09 FY ’05 ’06 ’07 ’08 ’09 FY ’05 ’06 ’07 ’08 ’09

Net cash provided by Capital expenditures * Cash and cash equivalents, time
operating activities Depreciation deposits, marketable debt
Free cash flow securities and investment in
* Excluding vehicles and equipment monetary trust funds
* (Net cash provided by operating on operating leases
activities) – (Capital expenditures
for property, plant and equipment,
excluding vehicles and equipment
on operating leases)

56 TOYOTA MOTOR CORPORATION

 Management & Investor
Top Messages Performance Overview The Right Way Forward Business Overview Corporate Information Financial Section Information

pension liabilities relate primarily to the parent company and its

Japanese subsidiaries. The unfunded amounts will be funded
through future cash contributions by Toyota or in some cases
will be funded on the retirement date of each covered employ-
ee. The unfunded pension liabilities increased in fiscal 2009
compared to the prior year primarily due to a decrease in the
market value of plan assets. See note 19 to the consolidated
financial statements for further discussion.
Toyota’s treasury policy is to maintain controls on all expo-
sures, to adhere to stringent counterparty credit standards, and
to actively monitor marketplace exposures. Toyota remains cen-
tralized, and is pursuing global efficiency of its financial services
operations through Toyota Financial Services Corporation.
The key element of Toyota’s financial policy is maintaining a
strong financial position that will allow Toyota to fund its
research and development initiatives, capital expenditures and
financing operations on a cost effective basis even if earnings
experience short-term fluctuations. Toyota believes that it main-
tains sufficient liquidity for its present requirements and that by
maintaining its high credit ratings, it will continue to be able to
access funds from external sources in large amounts and at rela-
tively low costs. Toyota’s ability to maintain its high credit ratings
is subject to a number of factors, some of which are not within
Toyota’s control. These factors include general economic condi-
tions in Japan and the other major markets in which Toyota does
business, as well as Toyota’s successful implementation of its
business strategy.

Shareholders’ Equity
and Equity Ratio

(¥ Billion) %
15,000 100

12,000 80

9,000 60

6,000 40

3,000 20

0 0
FY ’05 ’06 ’07 ’08 ’09

Equity ratio (Right scale)

Annual Report 2009 57

 Financial Section

facility. Toyota’s financial services operation also provides financ-

Off-Balance Sheet Arrangements
ing to various multi-franchise dealer organizations, referred to as
dealer groups, often as part of a lending consortium, for whole-
Toyota uses its securitization program as part of its funding for sale inventory financing, business acquisitions, facilities refur-
its financial services operations. See note 7 to the consolidated bishment, real estate purchases, and working capital
financial statements regarding the impact of the securitization requirements. Toyota’s outstanding credit facilities with dealers
program on the consolidated financial statements. totaled ¥1,702.3 billion as of March 31, 2009.

Guarantees
Toyota enters into certain guarantee contracts with its dealers to
Lending Commitments
guarantee customers’ payments of their installment payables
that arise from installment contracts between customers and
Credit Facilities with Credit Card Holders Toyota dealers, as and when requested by Toyota dealers.
Toyota’s financial services operation issues credit cards to custom- Guarantee periods are set to match the maturity of installment
ers. As customary for credit card businesses, Toyota maintains payments, and as of March 31, 2009, ranged from one month to
credit facilities with holders of credit cards issued by Toyota. 35 years. However, they are generally shorter than the useful
These facilities are used upon each holders’ requests up to the lives of products sold. Toyota is required to execute its guarantee
limits established on an individual holder’s basis. Although loans primarily when customers are unable to make required payments.
made to customers through this facility are not secured, for the The maximum potential amount of future payments as of
purposes of minimizing credit risks and of appropriately estab- March 31, 2009 is ¥1,570.4 billion. Liabilities for these guarantees
lishing credit limits for each individual credit card holder, Toyota of ¥5.3 billion have been provided as of March 31, 2009. Under
employs its own risk management policy which includes an anal- these guarantee contracts, Toyota is entitled to recover any
ysis of information provided by financial institutions in alliance amounts paid by it from the customers whose obligations it
with Toyota. Toyota periodically reviews and revises, as appro- guaranteed.
priate, these credit limits. Outstanding credit facilities with credit
card holders were ¥1,816.7 billion as of March 31, 2009.

Contractual Obligations and Commitments

Credit Facilities with Dealers
Toyota’s financial services operation maintains credit facilities
with dealers. These credit facilities may be used for business For information regarding debt obligations, capital lease obliga-
acquisitions, facilities refurbishment, real estate purchases, and tions, operating lease obligations and other obligations, includ-
working capital requirements. These loans are typically collater- ing amounts maturing in each of the next five years, see notes
alized with liens on real estate, vehicle inventory, and/or other 13, 22 and 23 to the consolidated financial statements. In addi-
dealership assets, as appropriate. Toyota obtains a personal tion, as part of Toyota’s normal business practices, Toyota enters
guarantee from the dealer or corporate guarantee from the into long-term arrangements with suppliers for purchases of cer-
dealership when deemed prudent. Although the loans are typi- tain raw materials, components and services. These arrange-
cally collateralized or guaranteed, the value of the underlying ments may contain fixed/minimum quantity purchase
collateral or guarantees may not be sufficient to cover Toyota’s requirements. Toyota enters into such arrangements to facilitate
exposure under such agreements. Toyota prices the credit facili- an adequate supply of these materials and services.
ties according to the risks assumed in entering into the credit

The following tables summarize Toyota’s contractual obligations and commercial commitments as of March 31, 2009:
Yen in millions
Payments Due by Period
Total Less than 1 year 1 to 3 years 3 to 5 years 5 years and after
Contractual Obligations:
Short-term borrowings (note 13)
Loans ............................................................................................ ¥ 1,115,122 ¥1,115,122 ¥ — ¥ — ¥ —
Commercial paper ...................................................................... 2,502,550 2,502,550 — — —
Long-term debt* (note 13) ............................................................. 8,949,615 2,688,324 3,589,350 1,261,893 1,410,048
Capital lease obligations (note 13) ................................................ 51,366 11,188 25,272 2,535 12,371
Non-cancelable operating lease obligations (note 22) ............... 54,161 11,567 15,457 9,503 17,634
Commitments for the purchase of property,
plant and other assets (note 23) .................................................. 110,874 50,200 34,275 10,908 15,491
Total.............................................................................................. ¥12,783,688 ¥6,378,951 ¥3,664,354 ¥1,284,839 ¥1,455,544
* “Long-term debt” represents future principal payments.

58 TOYOTA MOTOR CORPORATION

 Management & Investor
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Toyota is unable to make reasonable estimates of the period of cash settlement with respect to liabilities recognized for uncertain tax
benefits, and accordingly such liabilities are excluded from the table above. See note 16 to the consolidated financial statements for fur-
ther discussion.
Toyota expects to contribute ¥95,270 million to its pension plans in fiscal 2010.
Yen in millions
Total Amount of Commitment Expiration Per Period
Amounts
Committed Less than 1 year 1 to 3 years 3 to 5 years 5 years and after
Commercial Commitments:
Maximum potential exposure to guarantees given
in the ordinary course of business (note 23) .................................. ¥1,570,497 ¥446,638 ¥724,503 ¥314,472 ¥84,884
Total Commercial Commitments .................................................. ¥1,570,497 ¥446,638 ¥724,503 ¥314,472 ¥84,884

Related Party Transactions Recent Accounting Pronouncements

in the United States
Toyota does not have any significant related party transactions
other than transactions with affiliated companies in the ordinary In December 2007, FASB issued FAS No. 141(R), Business
course of business. See note 12 to the consolidated financial Combinations (“FAS 141(R)”). FAS 141(R) establishes principles
statements for further discussion. and requirements for how the acquirer recognizes and measures
the identifiable assets acquired, the liabilities assumed, any non-
controlling interest, and the goodwill acquired in a business
combination or a gain from a bargain purchase. Also, FAS 141(R)
Legislation Regarding End-of-Life Vehicles
provides several new disclosure requirements that enable users
of the financial statements to evaluate the nature and financial
In October 2000, the European Union enforced a directive that effects of the business combination. FAS 141(R) is effective to
requires member states to promulgate regulations implement- business combinations on and after the beginning of fiscal year
ing the following: beginning on or after December 15, 2008. The impact of adopt-
• manufacturers shall bear all or a significant part of the costs for ing FAS 141(R) on Toyota’s consolidated financial statements will
taking back end-of-life vehicles put on the market after July 1, depend on the nature and significance of any acquisitions in the
2002 and dismantling and recycling those vehicles. Beginning future period.
January 1, 2007, this requirement will also be applicable to In December 2007, FASB issued FAS No. 160, Noncontrolling
vehicles put on the market before July 1, 2002; Interests in Consolidated Financial Statements—an amendment
• manufacturers may not use certain hazardous materials in of ARB No. 51 (“FAS 160”). FAS 160 amends the guidance in
vehicles sold after July 2003; Accounting Research Bulletins No. 51, Consolidated Financial
• vehicles type-approved and put on the market after December Statements, to establish accounting and reporting standards for
15, 2008 shall be re-usable and/or recyclable to a minimum of the noncontrolling interest in a subsidiary and for the deconsoli-
85% by weight per vehicle and shall be re-usable and/or dation of a subsidiary. FAS 160 is effective for fiscal year, and
recoverable to a minimum of 95% by weight per vehicle; and interim period within the fiscal year, beginning on or after
• end-of-life vehicles must meet actual re-use of 80% and re-use December 15, 2008. The presentation and disclosure require-
as material or energy of 85%, respectively, of vehicle weight by ments shall be applied retrospectively for all periods presented
2006, rising to 85% and 95%, respectively, by 2015. in the consolidated financial statements in which FAS 160 is ini-
tially applied. Management is evaluating the impact of adopting
See note 23 to the consolidated financial statements for fur- FAS 160 on Toyota’s consolidated financial statements.
ther discussion. In December 2008, FASB issued FASB Staff Position No. FAS
132(R)-1, Employers’ Disclosures about Postretirement Benefit
Plan Assets (“FSP FAS 132(R)-1”). FSP FAS 132(R)-1 requires
additional disclosures about postretirement benefit plan assets
including investment policies and strategies, categories of plan
assets, fair value measurements of plan assets, and significant
concentrations of risk. FSP FAS 132(R)-1 is effective for fiscal year
ending after December 15, 2009. Management does not expect
this Statement to have a material impact on Toyota’s consolidated
financial statements.

Annual Report 2009 59

 Financial Section

In April 2009, FASB issued FASB Staff Position No. FAS 115-2 Consequently, actual warranty costs will differ from the estimat-
and FAS 124-2, Recognition and Presentation of Other-Than- ed amounts and could require additional warranty provisions. If
Temporary Impairments (“FSP FAS 115-2 and FAS 124-2”). FSP these factors require a significant increase in Toyota’s accrued
FAS 115-2 and FAS 124-2 revises the recognition and presenta- estimated warranty costs, it would negatively affect future oper-
tion requirements for other-than-temporary impairments of debt ating results of the automotive operations.
securities, and contains additional disclosure requirements relat-
ed to debt and equity securities. FSP FAS 115-2 and FAS 124-2 Allowance for Doubtful Accounts and Credit Losses
is effective for interim period and fiscal year ending after June • Natures of Estimates and Assumptions
15, 2009. Management does not expect this Statement to have Sales financing and finance lease receivables consist of retail
a material impact on Toyota’s consolidated financial statements. installment sales contracts secured by passenger cars and com-
In May 2009, FASB issued FAS No. 165, Subsequent Events mercial vehicles. Collectibility risks include consumer and dealer
(“FAS 165”). FAS 165 is intended to establish general standards of insolvencies and insufficient collateral values (less costs to sell)
accounting for and disclosure of events that occur after the bal- to realize the full carrying values of these receivables. As a mat-
ance sheet date but before financial statements are issued. FAS ter of policy, Toyota maintains an allowance for doubtful
165 is effective for interim period or fiscal year ending after June accounts and credit losses representing management’s estimate
15, 2009. Management does not expect this Statement to have of the amount of asset impairment in the portfolios of finance,
a material impact on Toyota’s consolidated financial statements. trade and other receivables. Toyota determines the allowance
for doubtful accounts and credit losses based on a systematic,
ongoing review and evaluation performed as part of the credit-
risk evaluation process, historical loss experience, the size and
Critical Accounting Estimates
composition of the portfolios, current economic events and con-
ditions, the estimated fair value, adequacy of collateral and
The consolidated financial statements of Toyota are prepared in other pertinent factors. This evaluation is inherently judgmental
conformity with accounting principles generally accepted in the and requires material estimates, including the amounts and tim-
United States of America. The preparation of these financial ing of future cash flows expected to be received, which may be
statements requires the use of estimates, judgments and susceptible to significant change. Although management con-
assumptions that affect the reported amounts of assets and lia- siders the allowance for doubtful accounts and credit losses to
bilities at the date of the financial statements and the reported be adequate based on information currently available, addition-
amounts of revenues and expenses during the periods present- al provisions may be necessary due to (i) changes in manage-
ed. Toyota believes that of its significant accounting policies, ment estimates and assumptions about asset impairments, (ii)
the following may involve a higher degree of judgments, esti- information that indicates changes in expected future cash
mates and assumptions: flows, or (iii) changes in economic and other events and condi-
tions. To the extent that sales incentives remain an integral part
Product Warranty of sales promotion with the effect of reducing new vehicle pric-
Toyota generally warrants its products against certain manufac- es, resale prices of used vehicles and, correspondingly, the col-
turing and other defects. Product warranties are provided for lateral value of Toyota’s sales financing and finance lease
specific periods of time and/or usage of the product and vary receivables could experience further downward pressure. If
depending upon the nature of the product, the geographic these factors require a significant increase in Toyota’s allowance
location of the sale and other factors. All product warranties are for doubtful accounts and credit losses, it could negatively affect
consistent with commercial practices. Toyota includes a provi- future operating results of the financial services operations. The
sion for estimated product warranty costs as a component of level of credit losses, which has a greater impact on Toyota’s
cost of sales at the time the related sale is recognized. The results of operations, is influenced primarily by two factors: fre-
accrued warranty costs represent management’s best estimate quency of occurrence and severity of loss. For evaluation pur-
at the time of sale of the total costs that Toyota will incur to poses, exposures to credit loss are segmented into the two
repair or replace product parts that fail while still under warranty. primary categories of “consumer” and “dealer”. Toyota’s con-
The amount of accrued estimated warranty costs is primarily sumer portfolio consists of smaller balances that are homoge-
based on historical experience of product failures as well as cur- nous retail finance receivables and lease earning assets. The
rent information on repair costs. The amount of warranty costs dealer portfolio consists of wholesale and other dealer financing
accrued also contains an estimate of warranty claim recoveries receivables. The overall allowance for credit losses is evaluated
to be received from suppliers. The foregoing evaluations are at least quarterly, considering a variety of assumptions and fac-
inherently uncertain, as they require material estimates and tors to determine whether reserves are considered adequate to
some products’ warranties extend for several years. cover probable losses.

60 TOYOTA MOTOR CORPORATION

 Management & Investor
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• Sensitivity Analysis which the end-of-term market value of a lease is less than its
The level of credit losses, which could significantly impact carrying value at lease end.
Toyota’s results of operations, is influenced primarily by two fac-
tors: frequency of occurrence and severity of loss. The overall • Sensitivity Analysis
allowance for credit losses is evaluated at least quarterly, consid- The following table illustrates the effect of an assumed change
ering a variety of assumptions and factors to determine whether in the vehicle return rate, which we believe is one of the critical
reserves are considered adequate to cover probable losses. The estimates, in determining the residual value losses, holding all
following table illustrates the effect of an assumed change in other assumptions constant. The following table represents the
expected severity of loss, which we believe is one of the key impact on the residual value losses in Toyota’s financial services
critical estimates for determining the allowance for credit losses, operations as those changes have a significant impact on financ-
assuming all other assumptions are held consistent. The table ing operations.
below represents the impact on the allowance for credit losses
Yen in millions
in Toyota’s financial services operations as any change impacts
Effect on the residual
most significantly on the financial services operations. value losses over
the remaining terms
Yen in millions of the operating leases
on and after April 1, 2009
Effect on the allowance
for credit losses 1 percent increase in vehicle return rate ............ ¥1,965
as of March 31, 2009
10 percent increase in expected severity of loss ... ¥16,404 Impairment of Long-Lived Assets
Toyota periodically reviews the carrying value of its long-lived
Investment in Operating Leases assets held and used and assets to be disposed of, including
• Natures of Estimates and Assumptions goodwill and other intangible assets, when events and circum-
Vehicles on operating leases, where Toyota is the lessor, are val- stances warrant such a review. This review is performed using
ued at cost and depreciated over their estimated useful lives estimates of future cash flows. If the carrying value of a long-
using the straight-line method to their estimated residual val- lived asset is considered impaired, an impairment charge is
ues. Toyota utilizes industry published information and its own recorded for the amount by which the carrying value of the
historical experience to determine estimated residual values for long-lived asset exceeds its fair value. Management believes
these vehicles. Toyota evaluates the recoverability of the carry- that the estimates of future cash flows and fair values are rea-
ing values of its leased vehicles for impairment when there are sonable. However, changes in estimates of such cash flows and
indications of declines in residual values, and if impaired, Toyota fair values would affect the evaluations and negatively affect
recognizes an allowance for its residual values. In addition, to future operating results of the automotive operations.
the extent that sales incentives remain an integral part of sales
promotion with the effect of reducing new vehicle prices, resale Pension Costs and Obligations
prices of used vehicles and, correspondingly, the fair value of • Natures of Estimates and Assumptions
Toyota’s leased vehicles could be subject to downward pressure. Pension costs and obligations are dependent on assumptions
If resale prices of used vehicles decline, future operating results used in calculating such amounts. These assumptions include
of the financial services operations are likely to be adversely discount rates, benefits earned, interest costs, expected rate of
affected by incremental charges to reduce estimated residual return on plan assets, mortality rates and other factors. Actual
values. Throughout the life of the lease, management performs results that differ from the assumptions are accumulated and
periodic evaluations of estimated end-of-term market values to amortized over future periods and, therefore, generally affect
determine whether estimates used in the determination of the recognized expense in future periods. While management
contractual residual value are still considered reasonable. believes that the assumptions used are appropriate, differences
Factors affecting the estimated residual value at lease maturity in actual experience or changes in assumptions may affect
include, but are not limited to, new vehicle incentive programs, Toyota’s pension costs and obligations.
new vehicle pricing, used vehicle supply, projected vehicle The two most critical assumptions impacting the calculation
return rates, and projected loss severity. The vehicle return rate of pension costs and obligations are the discount rates and the
represents the number of leased vehicles returned at contract expected rates of returns on plan assets. Toyota determines the
maturity and sold by Toyota during the period as a percentage discount rates mainly based on the rates of high quality fixed
of the number of lease contracts that, as of their origination income bonds or fixed income governmental bonds currently
dates, were scheduled to mature in the same period. A higher available and expected to be available during the period to
rate of vehicle returns exposes Toyota to higher potential losses maturity of the defined benefit pension plans. Toyota deter-
incurred at lease termination. Severity of loss is the extent to mines the expected rates of return for pension assets after con-

Annual Report 2009 61

 Financial Section

sidering several applicable factors including, the composition of

Market Risk Disclosures
plan assets held, assumed risks of asset management, historical
results of the returns on plan assets, Toyota’s principal policy for
plan asset management, and forecasted market conditions. A Toyota is exposed to market risk from changes in foreign curren-
weighted-average discount rate of 2.8% and a weighted-aver- cy exchange rates, interest rates, certain commodity and equity
age expected rate of return on plan assets of 3.6% are the security prices. In order to manage the risk arising from changes
results of assumptions used for the various pension plans in cal- in foreign currency exchange rates and interest rates, Toyota
culating Toyota’s consolidated pension costs for fiscal 2009. enters into a variety of derivative financial instruments.
Also, a weighted-average discount rate of 2.8% is the result of A description of Toyota’s accounting policies for derivative
assumption used for the various pension plans in calculating instruments is included in note 2 to the consolidated financial
Toyota’s consolidated pension obligations for fiscal 2009. statements and further disclosure is provided in notes 20 and 21
to the consolidated financial statements.
• Sensitivity Analysis Toyota monitors and manages these financial exposures as an
The following table illustrates the effects of assumed changes in integral part of its overall risk management program, which rec-
weighted-average discount rate and the weighted-average ognizes the unpredictability of financial markets and seeks to
expected rate of return on plan assets, which we believe are reduce the potentially adverse effects on Toyota’s operating
critical estimates in determining pension costs and obligations, results.
assuming all other assumptions are consistent. The financial instruments included in the market risk analysis
consist of all of Toyota’s cash and cash equivalents, marketable
Yen in millions
securities, finance receivables, securities investments, long-term
Effect on pre-tax income
for the year ending Effect on PBO and short-term debt and all derivative financial instruments.
March 31, 2010 as of March 31, 2009 Toyota’s portfolio of derivative financial instruments consists of
Discount rates forward foreign currency exchange contracts, foreign currency
0.5% decrease ............ ¥(10,749) ¥120,771
options, interest rate swaps, interest rate currency swap agree-
0.5% increase.............. 10,197 (111,712)
ments and interest rate options. Anticipated transactions
Expected rate of return
denominated in foreign currencies that are covered by Toyota’s
on plan assets
derivative hedging are not included in the market risk analysis.
0.5% decrease ............ ¥(4,895)
Although operating leases are not required to be included,
0.5% increase.............. 4,895
Toyota has included these instruments in determining interest
rate risk.
Derivatives and Other Contracts at Fair Value
Toyota uses derivatives in the normal course of business to man-
age its exposure to foreign currency exchange rates and interest
Foreign Currency Exchange Rate Risk
Toyota has foreign currency exposures related to buying, selling
rates. The accounting is complex and continues to evolve. In
and financing in currencies other than the local currencies in
addition, there are significant judgments and estimates involved
which it operates. Toyota is exposed to foreign currency risk
in the estimating of fair value in the absence of quoted market
related to future earnings or assets and liabilities that are
values. These estimates are based upon valuation methodolo-
exposed due to operating cash flows and various financial
gies deemed appropriate under the circumstances. However,
instruments that are denominated in foreign currencies. Toyota’s
the use of different assumptions may have a material effect on
most significant foreign currency exposures relate to the U.S.
the estimated fair value amounts.
dollar and the euro.
Toyota uses a value-at-risk analysis (“VAR”) to evaluate its
Marketable Securities and Investments in Affiliated
exposure to changes in foreign currency exchange rates. The
Companies
VAR of the combined foreign exchange position represents a
Toyota’s accounting policy is to record a write-down of such
potential loss in pre-tax earnings that was estimated to be ¥44.3
investments to net realizable value when a decline in fair value
billion as of March 31, 2008 and ¥114.1 billion as of March 31,
below the carrying value is other-than-temporary. In determining
2009. Based on Toyota's overall currency exposure (including
if a decline in value is other-than-temporary, Toyota considers
derivative positions), the risk during the year ended March 31,
the length of time and the extent to which the fair value has
2009 to pre-tax cash flow from currency movements was on
been less than the carrying value, the financial condition and
average ¥126.0 billion, with a high of ¥158.9 billion and a low of
prospects of the company and Toyota’s ability and intent to
¥97.1 billion.
retain its investment in the company for a period of time suffi-
The VAR was estimated by using a Monte Carlo Simulation
cient to allow for any anticipated recovery in fair value.
Method and assumed 95% confidence level on the realization
date and a 10-day holding period.

62 TOYOTA MOTOR CORPORATION

 Management & Investor
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Interest Rate Risk

Toyota is subject to market risk from exposures to changes in
interest rates based on its financing, investing and cash man-
agement activities. Toyota enters into various financial instru-
ment transactions to maintain the desired level of exposure to
the risk of interest rate fluctuations and to minimize interest
expense. The potential decrease in fair value resulting from a
hypothetical 100 basis point upward shift in interest rates would
be approximately ¥110.6 billion as of March 31, 2008 and ¥55.8
billion as of March 31, 2009.
There are certain shortcomings inherent to the sensitivity
analyses presented. The model assumes that interest rate
changes are instantaneous parallel shifts in the yield curve.
However, in reality, changes are rarely instantaneous. Although
certain assets and liabilities may have similar maturities or peri-
ods to repricing, they may not react correspondingly to changes
in market interest rates. Also, the interest rates on certain types
of assets and liabilities may fluctuate with changes in market
interest rates, while interest rates on other types of assets may
lag behind changes in market rates. Finance receivables are less
susceptible to prepayments when interest rates change and, as
a result, Toyota’s model does not address prepayment risk for
automotive related finance receivables. However, in the event of
a change in interest rates, actual loan prepayments may deviate
significantly from the assumptions used in the model.

Commodity Price Risk

Commodity price risk is the possibility of higher or lower costs
due to changes in the prices of commodities, such as non-
ferrous alloys (e.g., aluminum), precious metals (e.g., palladium,
platinum and rhodium) and ferrous alloys, which Toyota uses in
the production of motor vehicles. Toyota does not use deriva-
tive instruments to hedge the price risk associated with the pur-
chase of those commodities and controls its commodity price
risk by holding minimum stock levels.

Equity Price Risk

Toyota holds investments in various available-for-sale equity
securities that are subject to price risk. The fair value of avail-
able-for-sale equity securities was ¥1,177.0 billion as of March
31, 2008 and ¥798.2 billion as of March 31, 2009. The potential
change in the fair value of these investments, assuming a 10%
change in prices, would be approximately ¥117.7 billion as of
March 31, 2008 and ¥79.8 billion as of March 31, 2009.

Annual Report 2009 63

 Financial Section

Consolidated Balance Sheets

Toyota Motor Corporation
March 31, 2008 and 2009

U.S. dollars
Yen in millions in millions
ASSETS 2008 2009 2009
Current assets
Cash and cash equivalents ............................................................................... ¥ 1,628,547 ¥ 2,444,280 $ 24,883
Time deposits .................................................................................................. 134,773 45,178 460
Marketable securities ....................................................................................... 542,210 495,326 5,043
Trade accounts and notes receivable, less allowance for doubtful
accounts of ¥17,471 million in 2008 and ¥15,034 million
($153 million) in 2009 ...................................................................................... 2,040,233 1,392,749 14,179
Finance receivables, net ................................................................................... 4,301,142 3,891,406 39,615
Other receivables.............................................................................................. 523,533 332,722 3,387
Inventories ......................................................................................................... 1,825,716 1,459,394 14,857
Deferred income taxes ..................................................................................... 563,220 605,331 6,162
Prepaid expenses and other current assets.................................................... 526,853 632,543 6,439
Total current assets ................................................................................... 12,086,227 11,298,929 115,025

Noncurrent finance receivables, net................................................................ 5,974,756 5,655,545 57,575

Investments and other assets

Marketable securities and other securities investments ............................... 3,429,238 2,102,874 21,408
Affiliated companies ......................................................................................... 2,098,556 1,826,375 18,593
Employees receivables ..................................................................................... 70,776 69,523 708
Other.................................................................................................................. 986,765 707,110 7,198
Total investments and other assets ......................................................... 6,585,335 4,705,882 47,907

Property, plant and equipment

Land ...................................................................................................................
1,262,034 1,257,409 12,801
Buildings ............................................................................................................
3,580,607 3,633,954 36,994
Machinery and equipment ............................................................................... 9,270,650 9,201,093 93,669
Vehicles and equipment on operating leases ................................................ 2,922,325 2,836,881 28,880
Construction in progress .................................................................................. 360,620 263,602 2,683
17,396,236 17,192,939 175,027
Less—Accumulated depreciation ................................................................... (9,584,234) (9,791,258) (99,677)
Property, plant and equipment, net ........................................................ 7,812,002 7,401,681 75,350
Total assets ............................................................................................... ¥32,458,320 ¥29,062,037 $295,857
The accompanying notes are an integral part of these consolidated financial statements.

64 TOYOTA MOTOR CORPORATION

 Management & Investor
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U.S. dollars
Yen in millions in millions
LIABILITIES AND SHAREHOLDERS’ EQUITY 2008 2009 2009
Current liabilities
Short-term borrowings ..................................................................................... ¥ 3,552,721 ¥ 3,617,672 $ 36,829
Current portion of long-term debt .................................................................. 2,675,431 2,699,512 27,482
Accounts payable ............................................................................................. 2,212,773 1,299,455 13,229
Other payables ................................................................................................. 806,514 670,634 6,827
Accrued expenses ............................................................................................ 1,606,964 1,540,681 15,684
Income taxes payable....................................................................................... 305,592 51,298 522
Other current liabilities ..................................................................................... 780,747 710,041 7,228
Total current liabilities ............................................................................... 11,940,742 10,589,293 107,801

Long-term liabilities
Long-term debt................................................................................................. 5,981,931 6,301,469 64,150
Accrued pension and severance costs............................................................ 632,297 634,612 6,461
Deferred income taxes ..................................................................................... 1,099,006 642,293 6,539
Other long-term liabilities ................................................................................ 278,150 293,633 2,989
Total long-term liabilities .......................................................................... 7,991,384 7,872,007 80,139

Minority interest in consolidated subsidiaries ............................................... 656,667 539,530 5,492

Shareholders’ equity
Common stock, no par value,
authorized: 10,000,000,000 shares in 2008 and 2009;
issued: 3,447,997,492 shares in 2008 and 2009............................................. 397,050 397,050 4,042
Additional paid-in capital................................................................................. 497,569 501,211 5,102
Retained earnings ............................................................................................. 12,408,550 11,531,622 117,394
Accumulated other comprehensive income (loss) ......................................... (241,205) (1,107,781) (11,277)
Treasury stock, at cost, 298,717,640 shares in 2008 and
312,115,017 shares in 2009 ............................................................................. (1,192,437) (1,260,895) (12,836)
Total shareholders’ equity ........................................................................ 11,869,527 10,061,207 102,425

Commitments and contingencies

Total liabilities and shareholders’ equity ............................................. ¥32,458,320 ¥29,062,037 $295,857
The accompanying notes are an integral part of these consolidated financial statements.

Annual Report 2009 65

 Financial Section

Consolidated Statements of Income

Toyota Motor Corporation
For the years ended March 31, 2007, 2008 and 2009

U.S. dollars
Yen in millions in millions
2007 2008 2009 2009
Net revenues
Sales of products .................................................................... ¥22,670,097 ¥24,820,510 ¥19,173,720 $195,192
Financing operations .............................................................. 1,277,994 1,468,730 1,355,850 13,803
23,948,091 26,289,240 20,529,570 208,995

Costs and expenses

Cost of products sold ............................................................. 18,356,255 20,452,338 17,468,416 177,832
Cost of financing operations ................................................. 872,138 1,068,015 987,384 10,052
Selling, general and administrative ....................................... 2,481,015 2,498,512 2,534,781 25,804
21,709,408 24,018,865 20,990,581 213,688

Operating income (loss) ........................................................... 2,238,683 2,270,375 (461,011) (4,693)

Other income (expense)

Interest and dividend income ................................................ 131,939 165,676 138,467 1,410
Interest expense ..................................................................... (49,326) (46,113) (46,882) (477)
Foreign exchange gain (loss), net ......................................... 33,005 9,172 (1,815) (19)
Other income (loss), net ......................................................... 28,215 38,112 (189,140) (1,926)
143,833 166,847 (99,370) (1,012)

Income (loss) before income taxes, minority interest and

equity in earnings of affiliated companies ......................... 2,382,516 2,437,222 (560,381) (5,705)
Provision for income taxes ...................................................... 898,312 911,495 (56,442) (575)

Income (loss) before minority interest and equity

in earnings of affiliated companies ...................................... 1,484,204 1,525,727 (503,939) (5,130)

Minority interest in consolidated subsidiaries ..................... (49,687) (77,962) 24,278 247

Equity in earnings of affiliated companies ........................... 209,515 270,114 42,724 435

Net income (loss) ............................................................... ¥ 1,644,032 ¥ 1,717,879 ¥ (436,937) $ (4,448)

Yen U.S. dollars

Net income (loss) per share

—Basic ..................................................................................... ¥512.09 ¥540.65 ¥(139.13) $(1.42)
—Diluted ................................................................................. ¥511.80 ¥540.44 ¥(139.13) $(1.42)

Cash dividends per share ........................................................ ¥120.00 ¥140.00 ¥100.00 $1.02

The accompanying notes are an integral part of these consolidated financial statements.

66 TOYOTA MOTOR CORPORATION

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Consolidated Statements of Shareholders’ Equity

Toyota Motor Corporation
For the years ended March 31, 2007, 2008 and 2009

Yen in millions
Accumulated
Additional other Treasury Total
Common paid-in Retained comprehensive stock, shareholders’
stock capital earnings income (loss) at cost equity
Balances at March 31, 2006 ............................................... ¥397,050 ¥495,250 ¥10,459,788 ¥ 437,316 ¥(1,228,955) ¥10,560,449
Issuance during the year ....................................................... 2,343 2,343
Comprehensive income
Net income ......................................................................... 1,644,032 1,644,032
Other comprehensive income
Foreign currency translation adjustments.................... 130,746 130,746
Unrealized gains on securities,
net of reclassification adjustments ............................. 38,800 38,800
Minimum pension liability adjustments ....................... 3,499 3,499
Total comprehensive income ............................................ 1,817,077
Adjustment to initially apply FAS No. 158 ........................... 91,029 91,029
Dividends paid ....................................................................... (339,107) (339,107)
Purchase and reissuance of common stock ........................ (295,699) (295,699)
Balances at March 31, 2007 ............................................... 397,050 497,593 11,764,713 701,390 (1,524,654) 11,836,092
Issuance during the year ....................................................... 3,475 3,475
Comprehensive income
Net income ......................................................................... 1,717,879 1,717,879
Other comprehensive income (loss)
Foreign currency translation adjustments.................... (461,189) (461,189)
Unrealized losses on securities,
net of reclassification adjustments ............................. (347,829) (347,829)
Pension liability adjustments......................................... (133,577) (133,577)
Total comprehensive income ............................................ 775,284
Dividends paid ....................................................................... (430,860) (430,860)
Purchase and reissuance of common stock ........................ (314,464) (314,464)
Retirement of common stock ............................................... (3,499) (643,182) 646,681 —
Balances at March 31, 2008 ............................................... 397,050 497,569 12,408,550 (241,205) (1,192,437) 11,869,527
Issuance during the year ....................................................... 3,642 3,642
Comprehensive loss
Net loss ............................................................................... (436,937) (436,937)
Other comprehensive income (loss)
Foreign currency translation adjustments.................... (381,303) (381,303)
Unrealized losses on securities,
net of reclassification adjustments ............................. (293,101) (293,101)
Pension liability adjustments......................................... (192,172) (192,172)
Total comprehensive loss .................................................. (1,303,513)
Dividends paid ....................................................................... (439,991) (439,991)
Purchase and reissuance of common stock ........................ (68,458) (68,458)
Balances at March 31, 2009 ............................................... ¥397,050 ¥501,211 ¥11,531,622 ¥(1,107,781) ¥(1,260,895) ¥10,061,207
U.S. dollars in millions
Accumulated
Additional other Treasury Total
Common paid-in Retained comprehensive stock, shareholders’
stock capital earnings income (loss) at cost equity

Balances at March 31, 2008 ............................................... $4,042 $5,065 $126,321 $ (2,455) $(12,139) $120,834
Issuance during the year ....................................................... 37 37
Comprehensive loss
Net loss ............................................................................... (4,448) (4,448)
Other comprehensive income (loss)
Foreign currency translation adjustments.................... (3,882) (3,882)
Unrealized losses on securities,
net of reclassification adjustments ............................. (2,984) (2,984)
Pension liability adjustments......................................... (1,956) (1,956)
Total comprehensive loss .................................................. (13,270)
Dividends paid ....................................................................... (4,479) (4,479)
Purchase and reissuance of common stock ........................ (697) (697)
Balances at March 31, 2009 ............................................... $4,042 $5,102 $117,394 $(11,277) $(12,836) $102,425

The accompanying notes are an integral part of these consolidated financial statements.

Annual Report 2009 67

 Financial Section

Consolidated Statements of Cash Flows

Toyota Motor Corporation
For the years ended March 31, 2007, 2008 and 2009

U.S. dollars
Yen in millions in millions
2007 2008 2009 2009
Cash flows from operating activities
Net income (loss) ............................................................................... ¥ 1,644,032 ¥ 1,717,879 ¥ (436,937) $ (4,448)
Adjustments to reconcile net income (loss) to net cash
provided by operating activities
Depreciation ................................................................................... 1,382,594 1,491,135 1,495,170 15,221
Provision for doubtful accounts and credit losses ...................... 71,862 122,790 257,433 2,621
Pension and severance costs, less payments .............................. (32,054) (54,341) (20,958) (213)
Losses on disposal of fixed assets ................................................ 50,472 45,437 68,682 699
Unrealized losses on available-for-sale securities, net ................ 4,614 11,346 220,920 2,249
Deferred income taxes .................................................................. 132,308 81,458 (194,990) (1,985)
Minority interest in consolidated subsidiaries ............................. 49,687 77,962 (24,278) (247)
Equity in earnings of affiliated companies ................................... (209,515) (270,114) (42,724) (435)
Changes in operating assets and liabilities, and other
(Increase) decrease in accounts and notes receivable ............ (212,856) (206,793) 791,481 8,057
(Increase) decrease in inventories ............................................. (133,698) (149,984) 192,379 1,958
(Increase) decrease in other current assets .............................. (108,767) (82,737) 9,923 101
Increase (decrease) in accounts payable.................................. 104,188 62,241 (837,402) (8,525)
Increase (decrease) in accrued income taxes .......................... 74,255 (118,030) (251,868) (2,564)
Increase (decrease) in other current liabilities ......................... 264,490 206,911 (41,819) (426)
Other ........................................................................................... 156,561 46,464 291,893 2,972
Net cash provided by operating activities ........................... 3,238,173 2,981,624 1,476,905 15,035

Cash flows from investing activities

Additions to finance receivables ...................................................... (7,489,096) (8,647,717) (7,700,459) (78,392)
Collection of finance receivables ..................................................... 6,190,661 7,223,573 7,232,152 73,625
Proceeds from sale of finance receivables ...................................... 84,083 109,124 11,290 115
Additions to fixed assets excluding equipment
leased to others ............................................................................... (1,425,814) (1,480,570) (1,364,582) (13,892)
Additions to equipment leased to others ....................................... (1,264,381) (1,279,405) (960,315) (9,776)
Proceeds from sales of fixed assets excluding
equipment leased to others............................................................ 64,421 67,551 47,386 482
Proceeds from sales of equipment leased to others ...................... 321,761 375,881 528,749 5,383
Purchases of marketable securities and security investments ....... (1,068,205) (1,151,640) (636,030) (6,475)
Proceeds from sales of marketable securities and
security investments ........................................................................ 148,442 165,495 800,422 8,148
Proceeds upon maturity of marketable securities and
security investments ........................................................................ 676,729 821,915 675,455 6,876
Payment for additional investments in affiliated companies,
net of cash acquired ........................................................................ (1,651) (4,406) (45) (0)
Changes in investments and other assets, and other..................... (51,328) (74,687) 135,757 1,382
Net cash used in investing activities ..................................... (3,814,378) (3,874,886) (1,230,220) (12,524)

Cash flows from financing activities

Purchase of common stock ............................................................... (295,699) (311,667) (70,587) (719)
Proceeds from issuance of long-term debt ..................................... 2,890,000 3,349,812 3,506,990 35,702
Payments of long-term debt ............................................................. (1,726,823) (2,310,008) (2,704,078) (27,528)
Increase in short-term borrowings ................................................... 353,397 408,912 406,507 4,138
Dividends paid ................................................................................... (339,107) (430,860) (439,991) (4,479)
Net cash provided by financing activities ............................ 881,768 706,189 698,841 7,114
Effect of exchange rate changes on cash and
cash equivalents ................................................................................. 25,429 (84,759) (129,793) (1,321)
Net increase (decrease) in cash and cash equivalents ................... 330,992 (271,832) 815,733 8,304
Cash and cash equivalents at beginning of year ............................ 1,569,387 1,900,379 1,628,547 16,579
Cash and cash equivalents at end of year ....................................... ¥ 1,900,379 ¥ 1,628,547 ¥ 2,444,280 $ 24,883

The accompanying notes are an integral part of these consolidated financial statements.

68 TOYOTA MOTOR CORPORATION

 Management & Investor
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Notes to Consolidated Financial Statements

Toyota Motor Corporation

1 Nature of operations:

Toyota is primarily engaged in the design, manufacture, and leasing and certain other financial services primarily to its deal-
sale of sedans, minivans, compact cars, sport-utility vehicles, ers and their customers to support the sales of vehicles and
trucks and related parts and accessories throughout the world. other products manufactured by Toyota.
In addition, Toyota provides financing, vehicle and equipment

2 Summary of significant accounting policies:

The parent company and its subsidiaries in Japan maintain their Translation of foreign currencies
records and prepare their financial statements in accordance All asset and liability accounts of foreign subsidiaries and affiliates
with accounting principles generally accepted in Japan, and its are translated into Japanese yen at appropriate year-end current
foreign subsidiaries in conformity with those of their countries of exchange rates and all income and expense accounts of those
domicile. Certain adjustments and reclassifications have been subsidiaries are translated at the average exchange rates for each
incorporated in the accompanying consolidated financial state- period. The foreign currency translation adjustments are included
ments to conform to accounting principles generally accepted as a component of accumulated other comprehensive income.
in the United States of America. Foreign currency receivables and payables are translated at
Significant accounting policies after reflecting adjustments for appropriate year-end current exchange rates and the resulting
the above are as follows: transaction gains or losses are recorded in operations currently.

Basis of consolidation and accounting for investments Revenue recognition

in affiliated companies Revenues from sales of vehicles and parts are generally recog-
The consolidated financial statements include the accounts of the nized upon delivery which is considered to have occurred when
parent company and those of its majority-owned subsidiary com- the dealer has taken title to the product and the risk and reward
panies. All significant intercompany transactions and accounts of ownership have been substantively transferred, except as
have been eliminated. Investments in affiliated companies in described below.
which Toyota exercises significant influence, but which it does not Toyota’s sales incentive programs principally consist of cash
control, are stated at cost plus equity in undistributed earnings. payments to dealers calculated based on vehicle volume or a
Consolidated net income includes Toyota’s equity in current earn- model sold by a dealer during a certain period of time. Toyota
ings of such companies, after elimination of unrealized intercom- accrues these incentives as revenue reductions upon the sale of
pany profits. Investments in such companies are reduced to net a vehicle corresponding to the program by the amount deter-
realizable value if a decline in market value is determind other- mined in the related incentive program.
than-temporary. Investments in non-public companies in which Revenues from the sales of vehicles under which Toyota con-
Toyota does not exercise significant influence (generally less than ditionally guarantees the minimum resale value are recognized
a 20% ownership interest) are stated at cost. The accounts of vari- on a pro rata basis from the date of sale to the first exercise
able interest entities as defined by the Financial Accounting date of the guarantee in a manner similar to operating lease
Standards Board Interpretation No. 46(R), Consolidation of accounting. The underlying vehicles of these transactions are
Variable Interest Entities (revised December 2003)—an interpreta- recorded as assets and are depreciated in accordance with
tion of ARB No. 51, are included in the consolidated financial Toyota’s depreciation policy.
statements, if applicable. Revenues from retail financing contracts and finance leases
are recognized using the effective yield method. Revenues from
Estimates operating leases are recognized on a straight-line basis over the
The preparation of Toyota’s consolidated financial statements in lease term.
conformity with accounting principles generally accepted in the Toyota on occasion sells finance receivables in transactions
United States of America requires management to make esti- subject to limited recourse provisions. These sales are to trusts
mates and assumptions that affect the amounts reported in the and Toyota retains the servicing rights and is paid a servicing
consolidated financial statements and accompanying notes. fee. Gains or losses from the sales of the finance receivables are
Actual results could differ from those estimates. The more sig- recognized in the fiscal year in which such sales occur.
nificant estimates include: product warranties, allowance for
doubtful accounts and credit losses, residual values for leased Other costs
assets, impairment of long-lived assets, pension costs and obli- Advertising and sales promotion costs are expensed as incurred.
gations, fair value of derivative financial instruments, other-than- Advertising costs were ¥451,182 million, ¥484,508 million and
temporary losses on marketable securities and valuation ¥389,242 million ($3,963 million) for the years ended March 31,
allowance for deferred tax assets. 2007, 2008 and 2009, respectively.

Annual Report 2009 69

 Financial Section

Toyota generally warrants its products against certain manufac- Finance receivables
turing and other defects. Provisions for product warranties are Finance receivables are recorded at the present value of the
provided for specific periods of time and/or usage of the prod- related future cash flows including residual values for finance
uct and vary depending upon the nature of the product, the leases.
geographic location of the sale and other factors. Toyota records
a provision for estimated product warranty costs at the time the Allowance for credit losses
related sale is recognized based on estimates that Toyota will Allowance for credit losses are established to cover probable
incur to repair or replace product parts that fail while under war- losses on receivables resulting from the inability of customers to
ranty. The amount of accrued estimated warranty costs is pri- make required payments. The allowance for credit losses is
marily based on historical experience as to product failures as based primarily on the frequency of occurrence and loss severi-
well as current information on repair costs. The amount of war- ty. Other factors affecting collectibility are also evaluated in
ranty costs accrued also contains an estimate of warranty claim determining the amount to be provided.
recoveries to be received from suppliers. Product recalls and Losses are charged to the allowance when it has been deter-
voluntary service campaigns are recorded when they are deter- mined that payments will not be received and collateral cannot
mined to be probable and reasonably estimable. be recovered or the related collateral is repossessed and sold.
Research and development costs are expensed as incurred. Any shortfall between proceeds received and the carrying cost of
Research and development costs were ¥890,782 million, repossessed collateral is charged to the allowance. Recoveries
¥958,882 million and ¥904,075 million ($9,204 million) for the are reversed from the allowance for credit losses.
years ended March 31, 2007, 2008 and 2009, respectively.
Allowance for residual value losses
Cash and cash equivalents Toyota is exposed to risk of loss on the disposition of off-lease
Cash and cash equivalents include all highly liquid investments vehicles to the extent that sales proceeds are not sufficient to
with original maturities of three months or less, that are readily cover the carrying value of the leased asset at lease termination.
convertible to known amounts of cash and are so near maturity Toyota maintains an allowance to cover probable estimated loss-
that they present insignificant risk of changes in value because es related to unguaranteed residual values on its owned portfolio.
of changes in interest rates. The allowance is evaluated considering projected vehicle return
rates and projected loss severity. Factors considered in the deter-
Marketable securities mination of projected return rates and loss severity include histor-
Marketable securities consist of debt and equity securities. Debt ical and market information on used vehicle sales, trends in lease
and equity securities designated as available-for-sale are carried returns and new car markets, and general economic conditions.
at fair value with unrealized gains or losses included as a com- Management evaluates the foregoing factors, develops several
ponent of accumulated other comprehensive income in share- potential loss scenarios, and reviews allowance levels to deter-
holders’ equity, net of applicable taxes. Individual securities mine whether reserves are considered adequate to cover the
classified as available-for-sale are reduced to net realizable probable range of losses.
value for other-than-temporary declines in market value. In The allowance for residual value losses is maintained in
determining if a decline in value is other-than-temporary, Toyota amounts considered by Toyota to be appropriate in relation to
considers the length of time and the extent to which the fair the estimated losses on its owned portfolio. Upon disposal of
value has been less than the carrying value, the financial condi- the assets, the allowance for residual losses is adjusted for the
tion and prospects of the company and Toyota’s ability and difference between the net book value and the proceeds from
intent to retain its investment in the company for a period of sale.
time sufficient to allow for any anticipated recovery in market
value. Realized gains and losses, which are determined on the Inventories
average-cost method, are reflected in the statement of income Inventories are valued at cost, not in excess of market, cost
when realized. being determined on the “average-cost” basis, except for the
cost of finished products carried by certain subsidiary compa-
Security investments in non-public companies nies which is determined on the “specific identification” basis or
Security investments in non-public companies are carried at cost “last-in, first-out” (“LIFO”) basis. Inventories valued on the LIFO
as fair value is not readily determinable. If the value of a non-pub- basis totaled ¥283,735 million and ¥150,110 million ($1,528 mil-
lic security investment is estimated to have declined and such lion) at March 31, 2008 and 2009, respectively. Had the “first-in,
decline is judged to be other-than-temporary, Toyota recognizes first-out” basis been used for those companies using the LIFO
the impairment of the investment and the carrying value is basis, inventories would have been ¥30,360 million and ¥58,980
reduced to its fair value. Determination of impairment is based on million ($600 million) higher than reported at March 31, 2008
the consideration of such factors as operating results, business and 2009, respectively.
plans and estimated future cash flows. Fair value is determined
principally through the use of the latest financial information.

70 TOYOTA MOTOR CORPORATION

 Management & Investor
Top Messages Performance Overview The Right Way Forward Business Overview Corporate Information Financial Section Information

Property, plant and equipment the provisions regarding recognition of funded status and dis-
Property, plant and equipment are stated at cost. Major renew- closure under FAS No. 158, Employers’ Accounting for Defined
als and improvements are capitalized; minor replacements, Benefit Pension and Other Postretirement Plans—an amend-
maintenance and repairs are charged to current operations. ment of FASB Statements No. 87, 88, 106, and 132(R) (“FAS 158”)
Depreciation of property, plant and equipment is mainly as of March 31, 2007. Under the provisions of FAS 158, the over-
computed on the declining-balance method for the parent com- funded or underfunded status of the defined benefit postretire-
pany and Japanese subsidiaries and on the straight-line method ment plans is recognized on the consolidated balance sheets as
for foreign subsidiary companies at rates based on estimated prepaid pension and severance costs or accrued pension and
useful lives of the respective assets according to general class, severance costs, and the funded status change is recognized in
type of construction and use. The estimated useful lives range the year in which it occurs through comprehensive income. Prior
from 2 to 65 years for buildings and from 2 to 20 years for to the adoption of FAS 158, a minimum pension liability had
machinery and equipment. been recorded for plans where the accumulated benefit obliga-
Vehicles and equipment on operating leases to third parties tion net of plan assets exceeded the accrued pension and sev-
are originated by dealers and acquired by certain consolidated erance costs. After the adoption of FAS 158, a minimum pension
subsidiaries. Such subsidiaries are also the lessors of certain liability is not recorded.
property that they acquire directly. Vehicles and equipment on
operating leases are depreciated primarily on a straight-line Environmental matters
method over the lease term, generally 5 years, to the estimated Environmental expenditures relating to current operations are
residual value. expensed or capitalized as appropriate. Expenditures relating to
existing conditions caused by past operations, which do not
Long-lived assets contribute to current or future revenues, are expensed. Liabilities
Toyota reviews its long-lived assets for impairment whenever for remediation costs are recorded when they are probable and
events or changes in circumstances indicate that the carrying reasonably estimable, generally no later than the completion of
amount of an asset group may not be recoverable. An impair- feasibility studies or Toyota’s commitment to a plan of action.
ment loss would be recognized when the carrying amount of an The cost of each environmental liability is estimated by using
asset group exceeds the estimated undiscounted cash flows current technology available and various engineering, financial
expected to result from the use of the asset and its eventual dis- and legal specialists within Toyota based on current law. Such
position. The amount of the impairment loss to be recorded is liabilities do not reflect any offset for possible recoveries from
calculated by the excess of the carrying value of the asset group insurance companies and are not discounted. There were no
over its fair value. Fair value is determined mainly using a dis- material changes in these liabilities for all periods presented.
counted cash flow valuation method.
Income taxes
Goodwill and intangible assets The provision for income taxes is computed based on the pre-
Goodwill is not material to Toyota’s consolidated balance tax income included in the consolidated statement of income.
sheets. The asset and liability approach is used to recognize deferred
Intangible assets consist mainly of software. Intangible assets tax assets and liabilities for the expected future tax consequenc-
with a definite life are amortized on a straight-line basis with es of temporary differences between the carrying amounts and
estimated useful lives mainly of 5 years. Intangible assets with the tax bases of assets and liabilities. Valuation allowances are
an indefinite life are tested for impairment whenever events or recorded to reduce deferred tax assets when it is more likely
circumstances indicate that a carrying amount of an asset (asset than not that a tax benefit will not be realized.
group) may not be recoverable. An impairment loss would be
recognized when the carrying amount of an asset exceeds the Derivative financial instruments
estimated undiscounted cash flows used in determining the fair Toyota employs derivative financial instruments, including for-
value of the asset. The amount of the impairment loss to be ward foreign currency exchange contracts, foreign currency
recorded is generally determined by the difference between the options, interest rate swaps, interest rate currency swap agree-
fair value of the asset using a discounted cash flow valuation ments and interest rate options to manage its exposure to fluc-
method and the current book value. tuations in interest rates and foreign currency exchange rates.
Toyota does not use derivatives for speculation or trading pur-
Employee benefit obligations poses. Changes in the fair value of derivatives are recorded
Toyota has both defined benefit and defined contribution plans each period in current earnings or through other comprehensive
for employees’ retirement benefits. Retirement benefit obliga- income, depending on whether a derivative is designated as
tions are measured by actuarial calculations in accordance with part of a hedge transaction and the type of hedge transaction.
a Statement of Financial Accounting Standards (“FAS”) No. 87 The ineffective portion of all hedges is recognized currently in
Employers’ Accounting for Pensions (“FAS 87”). Toyota adopted operations.

Annual Report 2009 71

 Financial Section

Net income per share In September 2006, FASB issued FAS 158. FAS 158 requires
Basic net income per common share is calculated by dividing employers to measure the funded status of their defined benefit
net income by the weighted-average number of shares out- postretirement plans as of the date of their year-end statement
standing during the reported period. The calculation of diluted of financial position. Toyota adopted the provision in FAS 158
net income per common share is similar to the calculation of regarding a measurement date from the fiscal year ended after
basic net income per share, except that the weighted-average December 15, 2008. The adoption of this provision in FAS 158
number of shares outstanding includes the additional dilution did not have a material impact on Toyota’s consolidated finan-
from the assumed exercise of dilutive stock options. cial statements.
In February 2007, FASB issued FAS No. 159, The Fair Value
Stock-based compensation Option for Financial Assets and Financial Liabilities—Including
Toyota measures compensation expense for its stock-based an amendment of FASB Statement No. 115 (“FAS 159”). FAS
compensation plan based on the grant-date fair value of the 159 permits entities to measure many financial instruments and
award, and accounts for the award in accordance with FAS No. certain other assets and liabilities at fair value on an instrument-
123(R), Share—Based Payment (revised 2004). by-instrument basis and subsequent change in fair value must
be recorded in earnings at each reporting date. Toyota adopted
Other comprehensive income FAS 159 from the fiscal year begun after November 15, 2007.
Other comprehensive income refers to revenues, expenses, The adoption of FAS 159 did not have a material impact on
gains and losses that, under accounting principles generally Toyota’s consolidated financial statements.
accepted in the United States of America are included in com- In March 2008, FASB issued FAS No. 161, Disclosures about
prehensive income, but are excluded from net income as these Derivative Instruments and Hedging Activities—an amendment
amounts are recorded directly as an adjustment to shareholders’ of FASB Statement No. 133 (“FAS 161”). FAS 161 changes and
equity. Toyota’s other comprehensive income is primarily com- enhances the current disclosure requirements for derivative
prised of unrealized gains/losses on marketable securities des- instruments and hedging activities under FAS No. 133,
ignated as available-for-sale, foreign currency translation Accounting for Derivative Instruments and Hedging Activities.
adjustments and adjustments attributed to pension liabilities or Toyota adopted FAS 161 from the fiscal year ended March 31,
minimum pension liabilities associated with Toyota’s defined 2009. The adoption of FAS 161 did not have a material impact
benefit pension plans. on Toyota’s consolidated financial statements. See note 20 to
the consolidated financial statements for disclosures of the
Accounting changes adoption of the statement.
In June 2006, the Financial Accounting Standards Board
(“FASB”) issued FASB Interpretation No. 48, Accounting for Recent pronouncements to be adopted
Uncertainty in Income Taxes—an interpretation of FASB in future periods
Statement No. 109 (“FIN 48”). FIN 48 clarifies the accounting for In December 2007, FASB issued FAS No. 141(R), Business
uncertainty in tax positions and requires a company to recog- Combinations (“FAS 141(R)”). FAS 141(R) establishes principles
nize in its financial statements, the impact of a tax position, if and requirements for how the acquirer recognizes and measures
that position is more likely than not to be sustained on audit, the identifiable assets acquired, the liabilities assumed, any non-
based on the technical merits of the position. Toyota adopted controlling interest, and the goodwill acquired in a business
FIN 48 from the fiscal year begun after December 15, 2006. See combination or a gain from a bargain purchase. Also, FAS 141(R)
note 16 to the consolidated financial statements for the impact provides several new disclosure requirements that enable users
of the adoption of the interpretation on Toyota’s consolidated of the financial statements to evaluate the nature and financial
financial statements. effects of the business combination. FAS 141(R) is effective to
In September 2006, FASB issued FAS No. 157, Fair Value business combinations on and after the beginning of fiscal year
Measurements (“FAS 157”), which defines fair value, establishes beginning on or after December 15, 2008. The impact of adopt-
a framework for measuring fair value and expands disclosures ing FAS 141(R) on Toyota’s consolidated financial statements will
about fair value measurements. Toyota adopted FAS 157 from depend on the nature and significance of any acquisitions in the
the fiscal year begun after November 15, 2007. Toyota adopted future period.
FASB Staff Position (“FSP”) No. FAS 157-2, Effective Date of In December 2007, FASB issued FAS No. 160, Noncontrolling
FASB Statement No. 157, which defers the effective date of FAS Interests in Consolidated Financial Statements—an amendment
157 for certain nonfinancial assets and nonfinancial liabilities to of ARB No. 51 (“FAS 160”). FAS 160 amends the guidance in
fiscal year beginning after November 15, 2008, and interim peri- Accounting Research Bulletins No. 51, Consolidated Financial
od within the fiscal year. The adoption of FAS 157 did not have a Statements, to establish accounting and reporting standards for
material impact on Toyota’s consolidated financial statements. the noncontrolling interest in a subsidiary and for the deconsoli-
See note 26 to the consolidated financial statements for disclo- dation of a subsidiary. FAS 160 is effective for fiscal year, and
sures of the adoption of these statements. interim period within the fiscal year, beginning on or after

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December 15, 2008. The presentation and disclosure require- ance sheet date but before financial statements are issued. FAS
ments shall be applied retrospectively for all periods presented 165 is effective for interim period or fiscal year ending after June
in the consolidated financial statements in which FAS 160 is ini- 15, 2009. Management does not expect this Statement to have a
tially applied. Management is evaluating the impact of adopting material impact on Toyota’s consolidated financial statements.
FAS 160 on Toyota’s consolidated financial statements.
In December 2008, FASB issued FSP No. FAS 132(R)-1, Reclassifications
Employers’ Disclosures about Postretirement Benefit Plan Assets Certain prior year amounts have been reclassified to conform to
(“FSP FAS 132(R)-1”). FSP FAS 132(R)-1 requires additional dis- the presentations as of and for the year ended March 31, 2009.
closures about postretirement benefit plan assets including During the year ended March 31, 2008, certain leases that his-
investment policies and strategies, categories of plan assets, fair torically have been accounted for as operating leases, were cor-
value measurements of plan assets, and significant concentra- rected to be accounted for as finance leases. This resulted in the
tions of risk. FSP FAS 132(R)-1 is effective for fiscal year ending recognition of current and noncurrent finance receivables and
after December 15, 2009. Management does not expect this revenue from financing operations related to finance leases, and
FSP to have a material impact on Toyota’s consolidated financial the derecognition of vehicles and equipment on operating leas-
statements. es, accumulated depreciation, revenue from financing opera-
In April 2009, FASB issued FSP No. FAS 115-2 and FAS 124-2, tions related to operating leases, cost of financing operations
Recognition and Presentation of Other-Than-Temporary including depreciation expense, cash provided by operating
Impairments (“FSP FAS 115-2 and FAS 124-2”). FSP FAS 115-2 activities and cash used in investing activities, as of and for the
and FAS 124-2 revises the recognition and presentation require- year ended March 31, 2008. At March 31, 2007, the adjustments
ments for other-than-temporary impairments of debt securities, resulted in an increase in current assets and a decrease in non-
and contains additional disclosure requirements related to debt current assets. For the year ended March 31, 2007, the adjust-
and equity securities. FSP FAS 115-2 and FAS 124-2 is effective ments resulted in decreases to both additions to equipment
for interim period and fiscal year ending after June 15, 2009. leased to others and proceeds from sales of equipment leased
Management does not expect this FSP to have a material to others, and increases to both additions to finance receivables
impact on Toyota’s consolidated financial statements. and collection of finance receivables. These adjustments are
In May 2009, FASB issued FAS No. 165, Subsequent Events immaterial to Toyota’s consolidated financial statements for all
(“FAS 165”). FAS 165 is intended to establish general standards of periods presented.
accounting for and disclosure of events that occur after the bal-

3 U.S. dollar amounts:

U.S. dollar amounts presented in the consolidated financial into, U.S. dollars. For this purpose, the rate of ¥98.23 = U.S. $1,
statements and related notes are included solely for the conve- the approximate current exchange rate at March 31, 2009, was
nience of the reader and are unaudited. These translations used for the translation of the accompanying consolidated
should not be construed as representations that the yen financial amounts of Toyota as of and for the year ended March
amounts actually represent, or have been or could be converted 31, 2009.

4 Supplemental cash flow information:

Cash payments for income taxes were ¥741,798 million, ¥921,798 Capital lease obligations of ¥6,559 million, ¥7,401 million and
million and ¥563,368 million ($5,735 million) for the years ended ¥28,953 million ($295 million) were incurred for the years ended
March 31, 2007, 2008 and 2009, respectively. Interest payments March 31, 2007, 2008 and 2009, respectively.
during the years ended March 31, 2007, 2008 and 2009 were
¥550,398 million, ¥686,215 million and ¥614,017 million ($6,251
million), respectively.

5 Acquisitions and dispositions:

During the years ended March 31, 2007, 2008 and 2009, Toyota bilities assumed were not material.
made several acquisitions, however the assets acquired and lia-

Annual Report 2009 73

 Financial Section

6 Marketable securities and other securities investments:

Marketable securities and other securities investments include debt and equity securities for which the aggregate cost, gross unrealized
gains and losses and fair value are as follows:
Yen in millions
March 31, 2008
Gross Gross
unrealized unrealized Fair
Cost gains losses value
Available-for-sale
Debt securities ............................................................................................................ ¥2,602,951 ¥ 52,345 ¥ 4,673 ¥2,650,623
Equity securities .......................................................................................................... 853,174 342,596 18,681 1,177,089
Total.......................................................................................................................... ¥3,456,125 ¥394,941 ¥23,354 ¥3,827,712

Securities not practicable to determine fair value

Debt securities ............................................................................................................ ¥ 30,239
Equity securities .......................................................................................................... 113,497
Total.......................................................................................................................... ¥143,736

Yen in millions
March 31, 2009
Gross Gross
unrealized unrealized Fair
Cost gains losses value
Available-for-sale
Debt securities ............................................................................................................ ¥1,704,904 ¥ 42,326 ¥ 65,379 ¥1,681,851
Equity securities .......................................................................................................... 736,966 172,992 111,698 798,260
Total.......................................................................................................................... ¥2,441,870 ¥215,318 ¥177,077 ¥2,480,111

Securities not practicable to determine fair value

Debt securities ............................................................................................................ ¥ 26,104
Equity securities .......................................................................................................... 91,985
Total.......................................................................................................................... ¥118,089

U.S. dollars in millions

March 31, 2009
Gross Gross
unrealized unrealized Fair
Cost gains losses value
Available-for-sale
Debt securities ............................................................................................................ $17,357 $ 431 $ 666 $17,122
Equity securities .......................................................................................................... 7,502 1,761 1,137 8,126
Total.......................................................................................................................... $24,859 $2,192 $1,803 $25,248

Securities not practicable to determine fair value

Debt securities ............................................................................................................ $ 266
Equity securities .......................................................................................................... 937
Total.......................................................................................................................... $1,203

Unrealized losses continuing over a 12 month period or more million, ¥18,766 million and ¥35,694 million ($363 million) and
in the aggregate were not material at March 31, 2008 and 2009. gross realized losses were ¥317 million, ¥21 million and ¥1,856
At March 31, 2008 and 2009, debt securities classified as avail- million ($19 million), respectively.
able-for-sale mainly consist of government bonds and corporate During the years ended March 31, 2007, 2008 and 2009, Toyota
debt securities with maturities from 1 to 10 years. recognized impairment losses on available-for-sale securities of
Proceeds from sales of available-for-sale securities were ¥4,614 million, ¥11,346 million, and ¥220,920 million ($2,249 mil-
¥148,442 million, ¥165,495 million and ¥800,422 million ($8,148 lion), respectively, which are included in “Other income (loss),
million) for the years ended March 31, 2007, 2008 and 2009, net” in the accompanying consolidated statements of income.
respectively. On those sales, gross realized gains were ¥8,832 Impairment losses recognized during the year ended March

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31, 2009 primarily include a loss for an other-than-temporary ments by reviewing the financial viability of the underlying
impairment on a certain investment for which Toyota previously companies and the prevailing market conditions in which these
recorded an exchange gain in accordance with EITF Issue No. companies operate to determine if Toyota’s investment in each
91-5, Nonmonetary Exchange of Cost-Method Investments. individual company is impaired and whether the impairment is
In the ordinary course of business, Toyota maintains long-term other-than-temporary. Toyota periodically performs this impair-
investment securities, included in “Marketable securities and ment test for significant investments recorded at cost. If the
other securities investments” and issued by a number of non- impairment is determined to be other-than-temporary, the car-
public companies which are recorded at cost, as their fair values rying value of the investment is written-down by the impaired
were not readily determinable. Management employs a system- amount and the losses are recognized currently in operations.
atic methodology to assess the recoverability of such invest-

7 Finance receivables:

Finance receivables consist of the following:

U.S. dollars
Yen in millions in millions
March 31, March 31,
2008 2009 2009
Retail ................................................................................................................................................. ¥ 6,959,479 ¥ 6,655,404 $ 67,753
Finance leases .................................................................................................................................. 1,160,401 1,108,408 11,284
Wholesale and other dealer loans ................................................................................................. 2,604,411 2,322,721 23,646
10,724,291 10,086,533 102,683
Deferred origination costs .............................................................................................................. 106,678 104,521 1,064
Unearned income ............................................................................................................................ (437,365) (405,171) (4,125)
Allowance for credit losses ............................................................................................................. (117,706) (238,932) (2,432)
Total finance receivables, net.................................................................................................. 10,275,898 9,546,951 97,190
Less—Current portion ..................................................................................................................... (4,301,142) (3,891,406) (39,615)
Noncurrent finance receivables, net ...................................................................................... ¥ 5,974,756 ¥ 5,655,545 $ 57,575

The contractual maturities of retail receivables, the future minimum lease payments on finance leases and wholesale and other dealer
loans at March 31, 2009 are summarized as follows:
Yen in millions U.S. dollars in millions
Wholesale Wholesale
Finance and other Finance and other
Years ending March 31, Retail lease dealer loans Retail lease dealer loans
2010..................................................................... ¥1,925,835 ¥330,433 ¥1,790,174 $19,605 $3,364 $18,224
2011..................................................................... 1,717,107 243,759 127,512 17,480 2,482 1,298
2012..................................................................... 1,367,769 187,929 107,624 13,924 1,913 1,096
2013..................................................................... 900,158 76,534 86,585 9,164 779 881
2014..................................................................... 467,476 23,419 105,055 4,759 238 1,070
Thereafter ........................................................... 277,059 9,176 105,771 2,821 93 1,077
¥6,655,404 ¥871,250 ¥2,322,721 $67,753 $8,869 $23,646

Finance leases consist of the following:

U.S. dollars
Yen in millions in millions
March 31, March 31,
2008 2009 2009
Minimum lease payments ................................................................................................................. ¥ 738,786 ¥ 871,250 $ 8,870
Estimated unguaranteed residual values ........................................................................................ 421,615 237,158 2,414
1,160,401 1,108,408 11,284
Deferred origination costs ................................................................................................................ 4,414 6,085 62
Less—Unearned income ................................................................................................................... (118,831) (102,826) (1,047)
Less—Allowance for credit losses .................................................................................................... (4,592) (7,776) (79)
Finance leases, net ........................................................................................................................ ¥1,041,392 ¥1,003,891 $10,220

Annual Report 2009 75

 Financial Section

Toyota maintains a program to sell retail and finance lease and provide credit enhancement to the senior securities in
receivables. Under the program, Toyota’s securitization transac- Toyota’s securitization transactions. The retained interests are
tions are generally structured as qualifying SPEs (“QSPE”s), thus not available to satisfy any obligations of Toyota. Investors in the
Toyota achieves sale accounting treatment under the provisions securitizations have no recourse to Toyota beyond the contrac-
of FAS No. 140, Accounting for Transfers and Servicing of tual cash flows of the securitized receivables, retained subordi-
Financial Assets and Extinguishments of Liabilities (“FAS 140”). nated interests, any cash reserve funds and any amounts
Toyota recognizes a gain or loss on the sale of the finance available or funded under the revolving liquidity notes. Toyota’s
receivables upon the transfer of the receivables to the securiti- exposure to these retained interests exists until the associated
zation trusts structured as a QSPE. Toyota retains servicing rights securities are paid in full. Investors do not have recourse to
and earns a contractual servicing fee of 1% per annum on the other assets held by Toyota for failure of obligors on the receiv-
total monthly outstanding principal balance of the related secu- ables to pay when due or otherwise.
ritized receivables. In a subordinated capacity, Toyota retains During the year ended March 31, 2008, Toyota sold mortgage
interest-only strips, subordinated securities, and cash reserve loan receivables, while no other retail and finance lease receiv-
funds in these securitizations, and these retained interests are ables were securitized. During the year ended March 31, 2009,
held as restricted assets subject to limited recourse provisions no retail and finance lease receivables were securitized.

The following table summarizes certain cash flows received from and paid to the securitization trusts for the years ended March 31,
2007, 2008 and 2009.
U.S. dollars
Yen in millions in millions
For the year ended
For the years ended March 31, March 31,
2007 2008 2009 2009
Proceeds from new securitizations, net of purchased and retained securities .............. ¥69,018 ¥91,385 ¥ — $—
Servicing fees received ....................................................................................................... 1,881 1,682 777 8
Excess interest received from interest only strips ............................................................. 2,818 1,865 356 4
Repurchases of receivables................................................................................................. — (4,681) (48) (0)
Servicing advances .............................................................................................................. (234) (114) — —
Reimbursement of servicing and maturity advances ........................................................ 234 114 — —

Toyota sold finance receivables under the program and rec- the prepayment speed of the receivables. All key economic
ognized pretax gains resulting from these sales of ¥1,589 million assumptions used in the valuation of the retained interests are
and ¥1,688 million for the years ended March 31, 2007 and 2008, reviewed periodically and are revised as considered necessary.
respectively, after providing an allowance for estimated credit At March 31, 2008 and 2009, Toyota’s retained interests relating
losses. The gain on sale recorded depends on the carrying to these securitizations include interest in trusts, interest-only
amount of the assets at the time of the sale. The carrying strips, and other receivables, amounting to ¥23,876 million and
amount is allocated between the assets sold and the retained ¥19,581 million ($199 million), respectively.
interests based on their relative fair values at the date of the Toyota recorded no impairments on retained interests for the
sale. The key economic assumptions initially and subsequently years ended March 31, 2007, 2008 and 2009. Impairments are
measuring the fair value of retained interests include the market calculated, if any, by discounting cash flows using management’s
interest rate environment, severity and rate of credit losses, and estimates and other key economic assumptions.

Key economic assumptions used in measuring the fair value of retained interests at the sale date of securitization transactions com-
pleted during the years ended March 31, 2007, 2008 and 2009 were as follows:
For the years ended March 31,
2007 2008 2009
Prepayment speed related to securitizations ......................................................................... 0.7%–1.4% 6.0% —
Weighted-average life (in years) .............................................................................................. 1.90–2.57 9.00 —
Expected annual credit losses ................................................................................................. 0.05%–0.12% 0.05% —
Discount rate used on the retained interests ......................................................................... 5.0% 3.8% —

Expected cumulative static pool losses over the life of the credit losses for finance receivables securitized for the years
securitizations are calculated by taking actual life to date losses ended March 31, 2007, 2008 and 2009 were 0.16%, 0.26% and
plus projected losses and dividing the sum by the original bal- 0.26%, respectively.
ance of each pool of assets. Expected cumulative static pool

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The key economic assumptions and the sensitivity of the current fair value of the retained interest to an immediate 10 and 20 percent
adverse change in those economic assumptions are presented below.
U.S. dollars
Yen in millions in millions
March 31, March 31,
2009 2009
Prepayment speed assumption (annual rate) ..................................................................................................... 0.5%–6.0%
Impact on fair value of 10% adverse change .................................................................................................. ¥ (232) $ (2)
Impact on fair value of 20% adverse change .................................................................................................. (419) (4)
Residual cash flows discount rate (annual rate).................................................................................................. 3.0%–6.5%
Impact on fair value of 10% adverse change .................................................................................................. ¥ (600) $ (6)
Impact on fair value of 20% adverse change .................................................................................................. (1,165) (12)
Expected credit losses (annual rate) ................................................................................................................... 0.05%–0.18%
Impact on fair value of 10% adverse change .................................................................................................. ¥ (8) $ (0)
Impact on fair value of 20% adverse change .................................................................................................. (16) (0)

These hypothetical scenarios do not reflect expected market calculated without changing any other assumption. Actual
conditions and should not be used as a prediction of future per- changes in one factor may result in changes in another, which
formance. As the figures indicate, changes in the fair value may might magnify or counteract the sensitivities. Actual cash flows
not be linear. Also, in this table, the effect of a variation in a par- may differ from the above analysis.
ticular assumption on the fair value of the retained interest is

Outstanding receivable balances and delinquency amounts for managed retail and lease receivables, which include both owned and
securitized receivables, as of March 31, 2008 and 2009 are as follows:
U.S. dollars
Yen in millions in millions
March 31, March 31,
2008 2009 2009
Principal amount outstanding .......................................................................................................... ¥7,867,964 ¥7,481,016 $76,158
Delinquent amounts over 60 days or more ..................................................................................... 79,313 83,613 851

Comprised of:
Receivables owned ........................................................................................................................ ¥7,682,515 ¥7,358,641 $74,912
Receivables securitized ................................................................................................................. 185,449 122,375 1,246

Credit losses, net of recoveries attributed to managed retail and lease receivables for the years ended March 31, 2007, 2008 and 2009
totaled ¥63,428 million, ¥93,036 million and ¥124,939 million ($1,272 million), respectively.

8 Other receivables:

Other receivables relate to arrangements with certain component manufacturers whereby Toyota procures inventory for these compo-
nent manufactures and is reimbursed for the related purchases.

9 Inventories:

Inventories consist of the following:

U.S. dollars
Yen in millions in millions
March 31, March 31,
2008 2009 2009
Finished goods .................................................................................................................................. ¥1,211,569 ¥ 875,930 $ 8,917
Raw materials ..................................................................................................................................... 299,606 257,899 2,626
Work in process ................................................................................................................................. 239,937 251,670 2,562
Supplies and other ............................................................................................................................ 74,604 73,895 752
¥1,825,716 ¥1,459,394 $14,857

Annual Report 2009 77

 Financial Section

10 Vehicles and equipment on operating leases:

Vehicles and equipment on operating leases consist of the following:

U.S. dollars
Yen in millions in millions
March 31, March 31,
2008 2009 2009
Vehicles ............................................................................................................................................... ¥2,814,706 ¥2,729,713 $27,789
Equipment .......................................................................................................................................... 107,619 107,168 1,091
2,922,325 2,836,881 28,880
Less—Accumulated depreciation .................................................................................................... (718,207) (795,767) (8,101)
Vehicles and equipment on operating leases, net ..................................................................... ¥2,204,118 ¥2,041,114 $20,779

Rental income from vehicles and equipment on operating leases was ¥508,095 million, ¥588,262 million and ¥560,251 million ($5,703
million) for the years ended March 31, 2007, 2008 and 2009, respectively. Future minimum rentals from vehicles and equipment on oper-
ating leases are due in installments as follows:

U.S. dollars
Years ending March 31, Yen in millions in millions
2010................................................................................................................................................................................... ¥459,110 $4,674
2011................................................................................................................................................................................... 302,990 3,084
2012................................................................................................................................................................................... 130,948 1,333
2013................................................................................................................................................................................... 37,294 380
2014................................................................................................................................................................................... 8,262 84
Thereafter ......................................................................................................................................................................... 7,265 74
Total minimum future rentals ...................................................................................................................................... ¥945,869 $9,629

The future minimum rentals as shown above should not be considered indicative of future cash collections.

11 Allowance for doubtful accounts and credit losses:

An analysis of activity within the allowance for doubtful accounts relating to trade accounts and notes receivable for the years ended
March 31, 2007, 2008 and 2009 is as follows:
U.S. dollars
Yen in millions in millions
For the year ended
For the years ended March 31, March 31,
2007 2008 2009 2009
Allowance for doubtful accounts at beginning of year .................................................... ¥62,088 ¥58,066 ¥52,063 $530
Provision for doubtful accounts, net of reversal................................................................ (841) 357 (1,663) (17)
Write-offs .............................................................................................................................. (3,154) (3,348) (1,695) (17)
Other..................................................................................................................................... (27) (3,012) (699) (7)
Allowance for doubtful accounts at end of year ....................................................... ¥58,066 ¥52,063 ¥48,006 $489

The other amount includes the impact of consolidation and A portion of the allowance for doubtful accounts balance at
deconsolidation of certain entities due to changes in ownership March 31, 2008 and 2009 totaling ¥34,592 million and ¥32,972
interest and currency translation adjustments for the years million ($336 million), respectively, is attributed to certain non-
ended March 31, 2007, 2008 and 2009. current receivable balances which are reported as other assets
in the consolidated balance sheets.

An analysis of the allowance for credit losses relating to finance receivables and vehicles and equipment on operating leases for the
years ended March 31, 2007, 2008 and 2009 is as follows:
U.S. dollars
Yen in millions in millions
For the year ended
For the years ended March 31, March 31,
2007 2008 2009 2009
Allowance for credit losses at beginning of year .............................................................. ¥101,383 ¥112,116 ¥ 117,706 $ 1,198
Provision for credit losses ................................................................................................... 72,703 122,433 259,096 2,638
Charge-offs, net of recoveries ............................................................................................ (63,879) (88,902) (116,793) (1,189)
Other..................................................................................................................................... 1,909 (27,941) (21,077) (215)
Allowance for credit losses at end of year ................................................................. ¥112,116 ¥117,706 ¥ 238,932 $ 2,432

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The other amount primarily includes the impact of currency translation adjustments for the years ended March 31, 2007, 2008 and 2009.

12 Affiliated companies and variable interest entities:

Investments in and transactions with affiliated companies

Summarized financial information for affiliated companies accounted for by the equity method is shown below:
U.S. dollars
Yen in millions in millions
March 31, March 31,
2008 2009 2009
Current assets .............................................................................................................................. ¥ 8,067,295 ¥ 6,400,685 $ 65,160
Noncurrent assets ........................................................................................................................ 10,689,963 9,438,905 96,090
Total assets ........................................................................................................................... ¥18,757,258 ¥15,839,590 $161,250
Current liabilities .......................................................................................................................... ¥ 6,012,270 ¥ 4,216,956 $ 42,929
Long-term liabilities..................................................................................................................... 5,619,997 5,740,150 58,436
Shareholders’ equity.................................................................................................................... 7,124,991 5,882,484 59,885
Total liabilities and shareholders’ equity ............................................................................ ¥18,757,258 ¥15,839,590 $161,250
Toyota’s share of shareholders’ equity ....................................................................................... ¥ 2,065,778 ¥ 1,810,106 $ 18,427
Number of affiliated companies accounted for by the equity method at end of period ..... 55 56

U.S. dollars
Yen in millions in millions
For the year ended
For the years ended March 31, March 31,
2007 2008 2009 2009
Net revenues ..................................................................................................... ¥23,368,250 ¥26,511,831 ¥23,149,968 $235,671
Gross profit........................................................................................................ ¥ 2,642,377 ¥ 3,081,366 ¥ 2,034,617 $ 20,713
Net income........................................................................................................ ¥ 701,816 ¥ 870,528 ¥ 13,838 $ 141

Entities comprising a significant portion of Toyota’s invest- ($11,483 million), respectively. For the year ended March 31,
ment in affiliated companies include Denso Corporation; Aioi 2009, Toyota did not recognize impairment losses on certain
Insurance Co., Ltd.; Aisin Seiki Co., Ltd.; Toyota Industries investments in affiliated companies accounted for by the equity
Corporation; and Toyota Tsusho Corporation. method after considering the length of time and the extent to
Certain affiliated companies accounted for by the equity which the quoted market prices have been less than the carry-
method with carrying amounts of ¥1,677,617 million and ing amounts, the financial condition and near-term prospects of
¥1,417,896 million ($14,434 million) at March 31, 2008 and 2009, the affiliated companies and Toyota’s ability and intent to retain
respectively, were quoted on various established markets at an those investments in the companies for a period of time.
aggregate value of ¥2,229,321 million and ¥1,127,976 million

Account balances and transactions with affiliated companies are presented below:
U.S. dollars
Yen in millions in millions
March 31, March 31,
2008 2009 2009
Trade accounts and notes receivable, and other receivables........................................................ ¥247,311 ¥159,821 $1,627
Accounts payable and other payables ............................................................................................ 622,830 363,954 3,705

U.S. dollars
Yen in millions in millions
For the year ended
For the years ended March 31, March 31,
2007 2008 2009 2009
Net revenues ....................................................................................................... ¥1,475,220 ¥1,693,969 ¥1,585,814 $16,144
Purchases............................................................................................................. 4,028,260 4,525,049 3,918,717 39,893

Dividends from affiliated companies accounted for by the Toyota does not have any significant related party transac-
equity method for the years ended March 31, 2007, 2008 and tions other than transactions with affiliated companies in the
2009 were ¥45,234 million, ¥76,351 million and ¥114,409 million ordinary course of business.
($1,165 million), respectively.

Annual Report 2009 79

 Financial Section

Variable Interest Entities Certain joint ventures in which Toyota has invested are VIEs
Toyota enters into securitization transactions with certain spe- for which Toyota is not the primary beneficiary. However, neither
cial-purpose entities. However, substantially all securitization the aggregate size of these joint ventures nor Toyota’s involve-
transactions are with entities that are qualifying special-purpose ments in these entities are material to Toyota’s consolidated
entities under FAS 140 and thus no material variable interest financial statements.
entities (“VIEs”) relating to these securitization transactions.

13 Short-term borrowings and long-term debt:

Short-term borrowings at March 31, 2008 and 2009 consist of the following:
U.S. dollars
Yen in millions in millions
March 31, March 31,
2008 2009 2009
Loans, principally from banks, with a weighted-average interest at March 31, 2008
and March 31, 2009 of 3.36% and of 2.44% per annum, respectively ..................................... ¥1,226,717 ¥1,115,122 $11,352
Commercial paper with a weighted-average interest at March 31, 2008
and March 31, 2009 of 3.76% and of 1.52% per annum, respectively ..................................... 2,326,004 2,502,550 25,477
¥3,552,721 ¥3,617,672 $36,829

As of March 31, 2009, Toyota has unused short-term lines of programs. Under these programs, Toyota is authorized to obtain
credit amounting to ¥2,476,458 million ($25,211 million) of which short-term financing at prevailing interest rates for periods not
¥751,523 million ($7,651 million) related to commercial paper in excess of 360 days.

Long-term debt at March 31, 2008 and 2009 comprises the following:
U.S. dollars
Yen in millions in millions
March 31, March 31,
2008 2009 2009
Unsecured loans, representing obligations principally to banks, due 2008 to 2028
in 2008 and due 2009 to 2028 in 2009 with interest ranging from 0.17% to 28.00%
per annum in 2008 and from 0.17% to 31.50% per annum in 2009 ......................................... ¥ 1,016,101 ¥ 1,536,413 $ 15,641
Secured loans, representing obligations principally to banks, due 2008 to 2019
in 2008 and due 2009 to 2019 in 2009 with interest ranging from 0.35% to 5.60%
per annum in 2008 and from 0.68% to 5.35% per annum in 2009 ........................................... 15,635 11,227 114
Medium-term notes of consolidated subsidiaries, due 2008 to 2047 in 2008
and due 2009 to 2047 in 2009 with interest ranging from 0.32% to 15.25%
per annum in 2008 and from 0.19% to 17.47% per annum in 2009 ......................................... 5,451,779 5,335,159 54,313
Unsecured notes of parent company, due 2008 to 2018 in 2008
and due 2010 to 2018 in 2009 with interest ranging from 1.33% to 3.00%
per annum in 2008 and from 1.33% to 3.00% per annum in 2009 ........................................... 350,000 450,000 4,581
Unsecured notes of consolidated subsidiaries, due 2008 to 2031 in 2008
and due 2009 to 2031 in 2009 with interest ranging from 0.34% to 14.00%
per annum in 2008 and from 0.59% to 19.42% per annum in 2009 ......................................... 1,780,284 1,616,816 16,460
Long-term capital lease obligations, due 2008 to 2017 in 2008
and due 2009 to 2028 in 2009, with interest ranging from 0.31% to 10.00%
per annum in 2008 and from 0.21% to 15.47% per annum in 2009 ......................................... 43,563 51,366 523
8,657,362 9,000,981 91,632
Less—Current portion due within one year ................................................................................ (2,675,431) (2,699,512) (27,482)
¥ 5,981,931 ¥ 6,301,469 $ 64,150

As of March 31, 2009, approximately 28%, 21%, 15% and 36% book value of ¥87,845 million ($894 million) and in addition,
of long-term debt are denominated in U.S. dollars, Japanese other assets aggregating ¥34,329 million ($349 million) were
yen, euros, and other currencies, respectively. pledged as collateral mainly for certain debt obligations of sub-
As of March 31, 2009, property, plant and equipment with a sidiaries.

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The aggregate amounts of annual maturities of long-term debt during the next five years are as follows:
U.S. dollars
Years ending March 31, Yen in millions in millions
2010................................................................................................................................................................................... ¥2,699,512 $27,482
2011................................................................................................................................................................................... 1,640,353 16,699
2012................................................................................................................................................................................... 1,974,269 20,098
2013................................................................................................................................................................................... 637,445 6,489
2014................................................................................................................................................................................... 626,983 6,383

Standard agreements with certain banks in Japan include pro- edness to such banks. During the year ended March 31, 2009,
visions that collateral (including sums on deposit with such Toyota has not received any significant such requests from these
banks) or guarantees will be furnished upon the banks’ request banks.
and that any collateral furnished, pursuant to such agreements As of March 31, 2009, Toyota has unused long-term lines of
or otherwise, will be applicable to all present or future indebt- credit amounting to ¥4,152,621 million ($42,274 million).

14 Product warranties:

Toyota provides product warranties for certain defects mainly the warranty contracts. The net change in the accrual for the
resulting from manufacturing based on warranty contracts with its product warranties for the years ended March 31, 2007, 2008 and
customers at the time of sale of products. Toyota accrues estimat- 2009, which is included in “Accrued expenses” in the accompany-
ed warranty costs to be incurred in the future in accordance with ing consolidated balance sheets, consist of the following:

U.S. dollars
Yen in millions in millions
For the year ended
For the years ended March 31, March 31,
2007 2008 2009 2009
Liabilities for product warranties at beginning of year .................................... ¥ 377,879 ¥ 412,452 ¥ 446,384 $ 4,544
Payments made during year .............................................................................. (279,597) (324,110) (337,863) (3,439)
Provision for warranties ...................................................................................... 336,543 392,349 366,604 3,732
Changes relating to pre-existing warranties .................................................... (29,458) (14,155) (17,869) (182)
Other.................................................................................................................... 7,085 (20,152) (27,999) (285)
Liabilities for product warranties at end of year............................................... ¥ 412,452 ¥ 446,384 ¥ 429,257 $ 4,370

The other amount primarily includes the impact of currency actions or voluntary service campaigns to repair or to replace
translation adjustments and the impact of consolidation and parts which might be expected to fail from products safety per-
deconsolidation of certain entities due to changes in ownership spectives or customer satisfaction standpoints. Toyota accrues
interest. costs of these activities, which are not included in the reconcilia-
In addition to product warranties above, Toyota initiates recall tion above, based on management’s estimates.

15 Other payables:

Other payables are mainly related to purchases of property, plant and equipment and non-manufacturing purchases.

16 Income taxes:

The components of income (loss) before income taxes comprise the following:
U.S. dollars
Yen in millions in millions
For the year ended
For the years ended March 31, March 31,
2007 2008 2009 2009
Income (loss) before income taxes:
Parent company and domestic subsidiaries ................................................. ¥1,412,674 ¥1,522,619 ¥(224,965) $(2,290)
Foreign subsidiaries........................................................................................ 969,842 914,603 (335,416) (3,415)
¥2,382,516 ¥2,437,222 ¥(560,381) $(5,705)

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 Financial Section

The provision for income taxes consists of the following:

U.S. dollars
Yen in millions in millions
For the year ended
For the years ended March 31, March 31,
2007 2008 2009 2009
Current income tax expense:
Parent company and domestic subsidiaries ................................................. ¥591,840 ¥491,185 ¥ 65,684 $ 668
Foreign subsidiaries........................................................................................ 174,164 338,852 72,864 742
Total current................................................................................................. 766,004 830,037 138,548 1,410
Deferred income tax expense (benefit):
Parent company and domestic subsidiaries ................................................. 51,740 119,333 (26,472) (269)
Foreign subsidiaries........................................................................................ 80,568 (37,875) (168,518) (1,716)
Total deferred .............................................................................................. 132,308 81,458 (194,990) (1,985)
Total provision ............................................................................................. ¥898,312 ¥911,495 ¥ (56,442) $ (575)

Toyota is subject to a number of different income taxes which, porary differences, which are expected to be realized in the
in the aggregate, indicate a statutory rate in Japan of approxi- future years. Reconciliation of the differences between the statu-
mately 40.2% for the years ended March 31, 2007, 2008, and tory tax rate and the effective income tax rate is as follows:
2009. Such rate was also used to calculate the tax effects of tem-
For the years ended March 31,
2007 2008 2009
Statutory tax rate ................................................................................................................................. 40.2% 40.2% 40.2%
Increase (reduction) in taxes resulting from:
Non-deductible expenses............................................................................................................... 0.5 0.6 (5.0)
Deferred tax liabilities on undistributed earnings of foreign subsidiaries ................................. 0.7 0.9 (2.5)
Deferred tax liabilities on undistributed earnings of affiliates accounted
for by the equity method ............................................................................................................. 2.4 3.1 (2.5)
Valuation allowance ......................................................................................................................... (0.1) (0.4) (25.4)
Tax credits ......................................................................................................................................... (3.9) (4.4) 10.0
Other................................................................................................................................................. (2.1) (2.6) (4.7)
Effective income tax rate..................................................................................................................... 37.7% 37.4% 10.1%

The other includes the difference between the statutory tax rate of TMC and that of foreign subsidiaries during the years ended March
31, 2007, 2008 and 2009.
Significant components of deferred tax assets and liabilities are as follows:
U.S. dollars
Yen in millions in millions
March 31, March 31,
2008 2009 2009
Deferred tax assets
Accrued pension and severance costs.................................................................................... ¥ 156,924 ¥ 288,849 $ 2,940
Warranty reserves and accrued expenses .............................................................................. 205,564 227,757 2,319
Other accrued employees’ compensation ............................................................................. 129,472 99,867 1,017
Operating loss carryforwards for tax purposes ...................................................................... 54,368 290,044 2,953
Inventory adjustments .............................................................................................................. 67,904 64,439 656
Property, plant and equipment and other assets ................................................................... 180,922 208,983 2,127
Other.......................................................................................................................................... 332,779 413,728 4,212
Gross deferred tax assets ..................................................................................................... 1,127,933 1,593,667 16,224
Less—Valuation allowance ....................................................................................................... (82,191) (208,627) (2,124)
Total deferred tax assets ...................................................................................................... 1,045,742 1,385,040 14,100
Deferred tax liabilities
Unrealized gains on securities ................................................................................................. (279,795) (100,698) (1,025)
Undistributed earnings of foreign subsidiaries ..................................................................... (20,980) (13,971) (142)
Undistributed earnings of affiliates accounted for by the equity method ......................... (586,530) (536,876) (5,466)
Basis difference of acquired assets ......................................................................................... (37,919) (38,356) (391)
Lease transactions .................................................................................................................... (405,028) (472,817) (4,813)
Gain on securities contribution to employee retirement benefit trust ................................ (66,523) (66,523) (677)
Other.......................................................................................................................................... (80,230) (57,113) (581)
Gross deferred tax liabilities ................................................................................................ (1,477,005) (1,286,354) (13,095)
Net deferred tax assets (liability) ......................................................................................... ¥ (431,263) ¥ 98,686 $ 1,005

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The valuation allowance mainly relates to deferred tax assets net changes in the total valuation allowance for deferred tax
of the consolidated subsidiaries with operating loss carryfor- assets for the years ended March 31, 2007, 2008 and 2009 con-
wards for tax purposes that are not expected to be realized. The sist of the following:

U.S. dollars
Yen in millions in millions
For the year ended
For the years ended March 31, March 31,
2007 2008 2009 2009
Valuation allowance at beginning of year ........................................................ ¥ 93,629 ¥ 95,225 ¥ 82,191 $ 837
Additions ......................................................................................................... 16,967 4,783 145,707 1,483
Deductions ...................................................................................................... (20,429) (13,508) (3,511) (36)
Other................................................................................................................ 5,058 (4,309) (15,760) (160)
Valuation allowance at end of year ................................................................... ¥ 95,225 ¥ 82,191 ¥208,627 $2,124

The other amount includes the impact of consolidation and deconsolidation of certain entities due to changes in ownership interest
and currency translation adjustments during the years ended March 31, 2007, 2008 and 2009.
The deferred tax assets and liabilities that comprise the net deferred tax asset (liability) are included in the consolidated balance
sheets as follows:
U.S. dollars
Yen in millions in millions
March 31, March 31,
2008 2009 2009
Deferred tax assets
Deferred income taxes (Current assets) ................................................................................... ¥ 563,220 ¥ 605,331 $ 6,162
Investments and other assets—other ...................................................................................... 111,477 149,511 1,523
Deferred tax liabilities
Other current liabilities .............................................................................................................. (6,954) (13,863) (141)
Deferred income taxes (Long-term liabilities) ......................................................................... (1,099,006) (642,293) (6,539)
Net deferred tax asset (liability) ............................................................................................ ¥ (431,263) ¥ 98,686 $ 1,005

Because management intends to reinvest undistributed earn- Operating loss carryforwards for tax purposes attributed to
ings of foreign subsidiaries to the extent not expected to be consolidated subsidiaries as of March 31, 2009 were approxi-
remitted in the foreseeable future, management has made no mately ¥811,588 million ($8,262 million) and are available as an
provision for income taxes on those undistributed earnings offset against future taxable income of such subsidiaries. The
aggregating ¥2,363,721 million ($24,063 million) as of March 31, majority of these carryforwards expire in years 2010 to 2029.
2009. Toyota estimates an additional tax provision of ¥89,119 mil-
lion ($907 million) would be required if the full amount of those
undistributed earnings were remitted.

Toyota adopted FIN 48 on April 1, 2007. A summary of the gross unrecognized tax benefits changes for the years ended March 31,
2008 and 2009, is as follows:
U.S. dollars
Yen in millions in millions
For the year ended For the year ended
March 31, March 31,
2008 2009 2009
Balance at beginning of year ........................................................................................................ ¥29,639 ¥ 37,722 $ 384
Additions (reductions) based on tax positions related to the current year .............................. (424) 858 8
Additions for tax positions of prior years ................................................................................... 25,954 35,464 361
Reductions for tax positions of prior years .................................................................................. (8,771) (24,061) (245)
Reductions for tax positions related to lapse of statute of limitations ..................................... (30) (114) (1)
Reductions for settlement............................................................................................................. (4,618) (128) (1)
Other............................................................................................................................................... (4,028) (2,938) (30)
Balance at end of year ............................................................................................................... ¥37,722 ¥ 46,803 $ 476

The amount of unrecognized tax benefits that, if recognized, ably possible that the total amounts of unrecognized tax bene-
would affect the effective tax rate was not material at March 31, fits will significantly increase or decrease within the next twelve
2008 and 2009, respectively. Toyota does not believe it is reason- months.

Annual Report 2009 83

 Financial Section

Interest and penalties related to income tax liabilities are Toyota remains subject to income tax examination for the tax
included in “Other income (loss), net”. The amounts of interest returns related to the years beginning on and after January 1,
and penalties accrued as of and recognized for the years ended 2000, with various tax jurisdictions including Japan.
March 31, 2008 and 2009, respectively, were not material.

17 Shareholders’ equity:

Changes in the number of shares of common stock issued have resulted from the following:
For the years ended March 31,
2007 2008 2009
Common stock issued
Balance at beginning of year ................................................................................................ 3,609,997,492 3,609,997,492 3,447,997,492
Issuance during the year ....................................................................................................... — — —
Purchase and retirement ....................................................................................................... — (162,000,000) —
Balance at end of year ....................................................................................................... 3,609,997,492 3,447,997,492 3,447,997,492

The Corporation Act provides that an amount equal to 10% of On June 23, 2006, at the Ordinary General Shareholders’
distributions from surplus paid by the parent company and its Meeting, the shareholders of the parent company approved to
Japanese subsidiaries be appropriated as a capital reserve or a purchase up to 30 million shares of its common stock at a cost
retained earnings reserve. No further appropriations are up to ¥200,000 million during the purchase period of one year
required when the total amount of the capital reserve and the from the following day. As a result, the parent company repur-
retained earnings reserve reaches 25% of stated capital. chased approximately 28 million shares during the approved
The retained earnings reserve included in retained earnings period of time.
as of March 31, 2008 and 2009 was ¥160,229 million and On June 22, 2007, at the Ordinary General Shareholders’
¥167,722 million ($1,707 million), respectively. The Corporation Meeting, the shareholders of the parent company approved to
Act provides that the retained earnings reserve of the parent purchase up to 30 million shares of its common stock at a cost
company and its Japanese subsidiaries is restricted and unable up to ¥250,000 million during the purchase period of one year
to be used for dividend payments, and is excluded from the cal- from the following day. As a result, the parent company repur-
culation of the profit available for dividend. chased 30 million shares during the approved period of time.
The amounts of statutory retained earnings of the parent On February 5, 2008, the Board of Directors resolved to pur-
company available for dividend payments to shareholders were chase up to 12 million shares of its common stock at a cost up
¥6,073,271 million and ¥5,624,709 million ($57,261 million) as of to ¥60,000 million in accordance with the Corporation Act. As a
March 31, 2008 and 2009, respectively. In accordance with cus- result, the parent company repurchased approximately 10 mil-
tomary practice in Japan, the distributions from surplus are not lion shares.
accrued in the financial statements for the corresponding peri- On the same date, the Board of Directors also resolved to
od, but are recorded in the subsequent accounting period after retire 162 million shares of its common stock, and then the par-
shareholders’ approval has been obtained. Retained earnings at ent company retired its common stock on March 31, 2008. This
March 31, 2009 include amounts representing year-end cash div- retirement, in accordance with the Corporation Act and related
idends of ¥109,756 million ($1,117 million), ¥35 ($0.36) per share, regulations, is treated as a reduction from additional paid-in cap-
which were approved at the Ordinary General Shareholders’ ital and retained earnings. As a result, treasury stock, additional
Meeting, held on June 23, 2009. paid-in capital and retained earnings decreased by ¥646,681 mil-
Retained earnings at March 31, 2009 include ¥1,363,044 mil- lion, ¥3,499 million and ¥643,182 million, respectively.
lion ($13,876 million) relating to equity in undistributed earnings On June 24, 2008, at the Ordinary General Shareholders’
of companies accounted for by the equity method. Meeting, the shareholders of the parent company approved to
On June 23, 2005, at the Ordinary General Shareholders’ purchase up to 30 million shares of its common stock at a cost
Meeting, the shareholders of the parent company approved to up to ¥200,000 million during the purchase period of one year
purchase up to 65 million shares of its common stock at a cost from the following day. As a result, the parent company repur-
up to ¥250,000 million during the period until the next Ordinary chased approximately 14 million shares during the approved
General Shareholders’ Meeting which was held on June 23, period of time. These approvals by the shareholders are not
2006. As a result, the parent company repurchased approxi- required under the current regulation.
mately 38 million shares during the approved period of time.

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Detailed components of accumulated other comprehensive income (loss) at March 31, 2008 and 2009 and the related changes, net of
taxes for the years ended March 31, 2007, 2008 and 2009 consist of the following:
Yen in millions
Foreign Minimum Accumulated
currency Unrealized pension Pension other
translation gains on liability liability comprehensive
adjustments securities adjustments adjustments income (loss)
Balances at March 31, 2006 ......................................................... ¥(170,924) ¥ 620,008 ¥(11,768) ¥ — ¥ 437,316
Other comprehensive income ........................................................ 130,746 38,800 3,499 — 173,045
Adjustment to initially apply FAS 158 ............................................ — — 8,269 82,760 91,029
Balances at March 31, 2007 ......................................................... (40,178) 658,808 — 82,760 701,390
Other comprehensive income (loss) .............................................. (461,189) (347,829) — (133,577) (942,595)
Balances at March 31, 2008 ......................................................... (501,367) 310,979 — (50,817) (241,205)
Other comprehensive income (loss) .............................................. (381,303) (293,101) — (192,172) (866,576)
Balances at March 31, 2009 ......................................................... ¥(882,670) ¥ 17,878 ¥ — ¥(242,989) ¥(1,107,781)

U.S. dollars in millions

Foreign Minimum Accumulated
currency Unrealized pension Pension other
translation gains on liability liability comprehensive
adjustments securities adjustments adjustments income (loss)
Balances at March 31, 2008 ......................................................... $(5,104) $ 3,166 $— $ (517) $ (2,455)
Other comprehensive income (loss) .............................................. (3,882) (2,984) — (1,956) (8,822)
Balances at March 31, 2009 ......................................................... $(8,986) $ 182 $— $(2,473) $(11,277)

Tax effects allocated to each component of other comprehensive income (loss) for the years ended March 31, 2007, 2008 and 2009 are
as follows:
Yen in millions
Pre-tax Net-of-tax
amount Tax amount amount
For the year ended March 31, 2007
Foreign currency translation adjustments ........................................................................................ ¥ 133,835 ¥ (3,089) ¥ 130,746
Unrealized gains on securities:
Unrealized net holding gains arising for the year ........................................................................ 78,055 (31,378) 46,677
Less: reclassification adjustments for gains included in net income .......................................... (13,172) 5,295 (7,877)
Minimum pension liability adjustments ............................................................................................ 5,854 (2,355) 3,499
Other comprehensive income ................................................................................................... ¥ 204,572 ¥ (31,527) ¥ 173,045
For the year ended March 31, 2008
Foreign currency translation adjustments ........................................................................................ ¥ (460,723) ¥ (466) ¥(461,189)
Unrealized losses on securities:
Unrealized net holding losses arising for the year ....................................................................... (545,555) 219,313 (326,242)
Less: reclassification adjustments for gains included in net income .......................................... (36,099) 14,512 (21,587)
Pension liability adjustments ............................................................................................................. (221,142) 87,565 (133,577)
Other comprehensive income (loss) .......................................................................................... ¥(1,263,519) ¥320,924 ¥(942,595)
For the year ended March 31, 2009
Foreign currency translation adjustments ........................................................................................ ¥ (391,873) ¥ 10,570 ¥(381,303)
Unrealized losses on securities:
Unrealized net holding losses arising for the year ....................................................................... (677,710) 255,890 (421,820)
Less: reclassification adjustments for losses included in net loss ............................................... 215,249 (86,530) 128,719
Pension liability adjustments ............................................................................................................. (319,613) 127,441 (192,172)
Other comprehensive income (loss) .......................................................................................... ¥(1,173,947) ¥307,371 ¥(866,576)

U.S. dollars in millions

Pre-tax Net-of-tax
amount Tax amount amount
For the year ended March 31, 2009
Foreign currency translation adjustments ........................................................................................ $ (3,990) $ 108 $(3,882)
Unrealized losses on securities:
Unrealized net holding losses arising for the year ....................................................................... (6,899) 2,605 (4,294)
Less: reclassification adjustments for losses included in net loss ............................................... 2,191 (881) 1,310
Pension liability adjustments ............................................................................................................. (3,253) 1,297 (1,956)
Other comprehensive income (loss) .......................................................................................... $(11,951) $3,129 $(8,822)

Annual Report 2009 85

 Financial Section

18 Stock-based compensation:

In June 1997, the parent company’s shareholders approved a under the Toyota’s stock option plan for directors, officers and
stock option plan for board members. In June 2001, the share- employees of the parent company, its subsidiaries and affiliates.
holders approved an amendment of the plan to include both For the years ended March 31, 2007, 2008 and 2009, Toyota
board members and key employees. Each year, since the plans’ recognized stock-based compensation expenses for stock
inception, the shareholders have approved the authorization for options of ¥1,936 million, ¥3,273 million and ¥3,015 million ($31
the grant of options for the purchase of Toyota’s common stock. million) as selling, general and administrative expenses.
Authorized shares for each year that remain ungranted are The weighted-average grant-date fair value of options grant-
unavailable for grant in future years. Stock options granted in ed during the years ended March 31, 2007, 2008 and 2009 was
and after August 2002 have terms ranging from 6 years to 8 ¥1,235, ¥1,199, and ¥635 ($6), respectively per share. The fair
years and an exercise price equal to 1.025 times the closing value of options granted is amortized over the option vesting
price of Toyota’s common stock on the date of grant. These period in determining net income in the consolidated state-
options generally vest 2 years from the date of grant. ments of income. The grant-date fair value of options granted is
On June 23, 2009, at the Ordinary General Shareholders’ estimated using the Black-Scholes option pricing model with the
Meeting, the shareholders of the parent company approved the following weighted-average assumptions:
authorization of an additional up to 3,700,000 shares for issuance
2007 2008 2009
Dividend rate ............................................................................................................................... 1.5% 1.7% 3.0%
Risk-free interest rate................................................................................................................... 1.4% 1.3% 1.1%
Expected volatility ....................................................................................................................... 27% 23% 23%
Expected holding period (years) ................................................................................................ 5.0 5.0 5.0

The following table summarizes Toyota’s stock option activity:

Yen
Yen in millions
Weighted-average
remaining Aggregate
Number of Weighted-average contractual intrinsic
shares exercise price life in years value
Options outstanding at March 31, 2006 ................................................. 4,786,900 ¥4,180 4.52
Granted....................................................................................................... 3,176,000 6,140
Exercised .................................................................................................... (1,233,100) 4,008
Canceled .................................................................................................... (437,100) 4,590
Options outstanding at March 31, 2007 ................................................. 6,292,700 5,175 5.53 ¥14,947
Granted....................................................................................................... 3,264,000 7,278
Exercised .................................................................................................... (792,100) 4,208
Canceled .................................................................................................... (423,000) 6,196
Options outstanding at March 31, 2008 ................................................. 8,341,600 6,038 5.71 ¥ 1,753
Granted....................................................................................................... 3,494,000 4,726
Exercised .................................................................................................... (119,900) 3,626
Canceled .................................................................................................... (375,000) 6,889
Options outstanding at March 31, 2009 ................................................. 11,340,700 ¥5,631 5.51 ¥ 1
Options exercisable at March 31, 2007 ........................................................ 1,282,700 ¥3,990 2.90 ¥ 4,567
Options exercisable at March 31, 2008 ........................................................ 2,354,600 ¥4,225 2.76 ¥ 1,753
Options exercisable at March 31, 2009 ........................................................ 4,971,700 ¥5,302 3.76 ¥ 1

The total intrinsic value of options exercised for the years ed. Those expenses are expected to be recognized over a
ended March 31, 2007, 2008 and 2009 was ¥3,866 million, ¥1,651 weighted-average period of 1.0 years.
million and ¥97 million ($1 million), respectively. Cash received from the exercise of stock options for the years
As of March 31, 2009, there were unrecognized compensation ended March 31, 2007, 2008 and 2009 was ¥4,942 million, ¥3,333
expenses of ¥1,677 million ($17 million) for stock options grant- million and ¥435 million ($4 million), respectively.

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The following table summarizes information for options outstanding and options exercisable at March 31, 2009:
Outstanding Exercisable
Exercise Weighted-average Weighted-average Weighted-average Weighted-average Weighted-average
price range Number of exercise price exercise price remaining life Number of exercise price exercise price
Yen shares Yen Dollars Years shares Yen Dollars
¥3,116–5,000 5,690,700 ¥4,546 $46 5.18 2,220,700 ¥4,264 $43
5,001–7,278 5,650,000 6,724 68 5.85 2,751,000 6,140 63
3,116–7,278 11,340,700 5,631 57 5.51 4,971,700 5,302 54

19 Employee benefit plans:

Pension and severance plans The parent company and most subsidiaries in Japan have
Upon terminations of employment, employees of the parent contributory funded defined benefit pension plans, which are
company and subsidiaries in Japan are entitled, under the pursuant to the Corporate Defined Benefit Pension Plan Law
retirement plans of each company, to lump-sum indemnities or (CDBPPL). The contributions to the plans are funded with sever-
pension payments, based on current rates of pay and lengths of al financial institutions in accordance with the applicable laws
service or the number of “points” mainly determined by those. and regulations. These pension plan assets consist principally of
Under normal circumstances, the minimum payment prior to investments in government obligations, equity and fixed income
retirement age is an amount based on voluntary retirement. securities, and insurance contracts.
Employees receive additional benefits on involuntary retirement, Most foreign subsidiaries have pension plans or severance
including retirement at the age limit. indemnity plans covering substantially all of their employees
Effective October 1, 2004, the parent company amended its under which the cost of benefits are currently invested or
retirement plan to introduce a “point” based retirement benefit accrued. The benefits for these plans are based primarily on
plan. Under the new plan, employees are entitled to lump-sum lengths of service and current rates of pay.
or pension payments determined based on accumulated Toyota uses a March 31 measurement date for its benefit
“points” vested in each year of service. plans.
There are three types of “points” that vest in each year of ser-
vice consisting of “service period points” which are attributed The impact of adopting FAS 158
to the length of service, “job title points” which are attributed Toyota adopted the provisions regarding recognition of funded
to the job title of each employee, and “performance points” status and disclosure under FAS 158 as of March 31, 2007.
which are attributed to the annual performance evaluation of Toyota recognized the overfunded or underfunded status of its
each employee. Under normal circumstances, the minimum pay- defined benefit postretirement plans as prepaid pension and
ment prior to retirement age is an amount reflecting an adjust- severance costs or accrued pension and severance costs on its
ment rate applied to represent voluntary retirement. Employees consolidated balance sheet, with corresponding adjustments to
receive additional benefits upon involuntary retirement, includ- accumulated other comprehensive income, net of tax. The
ing retirement at the age limit. impacts of adopting the provisions of FAS 158 on Toyota’s con-
Effective October 1, 2005, the parent company partly amend- solidated balance sheet as of March 31, 2007 are as follows. The
ed its retirement plan and introduced the quasi cash-balance adoption of the provisions had no impact on Toyota’s consoli-
plan under which benefits are determined based on the vari- dated statement of income for the year ended March 31, 2007.
able-interest crediting rate rather than the fixed-interest credit-
ing rate as was in the pre-amended plan.

Yen in millions
Amount before Amount after
adoption of FAS 158 adoption of
FAS 158 Adjustment FAS 158
Investments and other assets—other (Prepaid pension and severance costs) ....................... ¥246,499 ¥142,520 ¥389,019
Accrued expenses (Accrued pension and severance costs) ..................................................... — 30,951 30,951
Accrued pension and severance costs ....................................................................................... 672,154 (31,568) 640,586
Accumulated other comprehensive income (loss) (Pre-tax amount)........................................ (26,337) 133,437 107,100
Accumulated other comprehensive income (loss) (Net-of-tax amount) .................................. (8,270) 91,029 82,759

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Information regarding defined benefit plans

Information regarding Toyota’s defined benefit plans is as follows:
U.S. dollars
Yen in millions in millions
March 31, March 31,
2008 2009 2009
Change in benefit obligation
Benefit obligation at beginning of year .................................................................................. ¥1,707,969 ¥1,693,155 $17,237
Service cost ............................................................................................................................... 96,454 84,206 857
Interest cost ............................................................................................................................... 54,417 52,959 539
Plan participants’ contributions ............................................................................................... 767 750 8
Plan amendments ..................................................................................................................... (7,619) (2,096) (21)
Net actuarial gain ..................................................................................................................... (22,112) (47,272) (481)
Acquisition and other ............................................................................................................... (55,960) (64,784) (660)
Benefits paid ............................................................................................................................. (80,761) (84,139) (857)
Benefit obligation at end of year ......................................................................................... 1,693,155 1,632,779 16,622

Change in plan assets

Fair value of plan assets at beginning of year ........................................................................ 1,425,451 1,282,048 13,051
Actual return on plan assets..................................................................................................... (206,101) (307,293) (3,128)
Acquisition and other ............................................................................................................... (26,851) (43,851) (446)
Employer contributions ............................................................................................................ 169,543 131,412 1,338
Plan participants’ contributions ............................................................................................... 767 835 9
Benefits paid ............................................................................................................................. (80,761) (84,139) (857)
Fair value of plan assets at end of year ............................................................................... 1,282,048 979,012 9,967
Funded status ............................................................................................................................... ¥ 411,107 ¥ 653,767 $ 6,655

Amounts recognized in the consolidated balance sheet as of March 31, 2008 and 2009 are comprised of the following:
U.S. dollars
Yen in millions in millions
March 31, March 31,
2008 2009 2009
Accrued expenses (Accrued pension and severance costs) ..................................................... ¥ 30,345 ¥ 30,658 $ 312
Accrued pension and severance costs ....................................................................................... 632,297 634,612 6,460
Investments and other assets—other (Prepaid pension and severance costs) ....................... (251,535) (11,503) (117)
Net amount recognized ........................................................................................................... ¥ 411,107 ¥653,767 $6,655

Amounts recognized in accumulated other comprehensive income (loss) as of March 31, 2008 and 2009 are comprised of the following:
U.S. dollars
Yen in millions in millions
March 31, March 31,
2008 2009 2009
Net actuarial loss .......................................................................................................................... ¥(217,138) ¥(497,055) $(5,060)
Prior service costs ......................................................................................................................... 125,553 109,570 1,115
Net transition obligation .............................................................................................................. (7,458) (5,514) (56)
Net amount recognized ........................................................................................................... ¥ (99,043) ¥(392,999) $(4,001)

The accumulated benefit obligation for all defined benefit pen- The projected benefit obligation, accumulated benefit obliga-
sion plans was ¥1,547,218 million and ¥1,524,556 million ($15,520 tion and fair value of plan assets for which the accumulated bene-
million) at March 31, 2008 and 2009, respectively. fit obligations exceed plan assets are as follows:

U.S. dollars
Yen in millions in millions
March 31, March 31,
2008 2009 2009
Projected benefit obligation........................................................................................................ ¥508,505 ¥1,076,362 $10,958
Accumulated benefit obligation ................................................................................................. 467,421 1,039,314 10,580
Fair value of plan assets ............................................................................................................... 91,723 614,377 6,254

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Components of the net periodic pension cost are as follows:

U.S. dollars
Yen in millions in millions
For the year ended
For the years ended March 31, March 31,
2007 2008 2009 2009
Service cost ......................................................................................................... ¥ 80,414 ¥ 96,454 ¥ 84,206 $ 857
Interest cost ......................................................................................................... 48,128 54,417 52,959 539
Expected return on plan assets ......................................................................... (38,139) (43,450) (43,053) (438)
Amortization of prior service costs.................................................................... (17,301) (17,162) (17,677) (180)
Recognized net actuarial loss ............................................................................ 8,299 4,013 5,752 58
Amortization of net transition obligation ......................................................... 1,944 1,944 1,944 20
Net periodic pension cost.............................................................................. ¥ 83,345 ¥ 96,216 ¥ 84,131 $ 856

Other changes in plan assets and benefit obligations recognized in other comprehensive income (loss) are as follows:
U.S. dollars
Yen in millions in millions
For the year ended For the year ended
March 31, March 31,
2008 2009 2009
Net actuarial loss .......................................................................................................................... ¥(227,439) ¥(303,074) $(3,085)
Recognized net actuarial loss ...................................................................................................... 4,013 5,752 58
Prior service costs ......................................................................................................................... 7,619 2,096 21
Amortization of prior service costs.............................................................................................. (17,162) (17,677) (180)
Amortization of net transition obligation ................................................................................... 1,944 1,944 20
Other.............................................................................................................................................. 24,882 17,003 173
Total recognized in other comprehensive income (loss) ....................................................... ¥(206,143) ¥(293,956) $(2,993)

The estimated prior service costs, net actuarial loss and net 2007, Toyota had recorded a minimum pension liability for plans
transition obligations that will be amortized from accumulated where the accumulated benefit obligation net of plan assets
other comprehensive income (loss) into net periodic pension exceeded the accrued pension and severance costs. Changes in
cost during the year ending March 31, 2010 are ¥(16,200) million the minimum pension liability are reflected as adjustments in
($(165) million), ¥22,400 million ($228 million) and ¥1,900 million other comprehensive income for the year ended March 31, 2007
($19 million), respectively. as follows:
Prior to the adoption of the provisions regarding recognition
of funded status and disclosure under FAS 158 as of March 31,

Yen in millions
For the years ended
March 31,
2007
Minimum pension liability adjustments, included in other
comprehensive income ................................................................................................................................................................... ¥3,499

The minimum pension liability recognized as of March 31, 2007 was eliminated upon the adoption of the provisions regarding recognition
of funded status and disclosure under FAS 158, and after the adoption, no minimum pension liability had been recognized.
Weighted-average assumptions used to determine benefit obligations as of March 31, 2008 and 2009 are as follows:
March 31,
2008 2009
Discount rate .............................................................................................................................................................. 2.8% 2.8%
Rate of compensation increase ................................................................................................................................ 0.1–10.0% 0.1–10.0%

Weighted-average assumptions used to determine net periodic pension cost for the years ended March 31, 2007, 2008 and 2009 are
as follows:
For the years ended March 31,
2007 2008 2009
Discount rate ............................................................................................................................. 2.6% 2.7% 2.8%
Expected return on plan assets ............................................................................................... 3.0% 3.4% 3.6%
Rate of compensation increase ............................................................................................... 0.1–11.0% 0.1–10.0% 0.1–10.0%

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 Financial Section

The expected rate of return on plan assets is determined after policy for plan asset management, and forecasted market con-
considering several applicable factors including, the composi- ditions.
tion of plan assets held, assumed risks of asset management, Toyota’s pension plan weighted-average asset allocations as
historical results of the returns on plan assets, Toyota’s principal of March 31, 2008 and 2009, by asset category are as follows:
Plan assets at March 31,
2008 2009
Equity securities ......................................................................................................................................................... 60.5% 49.4%
Debt securities ........................................................................................................................................................... 25.2 30.9
Real estate .................................................................................................................................................................. 1.3 0.3
Other........................................................................................................................................................................... 13.0 19.4
Total ........................................................................................................................................................................ 100.0% 100.0%

Toyota’s policy and objective for plan asset management is to ation. To measure the performance of the plan asset manage-
maximize returns on plan assets to meet future benefit payment ment, Toyota establishes bench mark return rates for each
requirements under risks which Toyota considers permissible. individual investment, combines these individual bench mark
Asset allocations under the plan asset management are deter- rates based on the asset composition ratios within each asset
mined based on Toyota’s plan asset management guidelines category, and compares the combined rates with the corre-
which are established to achieve the optimized asset composi- sponding actual return rates on each asset category.
tions in terms of the long-term overall plan asset management. Toyota expects to contribute ¥95,270 million ($970 million) to
Prior to making individual investments, Toyota performs in-depth its pension plan in the year ending March 31, 2010.
assessments of corresponding factors including risks, transaction The following pension benefit payments, which reflect expect-
costs and liquidity of each potential investment under consider- ed future service, as appropriate, are expected to be paid:

U.S. dollars
Years ending March 31, Yen in millions in millions
2010................................................................................................................................................................................... ¥ 82,172 $ 836
2011................................................................................................................................................................................... 79,359 808
2012................................................................................................................................................................................... 75,919 773
2013................................................................................................................................................................................... 74,882 762
2014................................................................................................................................................................................... 77,278 787
from 2015 to 2019 ............................................................................................................................................................ 431,993 4,398
Total .............................................................................................................................................................................. ¥821,603 $8,364

Postretirement benefits other than pensions currently unfunded and provided through various insurance
and postemployment benefits companies and health care providers. The costs of these bene-
Toyota’s U.S. subsidiaries provide certain health care and life fits are recognized over the period the employee provides cred-
insurance benefits to eligible retired employees. In addition, ited service to Toyota. Toyota’s obligations under these
Toyota provides benefits to certain former or inactive employees arrangements are not material.
after employment, but before retirement. These benefits are

20 Derivative financial instruments:

Toyota adopted FAS 161 in the fiscal year ended March 31, 2009. transactions or on a portfolio basis. Toyota uses interest rate
Toyota employs derivative financial instruments, including for- currency swap agreements to hedge exposure to currency
eign exchange forward contracts, foreign currency options, exchange rate fluctuations on principal and interest payments
interest rate swaps, interest rate currency swap agreements and for borrowings denominated in foreign currencies. Notes and
interest rate options to manage its exposure to fluctuations in loans payable issued in foreign currencies are hedged by con-
interest rates and foreign currency exchange rates. Toyota does currently executing interest rate currency swap agreements,
not use derivatives for speculation or trading. which involve the exchange of foreign currency principal and
interest obligations for each functional currency obligations at
Fair value hedges agreed-upon currency exchange and interest rates.
Toyota enters into interest rate swaps and interest rate currency For the years ended March 31, 2007, 2008 and 2009, the inef-
swap agreements mainly to convert its fixed-rate debt to vari- fective portion of Toyota’s fair value hedge relationships was not
able-rate debt. Toyota uses interest rate swap agreements in material. For fair value hedging relationships, the components
managing interest rate risk exposure. Interest rate swap agree- of each derivative’s gain or loss are included in the assessment
ments are executed as either an integral part of specific debt of hedge effectiveness.

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Undesignated derivative financial instruments to foreign currency exchange rate fluctuations and interest rate
Toyota uses foreign exchange forward contracts, foreign curren- fluctuations from an economic perspective, and for which Toyota
cy options, interest rate swaps, interest rate currency swap is unable or has elected not to apply hedge accounting.
agreements, and interest rate options, to manage its exposure

Fair value and gains or losses on derivative financial instruments

The following table summarizes the fair values of derivative financial instruments at March 31, 2009:
U.S. dollars
Yen in millions in millions
March 31, March 31,
2009 2009
Derivative financial instruments designated as hedging instruments
Interest rate and currency swap agreements
Prepaid expenses and other current assets ................................................................................................... ¥ 35,882 $ 365
Investments and other assets—Other............................................................................................................ 83,014 845
Total ............................................................................................................................................................... ¥ 118,896 $ 1,210
Other current liabilities .................................................................................................................................... ¥ (47,022) $ (479)
Other long-term liabilities ............................................................................................................................... (79,634) (810)
Total ............................................................................................................................................................... ¥(126,656) $(1,289)

Undesignated derivative financial instruments

Interest rate and currency swap agreements
Prepaid expenses and other current assets ................................................................................................... ¥ 58,454 $ 595
Investments and other assets—Other............................................................................................................ 177,487 1,807
Total ............................................................................................................................................................... ¥ 235,941 $ 2,402
Other current liabilities .................................................................................................................................... ¥ (61,593) $ (627)
Other long-term liabilities ............................................................................................................................... (236,877) (2,412)
Total ............................................................................................................................................................... ¥(298,470) $(3,039)
Foreign exchange forward and option contracts
Prepaid expenses and other current assets ................................................................................................... ¥ 32,443 $ 330
Investments and other assets—Other............................................................................................................ 250 3
Total ............................................................................................................................................................... ¥ 32,693 $ 333
Other current liabilities .................................................................................................................................... ¥ (25,675) $ (261)
Total ............................................................................................................................................................... ¥ (25,675) $ (261)

The following table summarizes the notional amounts of derivative financial instruments at March 31, 2009:
Yen in millions U.S. dollars in millions
March 31, 2009 March 31, 2009
Designated Undesignated Designated Undesignated
derivative derivative derivative derivative
financial financial financial financial
instruments instruments instruments instruments
Interest rate and currency swap agreements .................................................. ¥1,907,927 ¥12,472,179 $19,423 $126,969
Foreign exchange forward and option contracts ........................................... — 1,562,876 — 15,911
Total ................................................................................................................ ¥1,907,927 ¥14,035,055 $19,423 $142,880

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 Financial Section

The following table summarizes the gains and losses on derivative financial instruments and hedged items reported in the consolidated
statement of income for the year ended March 31, 2009:
Yen in millions U.S. dollars in millions
For the year ended For the year ended
March 31, 2009 March 31, 2009
Gains or (losses) Gains or (losses)
on derivative Gains or on derivative Gains or
financial (losses) on financial (losses) on
instruments hedged items instruments hedged items
Derivative financial instruments designated as
hedging instruments—Fair value hedge
Interest rate and currency swap agreements
Cost of financing operations..................................................................... ¥288,553 ¥(293,637) $2,938 $(2,989)
Interest expense......................................................................................... (439) 439 (4) 4

Undesignated derivative financial instruments

Interest rate and currency swap agreements
Cost of financing operations..................................................................... ¥ 76,878 ¥ — $ 783 $ —
Foreign exchange gain (loss), net............................................................. (3,016) — (31) —
Foreign exchange forward and option contracts
Cost of financing operations..................................................................... 18,327 — 187 —
Foreign exchange gain (loss), net............................................................. 174,158 — 1,773 —

Unrealized gains or (losses) on undesignated derivative finan- or the counterparty to settle the contract or to post assets to the
cial instruments reported in the cost of financing operations for other party in the event of a ratings downgrade below a speci-
the years ended March 31, 2007, 2008 and 2009 were ¥(19,984) fied threshold.
million, ¥(67,991) million and ¥(80,298) million ($(817) million) The aggregate fair value amount of derivative financial instru-
those reported in foreign exchange gain (loss), net were ¥17,866 ments that contain credit risk related contingent features that
million, ¥45,670 million and ¥(33,578) million ($(342) million), are in a net liability position as of March 31, 2009 is ¥136,147 mil-
respectively. lion ($1,386 million). The aggregate fair value amount of assets
that are already posted as of March 31, 2009 is ¥28,978 million
Credit risk related contingent features ($295 million). If the ratings of Toyota decline below specified
Toyota enters into International Swaps and Derivatives thresholds, the maximum amount of assets to be posted or for
Association Master Agreements with counterparties. These which Toyota could be required to settle the contracts is
Master Agreements contain a provision requiring either Toyota ¥136,147 million ($1,386 million) as of March 31, 2009.

21 Other financial instruments:

Toyota has certain financial instruments, including financial Toyota’s risk is limited to the fair value of the instrument.
assets and liabilities and off-balance sheet financial instruments Although Toyota may be exposed to losses in the event of non-
which arose in the normal course of business. These financial performance by counterparties on financial instruments, it does
instruments are executed with creditworthy financial institutions, not anticipate significant losses due to the nature of its counter-
and virtually all foreign currency contracts are denominated in parties. Counterparties to Toyota’s financial instruments repre-
U.S. dollars, euros and other currencies of major industrialized sent, in general, international financial institutions. Additionally,
countries. Financial instruments involve, to varying degrees, mar- Toyota does not have a significant exposure to any individual
ket risk as instruments are subject to price fluctuations, and ele- counterparty. Based on the creditworthiness of these financial
ments of credit risk in the event a counterparty should default. In institutions, collateral is generally not required of the counterpar-
the unlikely event the counterparties fail to meet the contractual ties or of Toyota. Toyota believes that the overall credit risk relat-
terms of a foreign currency or an interest rate instrument, ed to its financial instruments is not significant.

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The estimated fair values of Toyota’s financial instruments, excluding marketable securities and other securities investments and affiliated
companies, are summarized as follows:
Yen in millions
March 31, 2008
Carrying Estimated
amount fair value
Asset (Liability)
Cash and cash equivalents .......................................................................................................................................... ¥ 1,628,547 ¥ 1,628,547
Time deposits .............................................................................................................................................................. 134,773 134,773
Total finance receivables, net ..................................................................................................................................... 9,132,242 9,287,490
Other receivables......................................................................................................................................................... 523,533 523,533
Short-term borrowings ................................................................................................................................................ (3,552,721) (3,552,721)
Long-term debt including the current portion .......................................................................................................... (8,613,799) (8,646,182)
Interest rate and currency swap agreements ............................................................................................................ 223,163 223,163
Foreign exchange forward contracts and option contracts .................................................................................... 40,635 40,635

Yen in millions U.S. dollars in millions

March 31, 2009 March 31, 2009
Carrying Estimated Carrying Estimated
amount fair value amount fair value
Asset (Liability)
Cash and cash equivalents ............................................................................ ¥ 2,444,280 ¥ 2,444,280 $ 24,883 $ 24,883
Time deposits ................................................................................................ 45,178 45,178 460 460
Total finance receivables, net ....................................................................... 8,450,709 8,677,228 86,030 88,336
Other receivables........................................................................................... 332,722 332,722 3,387 3,387
Short-term borrowings .................................................................................. (3,617,672) (3,617,672) (36,829) (36,829)
Long-term debt including the current portion ............................................ (8,949,615) (9,026,007) (91,109) (91,886)
See note 20 to the consolidated financial statements for the amounts of derivative financial instruments.

Following are explanatory notes regarding the financial assets and liabilities other than derivative financial instruments.

Cash and cash equivalents, time deposits of fixed rate finance receivables was estimated by discounting
and other receivables expected cash flows using the rates at which loans of similar
In the normal course of business, substantially all cash and cash credit quality and maturity would be made as of March 31, 2008
equivalents, time deposits and other receivables are highly liq- and 2009.
uid and are carried at amounts which approximate fair value.
Short-term borrowings and long-term debt
Finance receivables, net The fair values of short-term borrowings and total long-term
The carrying value of variable rate finance receivables was debt including the current portion were estimated based on the
assumed to approximate fair value as they were repriced at pre- discounted amounts of future cash flows using Toyota’s current
vailing market rates at March 31, 2008 and 2009. The fair value incremental borrowing rates for similar liabilities.

22 Lease commitments:

Toyota leases certain assets under capital lease and operating lease arrangements.
An analysis of leased assets under capital leases is as follows:
U.S. dollars
Yen in millions in millions
March 31, March 31,
2008 2009 2009
Class of property
Building...................................................................................................................................... ¥ 11,279 ¥ 24,369 $ 248
Machinery and equipment ....................................................................................................... 136,817 51,971 529
Less—Accumulated depreciation ........................................................................................... (116,019) (33,845) (344)
¥ 32,077 ¥ 42,495 $ 433

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 Financial Section

Amortization expenses under capital leases for the years ended March 31, 2007, 2008 and 2009 were ¥10,559 million, ¥7,846 million
and ¥12,183 million ($124 million), respectively.
Future minimum lease payments under capital leases together with the present value of the net minimum lease payments as of March
31, 2009 are as follows:
U.S. dollars
Years ending March 31, Yen in millions in millions
2010........................................................................................................................................................................... ¥ 12,688 $ 129
2011........................................................................................................................................................................... 24,166 246
2012........................................................................................................................................................................... 4,071 41
2013........................................................................................................................................................................... 2,141 22
2014........................................................................................................................................................................... 1,867 19
Thereafter ................................................................................................................................................................. 17,545 179
Total minimum lease payments ...................................................................................................................... 62,478 636
Less—Amount representing interest ..................................................................................................................... (11,112) (113)
Present value of net minimum lease payments ............................................................................................. 51,366 523
Less—Current obligations ...................................................................................................................................... (11,188) (114)
Long-term capital lease obligations............................................................................................................... ¥ 40,178 $ 409

Rental expenses under operating leases for the years ended March 31, 2007, 2008 and 2009 were ¥107,301 million, ¥100,319 million
and ¥106,653 million ($1,086 million), respectively.
The minimum rental payments required under operating leases relating primarily to land, buildings and equipment having initial or
remaining non-cancelable lease terms in excess of one year at March 31, 2009 are as follows:
U.S. dollars
Years ending March 31, Yen in millions in millions
2010........................................................................................................................................................................... ¥11,567 $118
2011........................................................................................................................................................................... 8,593 87
2012........................................................................................................................................................................... 6,864 70
2013........................................................................................................................................................................... 5,530 56
2014........................................................................................................................................................................... 3,973 40
Thereafter ................................................................................................................................................................. 17,634 180
Total minimum future rentals .......................................................................................................................... ¥54,161 $551

23 Other commitments and contingencies, concentrations and factors that may affect future operations:

Commitments outstanding at March 31, 2009 for the purchase Automobile Dealers Association and the Canadian Automobile
of property, plant and equipment and other assets totaled Dealers Association were named as defendants in purported
¥110,874 million ($1,129 million). nationwide class actions on behalf of all purchasers of new
Toyota enters into contracts with Toyota dealers to guarantee motor vehicles in the United States since January 1, 2001. 26
customers’ payments of their installment payables that arise similar actions were filed in federal district courts in California,
from installment contracts between customers and Toyota deal- Illinois, New York, Massachusetts, Florida, New Jersey and
ers, as and when requested by Toyota dealers. Guarantee peri- Pennsylvania. Additionally, 56 parallel class actions were filed in
ods are set to match maturity of installment payments, and at state courts in California, Minnesota, New Mexico, New York,
March 31, 2009, range from 1 month to 35 years; however, they Tennessee, Wisconsin, Arizona, Florida, Iowa, New Jersey and
are generally shorter than the useful lives of products sold. Nebraska on behalf of the same purchasers in these states. As
Toyota is required to execute its guarantee primarily when cus- of April 1, 2005, actions filed in federal district courts were con-
tomers are unable to make required payments. The maximum solidated in Maine and actions filed in the state courts of
potential amount of future payments as of March 31, 2009 is California and New Jersey were also consolidated, respectively.
¥1,570,497 million ($15,988 million). Liabilities for guarantees The nearly identical complaints allege that the defendants
totaling ¥5,301 million ($54 million) have been provided as of violated the Sherman Antitrust Act by conspiring among them-
March 31, 2009. Under these guarantee contracts, Toyota is enti- selves and with their dealers to prevent the sale to United States
tled to recover any amount paid by Toyota from the customers citizens of vehicles produced for the Canadian market. The
whose original obligations Toyota has guaranteed. complaints allege that new vehicle prices in Canada are 10% to
In February 2003, Toyota, General Motors Corporation, Ford, 30% lower than those in the United States and that preventing
DaimlerChrysler, Honda, Nissan and BMW and their U.S. and the sale of these vehicles to United States citizens resulted in
Canadian sales and marketing subsidiaries, the National United States consumers paying excessive prices for the same

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type of vehicles. The complaints seek permanent injunctions materials in vehicles to be sold after July 2003; (iii) vehicles type-
against the alleged antitrust violations and treble damages in an approved and put on the market after December 15, 2008, shall
unspecified amount. In March 2004, the federal district court of be re-usable and/or recyclable to a minimum of 85% by weight
Maine (i) dismissed claims against certain Canadian sales and per vehicle and shall be re-usable and/or recoverable to a mini-
marketing subsidiaries, including Toyota Canada, Inc., for lack of mum of 95% by weight per vehicle; and (iv) end-of-life vehicles
personal jurisdiction but denied or deferred to dismiss claims must meet actual re-use of 80% and re-use as material or energy
against certain other Canadian companies, and (ii) dismissed of 85%, respectively, of vehicle weight by 2006, rising respective-
the claim for damages based on the Sherman Antitrust Act but ly to 85% and 95% by 2015. A law to implement the directive
did not bar the plaintiffs from seeking injunctive relief against came into effect in all member states including Bulgaria,
the alleged antitrust violations. The plaintiffs have submitted an Romania that joined the European Union in January 2007.
amended compliant adding a claim for damages based on state Currently, there are uncertainties surrounding the implementa-
antitrust laws and Toyota has responded to the plaintiff’s discov- tion of the applicable regulations in different European Union
ery requests. Toyota believes that its actions have been lawful. member states, particularly regarding manufacturer responsibili-
In the interest of quickly resolving these legal actions, however, ties and resultant expenses that may be incurred.
Toyota entered into a settlement agreement with the plaintiffs In addition, under this directive member states must take
at the end of February 2006. The settlement agreement is pend- measures to ensure that car manufacturers, distributors and
ing the approval of the federal district court, and immediately other auto-related economic operators establish adequate used
upon approval the plaintiffs will, in accordance with the terms of vehicle collection and treatment facilities and to ensure that
the settlement agreement, withdraw all pending actions against hazardous materials and recyclable parts are removed from
Toyota in the federal district court as well as all state courts and vehicles prior to shredding. This directive impacts Toyota’s vehi-
all related actions will be closed. cles sold in the European Union and Toyota is introducing vehi-
Toyota has various other legal actions, governmental pro- cles that are in compliance with such measures taken by the
ceedings and other claims pending against it, including product member states pursuant to the directive.
liability claims in the United States. Although the claimants in Based on the legislation that has been enacted to date,
some of these actions seek potentially substantial damages, Toyota has provided for its estimated liability related to covered
Toyota cannot currently determine its potential liability or the vehicles in existence as of March 31, 2009. Depending on the
damages, if any, with respect to these claims. However, based legislation that will be enacted subject to other circumstances,
upon information currently available to Toyota, Toyota believes Toyota may be required to revise the accruals for the expected
that its losses from these matters, if any, would not have a mate- costs. Although Toyota does not expect its compliance with the
rial adverse effect on Toyota’s financial position, operating directive to result in significant cash expenditures, Toyota is con-
results or cash flows. tinuing to assess the impact of this future legislation on its results
In October 2000, the European Union brought into effect a of operations, cash flows and financial position.
directive that requires member states to promulgate regulations Toyota purchases materials that are equivalent to approxi-
implementing the following: (i) manufacturers shall bear all or a mately 10% of material costs from a supplier which is an affiliat-
significant part of the costs for taking back end-of-life vehicles ed company.
put on the market after July 1, 2002 and dismantling and recy- The parent company has a concentration of labor supply in
cling those vehicles. Beginning January 1, 2007, this require- employees working under collective bargaining agreements and
ment became applicable to vehicles put on the market before a substantial portion of these employees are working under the
July 1, 2002; (ii) manufacturers may not use certain hazardous agreement that will expire on December 31, 2011.

24 Segment data:

The operating segments reported below are the segments of Financial Services segment consists primarily of financing, and
Toyota for which separate financial information is available and vehicle and equipment leasing operations to assist in the mer-
for which operating income/loss amounts are evaluated regular- chandising of the parent company and its affiliate companies
ly by executive management in deciding how to allocate products as well as other products. The All Other segment
resources and in assessing performance. includes the design, manufacturing and sales of housing, tele-
The major portions of Toyota’s operations on a worldwide communications and other business.
basis are derived from the Automotive and Financial Services The following tables present certain information regarding
business segments. The Automotive segment designs, manu- Toyota’s industry segments and operations by geographic areas
factures and distributes sedans, minivans, compact cars, sport- and overseas revenues by destination as of and for the years
utility vehicles, trucks and related parts and accessories. The ended March 31, 2007, 2008 and 2009.

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 Financial Section

Segment operating results and assets

As of and for the year ended March 31, 2007:
Yen in millions
Inter-segment
Elimination/
Automotive Financial Services All Other Unallocated Amount Consolidated
Net revenues
Sales to external customers ............................................. ¥21,914,168 ¥ 1,277,994 ¥ 755,929 ¥ — ¥23,948,091
Inter-segment sales and transfers ................................... 13,838 22,554 567,802 (604,194) —
Total................................................................................ 21,928,006 1,300,548 1,323,731 (604,194) 23,948,091
Operating expenses ............................................................. 19,889,178 1,142,053 1,284,052 (605,875) 21,709,408
Operating income ................................................................ ¥ 2,038,828 ¥ 158,495 ¥ 39,679 ¥ 1,681 ¥ 2,238,683
Assets..................................................................................... ¥13,297,362 ¥13,735,434 ¥1,459,965 ¥4,082,018 ¥32,574,779
Investment in equity method investees .............................. 1,664,938 303,271 — 59,072 2,027,281
Depreciation expenses ........................................................ 950,762 402,876 28,956 — 1,382,594
Capital Expenditure.............................................................. 1,570,875 1,122,564 47,948 (51,192) 2,690,195

As of and for the year ended March 31, 2008:

Yen in millions
Inter-segment
Elimination/
Automotive Financial Services All Other Unallocated Amount Consolidated
Net revenues
Sales to external customers ............................................. ¥24,160,254 ¥ 1,468,730 ¥ 660,256 ¥ — ¥26,289,240
Inter-segment sales and transfers ................................... 17,052 29,624 686,699 (733,375) —
Total................................................................................ 24,177,306 1,498,354 1,346,955 (733,375) 26,289,240
Operating expenses ............................................................. 22,005,401 1,411,860 1,313,875 (712,271) 24,018,865
Operating income ................................................................ ¥ 2,171,905 ¥ 86,494 ¥ 33,080 ¥ (21,104) ¥ 2,270,375
Assets..................................................................................... ¥13,593,025 ¥13,942,372 ¥1,273,560 ¥3,649,363 ¥32,458,320
Investment in equity method investees .............................. 1,777,956 235,166 — 52,656 2,065,778
Depreciation expenses ........................................................ 1,050,541 409,725 30,869 — 1,491,135
Capital expenditure .............................................................. 1,546,524 1,149,842 56,439 7,170 2,759,975

As of and for the year ended March 31, 2009:

Yen in millions
Inter-segment
Elimination/
Automotive Financial Services All Other Unallocated Amount Consolidated
Net revenues
Sales to external customers ............................................. ¥18,550,501 ¥ 1,355,850 ¥ 623,219 ¥ — ¥20,529,570
Inter-segment sales and transfers ................................... 14,222 21,698 561,728 (597,648) —
Total................................................................................ 18,564,723 1,377,548 1,184,947 (597,648) 20,529,570
Operating expenses ............................................................. 18,959,599 1,449,495 1,175,034 (593,547) 20,990,581
Operating income (loss) ....................................................... ¥ (394,876) ¥ (71,947) ¥ 9,913 ¥ (4,101) ¥ (461,011)
Assets..................................................................................... ¥11,716,316 ¥13,631,662 ¥1,131,400 ¥2,582,659 ¥29,062,037
Investment in equity method investees .............................. 1,606,013 168,057 — 36,036 1,810,106
Depreciation expenses ........................................................ 1,072,848 389,937 32,385 — 1,495,170
Capital expenditure .............................................................. 1,343,572 883,968 35,334 62,023 2,324,897

U.S. dollars in millions

Inter-segment
Elimination/
Automotive Financial Services All Other Unallocated Amount Consolidated
Net revenues
Sales to external customers ............................................. $188,848 $ 13,803 $ 6,344 $ — $208,995
Inter-segment sales and transfers ................................... 144 221 5,719 (6,084) —
Total................................................................................ 188,992 14,024 12,063 (6,084) 208,995
Operating expenses ............................................................. 193,012 14,756 11,962 (6,042) 213,688
Operating income (loss) ....................................................... $ (4,020) $ (732) $ 101 $ (42) $ (4,693)
Assets..................................................................................... $119,274 $138,773 $11,518 $26,292 $295,857
Investment in equity method investees .............................. 16,350 1,711 — 366 18,427
Depreciation expenses ........................................................ 10,922 3,970 329 — 15,221
Capital expenditure .............................................................. 13,678 8,999 360 631 23,668

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Geographic Information
As of and for the year ended March 31, 2007:
Yen in millions
Inter-segment
Elimination/
Japan North America Europe Asia Other Unallocated Amount Consolidated
Net revenues
Sales to external customers ......... ¥ 8,152,884 ¥ 8,771,495 ¥3,346,013 ¥1,969,957 ¥1,707,742 ¥ — ¥23,948,091
Inter-segment sales
and transfers ................................ 6,662,398 258,278 196,180 255,571 215,000 (7,587,427) —
Total............................................ 14,815,282 9,029,773 3,542,193 2,225,528 1,922,742 (7,587,427) 23,948,091
Operating expenses ..................... 13,358,036 8,580,140 3,404,810 2,107,933 1,839,245 (7,580,756) 21,709,408
Operating income ........................ ¥ 1,457,246 ¥ 449,633 ¥ 137,383 ¥ 117,595 ¥ 83,497 ¥ (6,671) ¥ 2,238,683
Assets ............................................. ¥12,992,379 ¥10,890,157 ¥2,917,183 ¥1,563,742 ¥1,575,255 ¥ 2,636,063 ¥32,574,779
Long-lived assets .......................... 3,490,846 2,931,037 566,353 466,338 309,465 — 7,764,039

As of and for the year ended March 31, 2008:

Yen in millions
Inter-segment
Elimination/
Japan North America Europe Asia Other Unallocated Amount Consolidated
Net revenues
Sales to external customers ......... ¥ 8,418,620 ¥ 9,248,950 ¥3,802,814 ¥2,790,987 ¥2,027,869 ¥ — ¥26,289,240
Inter-segment sales
and transfers ................................ 6,897,192 174,308 190,620 329,839 266,268 (7,858,227) —
Total............................................ 15,315,812 9,423,258 3,993,434 3,120,826 2,294,137 (7,858,227) 26,289,240
Operating expenses ..................... 13,875,526 9,117,906 3,851,863 2,864,470 2,150,159 (7,841,059) 24,018,865
Operating income ........................ ¥ 1,440,286 ¥ 305,352 ¥ 141,571 ¥ 256,356 ¥ 143,978 ¥ (17,168) ¥ 2,270,375
Assets ............................................. ¥12,883,255 ¥10,779,947 ¥3,125,572 ¥1,792,681 ¥1,703,533 ¥ 2,173,332 ¥32,458,320
Long-lived assets .......................... 3,696,081 2,808,782 574,854 446,513 285,772 — 7,812,002

As of and for the year ended March 31, 2009:

Yen in millions
Inter-segment
Elimination/
Japan North America Europe Asia Other Unallocated Amount Consolidated
Net revenues
Sales to external customers ......... ¥ 7,471,916 ¥ 6,097,676 ¥2,889,753 ¥2,450,412 ¥1,619,813 ¥ — ¥20,529,570
Inter-segment sales
and transfers ................................ 4,714,821 125,238 123,375 268,917 263,087 (5,495,438) —
Total............................................ 12,186,737 6,222,914 3,013,128 2,719,329 1,882,900 (5,495,438) 20,529,570
Operating expenses ..................... 12,424,268 6,613,106 3,156,361 2,543,269 1,795,252 (5,541,675) 20,990,581
Operating income (loss) ............... ¥ (237,531) ¥ (390,192) ¥ (143,233) ¥ 176,060 ¥ 87,648 ¥ 46,237 ¥ (461,011)
Assets ............................................. ¥11,956,431 ¥10,685,466 ¥2,324,528 ¥1,547,890 ¥1,446,505 ¥ 1,101,217 ¥29,062,037
Long-lived assets .......................... 3,658,719 2,726,419 410,185 372,330 234,028 — 7,401,681

U.S. dollars in millions

Inter-segment
Elimination/
Japan North America Europe Asia Other Unallocated Amount Consolidated
Net revenues
Sales to external customers ......... $ 76,066 $ 62,075 $29,418 $24,946 $16,490 $ — $208,995
Inter-segment sales
and transfers ................................ 47,997 1,275 1,256 2,737 2,679 (55,944) —
Total............................................ 124,063 63,350 30,674 27,683 19,169 (55,944) 208,995
Operating expenses ..................... 126,481 67,322 32,132 25,891 18,277 (56,415) 213,688
Operating income (loss) ............... $ (2,418) $ (3,972) $ (1,458) $ 1,792 $ 892 $ 471 $ (4,693)
Assets ............................................. $121,719 $108,780 $23,664 $15,758 $14,726 $ 11,210 $295,857
Long-lived assets .......................... 37,246 27,755 4,176 3,790 2,383 — 75,350
* “Other” consists of Central and South America, Oceania and Africa.

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 Financial Section

Revenues are attributed to geographies based on the country were ¥4,758,410 million, ¥4,352,498 million and ¥3,225,901 mil-
location of the parent company or the subsidiary that transacted lion ($32,840 million), as of March 31, 2007, 2008 and 2009,
the sale with the external customer. respectively.
There are no any individually material countries with respect Transfers between industries or geographic segments are
to revenues, operating expenses, operating income, assets and made at amounts which Toyota’s management believes approxi-
long-lived assets included in other foreign countries. mate arm’s-length transactions. In measuring the reportable
Unallocated amounts included in assets represent assets held segments’ income or losses, operating income consists of reve-
for corporate purposes, which mainly consist of cash and cash nue less operating expenses.
equivalents and marketable securities. Such corporate assets

Overseas Revenues by destination

The following information shows revenues that are attributed to countries based on location of customers, excluding customers in
Japan. In addition to the disclosure requirements under FAS No. 131, Disclosure about Segments of an Enterprise and Related
Information (“FAS 131”), Toyota discloses this information in order to provide financial statement users with valuable information.

U.S. dollars
Yen in millions in millions
For the year ended
For the years ended March 31, March 31,
2007 2008 2009 2009
North America .................................................................................................... ¥9,039,560 ¥9,606,481 ¥6,294,230 $64,076
Europe ................................................................................................................. 3,345,001 3,746,362 2,861,351 29,129
Asia ...................................................................................................................... 2,248,031 2,968,460 2,530,352 25,760
Other* .................................................................................................................. 3,168,580 3,831,739 3,421,881 34,835
* “Other” consists of Central and South America, Oceania, Africa and the Middle East, etc.

Certain financial statement data on non-financial services and financial services businesses
The financial data below presents separately Toyota’s non-financial services and financial services businesses.

Balance sheets
U.S. dollars
Yen in millions in millions
March 31, March 31,
2008 2009 2009
Non-Financial Services Businesses
Current assets
Cash and cash equivalents .................................................................................................. ¥ 1,473,101 ¥ 1,648,143 $ 16,778
Marketable securities........................................................................................................... 526,801 494,476 5,034
Trade accounts and notes receivable, less allowance for doubtful accounts ................. 2,077,491 1,404,292 14,296
Inventories ............................................................................................................................ 1,825,716 1,459,394 14,857
Prepaid expenses and other current assets ....................................................................... 1,676,263 1,534,119 15,618
Total current assets .......................................................................................................... 7,579,372 6,540,424 66,583
Investments and other assets ................................................................................................. 6,064,286 4,254,126 43,308
Property, plant and equipment............................................................................................... 5,773,370 5,504,559 56,037
Total Non-Financial Services Businesses assets ............................................................ 19,417,028 16,299,109 165,928

Financial Services Businesses

Current assets
Cash and cash equivalents .................................................................................................. 155,446 796,137 8,105
Marketable securities........................................................................................................... 15,409 850 9
Finance receivables, net ...................................................................................................... 4,301,142 3,891,406 39,615
Prepaid expenses and other current assets ....................................................................... 793,434 790,901 8,051
Total current assets .......................................................................................................... 5,265,431 5,479,294 55,780
Noncurrent finance receivables, net ...................................................................................... 5,974,756 5,655,545 57,575
Investments and other assets ................................................................................................. 663,553 599,701 6,105
Property, plant and equipment............................................................................................... 2,038,632 1,897,122 19,313
Total Financial Services Businesses assets ..................................................................... 13,942,372 13,631,662 138,773
Eliminations .............................................................................................................................. (901,080) (868,734) (8,844)
Total assets ....................................................................................................................... ¥32,458,320 ¥29,062,037 $295,857

Assets in the non-financial services include unallocated corporate assets.

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U.S. dollars
Yen in millions in millions
March 31, March 31,
2008 2009 2009
Non-Financial Services Businesses
Current liabilities
Short-term borrowings ........................................................................................................ ¥ 725,563 ¥ 825,029 $ 8,399
Current portion of long-term debt ..................................................................................... 183,879 115,942 1,180
Accounts payable................................................................................................................. 2,211,507 1,299,523 13,230
Accrued expenses................................................................................................................ 1,478,249 1,432,988 14,588
Income taxes payable .......................................................................................................... 299,048 47,648 485
Other current liabilities ........................................................................................................ 1,208,476 944,303 9,613
Total current liabilities ...................................................................................................... 6,106,722 4,665,433 47,495
Long-term liabilities
Long-term debt .................................................................................................................... 391,303 850,233 8,656
Accrued pension and severance costs ............................................................................... 627,450 629,870 6,412
Other long-term liabilities ................................................................................................... 866,741 444,529 4,525
Total long-term liabilities ................................................................................................. 1,885,494 1,924,632 19,593
Total Non-Financial Services Businesses liabilities ........................................................ 7,992,216 6,590,065 67,088

Financial Services Businesses

Current liabilities
Short-term borrowings ........................................................................................................ 3,439,850 3,370,981 34,317
Current portion of long-term debt ..................................................................................... 2,511,719 2,640,104 26,877
Accounts payable................................................................................................................. 17,359 10,001 102
Accrued expenses................................................................................................................ 133,223 111,766 1,138
Income taxes payable .......................................................................................................... 6,544 3,650 37
Other current liabilities ........................................................................................................ 491,441 515,166 5,244
Total current liabilities ...................................................................................................... 6,600,136 6,651,668 67,715
Long-term liabilities
Long-term debt .................................................................................................................... 5,726,042 5,592,641 56,934
Accrued pension and severance costs ............................................................................... 4,847 4,742 49
Other long-term liabilities ................................................................................................... 510,415 491,397 5,002
Total long-term liabilities ................................................................................................. 6,241,304 6,088,780 61,985
Total Financial Services Businesses liabilities ................................................................ 12,841,440 12,740,448 129,700
Eliminations .............................................................................................................................. (901,530) (869,213) (8,848)
Total liabilities ................................................................................................................... 19,932,126 18,461,300 187,940
Minority interest in consolidated subsidiaries ....................................................................... 656,667 539,530 5,492
Shareholders’ equity ................................................................................................................ 11,869,527 10,061,207 102,425
Total liabilities and shareholders’ equity ........................................................................ ¥32,458,320 ¥29,062,037 $295,857

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Statements of income
U.S. dollars
Yen in millions in millions
For the year ended
For the years ended March 31, March 31,
2007 2008 2009 2009
Non-Financial Services Businesses
Net revenues ................................................................................................. ¥22,679,078 ¥24,831,172 ¥19,182,161 $195,278
Costs and expenses
Cost of revenues ....................................................................................... 18,361,641 20,459,061 17,470,791 177,856
Selling, general and administrative ......................................................... 2,230,734 2,181,491 2,097,674 21,355
Total costs and expenses...................................................................... 20,592,375 22,640,552 19,568,465 199,211
Operating income (loss) ............................................................................... 2,086,703 2,190,620 (386,304) (3,933)
Other income (expense), net ....................................................................... 145,570 176,417 (71,925) (732)
Income (loss) before income taxes, minority interest
and equity in earnings of affiliated companies ........................................ 2,232,273 2,367,037 (458,229) (4,665)
Provision for income taxes ........................................................................... 844,797 889,660 (10,152) (104)
Income (loss) before minority interest and equity in earnings
of affiliated companies ............................................................................... 1,387,476 1,477,377 (448,077) (4,561)
Minority interest in consolidated subsidiaries ............................................ (49,513) (73,543) 26,282 267
Equity in earnings of affiliated companies.................................................. 193,130 268,025 53,226 542
Net income (loss)—Non-Financial Services Businesses ........................... 1,531,093 1,671,859 (368,569) (3,752)

Financial Services Businesses

Net revenues ................................................................................................. 1,300,548 1,498,354 1,377,548 14,024
Costs and expenses
Cost of revenues ....................................................................................... 879,203 1,075,972 994,191 10,121
Selling, general and administrative ......................................................... 262,850 335,888 455,304 4,635
Total costs and expenses...................................................................... 1,142,053 1,411,860 1,449,495 14,756
Operating income (loss) ............................................................................... 158,495 86,494 (71,947) (732)
Other expense, net ....................................................................................... (8,171) (16,265) (30,233) (308)
Income (loss) before income taxes, minority interest
and equity in earnings of affiliated companies ........................................ 150,324 70,229 (102,180) (1,040)
Provision for income taxes ........................................................................... 53,548 21,904 (46,298) (471)
Income (loss) before minority interest and equity in earnings
of affiliated companies ............................................................................... 96,776 48,325 (55,882) (569)
Minority interest in consolidated subsidiaries ............................................ (174) (4,419) (2,004) (20)
Equity in earnings (losses) of affiliated companies .................................... 16,385 2,089 (10,502) (107)
Net income (loss)—Financial Services Businesses ..................................... 112,987 45,995 (68,388) (696)
Eliminations ................................................................................................... (48) 25 20 0
Net income (loss) .......................................................................................... ¥ 1,644,032 ¥ 1,717,879 ¥ (436,937) $ (4,448)

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Statements of cash flows

Yen in millions Yen in millions
For the year ended March 31, 2007 For the year ended March 31, 2008
Non-Financial Financial Non-Financial Financial
Services Services Services Services
Businesses Businesses Consolidated Businesses Businesses Consolidated
Cash flows from operating activities
Net income ....................................................................... ¥ 1,531,093 ¥ 112,987 ¥ 1,644,032 ¥ 1,671,859 ¥ 45,995 ¥ 1,717,879
Adjustments to reconcile net income to net cash
provided by operating activities
Depreciation ................................................................. 979,718 402,876 1,382,594 1,081,410 409,725 1,491,135
Provision for doubtful accounts and credit losses .... (841) 72,703 71,862 357 122,433 122,790
Pension and severance costs, less payments ............ (33,319) 1,265 (32,054) (54,868) 527 (54,341)
Losses on disposal of fixed assets .............................. 49,193 1,279 50,472 44,993 444 45,437
Unrealized losses on available-for-sale
securities, net ............................................................. 4,614 — 4,614 11,346 — 11,346
Deferred income taxes ................................................ 42,698 89,643 132,308 80,027 1,500 81,458
Minority interest in consolidated subsidiaries ........... 49,513 174 49,687 73,543 4,419 77,962
Equity in earnings of affiliated companies ................. (193,130) (16,385) (209,515) (268,025) (2,089) (270,114)
Changes in operating assets and liabilities,
and other .................................................................... 182,548 125,700 144,173 (220,217) 215,218 (241,928)
Net cash provided by operating activities ............. 2,612,087 790,242 3,238,173 2,420,425 798,172 2,981,624

Cash flows from investing activities

Additions to finance receivables .................................... — (14,192,154) (7,489,096) — (16,644,139) (8,647,717)
Collection of and proceeds
from sale of finance receivables ................................... — 12,814,669 6,274,744 — 15,095,380 7,332,697
Additions to fixed assets
excluding equipment leased to others ........................ (1,414,468) (11,346) (1,425,814) (1,472,422) (8,148) (1,480,570)
Additions to equipment leased to others ..................... (153,163) (1,111,218) (1,264,381) (137,711) (1,141,694) (1,279,405)
Proceeds from sales of fixed assets
excluding equipment leased to others ........................ 56,040 8,381 64,421 56,603 10,948 67,551
Proceeds from sales of equipment leased to others .... 107,270 214,491 321,761 80,944 294,937 375,881
Purchases of marketable securities
and security investments ............................................... (889,008) (179,197) (1,068,205) (936,324) (215,316) (1,151,640)
Proceeds from sales of and maturity of
marketable securities and security investments .......... 708,130 117,041 825,171 789,366 198,044 987,410
Payment for additional investments
in affiliated companies, net of cash acquired .............. (1,651) — (1,651) (4,406) — (4,406)
Changes in investments and other assets,
and other ........................................................................ (21,751) 15,250 (51,328) (44,891) 23,024 (74,687)
Net cash used in investing activities....................... (1,608,601) (2,324,083) (3,814,378) (1,668,841) (2,386,964) (3,874,886)

Cash flows from financing activities

Purchase of common stock ............................................. (295,699) — (295,699) (311,667) — (311,667)
Proceeds from issuance of long-term debt ................... 31,509 2,897,028 2,890,000 17,162 3,364,351 3,349,812
Payments of long-term debt ........................................... (41,833) (1,694,407) (1,726,823) (226,561) (2,156,709) (2,310,008)
Increase (decrease) in short-term borrowings ............... (83,651) 362,078 353,397 24,126 370,293 408,912
Dividends paid ................................................................. (339,107) — (339,107) (430,860) — (430,860)
Net cash provided by (used in)
financing activities .................................................. (728,781) 1,564,699 881,768 (927,800) 1,577,935 706,189
Effect of exchange rate changes on cash
and cash equivalents ......................................................... 21,995 3,434 25,429 (65,405) (19,354) (84,759)
Net increase (decrease) in cash and cash equivalents ..... 296,700 34,292 330,992 (241,621) (30,211) (271,832)
Cash and cash equivalents at beginning of year .............. 1,418,022 151,365 1,569,387 1,714,722 185,657 1,900,379
Cash and cash equivalents at end of year ......................... ¥ 1,714,722 ¥ 185,657 ¥ 1,900,379 ¥ 1,473,101 ¥ 155,446 ¥ 1,628,547

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Yen in millions U.S. dollars in millions

For the year ended March 31, 2009 For the year ended March 31, 2009
Non-Financial Financial Non-Financial Financial
Services Services Services Services
Businesses Businesses Consolidated Businesses Businesses Consolidated
Cash flows from operating activities
Net loss .............................................................................. ¥ (368,569) ¥ (68,388) ¥ (436,937) $ (3,752) $ (696) $ (4,448)
Adjustments to reconcile net loss to net cash
provided by operating activities
Depreciation .................................................................. 1,105,233 389,937 1,495,170 11,251 3,970 15,221
Provision for doubtful accounts and credit losses ..... (1,663) 259,096 257,433 (17) 2,638 2,621
Pension and severance costs, less payments ............. (21,428) 470 (20,958) (218) 5 (213)
Losses on disposal of fixed assets ............................... 68,546 136 68,682 698 1 699
Unrealized losses on available-for-sale
securities, net .............................................................. 220,920 — 220,920 2,249 — 2,249
Deferred income taxes ................................................. (132,127) (62,871) (194,990) (1,345) (640) (1,985)
Minority interest in consolidated subsidiaries ............ (26,282) 2,004 (24,278) (267) 20 (247)
Equity in earnings of affiliated companies .................. (53,226) 10,502 (42,724) (542) 107 (435)
Changes in operating assets and liabilities,
and other ..................................................................... (223,101) 186,234 154,587 (2,272) 1,895 1,573
Net cash provided by operating activities .............. 568,303 717,120 1,476,905 5,785 7,300 15,035

Cash flows from investing activities

Additions to finance receivables ..................................... — (13,318,620) (7,700,459) — (135,586) (78,392)
Collection of and proceeds
from sale of finance receivables .................................... — 13,047,393 7,243,442 — 132,825 73,740
Additions to fixed assets
excluding equipment leased to others ......................... (1,358,518) (6,064) (1,364,582) (13,830) (62) (13,892)
Additions to equipment leased to others ...................... (82,411) (877,904) (960,315) (839) (8,937) (9,776)
Proceeds from sales of fixed assets
excluding equipment leased to others ......................... 41,285 6,101 47,386 420 62 482
Proceeds from sales of equipment leased to others ..... 55,896 472,853 528,749 569 4,814 5,383
Purchases of marketable securities
and security investments ................................................ (418,342) (217,688) (636,030) (4,259) (2,216) (6,475)
Proceeds from sales of and maturity of
marketable securities and security investments ........... 1,295,561 180,316 1,475,877 13,189 1,835 15,024
Payment for additional investments
in affiliated companies, net of cash acquired ............... (45) — (45) (0) — (0)
Changes in investments and other assets,
and other ......................................................................... 129,834 (2,091) 135,757 1,322 (21) 1,382
Net cash used in investing activities........................ (336,740) (715,704) (1,230,220) (3,428) (7,286) (12,524)

Cash flows from financing activities

Purchase of common stock .............................................. (70,587) — (70,587) (719) — (719)
Proceeds from issuance of long-term debt .................... 545,981 3,030,029 3,506,990 5,558 30,846 35,702
Payments of long-term debt ............................................ (150,097) (2,580,637) (2,704,078) (1,528) (26,271) (27,528)
Increase in short-term borrowings .................................. 138,387 239,462 406,507 1,409 2,438 4,138
Dividends paid .................................................................. (439,991) — (439,991) (4,479) — (4,479)
Net cash provided by financing activities ............... 23,693 688,854 698,841 241 7,013 7,114
Effect of exchange rate changes on cash
and cash equivalents .......................................................... (80,214) (49,579) (129,793) (816) (505) (1,321)
Net increase in cash and cash equivalents ......................... 175,042 640,691 815,733 1,782 6,522 8,304
Cash and cash equivalents at beginning of year ............... 1,473,101 155,446 1,628,547 14,996 1,583 16,579
Cash and cash equivalents at end of year .......................... ¥ 1,648,143 ¥ 796,137 ¥ 2,444,280 $ 16,778 $ 8,105 $ 24,883

102 TOYOTA MOTOR CORPORATION

 Management & Investor
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25 Per share amounts:

Reconciliations of the differences between basic and diluted net income (loss) per share for the years ended March 31, 2007, 2008 and
2009 are as follows:
Thousands
Yen in millions of shares Yen U.S. dollars
Net income Net income
Net income Weighted- (loss) (loss)
(loss) average shares per share per share
For the year ended March 31, 2007
Basic net income per common share................................................................................ ¥1,644,032 3,210,422 ¥ 512.09
Effect of dilutive securities
Assumed exercise of dilutive stock options ............................................................. (2) 1,812
Diluted net income per common share ............................................................................ ¥1,644,030 3,212,234 ¥ 511.80
For the year ended March 31, 2008
Basic net income per common share................................................................................ ¥1,717,879 3,177,445 ¥ 540.65
Effect of dilutive securities
Assumed exercise of dilutive stock options ............................................................. (1) 1,217
Diluted net income per common share ............................................................................ ¥1,717,878 3,178,662 ¥ 540.44
For the year ended March 31, 2009
Basic net loss per common share ...................................................................................... ¥ (436,937) 3,140,417 ¥(139.13) $(1.42)
Effect of dilutive securities
Assumed exercise of dilutive stock options ............................................................. (0) —
Diluted net loss per common share .................................................................................. ¥ (436,937) 3,140,417 ¥(139.13) $(1.42)

Certain stock options were not included in the computation In addition to the disclosure requirements under FAS No.
of diluted net income per share for the year ended March 31, 128, Earnings per Share, Toyota discloses the information
2008 because the options’ exercise prices were greater than the below in order to provide financial statement users with valu-
average market price per common share during the period. able information.
Assumed exercise of certain stock options was not included The following table shows Toyota’s net assets per share as of
in the computation of diluted net loss per share for the year March 31, 2008 and 2009. Net assets per share amounts are cal-
ended March 31, 2009 because it had an antidilutive effect due culated by dividing net assets’ amount at the end of each peri-
to the net loss for the period. od by the number of shares issued and outstanding, excluding
treasury stock at the end of the corresponding period.

Thousands
Yen in millions of shares Yen U.S. dollars
Shares issued and
outstanding at the
end of the year
(excluding Net assets Net assets
Net assets treasury stock) per share per share
As of March 31, 2008 .......................................................................................................... ¥11,869,527 3,149,279 ¥3,768.97
As of March 31, 2009 ....................................................................................................... 10,061,207 3,135,882 3,208.41 $32.66

Annual Report 2009 103

 Financial Section

26 Fair value measurements:

Toyota adopted FAS 157 in the fiscal year ended March 31, 2009. In FAS 157, three levels of input which are used to measure fair value
are as follows.
Level 1: Quoted prices in active markets for identical assets or liabilities
Level 2: Quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in
markets that are not active; inputs other than quoted prices that are observable for the assets or liabilities
Level 3: Unobservable inputs for assets or liabilities

The following table summarizes the fair values of the assets and liabilities measured at fair value on a recurring basis at March 31, 2009:
Yen in millions
March 31, 2009
Level 1 Level 2 Level 3 Total
Assets:
Cash equivalents ......................................................................................................... ¥1,473,407 ¥ 115,339 ¥ — ¥1,588,746
Marketable securities and other securities investments ......................................... 2,273,294 187,236 19,581 2,480,111
Derivative financial instruments ................................................................................. — 369,572 17,958 387,530
Total.......................................................................................................................... ¥3,746,701 ¥ 672,147 ¥ 37,539 ¥4,456,387
Liabilities:
Derivative financial instruments ................................................................................. ¥ — ¥(427,109) ¥(23,692) ¥ (450,801)
Total.......................................................................................................................... ¥ — ¥(427,109) ¥(23,692) ¥ (450,801)

U.S. dollars in millions

March 31, 2009
Level 1 Level 2 Level 3 Total
Assets:
Cash equivalents ......................................................................................................... $15,000 $ 1,174 $ — $16,174
Marketable securities and other securities investments ......................................... 23,143 1,906 199 25,248
Derivative financial instruments ................................................................................. — 3,762 183 3,945
Total.......................................................................................................................... $38,143 $ 6,842 $ 382 $45,367
Liabilities:
Derivative financial instruments ................................................................................. $ — $(4,348) $(241) $ (4,589)
Total.......................................................................................................................... $ — $(4,348) $(241) $ (4,589)

The following is a description of the valuation methodologies classified as Level 3 include retained interests in securitized
used for the assets and liabilities measured at fair value, key financial receivables, which are measured at fair value using the
inputs and significant assumptions: assumptions such as interest rate, loss severity and other factors.

Cash equivalents Derivative financial instruments

Cash equivalents represent highly liquid investments with origi- Toyota estimates the fair value of derivative financial instruments
nal maturities of three months or less. Generally, quoted market using industry-standard valuation models that requires observ-
prices are used to determine the fair value of these instruments. able inputs including interest rates and foreign exchange rates,
and the contractual terms. In other certain cases when market
Marketable securities and other securities investments data is not available, key inputs to the fair value measurement
Marketable securities and other securities investments include include quotes from counterparties, and other market data.
debt securities and equity securities. Toyota uses quoted market Toyota’s derivative fair value measurements consider assump-
prices for identical or similar assets or liabilities to measure fair tions about counterparty and our own non-performance risk,
value. Marketable securities and other securities investments using such as credit default probabilities.

104 TOYOTA MOTOR CORPORATION

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The following table summarizes the changes in Level 3 assets and liabilities measured at fair value on a recurring basis for the period
ended March 31, 2009:
Yen in millions
For the year ended March 31, 2009
Marketable
securities and Derivative
other securities financial
investments instruments Total
Balance at beginning of year ............................................................................................................. ¥23,818 ¥ 25,499 ¥ 49,317
Total gains (losses)
Included in earnings ................................................................................................................... 586 (38,538) (37,952)
Included in other comprehensive income (loss) ....................................................................... (1,398) — (1,398)
Purchases, issuances and settlements .......................................................................................... (1,665) 7,026 5,361
Other................................................................................................................................................ (1,760) 279 (1,481)
Balance at end of year........................................................................................................................ ¥19,581 ¥ (5,734) ¥ 13,847

U.S. dollars in millions

For the year ended March 31, 2009
Marketable
securities and Derivative
other securities financial
investments instruments Total
Balance at beginning of year ............................................................................................................. $242 $ 260 $ 502
Total gains (losses)
Included in earnings ................................................................................................................... 6 (392) (386)
Included in other comprehensive income (loss) ....................................................................... (14) — (14)
Purchases, issuances and settlements .......................................................................................... (17) 71 54
Other................................................................................................................................................ (18) 3 (15)
Balance at end of year........................................................................................................................ $199 $ (58) $ 141

In the reconciliation table above, derivative financial instruments are presented net of assets and (liabilities). The other amount
primarily includes the impact of currency translation adjustments.

Certain assets and liabilities are measured at fair value on a nonrecurring basis. During the year ended March 31, 2009, Toyota
measured certain finance receivables at fair value of ¥25,932 million ($264 million) based on the collateral value, resulting in an
impairment loss of ¥10,011 million ($102 million). This fair value measurement on a nonrecurring basis as of March 31, 2009 was
classified as level 3.

Annual Report 2009 105

 Financial Section

Management’s Annual Report on Internal Control

over Financial Reporting
Toyota’s management is responsible for establishing and maintaining effective internal control over financial reporting. Internal
control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for external purposes in accordance with U.S. GAAP. Toyota’s internal
control over financial reporting includes those policies and procedures that:
(i) pertain to the maintenance of records that in reasonable detail, accurately and fairly reflect the transactions and
dispositions of Toyota’s assets;
(ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements
in accordance with U.S. GAAP, and that Toyota’s receipts and expenditures are being made only in accordance with
authorizations of Toyota’s management and directors; and
(iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of
Toyota’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also,
projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate
because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Toyota’s management conducted an evaluation of the effectiveness of internal control over financial reporting based on
the framework in “Internal Control — Integrated Framework” issued by the Committee of Sponsoring Organizations of the
Treadway Commission.

Based on this evaluation, management concluded that Toyota’s internal control over financial reporting was effective as of
March 31, 2009.

PricewaterhouseCoopers Aarata, an independent registered public accounting firm that audited the consolidated financial
statements included in this report, has also audited the effectiveness of Toyota’s internal control over financial reporting as of
March 31, 2009, as stated in its report included herein.

106 TOYOTA MOTOR CORPORATION

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Report of Independent Registered Public Accounting Firm

To the Shareholders and Board of Directors of

Toyota Jidosha Kabushiki Kaisha (“Toyota Motor Corporation”)

In our opinion, the accompanying consolidated balance sheets and the related consolidated statements of income,
shareholders’ equity and cash flows present fairly, in all material respects, the financial position of Toyota Motor Corporation
and its subsidiaries at March 31, 2008 and 2009, and the results of their operations and their cash flows for each of the three
years in the period ended March 31, 2009 in conformity with accounting principles generally accepted in the United States of
America. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting
as of March 31, 2009, based on criteria established in Internal Control—Integrated Framework issued by the Committee of
Sponsoring Organizations of the Treadway Commission (COSO). The Company’s management is responsible for these financial
statements, for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of
internal control over financial reporting, included in the accompanying Management’s Annual Report on Internal Control Over
Financial Reporting. Our responsibility is to express opinions on these financial statements and on the Company’s internal
control over financial reporting based on our integrated audits. We conducted our audits in accordance with the standards
of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the
audits to obtain reasonable assurance about whether the financial statements are free of material misstatement and whether
effective internal control over financial reporting was maintained in all material respects. Our audits of the financial statements
included examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by management, and evaluating the overall financial statement
presentation. Our audit of internal control over financial reporting included obtaining an understanding of internal control over
financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating
effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we
considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally
accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures
that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and
dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to
permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and
expenditures of the company are being made only in accordance with authorizations of management and directors of the
company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or
disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also,
projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate
because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Nagoya, Japan
June 23, 2009

Annual Report 2009 107

 Investor Information
As of March 31, 2009

Corporate Information

Corporate Data

Company Name: Toyota Motor Corporation Number of Affiliates:

[Consolidated Subsidiaries] 529
Established: August 28, 1937 [Affiliates Accounted for by the Equity Method] 56
Common Stock: ¥397,049 million Number of Employees:
71,116 (Consolidated: 320,808)
Fiscal Year-End: March 31
Corporate Web Site:
Public Accounting Firm: PricewaterhouseCoopers Aarata [Corporate Information] http://www.toyota.co.jp
[IR Information] http://www.toyota.co.jp/en/ir

Stock Information

Stock Data Contact Points for Investors

Number of Shares Authorized: 10,000,000,000 shares Japan: Toyota City Head Office
1, Toyota-cho, Toyota City,
Number of Shares Issued: 3,447,997,492 shares Aichi Prefecture 471-8571, Japan
Tel: (0565) 28-2121
Number of Treasury Stock: 312,115,017 shares Fax: (0565) 23-5721
Number of Shareholders: 653,433

Number of Shares per Trading Unit: 100 shares Tokyo Head Office
4-18, Koraku 1-chome, Bunkyo-ku, Tokyo 112-8701, Japan
Stock Listings: Tel: (03) 3817-7111
[Japan] Tokyo, Nagoya, Osaka, Fukuoka, Sapporo Fax: (03) 3817-9092
[Overseas] New York, London

Securities Code: U.S.A.: Toyota Motor North America, Inc.

[Japan] 7203 9 West 57th St., Suite 4900, New York, NY 10019, U.S.A.
Tel: (212) 223-0303
American Depositary Receipts (ADR):
Fax: (212) 750-3564
[Ratio] 1ADR=2 common stocks
[Symbol] TM

Transfer Agent in Japan: U.K.: Toyota Motor Europe

Mitsubishi UFJ Trust and Banking Corporation Curzon Square, 25 Park Lane, London W1K 1RA, U.K.
10-11, Higashisuna, 7-chome, Koutou-ku, Tokyo 137-8081, Japan Tel: (020) 7290-8500
Japan Toll-Free: (0120) 232-711 Fax: (020) 7290-8502

Depositary and Transfer Agent for ADR:

The Bank of New York Mellon
101 Barclay Street, New York, NY 10286, U.S.A.
Tel: (866) 238-8978
U.S. Toll-Free: (888) 269-2377
(888) BNY-ADRS
[Depositary Receipts] http://www.adrbnymellon.com
[Transfer Agent] http://www.bnymellon.com/shareowner

108 TOYOTA MOTOR CORPORATION

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Major Shareholders (Top 10) Ownership Breakdown

Name Number of Shares Held

(Thousands) 17.6 % 35.7 %
Other corporate Financial institutions,
entities Brokerages
Japan Trustee Services Bank, Ltd. 353,082

Toyota Industries Corporation 201,195

The Master Trust Bank of Japan, Ltd. 192,363

Nippon Life Insurance Company 130,791

22.6 %
State Street Bank and Trust Company 119,887 Individuals, etc.
24.1 %
Foreign corporate
The Bank of New York Mellon 85,081 entities and others
as Depositary Bank
for Depositary Receipt Holders Note: Individuals, etc. includes shares of 312 million treasury stock.

Trust & Custody Services Bank, Ltd. 84,527

Tokio Marine & Nichido Fire Insurance Co., Ltd. 83,821

Mitsui Sumitomo Insurance Company, Limited 65,166

JPMorgan Chase Bank 60,854

Toyota’s Stock Price and Trading Volume on the Tokyo Stock Exchange

Stock price (¥)

10,000

8,000

6,000

4,000

2,000
Trading volume
(Million shares)
0 400

300

200

100

FY 2005 FY 2006 FY 2007 FY 2008 FY 2009

High (¥) 4,520 6,560 8,350 7,880 5,710

Low (¥) 3,730 3,790 5,430 4,810 2,585

At Year-End (¥) 3,990 6,430 7,550 4,970 3,120

Note: Fiscal years ended March 31

Annual Report 2009 109

http://www.toyota.co.jp