EX-99.1 2 ex991.txt NOTICE OF CONVOCATION June 6, 2007 To All Shareholders: President Katsuaki Watanabe TOYOTA MOTOR CORPORATION 1, Toyota-cho, Toyota City, Aichi Prefecture Notice of Convocation of FY2007 Ordinary General Shareholders' Meeting (Unless otherwise stated, all financial information has been prepared in accordance with generally accepted accounting principles in Japan) English translation from the original Japanese-language document Dear Shareholder, Please refer to the following for information about the upcoming FY2007 Ordinary General Shareholders' Meeting. We hope that you will be able to attend this meeting. If you are unable to attend the meeting, it would be appreciated if you could find the time from your busy schedule to vote "yes" or "no" on the enclosed ballot form and return it to us after reviewing the enclosed documents no later than Thursday, June 21, 2007. Thank you very much for your cooperation. 1. Date and time: 10:00 a.m., Friday, June 22, 2007 2. Venue: Toyota Head Office, 1, Toyota-cho, Toyota City, Aichi Prefecture 3. Meeting Agenda Reports: Reports on business review, unconsolidated and consolidated financial statements for the FY2007 term (April 1, 2006 through March 31, 2007) and report by accounting auditor and the board of corporate auditors on the audit results of the consolidated financial statements. Resolutions: Proposed Resolution 1: Distribution of Dividends from Surplus Proposed Resolution 2: Election of 30 Directors Proposed Resolution 3: Election of 4 Corporate Auditors Proposed Resolution 4: Election of Accounting Auditor Proposed Resolution 5: Issue of Stock Acquisition Rights without Consideration to Directors, Managing Officers and Employees, etc. of Toyota Motor Corporation and its Affiliates Proposed Resolution 6: Acquisition of Own Shares Proposed Resolution 7: Award of Bonus Payments to Retiring Corporate Auditors Proposed Resolution 8: Payment of Executive Bonuses 1 Notes: - If you attend the meeting in person, please submit the enclosed voting ballot at the reception desk. It will serve as your admission pass. - If you intend to engage in split voting, please submit written notice to that effect and the reasons for the split voting at least three days prior to the general shareholders' meeting (by June 19, 2007). - If any revisions are made to the reference documents or attachments for the general shareholders' meeting, the revisions will be posted on the Toyota Motor Corporation's Web site (http://www.toyota.co.jp). 2 (Attachment) Business Report (Fiscal Year under review: April 1, 2006 through March 31, 2007) 1. Outlook of Associated Companies (1) Progress and Achievement in Operation Reviewing the general economic environment for the fiscal year ended March 2007, the Japanese economy experienced some weakness in personal consumption, but corporate revenues were in better shape and capital expenditure increased, resulting in a continuation of prolonged economic growth. Overseas, economic conditions remained steady overall, with stability in both capital expenditure and personal consumption in the United States, and acceleration in the pace of recovery in the European economy, while in Asia, the Chinese economy showed continued strong growth. Under these circumstances, Toyota Motor Corporation ("Toyota") and its consolidated subsidiaries (together, "TMC") have been striving to develop attractive products to satisfy its customers worldwide. TMC launched LS460, the flagship model of Lexus, equipped with the newest technologies based on an integration of cutting-edge production techniques and manufacturing skills in Japan in FY2007, which received high recognition and won the Japan Car of the Year award. Other FY2007 releases included the new Auris, a model designed in Europe with remarkable traveling capabilities, and the Blade, a luxury-class hatchback with a premier-quality image. The Corolla, best-selling model since its debut in 1966, was completely redesigned in FY2007 as the Corolla Axio, a vehicle with advanced equipment. Although vehicle sales in Japan in FY2007 decreased by 91 thousand units (or 3.9%) to 2,273 thousand units compared with FY2006, these active launches of new products and the diligent efforts of the dealers nationwide helped TMC achieve a record-high market share of 45.8% for Toyota Lexus brands (excluding mini-vehicles) in FY2007, as well as a record-high market share of 41.5%, on a total sales basis including mini-vehicles. In the United States, TMC started production of a new model of the Tundra pickup truck at the new plant in Texas and completed preparations for the production of the Camry at a facility of Fuji Heavy Industries Ltd. in Indiana. In China, Guangzhou Toyota Motor Co., Ltd. began production of the Camry. Moreover, TMC established a new plant in Thailand, as the base for production and supply in Asia, expanding production capacity. Through these active business operations overseas, TMC's overseas production output during FY2007 reached a record high of 3,980 thousand units, an increase of 204 thousand units (or 5.4%) compared with FY2006. Through these global expansion of production sites, the introduction of vehicles that closely meet customer needs in Japan and overseas and the implementation of various sales measures, the global sales, including Daihatsu and Hino brands, reached a total of 8,524 thousand units in FY2007, exceeding the FY2006 level by 550 thousand units (or 6.9%). 3 In parallel with these business developments, TMC has made environmental issues a management priority and has been working to reduce carbon-dioxide emissions and other environmental burdens at every stage of the vehicle life cycle -- from development, production, delivery, and use to disposal and recycling. TMC has been developing hybrid technology in efforts to innovate core solutions for environmental issues. To encourage the widespread use of hybrid technology, TMC began the production of the Camry Hybrid which is the first to be locally produced at the TMC factory in Kentucky, U.S.A. As a result, global sales of hybrid vehicles in FY2007 reached 354 thousand units and cumulative sales of hybrid vehicles exceeded 970 thousand units. TMC reached a basic agreement with Isuzu Motors Limited on a business collaboration focusing on the development of diesel engines, a part of technology for environmental measures. In another effort to depart from fossil fuels, TMC has also been promoting the introduction of vehicles that can run on bioethanol and the development of plug-in hybrids that can be charged from household electric outlets. In order to respond to the diverse customer needs, TMC is also actively developing its business in areas such as financial services and information and telecommunications industries. In the financial services business, due to our efforts to expand business in emerging markets such as China and Indonesia, we have succeeded in the development of a global network of 31 countries, which is becoming a stable source of global revenue in the automobile business. In the telecommunication business, we have strived to expand our information network capabilities in order to provide drivers with safe, secure, and comfortable information network services, as exemplified by our promotion to expand G-BOOK ALPHA to other companies. In the housing business, our active sales strategies, improved features for security, seismic safety, and other functions have spurred sales to 5,001 units on an unconsolidated basis and 5,807 units on a consolidated basis, both of which are historical highs. In addition to strong sales initiatives, improvements in management efficiency and diligent efforts to reduce costs resulted in consolidated net sales of 23,948.0 billion yen, an increase of 2,911.1 billion yen (or 13.8%) from FY2006, and consolidated operating income of 2,238.6 billion yen, an increase of 360.3 billion yen (or 19.2%) from FY2006. Consolidated net income in FY2007 increased by 271.9 billion yen (or 19.8%) from FY2006 to 1,644.0 billion yen. 4
The breakdown of consolidated net revenues is as follows: Unit: million yen ---------------------------------------------------------------------------------------------------------------------- FY2007 FY2006 Increase (Decrease) (April 2006 through (April 2005 through (Percent of March 2007) March 2006) changes) ---------------- ------------------ ------------------------ Vehicles 18,751,807 16,584,317 2,167,490 ( 13.1) Parts & components for 334,619 298,492 36,127 ( 12.1) overseas production Parts 1,551,969 1,311,617 240,352 ( 18.3) Other 1,275,773 1,131,190 144,583 ( 12.8) Total Automotive 21,914,168 19,325,616 2,588,552 ( 13.4) Financial Services 1,277,994 977,416 300,578 ( 30.8) Other 755,929 733,877 22,052 ( 3.0) ---------- ---------- --------- ------- Total 23,948,091 21,036,909 2,911,182 ( 13.8) ---------- ---------- --------- -------
Notes: 1. The consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States of America. 2. The amounts represent net revenues to external customers. 3. The net revenues do not include consumption taxes. With respect to capital expenditures, TMC is proceeding with the introduction of an innovative line which balances high quality and low cost by combining development and production. In addition, as a result of active investment to launch new products and efforts to expand production capacities in order to respond to customer demand, total capital expenditures for FY2007 reached 1,482.6 billion yen. (2) Funding Capital investment in the automobile business is financed mainly with funds gained from business operations. Funds necessary for the finance service business are financed mainly through the issuance of bonds, medium-term notes, and commercial papers. The balance of debt was 12,129 billion yen as of the end of FY2007. (3) Trends in Consolidated Assets and Income
Unit: million yen unless stated otherwise ---------------------------------------------------------------------------------------------------------------- FY2004 FY2005 FY2006 FY2007 (April 2003 (April 2004 (April 2005 (April 2006 through through through through March 2004) March 2005) March 2006) March 2007) ----------- ----------- ----------- ----------- Net revenues 17,294,760 18,551,526 21,036,909 23,948,091 Operating income 1,666,890 1,672,187 1,878,342 2,238,683 Net income 1,162,098 1,171,260 1,372,180 1,644,032 Net income per share - Basic (yen) 342.90 355.35 421.76 512.09 Total shareholders' equity 8,178,567 9,044,950 10,560,449 11,836,092 ---------- ---------- ---------- ---------- Total assets 22,040,228 24,335,011 28,731,595 32,574,779 ---------- ---------- ---------- ----------
5 (4) Issues for Associated Companies Although we expect overall growth of the world economy to continue, we face a variety of unstable elements in the future business environment, including concerns about the future of the American economy, changes in the pace of growth of the Chinese economy, and movement in oil prices. The Japanese economy is experiencing a moderate expansion, but there are concerns that rapid fluctuations in exchange rates and continuing high prices for raw materials may have an adverse impact on corporate revenue, which is the driving force of the current economy. In the automobile industry, emerging markets which are expected to continue to grow, competition among leading global and regional auto makers is becoming increasingly fierce. In addition, environmental regulations are being strengthened throughout the world and environmental awareness is on the rise, leading to intense global competition in the development of technologies and the introduction of new products. In order to build a robust base and continue advancing amidst these severe circumstances, TMC will make a collected effort to work on the following issues: First, as an immediate task, TMC is making efforts to revitalize the domestic market by launching market-creating products based on the anticipation of customer needs and timely measures to generate stronger customer interest in vehicles through measures that stimulate demand. Overseas, TMC will work diligently to smoothly inaugurate our new plants in Mississippi, U.S.A., Canada, Russia, and China to further develop our business infrastructures for production, procurement and sales, and to promote business activities rooted in each region. Medium- to long-term issues include the development and commercialization of innovative new technologies related to the environment, safety and energy, which lead to the realization of the ultimate automobile manufacturing that is beneficial to people, society and the earth. Next, we will improve quality of local procurement globally, one of TMC's strengths, to maintain and enhance the world's leading level of quality and strengthen cost competitiveness, thus supporting high-quality and sustainable growth. In addition, TMC fulfills its social responsibilities by carrying out corporate social responsibility (CSR) activities through philanthropic activities undertaken from a global perspective and thorough corporate ethics including full compliance with applicable laws and regulations. Based on the belief that the development of human resources is fundamental to corporate competitiveness, TMC is engaged in the training of highly-creative personnel who will pass on TMC's manufacturing technologies, skills and values to the next generation. By addressing these agenda, TMC is working to enhance its corporate value as a company with energy and dignity and maintain growth in harmony with society rooted in "manufacturing" over the 21st century. This year, Toyota Motor Corporation will celebrate the 70th anniversary of its establishment. We express our heartfelt appreciation to all of our shareholders and customers for their longstanding support and patronage. In this commemorative year, we commit ourselves to renewing our awareness of the philosophies established at our founding, including the "Customer First" principle underlying our commitment to provide high-quality products and services, "Research and innovation ahead of the times," and "Contribution to the society." As always, we will work diligently in line with these philosophies. We thank our shareholders for their ongoing support. 6 (5) Policy on Distribution of Surplus by Resolution of the Board of Directors Toyota deems the benefit of its shareholders as one of its priority management policies and continuously strives to increase per-share earnings, through aggressively promoting its business while improving and strengthening its corporate foundations. With respect to the payment of dividends, Toyota seeks to enhance the distribution of profits by striving to secure a consolidated dividend payout ratio of 30% over the medium- to long-term, while giving due consideration to factors such as the business results of each term and new investment plans. Furthermore, Toyota conducts repurchases of its own shares to improve capital efficiency and responds appropriately to changes in the business environment. In the expectation of the continued growth of the automobile market worldwide, Toyota will use its internal funds to invest in improvement of product performance and development of next-generation technologies to develop production and sales networks in both domestic and overseas markets for further expansion of its global business areas, while securing a solid management foundation. Toyota's articles of incorporation allow retained earnings to be distributed as dividends pursuant to resolution of the board of directors. Dividends will be declared twice a year, an interim dividend and a year-end dividend. In order to secure an opportunity to directly seek shareholders' opinion, Toyota makes year-end dividends a matter to be resolved at the FY2007 Ordinary General Shareholders' Meeting. Toyota also makes acquisition of its own shares a matter to be resolved at the same meeting for the same reason. 7 (6) Main Business
Business Main products -------------------------------------------------------------------------------------------------------------- LS, GS, GS450h, ES, IS, SC, LX, GX, RX, RX400h, Century, Crown, Brevis, Progres, Mark X, Avalon, Camry, Camry Hybrid, Premio, Allion, Avensis, Comfort, Prius, Corolla, Belta, Vios, Solara, Scion tC, MR-S, Blade, Matrix, Auris, Raum, Porte, Ractis, bB, ist, Vitz, Passo, Aygo, Mark II Blit, Caldina, Automotive Passenger vehicles Succeed wagon, Probox Wagon, Estima, Operations Estima Hybrid, Sienna, Isis, Ipsum, Innova, WISH, SIENTA, Avanza, Alphard, Alphard Hybrid, Hiace wagon, Noah, Voxy, Land Cruiser wagon, Sequoia, Hilux Surf, Harrier, Harrier Hybrid, Kluger L, Kluger Hybrid, Fortuner, FJ Cruiser, RAV4, Rush, Volkswagen vehicles, etc. ------------------------------------------------------------------------------------ Succeed Van, Probox Van, Hiace, Regiusace Van, Quick Delivery, Townace, Truck and bus Liteace, Tundra, Tacoma, Hilux, Dyna, Toyoace, Land Cruiser, Coaster, etc. ------------------------------------------------------------------------------------ Parts & components Various units and parts for overseas production for overseas production ------------------------------------------------------------------------------------ Parts Various maintenance parts for both domestic and overseas use -------------------------------------------------------------------------------------------------------------- Financial Services Operations Auto sales financing, leasing, etc. -------------------------------------------------------------------------------------------------------------- Espacio GX, Espacio Mezzo, Espacio EF Urban Wind, Espacio EF3, Espacio EF, Since Aventino, Since AIII, Since BIII, Other Operations Housing Since AII, Since Raison, Since Cada, Since Smart Stage More, Since Smart Stage, Vie a, Vie a mia casa, Vie a Tradage, Crest, T-fine, M&f, NS, DS, ZELK, Season Stage, T Stage, etc. --------------------------------------------------------------------------------------------------------------
* Hino brand products (trucks and buses) and Daihatsu brand products (mini-vehicles and passenger vehicles) are not included in the above table. 8 (7) Main Sites [Toyota] --------------------------------------------------------------------------- Name Location --------------------------------------------------------------------------- Head Office Aichi Prefecture Tokyo Head Office Tokyo Nagoya Office Aichi Prefecture Honsha Plant Aichi Prefecture Motomachi Plant Aichi Prefecture Kamigo Plant Aichi Prefecture Takaoka Plant Aichi Prefecture Miyoshi Plant Aichi Prefecture Tsutsumi Plant Aichi Prefecture Myochi Plant Aichi Prefecture Shimoyama Plant Aichi Prefecture Kinuura Plant Aichi Prefecture Tahara Plant Aichi Prefecture Teiho Plant Aichi Prefecture Hirose Plant Aichi Prefecture Higashi-Fuji Technical Center Shizuoka Prefecture --------------------------------------------------------------------------- [Domestic and overseas subsidiaries] Please see section "(9) Status of Main Subsidiaries." (8) Status of Employees ---------------------------------------------------------------------------- Number of employees Changes from end of prior FY ---------------------------------------------------------------------------- 299,394 +13,417 ---------------------------------------------------------------------------- 9 (9) Status of Main Subsidiaries
------------------------------------------------------------------------------------------------------------------------------------ Capital/ Toyota's ownership Company name Location subscription interest ratio Main business ------------------------------------------------------------------------------------------------------------------------------------ million yen Toyota Financial Services Corporation Aichi Prefecture 78,525 100.00 Management of domestic and overseas financial companies Hino Motors, Ltd. Tokyo 72,717 50.20* Manufacture and sales of automobiles Toyota Motor Kyushu, Inc. Fukuoka Prefecture 45,000 100.00 Manufacture and sales of automobiles Daihatsu Motor Co., Ltd. Osaka Prefecture 28,404 51.32* Manufacture and sales of automobiles Toyota Finance Corporation Tokyo 16,500 100.00* Finance of automobile sales, card business Toyota Auto Body Co., Ltd. Aichi Prefecture 10,371 56.08* Manufacture and sales of automobile bodies Kanto Auto Works, Ltd. Kanagawa Prefecture 6,850 50.46* Manufacture and sales of automobile bodies ------------------------------------------------------------------------------------------------------------------------------------ Currencies in thousands Toyota Motor Engineering & Manufacturing U.S.A. USD 1,958,949 100.00* Management of manufacturing North America, Inc. companies in North America Toyota Motor Manufacturing, Kentucky, Inc. U.S.A. USD 1,180,000 100.00* Manufacture and sales of automobiles Toyota Motor North America, Inc. U.S.A. USD 1,005,400 100.00* Government, public affairs and surveys of overall North America Toyota Motor Credit Corporation U.S.A. USD 915,000 100.00* Finance of automobile sales Toyota Motor Manufacturing, Indiana, Inc. U.S.A. USD 620,000 100.00* Manufacture and sales of automobiles Toyota Motor Sales, U.S.A., Inc. U.S.A. USD 365,000 100.00* Sales of automobiles Toyota Motor Manufacturing Canada, Inc. Canada CAD 680,000 100.00 Manufacture and sales of automobiles Toyota Credit Canada Inc. Canada CAD 60,000 100.00* Finance of automobile sales Toyota Motor Europe NV/SA Belgium EUR 2,443,595 100.00 Management of all European affiliates Toyota Motor Manufacturing France S.A.S. France EUR 380,078 100.00* Manufacture and sales of automobiles Toyota Motor Italia S.p.A. Italy EUR 38,958 100.00* Sales of automobiles Toyota Kreditbank G.m.b.H. Germany EUR 30,000 100.00* Finance of automobile sales Toyota Deutschland G.m.b.H. Germany EUR 5,726 100.00* Sales of automobiles Toyota France S.A. France EUR 2,123 100.00* Sales of automobiles Toyota Motor Finance (Netherlands) B.V. Netherlands EUR 908 100.00* Finance of overseas Toyota related companies Toyota Motor Manufacturing (UK) Ltd. U.K. GBP 300,000 100.00* Manufacture and sales of automobiles Toyota (GB) PLC U.K. GBP 2,600 100.00* Sales of automobiles Toyota Motor Manufacturing Russia Ltd. Russia RUB 29,369 100.00* Sales of automobiles Toyota Motor Manufacturing Turkey Inc. Turkey TRY 150,165 90.00* Manufacture and sales of automobiles Toyota Motor Corporation Australia Ltd. Australia AUD 481,100 100.00 Manufacture and sales of automobiles ------------------------------------------------------------------------------------------------------------------------------------
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------------------------------------------------------------------------------------------------------------------------------------ Company name Location Capital/ Toyota's ownership Main business subscription interest ratio ------------------------------------------------------------------------------------------------------------------------------------ Currencies in thousands Toyota Finance Australia Ltd. Australia AUD 120,000 100.00* Finance of automobile sales Toyota Motor Asia Pacific Pte Ltd. Singapore SGD 6,000 100.00 Sales of automobiles Toyota Motor Thailand Co., Ltd. Thailand THB 7,520,000 86.43 Manufacture and sales of automobiles Toyota Leasing (Thailand) Co., Ltd. Thailand THB 6,000,000 79.17* Finance of automobile sales Toyota do Brasil Ltda. Brazil BRL 709,980 100.00 Manufacture and sales of automobiles Toyota South Africa Motors (Pty) Ltd. South Africa ZAR 50 100.00* Manufacture and sales of automobiles ------------------------------------------------------------------------------------------------------------------------------------
Notes: 1. * Indicates that the ownership interest ratio includes such ratio of the subsidiaries. 2. The ownership interest ratios are calculated based on the total number of shares issued at the end of the fiscal year. 3. On April 1, 2006, Toyota technical center U.S.A, Inc. merged with Toyota Motor North America, Inc.; the newly formed company then officially adopted the name Toyota Motor North America, Inc. 4. On April 1, 2006, Toyota Motor Manufacturing North America, Inc. changed its name to Toyota Motor Engineering & Manufacturing North America, Inc. 11 2. Status of Shares (1) Total Number of Shares Authorized 10,000,000,000 shares (2) Total Number of Shares Issued 3,609,997,492 shares (3) Number of Shareholders 408,504 (4) Shareholders Holding more than One Tenth of the Total Number of Shares Issued (excluding treasury shares) None. 3. Status of Stock Acquisition Rights (1) Status of Stock Acquisition Rights as of the End of FY2007 1) Number of Stock Acquisition Rights issued: 77,638 2) Type and Number of Shares to be Issued or Transferred upon Exercise of Stock Acquisition Rights 7,763,800 shares of common stock of Toyota (The number of shares to be issued or transferred upon exercise of one Stock Acquisition Right is 100) 3) Stock Acquisition Rights held by Toyota's Directors and Corporate Auditors
--------------------------------------------------------------------------------------------------------------------- Series Expiration Date Number of Stock Number of (Exercise price) Acquisition Rights holders --------------------------------------------------------------------------------------------------------------------- 1st (2,958 yen) July 31, 2008 180 5 ------------------------------------------------------------------------------------------------ 2nd (3,116 yen) July 31, 2009 2,254 23 ------------------------------------------------------------------------------------------------ Directors 3rd (4,541 yen) July 31, 2010 2,410 19 ------------------------------------------------------------------------------------------------ 4th (4,377 yen) July 31, 2011 4,400 25 ------------------------------------------------------------------------------------------------ 5th (6,140 yen) July 31, 2014 8,800 25 ---------------------------------------------------------------------------------------------------------------------
Notes: 1. The above includes Stock Acquisition Rights exercisable by directors who retired during the period between the day after the FY2006 Ordinary General Shareholders' Meeting and the end of FY2007. 2. No Stock Acquisition Rights are held by Corporate Auditors. 12 (2) Status of Stock Acquisition Rights Issued During FY2007 1) Number of Stock Acquisition Rights issued: 31,760 2) Type and number of shares to be issued or transferred upon exercise of Stock Acquisition Rights 3,176,000 shares of common stock of Toyota (The number of shares to be issued or transferred upon exercise of one Stock Acquisition Right is 100.) 3) Issue price of Stock Acquisition Rights Stock Acquisition Rights shall be issued without consideration. 4) Amount to be paid upon the exercise of Stock Acquisition Rights 6,140.00yen 5) Conditions of exercise of Stock Acquisition Rights (i) The exercise period of the Stock Acquisition Rights is from August 1, 2008 to July 31, 2014. (ii) Stock Acquisition Right may not be partially exercised. (iii) The grantees of the Stock Acquisition Rights must, at the time of the closing of the Ordinary General Shareholders' Meeting to be held for the last fiscal year ending within two (2) years after the closing of the FY2006 Ordinary General Shareholders' Meeting, be a Director, Managing Officer, employee, etc. of Toyota at the time such rights are granted. (iv) The grantee of the Stock Acquisition Rights may exercise his or her Stock Acquisition Rights for up to two (2) years after the grantee loses his or her position as a Director, Managing Officer or an employee, etc. of Toyota or its affiliate to which the grantee belongs at the time of such rights are granted. However, if the grantee loses such position due to retirement of office or resignation for personal reasons, or removal from office or dismissal, the Stock Acquisition Rights will expire immediately. (v) Stock Acquisition Rights may not be inherited. (vi) Other exercise conditions shall be provided for in "the Contract of Grant of Stock Acquisition Rights" between Toyota and the grantees of the Stock Acquisition Rights. 6) Events and conditions of acquisition of Stock Acquisition Rights by Toyota Stock Acquisition Rights may be acquired by Toyota without consideration, on a date that shall be provided by the Board of Directors, if the Ordinary General Shareholders' Meeting approves a proposal on a merger agreement in which Toyota will be dissolved, or a proposal on a share exchange agreement or a share transfer by which Toyota will become a wholly-owned subsidiary of another company. 13 7) Details of Preferential Conditions Toyota will issue Stock Acquisition Rights without consideration to Directors, Managing Officers and employees, etc., of Toyota and its affiliates. 8) Breakdown of Stock Acquisition Rights granted to Managing Officers, engineers and employees of Toyota, Officers and employees of Toyota's subsidiaries, and employees of Toyota's affiliates
-------------------------------------------------------------------------------------------------------------------------------- Type and number of shares Total number of to be issued or transferred persons in which Number of Stock upon the exercise of Stock Acquisition Acquisition Rights Stock Acquisition Rights Rights were granted (common stock) -------------------------------------------------------------------------------------------------------------------------------- Managing Officers of Toyota 9,800 980,000 shares 49 -------------------------------------------------------------------------------------------------------------------------------- Engineers of Toyota 400 40,000 shares 4 -------------------------------------------------------------------------------------------------------------------------------- Employees of Toyota 9,900 990,000 shares 453 -------------------------------------------------------------------------------------------------------------------------------- Officers and employees of 2,480 248,000 shares 70 Toyota's subsidiaries -------------------------------------------------------------------------------------------------------------------------------- Employees of Toyota's 80 8,000 shares 4 affiliates --------------------------------------------------------------------------------------------------------------------------------
14 4. Status of Directors and Corporate Auditors (1) Directors and Corporate Auditors
------------------------------------------------------------------------------------------------------------- Name Position Main areas of responsibility Other executive duties ------------------------------------------------------------------------------------------------------------- Fujio Cho *Chairman of the - Director of Toyota Motor Board Sales, U.S.A., Inc. - Corporate Auditor of DENSO CORPORATION - Director of Central Japan Railway Company - Director of Toyota Motor Europe NV/SA - Director of Toyota Motor North America, Inc. - Chairman of Japan Automobile Manufacturers Association, Inc. - Director of Sony Corporation ------------------------------------------------------------------------------------------------------------- Katsuhiro *Vice Chairman - Director of Toyota Motor Nakagawa Sales, U.S.A., Inc. - Director of Toyota Motor Europe NV/SA - Director of Toyota Motor North America, Inc. - Corporate Auditor of Shochiku Co., Ltd. - Corporate Auditor of Aichi Steel Corporation ------------------------------------------------------------------------------------------------------------- Katsuaki *President - Director of Mitsubishi UFJ Watanabe Securities Co., Ltd. - Corporate Auditor of KDDI CORPORATION - Corporate Auditor of Toyota Financial Services Corporation - Director of Toyota Motor Sales, U.S.A., Inc. - Director of Toyota Motor Europe NV/SA - Director of Toyota Motor North America, Inc. - Corporate Auditor of Toyota Industries Corporation - Director of Toyota Motor Engineering & Manufacturing North America, Inc. ------------------------------------------------------------------------------------------------------------- Tokuichi *Executive Vice - Global Planning Operations - Chairman of Toyota Motor Uranishi President - Overseas (Americas, Europe Europe NV/SA & Africa, Asia, Oceania & - Director of Toyota Financial Middle East) Services Corporation - The Americas Operations - Director of Toyota Motor Group (Chief Officer) Sales, U.S.A., Inc. - Europe & Africa Operations - Director of Toyota Motor North Group (Chief Officer) America, Inc. -------------------------------------------------------------------------------------------------------------
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------------------------------------------------------------------------------------------------------------- Name Position Main areas of responsibility Other executive duties ------------------------------------------------------------------------------------------------------------- Kazuo Okamoto *Executive Vice - Research & Development (R - Director of TOYOTA BOSHOKU President & D Management, Technical CORPORATION Administration, Design, - Corporate Auditor of Toyoda Product Development, Gosei Co., Ltd. Vehicle Engineering, Motor - Director of Toyota Motor Europe Sports) NV/SA - Technical Administration - Director of Toyota Motor Group (Chief Officer) Engineering & Manufacturing - Design Group (Chief North America, Inc. Officer) - Motorsport Business Management Dept. - Motor Sports Div. ------------------------------------------------------------------------------------------------------------- Kyoji Sasazu *Executive Vice - Global Planning Operations - Director of Toyota Financial President - Japan Sales Operations Services Corporation ------------------------------------------------------------------------------------------------------------- Mitsuo Kinoshita *Executive Vice - Corporate Planning - Director of Toyota Financial President - General Management Services Corporation (General Administration & - Corporate Auditor of Aichi Human Resources, Steel Corporation Accounting, Information - Director of Toyota Motor Sales, Systems) U.S.A., Inc. - Business Development - Director of Toyota Motor - Government & Public Affairs Engineering & Manufacturing - Housing North America, Inc. - General Administration & - Director of Toyota Motor Europe Human Resources Group NV/SA (Chief Officer) o Director of New United Motor - Information System Group Manufacturing, Inc. (Chief Officer) - Director of Aioi Insurance Co., - Global Audit Div. Ltd. - Corporate Planning Div. - Research Div. ------------------------------------------------------------------------------------------------------------- Yoshimi Inaba *Executive Vice - Overseas (China) - Vice Chairman of FAW Toyota President - Customer Service Changchun Engine Co., Ltd. - China Operations Group - Vice Chairman of FAW Toyota (Chief Officer) Motor Sales Co., Ltd. - Chairman of Guangqi Toyota Engine Co., Ltd. - Vice Chairman of Guangzhou Toyota Motor Co., Ltd. - Vice Chairman of Sichuan FAW Toyota Motor Co., Ltd. - Vice Chairman of Tianjin FAW Toyota Motor Engine Co., Ltd. - Vice Chairman of Tianjin FAW Toyota Motor Co., Ltd. - Chairman of Toyota Motor (China), Investment Co., Ltd. ------------------------------------------------------------------------------------------------------------- Takeshi *Executive Vice - Production - Director of Toyota Motor Uchiyamada President - TQM Engineering & Manufacturing - Environmental Affairs North America, Inc. - Chairman of Toyota Motor Technical Center (China) - Director of Toyota Motor Europe NV/SA - Director of JTEKT Corporation -------------------------------------------------------------------------------------------------------------
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------------------------------------------------------------------------------------------------------------- Name Position Main areas of responsibility Other executive duties ------------------------------------------------------------------------------------------------------------- Masatami *Executive Vice - Quality Takimoto President - Research & Development (Power Train, Future Project) - Fuel Cell System Development - Power Train Development Group (Chief Officer) - Fuel Cell System Development Group (Chief Officer) - Future Project Div. ------------------------------------------------------------------------------------------------------------- Akio *Executive Vice - Product Management o Director of New United Motor Toyoda President - IT & ITS Manufacturing, Inc. - Purchasing - Director of Toyota Financial - Quality Services Corporation - IT & ITS Group (Chief - Chairman of Digital Media Asia Officer) Pacific Ltd. - e-TOYOTA Div. - Chairman of Toyota FAW (Tianjin) Dies Co., Ltd. - Vice Chairman of Toyota Motor Technical Center (China) - Director of Toyota Motor Engineering & Manufacturing North America, Inc. - Corporate Auditor of SHIROKI Corporation - Director of Toyota Motor Europe NV/SA - Corporate Auditor of JTEKT Corporation - Corporate Auditor of TOYOTA BOSHOKU CORPORATION ------------------------------------------------------------------------------------------------------------- Tetsuo Hattori Senior Managing - Vehicle Engineering Group - Director of Fine Sinter Co., Director (Chief Officer) Ltd. - CSR & Environmental - Director of Hamamatsu Photonics Affairs Div. K.K. ------------------------------------------------------------------------------------------------------------- Yukitoshi Funo Senior Managing - Chairman of Toyota Motor - Vice President of Calty Design Director North America, Inc. Research Inc. - Chairman of Toyota Motor - Director of Toyota Motor Sales, U.S.A., Inc. Engineering & Manufacturing North America, Inc. - Director of Toyota Motor Credit Corporation - President of Toyota Logistics Services, Inc. - President of Toyota Personal Services U.S.A., Inc. ------------------------------------------------------------------------------------------------------------- Takeshi Suzuki Senior Managing - Business Development Group - Director of Toyota Financial Director (Chief Officer) Services Corporation - Accounting Group (Chief - Corporate Auditor of Toyota Officer) Motor Kyushu, Inc. - Corporate Auditor of Hamamatsu Photonics K.K. - Director of Toyota Motor Credit Corporation -------------------------------------------------------------------------------------------------------------
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---------------------------------------------------------------------------------------------------------------- Name Position Main areas of responsibility Other executive duties ---------------------------------------------------------------------------------------------------------------- Atsushi Niimi Senior Managing - Strategic Production - Chairman of Toyota Motor Director Planning Group (Chief Engineering & Manufacturing Officer) North America, Inc. - Manufacturing Group (Chief - Director of Toyota Motor Officer) Manufacturing Canada Inc. - TQM Promotion Div. - Corporate Auditor of Chuo Spring Co., Ltd. ----------------------------------------------------------------------------------------------------------------- Hajime Wakayama Senior Managing - Purchasing Group (Chief - Corporate Auditor of KYOWA Director Officer) LEATHER CLOTH CO., LTD. ----------------------------------------------------------------------------------------------------------------- Hiroshi Takada Senior Managing - Global Planning Operations Director Group (Chief Officer) - Product Management Div. ----------------------------------------------------------------------------------------------------------------- Teiji Tachibana Senior Managing - Government & Public Affairs - President and Representative Director Group (Chief Officer) Director of Toyota Housing - Housing Group (Chief Corporation Officer) - Director of Misawa Homes - Legal Div. Holdings, Inc. ----------------------------------------------------------------------------------------------------------------- Shinichi Sasaki Senior Managing - Quality Group (Chief Officer) Director ----------------------------------------------------------------------------------------------------------------- Akira Okabe Senior Managing - Asia, Oceania & Middle East - Director of Toyota Motor Director Operations Group (Chief Corporation Australia Ltd. Officer) - Chairman of Toyota Motor Asia Pacific Pte Ltd. ----------------------------------------------------------------------------------------------------------------- Yoshio Shirai Senior Managing - Product Development Group - Corporate Auditor of Toyota Director (Chief Officer) Motor Kyushu, Inc. - R&D Management Div. - TOYOTA Development Center 2 (General Manager) ----------------------------------------------------------------------------------------------------------------- Yoichiro Senior Managing - Japan Sales Operations Ichimaru Director Group (Chief Officer) - Customer Service Operations Group (Chief Officer) ----------------------------------------------------------------------------------------------------------------- Shoji Ikawa Senior Managing - Production Engineering Director Group (Chief Officer) ----------------------------------------------------------------------------------------------------------------- Shoichiro Toyoda Honorary Chairman - Director of DENSO CORPORATION - Corporate Auditor of AISIN SEIKI., LTD. - Director of Toyota Motor Sales, U.S.A., Inc. - Representative Director of Toyota Central R&D Labs., Inc. - Representative Director of Genesis Research Institute, Incorporated - Chairman and Representative Director of Towa Real Estate Co., Ltd. - Director of Nagoya Railroad Co., Ltd. - Director of Toyota Motor Europe NV/SA - Director of Toyota Motor North America, Inc. -----------------------------------------------------------------------------------------------------------------
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------------------------------------------------------------------------------------------------------------- Name Position Main areas of responsibility Other executive duties ------------------------------------------------------------------------------------------------------------- Hiroshi Okuda Senior Advisor - Director of Toyota Motor Sales, U.S.A., Inc. - Director of KDDI CORPORATION - Director of Toyota Motor Europe NV/SA - Director of Toyota Motor North America, Inc. - Corporate Auditor of Toyota Industries Corporation ------------------------------------------------------------------------------------------------------------- Hideaki Miyahara Full-time Corporate Auditor ------------------------------------------------------------------------------------------------------------- Chiaki Yamaguchi Full-time Corporate - Corporate Auditor of Toyota Auditor Financial Services Corporation ------------------------------------------------------------------------------------------------------------- Masaki Full-time Corporate Nakatsugawa Auditor ------------------------------------------------------------------------------------------------------------- Yasutaka Okamura Corporate Auditor - Attorney - Outside Corporate Auditor of Mitsui & Co., Ltd. ------------------------------------------------------------------------------------------------------------- Yoichi Kaya Corporate Auditor - Assistant Director of Research Institute of Innovative Technology for the Earth - Outside Corporate Auditor of Nippon Steel Corporation ------------------------------------------------------------------------------------------------------------- Yoichi Morishita Corporate Auditor - Executive Advisor of Matsushita Electric Industrial Co., Ltd. - Outside Corporate Auditor of Kansai Electric Power Co., Inc. ------------------------------------------------------------------------------------------------------------- Akishige Okada Corporate Auditor - Corporation Advisor of Sumitomo Mitsui Banking Corporation - Outside Director of Sony Corporation - Outside Director of Mitsui & Co., Ltd. - Outside Corporate Auditor of Mitsui Fudosan Co., Ltd. - Outside Director of DAICEL CHEMICAL INDUSTRIES, LTD. -------------------------------------------------------------------------------------------------------------
Notes: 1. * Representative Director 2. Mr. Yasutaka Okamura, Mr. Yoichi Kaya, Mr. Yoichi Morishita, and Mr. Akishige Okada satisfy the qualifications of Outside Corporate Auditors as provided in Article 2, Item 16 of the "Corporation Act." 3. Mr. Shin Kanada resigned on August 31, 2006. 4. The company marked with 'o' operates in the same business category as Toyota. 5. The "other executive duties" are listed chronologically, in principal, based on the dates the executives assumed their present positions. 6. On April 1, 2006, Toyota Technical Center U.S.A., Inc. merged with Toyota Motor North America, Inc. Upon the merger, the newly formed company officially adopted the name Toyota Motor North America, Inc. 7. On April 1, 2006, Toyota Motor Manufacturing North America Inc. changed its name to Toyota Motor Engineering & Manufacturing North America Inc. 19 (2) Compensation to Directors and Corporate Auditors ------------------------------------------------------------------------------- Category Number of persons Compensation (million yen) ------------------------------------------------------------------------------- Directors 25 3,022 ------------------------------------------------------------------------------- Corporate Auditors (incl. Outside Corporate 7 329 Auditors) (4) (94) ------------------------------------------------------------------------------- Total 32 3,352 ------------------------------------------------------------------------------- Notes: 1. The numbers of persons are as of the end of the fiscal year. 2. The compensation includes the following amounts: (1) Executive bonuses (to be decided by the resolution of the FY2007 Ordinary General Shareholders' Meeting to be held on June 22, 2007) (2) Stock option (decided by the resolution of the FY2006 Ordinary General Shareholders' Meeting held on June 23, 2006) (3) Bonus paid to retiring Directors (decided by the resolution of the FY2006 Ordinary General Shareholders' Meeting held on June 23, 2006; to be decided by the resolution of the FY2007 Ordinary General Shareholders' Meeting to be held on June 22, 2007) 3. The Executive bonus and bonus paid to retiring Directors for FY2006 were as follows: (1) Executive bonus (decided by the resolution of the FY2006 Ordinary General Shareholders' Meeting held on June 23, 2006) 727 million yen (2) Bonus paid to retiring Directors (decided by the resolution of the FY2006 Ordinary General Shareholders' Meeting held on June 23, 2006) 71 million yen 20 (3) Status of Outside Corporate Auditors 1) Major activities for FY2007
----------------------------------------------------------------------------------------------------- Name Attendance (total attended/total held) ----------------------------------------------------------------------------------------------------- Yasutaka Okamura Directors' meetings 16/16 Corporate Auditors' meetings 17/17 ----------------------------------------------------------------------------------------------------- Yoichi Kaya Directors' meetings 12/16 Corporate Auditors' meetings 15/17 ----------------------------------------------------------------------------------------------------- Yoichi Morishita Directors' meetings 12/13 Corporate Auditors' meetings 13/13 ----------------------------------------------------------------------------------------------------- Akishige Okada Directors' meetings 12/13 Corporate Auditors' meetings 12/13 -----------------------------------------------------------------------------------------------------
Note: The total numbers of meetings held vary in accordance with the dates of assumption of office. Each Outside Corporate Auditor contributed appropriate opinions based on his experience and insight. 2) Outline of liability limitation agreements Agreements between the Outside Corporate Auditors and Toyota to limit liability as stipulated in Article 423, Paragraph 1 of the Corporation Act, with the liability limited to the amount stipulated in Article 425, Paragraph 1 of the Corporation Act. 21 5. Status of Accounting Auditor (1) Name of temporary Accounting Auditor PricewaterhouseCoopers Aarata (appointed on August 4, 2006) Note: ChuoAoyama PricewaterhouseCoopers (currently Misuzu Audit Corporation), Toyota's former Accounting Auditor, was suspended by the FSA from performing part of its business for two months, from July 1, 2006 to August 31, 2006, and accordingly lost its qualification to work for Toyota as an accounting auditor. As a result, Toyota elected PricewaterhouseCoopers Aarata as a temporary Accounting Auditor for Toyota at the meeting of the Board of Corporate Auditors held on August 4, 2006. (2) Compensation to Accounting Auditor for FY2007 1) Total compensation and other amounts paid by Toyota for the services provided in Article 2, Paragraph 1 of the Certified Public Accountant Law of Japan 1,906 million yen including the amount paid to PricewaterhouseCoopers Aarata 1,858 million yen 2) Total amount of cash and other property benefits paid by Toyota and Toyota's subsidiaries 2,557 million yen including the amount paid to PricewaterhouseCoopers Aarata 2,495 million yen Notes: 1. The amount in 1) above includes compensation for audits performed in compliance with the Securities and Exchange Law, and so on. 2. The amount in 2) above includes compensation for advice and consulting concerning information disclosure that are not included in the services provided in Article 2, Paragraph 1 of the Certified Public Accountant Law of Japan. 3. Kanto Auto Works, Ltd. and main overseas subsidiaries are audited by certified public accountants or audit firms other than PricewaterhouseCoopers Aarata. (3) Policy regarding decisions on the dismissal or non-reappointment of the Accounting Auditor It is a policy of Toyota that, if it is deemed that the Accounting Auditor will have difficulty in conducting an audit appropriately because of the occurrence of an event stipulated in laws or regulations or an event that interferes with the eligibility or independence of the Accounting Auditor, Toyota shall determine whether to dismiss or refrain from reappointing the Accounting Auditor, as needed. 22 6. Basic Policy Regarding the System to Secure the Appropriateness of Business Toyota, together with its subsidiaries, has created and maintained a sound corporate climate based on the "Guiding Principles at Toyota" and the "Toyota Code of Conduct." Toyota integrates the principles of problem identification and continuous improvement into its business operation process and makes continuous efforts to train employees who will put these principles into practice. Accordingly, Toyota has developed the following systems as stipulated in the Corporation Act: (1) System to ensure that the Directors execute their responsibilities in compliance with relevant laws and regulations and the Articles of Incorporation 1) Toyota will ensure that Directors act in compliance with relevant laws and regulations and the Articles of Incorporation, based on the Code of Ethics and other explanatory documents that include necessary legal information, presented on occasions such as trainings for new Directors. 2) Toyota will make decisions regarding business operations after comprehensive discussions at the Board meetings and other meetings of various cross-sectional decision-making bodies. Matters to be decided are properly submitted and discussed at the meetings of those decision-making bodies in accordance with the relevant rules. 3) Toyota will appropriately discuss significant matters and measures relating to issues such as corporate ethics, compliance, and risk management at the Corporate Ethics Committee and other meetings. Toyota will also discuss and decide at the meetings of various cross-sectional decision-making bodies policies and systems to monitor and respond to risks relating to organizational function. (2) System to retain and manage information relating to performance of duties by Directors Information relating to exercising duties by Directors shall be appropriately retained and managed by each division in charge pursuant to the relevant internal rules and laws and regulations. (3) Rules and systems related to the management of risk of loss 1) Toyota will properly manage the capital fund through its budgeting system and other forms of control, conduct business operations, and manage the budget, based on the authorities and responsibilities in accordance with the "Ringi" system (effective consensus-building and approval system). Significant matters will be properly submitted and discussed at the Board meetings and other meetings of various bodies in accordance with the standards stipulated in the relevant rules. 2) Toyota will ensure accurate financial reporting by issuing documentation on the financial flow and the control system etc., and by properly and promptly disclosing information through the Disclosure Committee. 3) Toyota will manage various risks relating to safety, quality, the environment and compliance by establishing rules or preparing and delivering manuals, as necessary, in each relevant division. 4) As a precaution against events such as natural disasters, Toyota will prepare manuals, conduct emergency drills, arrange risk diversification and insurance as needed. 23 (4) System to ensure that Directors exercise their duties efficiently 1) Toyota will manage consistant policies by specifying the policies at each level of the organization based on the medium- to long-term management policies and the Company's policies for each fiscal term. 2) The Chief Officer, as a liaising officer between the management and operational functions, will direct and supervise Managing Officers based on the management policies and delegate the executive authority over each division to the Managing Officers so that flexible and timely decision making can be achieved. 3) Toyota from time to time will make opportunities to listen to the opinions of various stakeholders, including external experts, and reflect those opinions in Toyota's management and corporate activities. (5) System to ensure that employees conduct business in compliance with relevant laws and regulations and the Articles of Incorporation 1) Toyota will clarify the responsibilities of each organization unit and maintain a basis to ensure continuous improvements in the system. 2) Toyota will continuously review the legal compliance and risk management framework to ensure effectiveness. For this purpose, each organization unit shall confirm the effectiveness by conducting self-checks among others, and report the result to the Corporate Ethics Committee. 3) Toyota will promptly obtain information regarding legal compliance and corporate ethics and respond to problems and questions related to compliance through its corporate ethics inquiry office and other channels. (6) System to ensure the appropriateness of business operations of the corporation and the business group consisting of the parent company and subsidiaries 1) Toyota will expand the guiding principles and the code of conduct to its subsidiaries as TMC's common charter of conduct, and develop and maintain a sound environment of internal controls for TMC. Toyota will also promote the guiding principles and the code of conduct through personal exchange. 2) Toyota will manage its subsidiaries in a comprehensive manner by clarifying the roles of the division responsible for the subsidiaries' financing and management and the roles of the division responsible for the subsidiaries' business activities. Those divisions will confirm the appropriateness and legality of the operations of the subsidiaries by exchanging information with those subsidiaries, periodically and as needed. (7) System concerning employees who assist the Corporate Auditors when required Toyota will establish a Corporate Auditors Department and assign a number of full-time staff to support this function. 24 (8) Independence of the employees described in the preceding item (7) from Directors Any changes in personnel in the Corporate Auditors Department will require prior consent of the Board of Corporate Auditors or a full-time Corporate Auditor selected by the Board of Corporate Auditors. (9) System for Directors and employees to report to Corporate Auditors, and other relative systems 1) Directors, from time to time, will properly report to the Corporate Auditors any major business operations through the divisions in charge. If any fact that may cause significant damage to the Company is discovered, they will report the matter to the Corporate Auditors immediately. 2) Directors, Managing Officers, and employees will report to Corporate Auditors on the business upon requests by the Corporate Auditors, periodically and as needed. (10) Other systems to ensure that the Corporate Auditors conducted audits effectively Toyota will ensure that the Corporate Auditors attend major Board meetings, inspect important Company documents, and make opportunities to exchange information between the Corporate Auditors and Accounting Auditor periodically and as needed, as well as appoint external experts. 25
UNCONSOLIDATED BALANCE SHEET (Million yen; amounts less than one million yen are omitted) ------------------------------------------------------------------------------------------------------------------------------- FY2007 FY2007 (As of (As of March 31, 2007) March 31, 2007) ------------------------------------------------------------------------------------------------------------------------------- Assets Liabilities ------------------------------------------------------------------------------------------------------------------------------- Current assets 4,116,670 Current liabilities 2,730,572 ------------------------------------------------------------------------------------------------------------------------------- Cash and deposits 182,855 Trade notes payable 1,227 Trade accounts receivable 1,254,098 Trade accounts payable 1,035,441 Marketable securities 1,011,348 Current portion of bonds 150,000 Finished goods 126,793 Other payables 467,229 Raw materials 46,001 Income taxes payable 283,960 Work in process 97,592 Accrued expenses 549,152 Supplies 8,113 Deposits received 224,038 Short-term loans 541,452 Others 19,523 ------------------------------------------------------------- Deferred income taxes 292,732 Long-term liabilities 779,993 ------------------------------------------------------------- Others 568,682 Bonds 350,000 Less: Allowance for doubtful accounts (13,000) Allowance for retirement benefits 283,032 --------------------------------------------------------------- Fixed assets 6,544,498 Deferred income taxes 103,593 --------------------------------------------------------------- Property, plant and equipment 1,358,160 Others 43,367 ------------------------------------------------------------------------------------------------------------------------------- Buildings 414,044 Total liabilities 3,510,565 ------------------------------------------------------------- Structures 41,316 Net assets ------------------------------------------------------------- Machinery and equipment 331,032 Shareholders' equity 6,593,724 ------------------------------------------------------------- Vehicle and delivery equipment 21,092 Common stock 397,049 ------------------------------------------------------------- Tools, furniture and fixtures 92,957 Capital surplus 417,378 ------------------------------------------------------------- Land 385,450 Capital reserve 416,970 Construction in progress 72,266 Other capital surplus 407 ------------------------------------------------------------------------------------------------------------------------------- Investments and other assets 5,186,338 Retained earnings 7,335,143 ------------------------------------------------------------------------------------------------------------------------------- Investments in securities 2,595,932 Legal reserve 99,454 Investments in subsidiaries and 1,974,239 Other retained earnings 7,235,689 affiliates Reserve for losses on overseas 117 Long-term loans 473,766 investments Others 164,099 Reserve for special depreciation 3,228 Less: Allowance for doubtful accounts (21,700) Reserve for reduction of acquisition 7,554 cost of fixed assets General reserve 5,740,926 Retained earnings carried forward 1,483,862 ------------------------------------------------------------ Less: Treasury stock (1,555,847) ------------------------------------------------------------ Valuation and translation adjustments 555,708 ------------------------------------------------------------ Net unrealized gains on other securities 554,947 Deferred hedge gains or losses 760 ------------------------------------------------------------ Stock acquisition rights 1,171 ------------------------------------------------------------ Total net assets 7,150,603 ------------------------------------------------------------------------------------------------------------------------------- Total assets 10,661,169 Total liabilities and net assets 10,661,169 -------------------------------------------------------------------------------------------------------------------------------
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UNCONSOLIDATED STATEMENT OF INCOME (Million yen; amounts less than one million yen are omitted) ------------------------------------------------------------------------------------------- FY2007 (April 1, 2006 through March 31, 2007) ------------------------------------------------------------------------------------------- Net sales 11,571,834 Cost of sales 9,233,135 Gross profit 2,338,698 Selling, general and administrative expenses 1,187,776 Operating income 1,150,921 Non-operating income 473,937 Interest income 34,045 Dividend income 311,830 Others 128,061 Non-operating expenses 69,665 Interest expenses 11,159 Others 58,505 Ordinary income 1,555,193 Income before income taxes 1,555,193 Income taxes - current 474,600 Income taxes - deferred 20,483 Net income 1,060,109
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UNCONSOLIDATED STATEMENT OF CHANGES IN NET ASSETS FY2007 (April 1, 2006 through March 31, 2007) (Million yen; amounts less than one million yen are omitted) --------------------------------------------------------------------------------------------------------- Shareholders' equity --------------------------------------------------------------------------------------------------------- Capital surplus Retained earnings ------------------------------------------------------------------------------------------------ Other retained earnings ---------------------------------------------------- Reserve for Common Other Total Reserve Reserve reduction Retained Total Stock Capital capital capital Legal for for of earnings retained Reserve surplus surplus Reserve losses on Special acquisition General carried earnings Overseas depre- cost of reserve forward Investments ciation fixed assets --------------------------------------------------------------------------------------------------------------------------------- Balance as of 397,049 416,970 - 416,970 99,454 197 3,196 6,586 5,340,926 1,164,506 6,614,868 March 31, 2006 --------------------------------------------------------------------------------------------------------------------------------- Changes during the fiscal year --------------------------------------------------------------------------------------------------------------------------------- Reversal of reserve for losses on overseas investments (79) 79 --------------------------------------------------------------------------------------------------------------------------------- Appropriation to reserve for special depreciation 830 (830) --------------------------------------------------------------------------------------------------------------------------------- Reversal of reserve for special depreciation (798) 798 --------------------------------------------------------------------------------------------------------------------------------- Appropriation to reserve for reduction of acquisition cost 992 (992) of fixed assets --------------------------------------------------------------------------------------------------------------------------------- Reversal of reserve for reduction of acquisition cost of fixed assets (24) 24 --------------------------------------------------------------------------------------------------------------------------------- Appropriation to 400,000 (400,000) general reserve --------------------------------------------------------------------------------------------------------------------------------- Dividends paid (339,107) (339,107) --------------------------------------------------------------------------------------------------------------------------------- Bonuses to directors (727) (727) and corporate auditors --------------------------------------------------------------------------------------------------------------------------------- Net income 1,060,109 1,060,109 --------------------------------------------------------------------------------------------------------------------------------- Purchase of treasury stock --------------------------------------------------------------------------------------------------------------------------------- Disposal of treasury 407 407 stock --------------------------------------------------------------------------------------------------------------------------------- Net changes of items other than shareholders' equity --------------------------------------------------------------------------------------------------------------------------------- Total changes during - - 407 407 - (79) 31 967 400,000 319,355 720,275 the fiscal year --------------------------------------------------------------------------------------------------------------------------------- Balance as of 397,049 416,970 407 417,378 99,454 117 3,228 7,554 5,740,926 1,483,862 7,335,143 March 31, 2007 ---------------------------------------------------------------------------------------------------------------------------------
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--------------------------------------------------------------------------------------------------------------------------------- Shareholders' equity Valuation and translation adjustments ------------------------------------------------------------------------ Treasury Total Net unrealized Deferred Total valuation Stock Total stock shareholders' gains on hedge gains and translation acquisition net assets equity other securities or losses adjustments rights ----------------------------------------------------------------------------------------------------------------------------------- Balance as of (1,260,148) 6,168,740 518,155 - 518,155 - 6,686,895 March 31, 2006 ----------------------------------------------------------------------------------------------------------------------------------- Changes during the fiscal year ----------------------------------------------------------------------------------------------------------------------------------- Reversal of reserve for losses on overseas investments ----------------------------------------------------------------------------------------------------------------------------------- Appropriation to reserve for special depreciation ----------------------------------------------------------------------------------------------------------------------------------- Reversal of reserve for special depreciation ----------------------------------------------------------------------------------------------------------------------------------- Appropriation to reserve for reduction of acquisition cost of fixed assets ----------------------------------------------------------------------------------------------------------------------------------- Reversal of reserve for reduction of acquisition cost of fixed assets ----------------------------------------------------------------------------------------------------------------------------------- Appropriation to general reserve ----------------------------------------------------------------------------------------------------------------------------------- Dividends paid (339,107) (339,107) ----------------------------------------------------------------------------------------------------------------------------------- Bonuses to directors (727) (727) and corporate auditors ----------------------------------------------------------------------------------------------------------------------------------- Net income 1,060,109 1,060,109 ----------------------------------------------------------------------------------------------------------------------------------- Purchase of treasury (300,233) (300,233) (300,233) stock ----------------------------------------------------------------------------------------------------------------------------------- Disposal of treasury 4,534 4,942 4,942 stock ----------------------------------------------------------------------------------------------------------------------------------- Net changes of items other than shareholders' equity 36,792 760 37,552 1,171 38,724 ----------------------------------------------------------------------------------------------------------------------------------- Total changes during (295,698) 424,984 36,792 760 37,552 1,171 463,708 the fiscal year ----------------------------------------------------------------------------------------------------------------------------------- Balance as of (1,555,847) 6,593,724 554,947 760 555,708 1,171 7,150,603 March 31, 2007 -----------------------------------------------------------------------------------------------------------------------------------
29 NOTES TO UNCONSOLIDATED FINANCIAL STATEMENTS *Amounts less than one million are, in principle, rounded down to the nearest million. [Significant accounting policies] 1. Standards and methods of valuation of assets (1) Standards and methods of valuation of securities Stocks of subsidiaries and affiliates are stated at cost determined using the moving average-method. Other securities: Other securities with fair value are stated at fair value based on the market prices, etc. at the end of each fiscal year. (Differences in valuation are included directly in net assets; costs of securities are calculated using the moving-average method.) Other securities not practicable to estimate their fair value are stated at cost determined using the moving average method. (2) Standards and methods of valuation of inventories Finished goods, work in progress, and supplies are, in principal, stated at cost, as determined by the periodic average method. Raw materials are stated at the lower of cost or market value, as determined by last-in first-out method. 2. Depreciation of property, plant and equipment is computed by the declining balance method. 3. Standard of accounting for reserves (1) Allowance for doubtful accounts: To prepare for losses from bad debt, allowance for doubtful accounts is provided in an amount which is determined by considering the historical loss experience and the collectibility of receivables. (2) Allowance for retirement benefits: Principally to provide for the retirement benefits for employees, including those already retired, allowance for retirement benefits is stated based on estimated retirement benefit obligations and estimated pension assets at the end of the year and an amount incurred is changed to income. 4. Other significant matters pertaining to the preparation of unconsolidated financial statements Consumption taxes are computed based on the net-of-tax method. 30 [Changes in accounting method] Accounting standard for presentation of net assets in the unconsolidated balance sheet Effective from FY2007, the "Accounting Standards for Presentation of Net Assets on the Balance Sheet" (ASBJ Statement No. 5, December 9, 2005) and the "Application Guidelines for Accounting Standards for the Presentation of Net Assets on the Balance Sheet" (ASBJ Guidance No. 8, December 9, 2005) are applied. The amount corresponding to the previous "Shareholders' Equity" is 7,148,672 million yen. [Unconsolidated balance sheet] 1. Assets pledged as collateral and relevant liabilities
-------------------------------------------------------------------------------------------------------------------------------- Assets pledged as collateral Relevant liabilities -------------------------------------------------------------------------------------------------------------------------------- Book value as of the end Balance as of the end Items of the fiscal year Items of the fiscal year (million yen) (million yen) -------------------------------------------------------------------------------------------------------------------------------- Investment in securities 11,335 Security deposit for deferred tax 11,500 payment for imported cargo Security deposit based on the Building Investment in securities 19 Lots and Buildings Transaction Business 20 Law ---------------------------------------------------------------------------------------------------------------------------- Total 11,355 Total 11,520 ---------------------------------------------------------------------------------------------------------------------------- 2. Accumulated depreciation for property, plant and equipment: 3,449,170 million yen 3. Guarantees Guarantees for bank loans of Toyota Motor Manufacturing Turkey Inc. 30,177 million yen Guarantees for bank loans of Toyota Peugeot Citroen Automobile Czech, s.r.o. 33,720 million yen 4. Export bill discounted 5,850 million yen 5. Receivables from and payables to subsidiaries and affiliates Short-term receivables 1,646,174 million yen Long-term receivables 378,157 million yen Short-term payables 1,099,349 million yen 6. The retirement benefit trust is established to appropriate the retirement benefits of the corporate pension plan. No portion of the trust offsets the severance indemnity plan.
31
[Unconsolidated statement of Income] Transactions with subsidiaries and affiliates Net sales 7,964,003 million yen Purchases 5,152,857 million yen Non-operating transactions 493,702 million yen [Unconsolidated statement of changes in net assets] 1. Type and number of treasury stock at the end of FY2007 Common stock 412,060,800 shares 2. Dividends from surplus (1) Cash dividends -------------------------------------------------------------------------------------------------------------------------------- Dividends Resolutions Type of shares Total cash dividends per share Record date Effective date -------------------------------------------------------------------------------------------------------------------------------- Ordinary General Shareholders' Meeting held Common stock 178,296 million yen 55 yen March 31, 2006 June 26, 2006 on June 23, 2006 -------------------------------------------------------------------------------------------------------------------------------- Directors' Meeting held on Common stock 160,810 million yen 50 yen September 30, 2006 November 27, 2006 November 7, 2006 --------------------------------------------------------------------------------------------------------------------------------
(2) Dividends whose record date falls in FY2007 and whose effective date falls in FY2008 Dividends on common stock are proposed for resolution at the General Shareholders' Meeting to be held on June 22, 2007, as follows: Total cash dividends 223,855 million yen Dividend per share 70 yen Record date March 31, 2007 Effective date June 25, 2007 The dividends shall be paid from retained earnings. 3.Types and numbers of shares to be issued or transferred upon the exercise of stock acquisition rights (excluding those whose exercise date has not arrived) at the end of FY2007 Common stock 2,483,800 shares [Tax effect accounting] Significant factors of deferred tax assets are unrealized loss on securities, accrued expenses, and allowance for retirement benefits. Valuation allowance is deducted. The significant factor of deferred tax liabilities is unrealized gains on securities. [Fixed assets used under lease agreements] In addition to fixed assets on the unconsolidated balance sheet, a part of tools, furniture, and fixtures is used under finance lease agreements with the title of lease assets remaining with the lessor. 32
Related-party transactions: --------------------------------------------------------------------------------------------------------------------------------- Transaction Balance as of Voting Description of amount the end of the Category Name Interests Relationship Transaction (million Account title fiscal year yen) (million yen) --------------------------------------------------------------------------------------------------------------------------------- Toyota Motor Equity Sales of Toyota Mainly Trade 302,613 Subsidiary Sales, U.S.A., Indirect products automobile 3,287,374 accounts (Note.3) Inc. 100.00% Concurrent posting sales (Note.3) receivable of directors (Note.1) --------------------------------------------------------------------------------------------------------------------------------- Toyota Motor Equity Sales of Toyota Mainly Trade 116,221 Subsidiary Europe S.A/N.V. Direct products automobile 1,125,136 accounts (Note.3) 100.00% Concurrent posting sales (Note.3) receivable of directors (Note.1) --------------------------------------------------------------------------------------------------------------------------------- Equity Purchase of DENSO Mainly DENSO Direct CORPORATION purchase of Trade Affiliate CORPORATION 24.76% products automobile 893,697 accounts 120,734 Indirect Concurrent posting parts (Note.3) payable (Note.3) 0.17% of directors (Note.1) --------------------------------------------------------------------------------------------------------------------------------- Equity Subsidiary Toyota Finance Indirect Loans from Toyota Loans 272,242 Loans 254,700 Corporation 100.00% (Note.2) (Note.2) --------------------------------------------------------------------------------------------------------------------------------- Toyota Financial Equity Loans from Toyota Loans Subsidiary Services Direct Concurrent posting (Note.2) 4,200 Loans 113,000 Corporation 100.00% of directors ---------------------------------------------------------------------------------------------------------------------------------
Note. 1. Terms of transactions, including price terms, are decided through negotiations with each company. Note. 2. Loans are decided based on the market interest rate at the time the loan is extended. The transaction amount for Toyota Finance Corporation is the mid-term average balance. Note. 3. The transaction amount and trade accounts receivable do not include consumption taxes. Trade accounts payable includes consumption taxes. [Per share information] (Amounts less than the hundredth digit are rounded) Net assets per share 2,235.64 yen Net income per share 330.20 yen 33 Independent Auditor's Report (Certified Copy) (English Translation) May 2, 2007 To the Board of Directors Toyota Motor Corporation PricewaterhouseCoopers Aarata Kouji Hatsukawa, CPA Engagement Partner Yasuo Isobe, CPA Engagement Partner Akihiko Nakamura, CPA Engagement Partner Hitoshi Kiuchi, CPA Engagement Partner We have audited, pursuant to Article 436, Paragraph 2, Item 1 of the Corporation Act of Japan, the unconsolidated financial statements, which consist of the unconsolidated balance sheet, unconsolidated statement of income, unconsolidated statement of changes in net assets and notes to unconsolidated financial statements, and supplementary schedules of Toyota Motor Corporation (hereinafter referred to as the "Company") for the 103rd fiscal year from April 1, 2006 to March 31, 2007. These unconsolidated financial statements and supplementary schedules are the responsibility of the Company's management. Our responsibility is to express an independent opinion on these unconsolidated financial statements and supplementary schedules based on our audit. We conducted our audit in accordance with auditing standards generally accepted in Japan. Those standards require that we obtain reasonable assurance as to whether the unconsolidated financial statements and supplementary schedules are free of material misstatements. An audit is conducted, on a test basis, and includes assessments of the accounting principles used, their application and significant estimates made by management, as well as an evaluation of the overall presentation of the unconsolidated financial statements and supplementary schedules. We believe that our audit provides a reasonable basis for our opinion. It is our opinion that the above unconsolidated financial statements and supplementary schedules are in accordance with corporate accounting standards generally accepted in Japan and present fairly the unconsolidated financial position and results of operation of the Company during the period of the unconsolidated financial statements and supplementary schedules in every significant aspect. We have no interests in or relationships with the Company that we are required to disclose pursuant to the provision of the Certified Public Accountant Law of Japan. 34
CONSOLIDATED BALANCE SHEET (Amounts are rounded to the nearest million yen) ---------------------------------------------------------------------------------------------------------------------------------- FY2007 FY2007 (As of (As of March 31, 2007) March 31, 2007) ---------------------------------------------------------------------------------------------------------------------------------- Assets Liabilities ---------------------------------------------------------------------------------------------------------------------------------- Current assets 11,784,123 Current liabilities 11,767,170 ---------------------------------------------------------------------------------------------------------------------------------- Cash and cash equivalents 1,900,379 Short-term borrowings 3,497,391 Time deposits 26,709 Current portion of long-term debt 2,368,116 Marketable securities 435,463 Accounts payable 2,211,586 Trade accounts and notes receivable, 2,023,818 Other payables 807,481 less allowance for doubtful accounts Accrued expenses 1,668,337 Finance receivables, net 4,036,363 Income taxes payable 421,196 Other receivables 486,170 Other current liabilities 793,063 Inventories 1,803,956 ---------------------------------------------------------------- Deferred income taxes 551,503 Long-term liabilities 8,343,273 Prepaid expenses and other current assets 519,762 ---------------------------------------------------------------- --------------------------------------------------------------- Long-term debt 6,263,585 Noncurrent finance 5,694,733 Accrued pension and severance costs 640,586 receivables, net Deferred income taxes 1,312,400 Other long-term liabilities 126,702 ---------------------------------------------------------------------------------------------------------------------------------- Investments and other assets 7,035,404 Total liabilities 20,110,443 ---------------------------------------------------------------------------------------------------------------------------------- Marketable securities and other 3,829,852 Minority interest in consolidated 628,244 securities investments subsidiaries Affiliated companies 2,058,177 ---------------------------------------------------------------- Employees receivables 96,742 Shareholders' equity Other 1,050,633 ---------------------------------------------------------------- --------------------------------------------------------------- Common stock 397,050 Property, plant and equipment 8,060,519 Additional paid-in capital 497,593 --------------------------------------------------------------- Retained earnings 11,764,713 Land 1,233,137 Accumulated other comprehensive income 701,390 Buildings 3,444,764 Treasury stock, at cost (1,524,654) Machinery and equipment 9,184,751 Vehicle and equipment on operating leases 3,309,337 Construction in progress 349,465 Less-Accumulated depreciation (9,460,935) Total shareholders' equity 11,836,092 ---------------------------------------------------------------------------------------------------------------------------------- Total liabilities, minority interest in Total assets 32,574,779 consolidated subsidiaries and 32,574,779 shareholders' equity ----------------------------------------------------------------------------------------------------------------------------------
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CONSOLIDATED STATEMENT OF INCOME (Amounts are rounded to the nearest million yen) ---------------------------------------------------------------------------------------------------------- FY2007 (April 1, 2006 through March 31, 2007) ---------------------------------------------------------------------------------------------------------- Net revenues: 23,948,091 Sales of products 22,670,097 Financing operations 1,277,994 Costs and expenses: 21,709,408 Cost of products sold 18,356,255 Cost of financing operations 872,138 Selling, general and administrative 2,481,015 Operating income 2,238,683 Other income (expense): 143,833 Interest and dividend income 131,939 Interest expense (49,326) Foreign exchange gain, net 33,005 Other income, net 28,215 Income before income taxes, minority interest and equity in 2,382,516 earnings of affiliated companies Provision for income taxes 898,312 Income before minority interest and equity in earnings of 1,484,204 affiliated companies Minority interest in consolidated subsidiaries (49,687) Equity in earnings of affiliated companies 209,515 Net income 1,644,032 ----------------------------------------------------------------------------------------------------------
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CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY FY2007 (April 1, 2006 through March 31, 2007) (Amounts are rounded to the nearest million yen) ---------------------------------------------------------------------------------------------------------------------------------- Accumulated Common Additional Retained other Treasury Total stock paid-in earnings comprehensive stock, shareholders' capital income at cost equity ---------------------------------------------------------------------------------------------------------------------------------- Balance as of 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 130,746 130,746 adjustments ---------------------------------------------------------------------------------------------------------------------------------- Unrealized gains on securities, net 38,800 38,800 of reclassification adjustments ---------------------------------------------------------------------------------------------------------------------------------- Minimum pension liability adjustments 3,499 3,499 ---------------------------------------------------------------------------------------------------------------------------------- Total comprehensive income: 1,817,077 ---------------------------------------------------------------------------------------------------------------------------------- Adjustment to initially apply FAS 91,029 91,029 No.158 ---------------------------------------------------------------------------------------------------------------------------------- Dividends paid (339,107) (339,107) ---------------------------------------------------------------------------------------------------------------------------------- Purchase and reissuance of common stock (295,699) (295,699) ---------------------------------------------------------------------------------------------------------------------------------- Balance as of March 31, 2007 397,050 497,593 11,764,713 701,390 (1,524,654) 11,836,092 ----------------------------------------------------------------------------------------------------------------------------------
37 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS *Amounts less than one million yen are, in principle, rounded to the nearest million. [Significant matters pertaining to the preparation of consolidated financial statements] 1. Number of consolidated subsidiaries and equity-method affiliates: Toyota has 522 consolidated subsidiaries and 56 equity-method affiliates. 2. Basis of preparation of consolidated financial statements: Pursuant to the provision of Article 148, Paragraph 1 of the Corporation Accounting Regulations, Toyota's consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States (U.S. GAAP). Also, pursuant to Paragraph 1 of the aforementioned provision, certain supplementary materials and notes required under the U.S. GAAP are omitted. 3. Standards and methods of valuation of securities: Available-for-sale is stated at fair value. The acquisition cost of the securities is calculated by the average cost method. 4. Standards and methods of valuation of inventories: Inventory asset's are valued at acquisition cost to the extent it does not exceed market value. The acquisition cost of inventory is calculated by the periodic average method, with the exception of finished products of certain subsidiaries, which are valued by the specific identification method or last-in first-out method. 5. Depreciation of property, plant and equipment / tangible fixed assets: The methods of depreciation used for property, plant and equipment/ tangible fixed assets are primarily the declining balance method for Toyota and its subsidiaries in Japan, and the straight-line method for overseas subsidiaries. 6. Amortization of goodwill and intangible assets: Goodwill and intangible assets with indefinite life are not amortized, but are tested once a fiscal year for impairment whenever events or circumstances indicate that a carrying amount of an asset (asset group) may not be recoverable. Intangible assets with definite life are amortized on a straight-line method. 7. Standard of recording main reserves: Allowance for doubtful accounts and allowance for credit losses: Reserves are recorded based on the frequency and the significance of losses. Severance pay reserves: Calculation of severance pay obligations is conducted based on the average number of years of service, and severance pay reserves are recorded after adjusting pension assets, past service costs, and unrecognized actuarial loss. 38 8. Changes in accounting policy On March 31, 2007, Toyota adopted the U.S. Statement of Financial Accounting Standards No. 158, "Employers' Accounting for Defined Benefit Pension and Other Postretirement Plans." This increased the amount of the "other" item in "investment and other assets" by 142,520 million yen and the amount of "accumulated other comprehensive income" after tax effect adjustment by 91,029 million yen. This has no effect on the net income. [Consolidated Balance Sheet] 1. Allowance for doubtful accounts 58,066 million yen Allowance for credit losses 112,116 million yen 2. Breakdown of accumulated other comprehensive income Foreign currency translation adjustments (40,177) million yen Unrealized gains on securities 658,808 million yen Pension liability adjustments 82,759 million yen 3. Assets pledged as collateral 125,721 million yen 4. Guarantees 1,333,961 million yen [Consolidated Statement of Shareholders' Equity] Total number of shares issued as of March 31, 2007 3,609,997,492 shares [Per share information] (Amounts less than the hundredth digit are rounded) 1. Net assets per share 3,701.17 yen 2. Net income per share Basic 512.09 yen Diluted 511.80 yen
39 Independent Auditor's Report (Certified Copy) (English Translation) May 2, 2007 To the Board of Directors Toyota Motor Corporation PricewaterhouseCoopers Aarata Kouji Hatsukawa, CPA Engagement Partner Yasuo Isobe, CPA Engagement Partner Akihiko Nakamura, CPA Engagement Partner Hitoshi Kiuchi, CPA Engagement Partner We have audited, pursuant to Article 444, Paragraph 4 of the Corporation Act of Japan, the consolidated financial statements, which consist of the consolidated balance sheet, consolidated statement of income, consolidated statement of shareholders' equity, and notes to the consolidated financial statements of Toyota Motor Corporation (hereinafter referred to as the "Company") for the consolidated fiscal year from April 1, 2006 to March 31, 2007. These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an independent opinion on these consolidated financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in Japan. Those standards require that we obtain reasonable assurance as to whether the consolidated financial statements are free of material misstatements. An audit is conducted, on a test basis, and includes assessments of the accounting principles used and significant estimates made by management, as well as an evaluation of the overall presentation of the consolidated financial statements. We believe that our audit provides a reasonable basis for our opinion. It is our opinion that, pursuant to the provision of Article 148, Paragraph 1 of the Corporation Accounting Regulations, the above consolidated financial statements are in accordance with corporate accounting standards generally accepted in the United States (Ref. to Item 2 of the "Significant matters pertaining to the preparation of the consolidated financial statements" in the "Notes to the consolidated financial statements"), and present fairly the consolidated financial position and results of operation of the business group comprised of the Company and its consolidated subsidiaries during the period of the consolidated financial statements in every significant aspect. Additional information: As described in Item 8 of "Significant matters pertaining to the preparation of the consolidated financial statements", effective from this consolidated fiscal year the Company has applied the U.S. Statement of Financial Accounting Standards No. 158, "Employers' Accounting for Defined Benefit Pension and Other Postretirement Plans". We have no interests in or relationships with the Company that we are required to disclose pursuant to the provision of the Certified Public Accountant Law of Japan. 40 Board of Corporate Auditors' Report (Certified Copy) Audit Report The Board of Corporate Auditors has discussed and prepared this Audit Report based on the audit reports prepared by each of the Corporate Auditors pertaining to the conduct of duties by the Directors of Toyota Motor Corporation during FY2007 extending from April 1, 2006 through March 31, 2007, and reports as follows. 1. Method and content of Audit by the Corporate Auditors and the Board of Corporate Auditors (1)Auditing method of the Board of Corporate Auditors The Board of Corporate Auditors determined the auditing policies and audit plan, received a report from each Corporate Auditor on the audit and its results, and received reports from the Directors and senior executives and Accounting Auditor on the execution of their duties. (2)Method and content of Audit by the Corporate Auditors 1) Based on the audit policies and audit plan adopted by the Board of Corporate Auditors, each Corporate Auditor communicated with the Directors and senior executives and other Corporate Auditors, collected information, developed an auditing environment, attended Directors' meetings and other important meetings, and received reports from the Directors and senior executives on the execution of their duties. The Corporate Auditors also reviewed important documents and surveyed operations and assets at the company head office, production facilities, and business offices. The Corporate Auditors exchanged opinions and information with the Directors and senior executives and Corporate Auditors of the subsidiaries, and received reports on business from them, as needed. 2) Concerning the unconsolidated financial statements (unconsolidated balance sheet, unconsolidated statement of income, unconsolidated statement of changes in net assets, and notes to the unconsolidated financial statements) and supplementary schedules and consolidated financial statements (consolidated balance sheet, consolidated statement of income, consolidated statement of shareholders' equity, and notes to the consolidated financial statements), each Corporate Auditor received reports from the Directors and senior executives and received reports from the Accounting Auditor on its audit and the results. The Corporate Auditors also received notice from the Accounting Auditor confirming that the "systems to ensure the appropriate execution of duties by the Accounting Auditor" (as described in each of the items of Article 159 of the Corporation Accounting Regulations) has been properly developed. 2. Result of Audit (1)Audit result concerning the business report and others 1) The business report and supplementary schedules accurately represent the company's situation as required by laws and regulations and the Articles of Incorporation. 2) No irregularity or violation of applicable laws or regulations or the Articles of Incorporation was found with respect to the performance of duties by the Directors. 3) Resolutions of the Board of Directors concerning the internal control system (as stipulated in Article 362, Paragraph 4, Item 6 the Corporation Act of Japan and Article 100, Paragraphs 1 and 3 of the Enforcement Regulations of the Corporation Act) are appropriate. We have nothing to point out concerning the execution of duties by the Directors with respect to the internal control system. (2)Audit results concerning unconsolidated financial statements and supplementary schedules The auditing method of PricewaterhouseCoopers Aarata, the temporary Accounting Auditor, and the results of the audit, are appropriate. (3)Audit results of consolidated financial statements The auditing method of PricewaterhouseCoopers Aarata, the temporary Accounting Auditor, and the results of the audit, are appropriate. May 8, 2007 Toyota Motor Corporation Board of Corporate Auditors Full-time Corporate Auditor Hideaki Miyahara Outside Corporate Auditor Yasutaka Okamura Full-time Corporate Auditor Chiaki Yamaguchi Outside Corporate Auditor Yoichi Kaya Full-time Corporate Auditor Masaki Nakatsugawa Outside Corporate Auditor Yoichi Morishita Outside Corporate Auditor Akishige Okada
41 Reference Documents Proposed resolutions and reference matters Proposed Resolution 1: Distribution of Dividends from Surplus We propose the distribution of dividends from surplus as follows: 1. Year-end Dividends We would like to offer a year-end dividend of 70 yen per share. Combined with the interim dividend, the total amount of the annual dividends for the fiscal year ended March 31, 2007 will be 120 yen per share, and the consolidated payout ratio will be 23.4 %. (1) Type of dividend assets Cash (2) Allocation of dividend assets and the total amount of dividends Payment of 70 yen per share of common stock (Total amount of dividends: 223,855,568,440 yen) (3) Effective date of dividends from surplus June 25, 2007 2. Appropriation of Surplus (1) Account item of surplus to be increased and its amount General reserve 600,000,000,000 yen (2) Account item of surplus to be decreased and its amount Retained earnings carried forward 600,000,000,000 yen 42 Proposed Resolution 2: Election of 30 Directors All Directors will retire upon the expiration of their term of office at the conclusion of this General Shareholders' Meeting. Accordingly, we hereby request that 30 Directors be elected. The candidates for the positions of Director are as follows:
Following are the nominees ---------------------------------------------------------------------------------------------------------------------------------- No. of no. Name Position and main Brief career summary and representative Toyota's (birth date) areas of responsibility positions in other organizations shares at Toyota owned ---------------------------------------------------------------------------------------------------------------------------------- Chairman of Apr. 1960 Joined Toyota the Board Sep. 1988 Director of Toyota Dec. 1988 Toyota Motor Manufacturing, U.S.A., Inc. President Sep. 1994 Managing Director of Toyota 1* Fujio Cho Oct. 1994 Retired from Toyota Motor 36,905 (2/2/1937) Manufacturing, U.S.A., Inc. President Jun. 1996 Senior Managing Director of Toyota Jun. 1998 Executive Vice President of Toyota Jun. 1999 President of Toyota Jun. 2005 Vice Chairman of Toyota Jun. 2006 Chairman of Toyota (other executive duties) Chairman of Japan Automobile Manufacturers Association, Inc. ---------------------------------------------------------------------------------------------------------------------------------- Vice Chairman Apr. 1965 Joined Ministry of International Trade and Industry Jul. 1997 Ministry of International Trade and Industry Vice-Minister for International Affairs Jun. 1998 Retired from Ministry of International Katsuhiro Trade and Industry Vice-Minister for 2* Nakagawa International Affairs 26,800 (3/11/1942) Jun. 2001 Managing Director of Toyota Jun. 2002 Senior Managing Director of Toyota Jun. 2003 Executive Vice President of Toyota Jun. 2004 Vice Chairman of Toyota ---------------------------------------------------------------------------------------------------------------------------------- President Apr. 1964 Joined Toyota Sep. 1992 Director Jun. 1997 Managing Director of Toyota 3* Katsuaki Watanabe Jun. 1999 Senior Managing Director of Toyota 28,871 (2/13/1942) Jun. 2001 Executive Vice President of Toyota Jun. 2005 President of Toyota ----------------------------------------------------------------------------------------------------------------------------------
43
---------------------------------------------------------------------------------------------------------------------------------- No. of no. Name Position and main Brief career summary and representative Toyota's (birth date) areas of responsibility positions in other organizations shares at Toyota owned ---------------------------------------------------------------------------------------------------------------------------------- Executive Apr. 1966 Joined Toyota Vice President Jun. 1996 Director of Toyota Jun. 2001 Managing Director of Toyota - Global Planning Jun. 2003 Senior Managing Director of Toyota Tokuichi Operations Jun. 2005 Executive Vice President of Toyota 4* Uranishi - Overseas (Americas, 24,633 (5/3/1942) Europe & Africa, Asia, Oceania & Middle East) (other executive duties) - The Americas Operations Chairman of Toyota Motor Europe NV/SA Group - Europe & Africa Operations Group ---------------------------------------------------------------------------------------------------------------------------------- Executive Apr. 1967 Joined Toyota Vice President Jun. 1996 Director of Toyota Jun. 2001 Managing Director of Toyota - Research & Development Jun. 2003 Senior Managing Director of Toyota (R & D Management, Jun. 2005 Executive Vice President of Toyota Technical Administration, Kazuo Design, Product 5* Okamoto Development, Vehicle 17,564 (2/20/1944) Engineering, Motor Sports) - Technical Administration Group - Design Group - Motorsport Business Management Dept. - Motor Sports Div. ---------------------------------------------------------------------------------------------------------------------------------- Executive Apr. 1967 Joined Toyota Motor Sales Vice President Co., Ltd. Jun. 1997 Director of Toyota 6* Kyoji Sasazu - Global Planning Jun. 2001 Managing Director of Toyota 24,892 (6/11/1944) Operations Jun. 2003 Senior Managing Director of Toyota - Japan Sales Operations Jun. 2005 Executive Vice President of Toyota ---------------------------------------------------------------------------------------------------------------------------------- Executive Apr. 1968 Joined Toyota Vice President Jun. 1997 Director of Toyota Jun. 2001 Managing Director of Toyota - Corporate Planning Jun. 2003 Senior Managing Director of Toyota - General Management Jun. 2005 Executive Vice President of Toyota (General Administration & Human Resources, Accounting, Information Systems) Mitsuo - Business Development 7* Kinoshita - Government & Public 24,070 (1/1/1946) Affairs - Housing - General Administration & Human Resources Group - Information System Group - Global Audit Div. - Corporate Planning Div. - Research Div. ----------------------------------------------------------------------------------------------------------------------------------
44
---------------------------------------------------------------------------------------------------------------------------------- No. of no. Name Position and main Brief career summary and representative Toyota's (birth date) areas of responsibility positions in other organizations shares at Toyota owned ---------------------------------------------------------------------------------------------------------------------------------- Executive Apr. 1969 Joined Toyota Vice President Jun. 1998 Director of Toyota - Production Jun. 2001 Managing Director of Toyota Takeshi - TQM Jun. 2003 Senior Managing Director of Toyota 8* Uchiyamada - Environmental Affairs Jun. 2005 Executive Vice President of Toyota 24,464 (8/17/1946) (other executive duties) Chairman of Toyota Motor Technical Center (China) ---------------------------------------------------------------------------------------------------------------------------------- Executive Apr. 1970 Joined Toyota Vice President Jun. 1999 Director of Toyota Jun. 2002 Managing Director of Toyota - Quality Jun. 2003 Senior Managing Director of Toyota - Research & Development Jun. 2005 Executive Vice President of Toyota (Power Train, Future Masatami Project) 9* Takimoto - Fuel Cell System 25,700 (1/13/1946) Development - Power Train Development Group - Fuel Cell System Development Group - Future Project Div. ---------------------------------------------------------------------------------------------------------------------------------- Executive Apr. 1984 Joined Toyota Vice President Jun. 2000 Director of Toyota Jun. 2002 Managing Director of Toyota - Product Management Jun. 2003 Senior Managing Director of Toyota Akio - IT & ITS Jun. 2005 Executive Vice President of Toyota 10* Toyoda - Purchasing (5/3/1956) - Quality 4,560,891 - IT & ITS Group - e-TOYOTA Div. (other executive duties) Chairman of Digital Media Asia Pacific Ltd. Chairman of Toyota FAW (Tianjin) Dies Co., Ltd. Vice Chairman of Toyota Motor Technical Center (China) ----------------------------------------------------------------------------------------------------------------------------------
45
---------------------------------------------------------------------------------------------------------------------------------- No. of no. Name Position and main Brief career summary and representative Toyota's (birth date) areas of responsibility positions in other organizations shares at Toyota owned ---------------------------------------------------------------------------------------------------------------------------------- Senior Apr. 1970 Joined Toyota Motor Sales Managing Director Co., Ltd. - Chairman of Toyota Motor Jun. 2000 Director of Toyota North America, Inc. Jun. 2003 Managing Officer of Toyota - Chairman of Toyota Jun. 2003 Toyota Motor Sales, U.S.A., Inc. Motor Sales, U.S.A., Inc. President Jun. 2004 Director of Toyota Jun. 2005 Senior Managing Director of Toyota Yukitoshi Jun. 2005 Toyota Motor Sales, U.S.A., Inc. 11* Funo Chairman 19,248 (2/1/1947) May 2006 Toyota Motor North America, Inc. Chairman (other executive duties) Vice President of Calty Design Research Inc. President of Toyota Logistics Services, Inc. President of Toyota Personal Services U.S.A., Inc. Chairman of Toyota Motor Sales, U.S.A., Inc. Chairman of Toyota Motor North America, Inc. ---------------------------------------------------------------------------------------------------------------------------------- Senior Apr. 1970 Joined Toyota Motor Sales Managing Director Co., Ltd. Takeshi Jun. 2000 Director of Toyota 12* Suzuki - Business Development Jun. 2003 Managing Officer of Toyota 12,076 (11/18/1947) Group Jun. 2004 Senior Managing Director of Toyota - Accounting Group ---------------------------------------------------------------------------------------------------------------------------------- Senior Apr. 1971 Joined Toyota Managing Director Jun. 2000 Director of Toyota - Strategic Production Jun. 2002 Toyota Motor Manufacturing North Planning Group America, Inc. President - Manufacturing Group Jun. 2003 Managing Officer of Toyota - TQM Promotion Div. Jun. 2004 Director of Toyota Jun. 2005 Retired from Toyota Motor 13* Atsushi Niimi Manufacturing North America, Inc. 20,938 (7/30/1947) President Jun. 2005 Senior Managing Director of Toyota (other executive duties) Chairman of Toyota Motor Engineering & Manufacturing North America, Inc. (Apr. 2006 The company's name was changed from Toyota Motor Manufacturing North America, Inc.) ----------------------------------------------------------------------------------------------------------------------------------
46
---------------------------------------------------------------------------------------------------------------------------------- No. of no. Name Position and main Brief career summary and representative Toyota's (birth date) areas of responsibility positions in other organizations shares at Toyota owned ---------------------------------------------------------------------------------------------------------------------------------- Senior Apr. 1969 Joined Toyota Motor Sales Managing Director Co., Ltd. Jun. 2001 Director of Toyota 14* Hiroshi - Global Planning Jun. 2003 Managing Officer of Toyota 8,850 (12/22/1946) Operations Group Jun. 2005 Senior Managing Director of Toyota - Product Management Div. ---------------------------------------------------------------------------------------------------------------------------------- Senior Apr. 1969 Joined Toyota Managing Director Jun. 2001 Director of Toyota Jun. 2003 Managing Officer of Toyota - Government & Public Jun. 2005 Senior Managing Director of Toyota Teiji Affairs Group 15* Tachibana - Housing Group 10,900 (1/18/1947) - Legal Div. (other executive duties) President of Toyota Housing Corporation ---------------------------------------------------------------------------------------------------------------------------------- Senior Apr. 1970 Joined Toyota Managing Director Jun. 2001 Director of Toyota Jun. 2003 Managing Officer of Toyota - Quality Group Jun. 2004 Toyota Motor Engineering & Manufacturing Europe NV/SA President Jun. 2005 Senior Managing Director of Toyota Shinichi Oct. 2005 Toyota Motor Europe NV/SA, 16* Sasaki Toyota Motor Marketing 8,010 (12/18/1946) Europe NV/SA and Toyota Motor Engineering & Manufacturing Europe NV/SA merged under the name Toyota Motor Europe NV/SA Oct. 2005 Toyota Motor Europe NV/SA President Jul. 2006 Retired from Toyota Motor Europe NV/SA President ---------------------------------------------------------------------------------------------------------------------------------- Senior Apr. 1971 Joined Toyota Motor Sales Managing Director Co., Ltd. Jun. 2001 Director of Toyota 17* Akira Okabe - Asia, Oceania & Middle Jun. 2003 Managing Officer of Toyota 20,000 (9/17/1947) East Operations Group Jun. 2005 Senior Managing Director of Toyota (other executive duties) Chairman of Toyota Motor Asia Pacific Pte Ltd. ---------------------------------------------------------------------------------------------------------------------------------- Senior Jul. 1971 Joined Toyota Motor Sales Managing Director Co., Ltd. Yoichiro Jun. 2001 Director of Toyota 18* Ichimaru - Japan Sales Operations Jun. 2003 Managing Officer of Toyota 17,468 (10/10/1948) Group Jun. 2005 Senior Managing Director of Toyota - Customer Service Operations Group ----------------------------------------------------------------------------------------------------------------------------------
47
---------------------------------------------------------------------------------------------------------------------------------- No. of no. Name Position and main Brief career summary and representative Toyota's (birth date) areas of responsibility positions in other organizations shares at Toyota owned ---------------------------------------------------------------------------------------------------------------------------------- Senior Apr. 1975 Joined Toyota Managing Director Jun. 2001 Director of Toyota 19* Shoji Ikawa Jun. 2003 Managing Officer of Toyota 24,136 (9/1/1949) - Production Engineering Jun. 2005 Senior Managing Director of Toyota Group ---------------------------------------------------------------------------------------------------------------------------------- Honorary Chairman Jul. 1952 Joined Toyota Jul. 1952 Director of Toyota Jan. 1961 Managing Director of Toyota Oct. 1967 Senior Managing Director of Toyota Dec. 1972 Executive Vice President of Toyota Jun. 1981 Director of Toyota Jun. 1981 Toyota Motor Sales Co., Ltd. President Shoichiro Jul. 1982 President of Toyota 20* Toyoda Sep. 1992 Chairman of Toyota 11,172,193 (2/27/1925) Jun. 1999 Honorary Chairman and Director of Toyota (other executive duties) Representative Director of Toyota Central R&D Labs., Inc. Representative Director of Genesis Research Institute, Incorporated Chairman of Towa Real Estate Co., Ltd. ---------------------------------------------------------------------------------------------------------------------------------- Senior Advisor Apr. 1955 Joined Toyota Motor Sales Co., Ltd. Jul. 1982 Director of Toyota Sep. 1987 Managing Director of Toyota Hiroshi Sep. 1988 Senior Managing Director of Toyota 21* Okuda Sep. 1992 Executive Vice President of Toyota 64,963 (12/29/1932) Aug. 1995 President of Toyota Jun. 1999 Chairman of Toyota Jun. 2006 Senior Advisor of Toyota ---------------------------------------------------------------------------------------------------------------------------------- Apr. 1973 Joined Toyota Jun. 2002 Director of Toyota Jun. 2003 Managing Officer of Toyota 22 Koichi Ina -- 20,900 (5/6/1948) (other executive duties) Chairman of Siam Toyota Manufacturing Co., Ltd Chairman of Toyota Autoparts Philippines Inc. ---------------------------------------------------------------------------------------------------------------------------------- 23 Takeshi Yoshida -- Apr. 1974 Joined Toyota 14,133 (3/21/1949) Jun. 2003 Managing Officer of Toyota ----------------------------------------------------------------------------------------------------------------------------------
48
---------------------------------------------------------------------------------------------------------------------------------- No. of no. Name Position and main Brief career summary and representative Toyota's (birth date) areas of responsibility positions in other organizations shares at Toyota owned ---------------------------------------------------------------------------------------------------------------------------------- 24 Shinzo Kobuki -- Apr. 1972 Joined Toyota 21,300 (3/8/1950) Jun. 2003 Managing Officer of Toyota ---------------------------------------------------------------------------------------------------------------------------------- Apr. 1970 Joined Toyota Jun. 2003 Managing Officer of Toyota Aug. 2003 Toyota Motor Technical Center (China) President 25 Akira Sasaki -- 6,600 (2/26/1948) (other executive duties) Chairman of Tianjin Toyota Forging Co., Ltd. Chairman of Tianjin Fengjin Auto Parts Co., Ltd. President of Toyota Motor Technical Center (China) ---------------------------------------------------------------------------------------------------------------------------------- Apr. 1972 Joined Toyota Motor Sales Co., Ltd. Hiroshi Jun. 2003 Managing Officer of Toyota 26 Kawakami -- 13,200 (5/3/1949) (other executive duties) President of J-TACS Corp. ---------------------------------------------------------------------------------------------------------------------------------- Apr. 1973 Joined Toyota Motor Sales Co., Ltd. Jun. 2003 Managing Officer of Toyota Jun. 2003 Toyota Motor Marketing Europe NV/SA President Oct. 2005 Toyota Motor Europe NV/SA, Toyota Motor Marketing Tadashi -- Europe NV/SA and Toyota Motor 27 Arashima Engineering & Manufacturing 20,781 (8/14/1949) Europe NV/SA merged under the name Toyota Motor Europe NV/SA Oct. 2005 Toyota Motor Europe NV/SA Executive Vice President Jul. 2006 Toyota Motor Europe NV/SA President (other executive duties) Vice Chairman of Bauda AS President of Toyota Motor Europe NV/SA ---------------------------------------------------------------------------------------------------------------------------------- 28 Mamoru Furuhashi -- Apr. 1973 Joined Toyota 10,000 (1/3/1950) Jun. 2003 Managing Officer of Toyota ----------------------------------------------------------------------------------------------------------------------------------
49
---------------------------------------------------------------------------------------------------------------------------------- No. of no. Name Position and main Brief career summary and representative Toyota's (birth date) areas of responsibility positions in other organizations shares at Toyota owned ---------------------------------------------------------------------------------------------------------------------------------- Apr. 1974 Joined Toyota Motor Sales Co., Ltd. Satoshi Jun. 2003 Managing Officer of Toyota 29 Ozawa -- 15,200 (8/5/1949) (other executive duties) President of TOYOTA Personal Support Co., Ltd. President of OJT Solutions Co., Ltd. ---------------------------------------------------------------------------------------------------------------------------------- Apr. 1970 Joined Toyota Motor Sales, U.S.A., Inc. Dec. 2000 Toyota Motor Sales, U.S.A., Inc. Executive Vice President and Chief Operating Officer Jun. 2003 Managing Officer of Toyota 30 James E. Press -- Jun. 2005 Toyota Motor Sales, U.S.A., Inc. 0 (10/4/1946) President May 2006 Toyota Motor North America, Inc. President Jun. 2006 Retired from Toyota Motor Sales, U.S.A., Inc. President (other executive duties) President of Toyota Motor North America, Inc. ---------------------------------------------------------------------------------------------------------------------------------- Note: * indicates current Director of Toyota.
50 Proposed Resolution 3: Election of 4 Corporate Auditors Corporate Auditors Mr. Hideaki Miyahara, Mr. Chiaki Yamaguchi, Mr. Yasutaka Okamura and Mr. Yoichi Kaya will retire upon the expiration of their terms of office at the conclusion of this General Shareholders' Meeting. Accordingly, we request that 4 Corporate Auditors be elected. The candidates for Corporate Auditors are as follows. The proposal of this resolution at this General Shareholders' Meeting has been approved by the Board of Corporate Auditors.
Following are the nominees ---------------------------------------------------------------------------------------------------------------------------------- No. of no. Name Position and main Brief career summary Toyota's (birth date) areas of responsibility shares at Toyota owned ---------------------------------------------------------------------------------------------------------------------------------- Chiaki Yamaguchi Full-time Corporate Auditor Apr. 1972 Joined Toyota Motor Sales 1* (12/25/1949) Co., Ltd. 5,000 Jun. 2003 Toyota's Full-time Corporate Auditor ---------------------------------------------------------------------------------------------------------------------------------- Outside Corporate Auditor Apr. 1998 Research Institute of Innovative Yoichi Kaya Technology for the Earth Assistant 0 2* (5/18/1934) Director Jun. 2003 Toyota's Outside Corporate Auditor ---------------------------------------------------------------------------------------------------------------------------------- -- Jun. 2004 Supreme Public Prosecutors Office Kunihiro Matsuo Prosecutor-General 3 (9/13/1942) Jun. 2006 Retired from Supreme Public Prosecutors 0 Office Prosecutor-General Sep. 2006 Registered as Attorney ---------------------------------------------------------------------------------------------------------------------------------- Yoshikazu Amano -- Apr. 1972 Joined Toyota 4 (3/11/1949) Jun. 2002 Director of Toyota 17,268 Jun. 2003 Managing Officer of Toyota ----------------------------------------------------------------------------------------------------------------------------------
Notes: 1. * Indicates the current Corporate Auditors of Toyota. 2. Matters related to the candidates for outside corporate auditors are as follows: (1) Mr. Yoichi Kaya and Mr. Kunihiro Matsuo are candidates for outside corporate auditors. (2) Reasons for nomination for outside corporate auditors Mr. Yoichi Kaya and Mr. Kunihiro Matsuo have not been directly involved in the management of corporations, but we consider that both of them will adequately execute their duties as outside corporate auditors with their broad experience and insights in their specialized fields. (3) Mr. Yoichi Kaya has been an outside corporate auditor of Nippon Steel Corporation, a company which received cease-and-desist recommendations from the Fair Trade Commission of Japan in accordance with the Japanese Antimonopoly Act with regard to its transaction of stainless cold-rolled steel sheet and steel bridge projects. Following these incidents, Mr. Kaya, as a corporate auditor of the said corporation, strongly requested the directors to review its compliance with the Antimonopoly Act and to take measures to prevent recurrence. He has since been auditing compliance with laws and regulations by directors and others. (4) Number of years in office as an Outside Corporate Auditor (at the conclusion of this General Shareholders' Meeting) Mr. Yoichi Kaya 4 years (5) Liability limitation agreement An agreement to limit the liability as stipulated in Article 423, Paragraph 1 of the Corporation Act was concluded between Mr. Yoichi Kaya and Toyota, with the total liability limit stipulated in Article 425, Paragraph 1 of the Corporation Act. An agreement of the same kind will be concluded between Mr. Kunihiro Matsuo and Toyota upon the approval of his election in this proposed resolution. 51 Proposed Resolution 4: Election of Accounting Auditors ChuoAoyama PricewaterhouseCoopers (currently, MISUZU Audit Corporation), which was formerly the Accounting Auditor of Toyota, was ordered by the Financial Services Agency to suspend its business for a period of two months from July 1, 2006 to August 31, 2006 and lost its qualification as an accounting auditor. Accordingly, pursuant to the resolution adopted at the meeting of the Board of Corporate Auditors held on August 4, 2006, Toyota elected PricewaterhouseCoopers Aarata as its temporary Accounting Auditor under the Corporation Act of Japan and it has been the temporary Accounting Auditor up to present. Taking into account the quality, independence and continuity of the audit as well as the efficiency of PricewaterhouseCoopers Aarata, Toyota considers PricewaterhouseCoopers Aarata eligible to be its Accounting Auditor. Accordingly, we ask for the election of PricewaterhouseCoopers Aarata as its Accounting Auditor. The proposal of this resolution at this General Shareholders' Meeting has been approved by the Board of Corporate Auditors. The candidate for the Accounting Auditor is as follows: Name: PricewaterhouseCoopers Aarata Office: (Location of the main office) East Tower, Sumitomo Fudosan Mita Twin Building, 2-8, Shibaura 4-chome, Minato-ku, Tokyo History: Established on June 1, 2006 Business operations commenced on July 1, 2006 Profile: Capital 514 million yen Partners 90 CPAs and Assistant CPAs 485 U.S. CPAs and other professionals 473 Office Clerks 101 ---------------------------------------------------- Total 1,149 Number of corporate clients 842 52 Proposed Resolution 5: Issue of Stock Acquisition Rights without Consideration to Directors, Managing Officers and Employees, etc., of Toyota and its Affiliates Pursuant to Articles 236, 238, and 239 of the Corporation Act, we request authorization for the board of directors to issue Stock Acquisition Rights (stock options) without consideration, for the purpose of granting stock options, to directors, managing officers, employees, and other persons in similar positions at Toyota and its affiliates and to determine the terms and conditions of such grants as described below. Stock acquisition rights granted to directors of Toyota without consideration constitute non-monetary compensation of indeterminable value to directors. Consequently, we also request approval of the method of calculating the value of Stock Acquisition Rights allotted to the board as remuneration, etc. In the event Proposed Resolution 2 (Election of 30 Directors) is approved, the number of directors eligible for stock acquisition rights will be 30, and the number of stock acquisition rights granted to directors of Toyota will be limited to 10,200. 1. Reason for Issue of Stock Acquisition Rights without Consideration Toyota will issue Stock Acquisition Rights to Directors, Managing Officers and employees, etc. of Toyota and its affiliates in order to enhance enthusiasm and raise morale for improving business performance and thereby contribute to strengthening Toyota's international competitiveness. 2. Summary of Terms of Issue of Stock Acquisition Rights (1) Grantees of the Stock Acquisition Rights Directors, Managing Officers and employees, etc., of Toyota and its affiliates. (2) Type and Number of Shares to be Issued or Transferred upon Exercise of Stock Acquisition Rights Up to 3,500,000 shares of common stock of Toyota. Provided, however, that if the number of shares to be issued or transferred upon exercise of each Stock Acquisition Right is adjusted in accordance with (3) below, such number of shares to be issued or transferred shall be adjusted to the number obtained by multiplying the number of shares after adjustment by the total number of Stock Acquisition Rights to be offered. (3) Total Number of Stock Acquisition Rights Up to 35,000 The number of shares for purposes of Stock Acquisition Rights (the "Number of Shares Granted") shall be 100; provided, however, that if Toyota splits its shares (including the allotment of common stock to shareholders without consideration; hereinafter the same shall apply) or consolidates its shares after the allotment date of the Stock Acquisition Rights, the number of shares to be issued or transferred upon exercise of each Stock Acquisition Right shall be adjusted according to the following formula. Number of shares after = Number of shares x Ratio of split adjustment before adjustment (or consolidation)
The adjustment above shall be made only to the unexercised rights remaining at the relevant time. 53 If any fraction less than one (1) share arises as a result of such adjustment, such fraction shall be discarded. (4) Amount Paid for Issuance of Stock Acquisition Rights With respect to Stock Acquisition Rights for which the authority to determine the terms and conditions of the offering is delegated to the Board of Directors, in accordance with the resolution of this year's Ordinary General Shareholders' Meeting, no monetary payment shall be required. (5) Amount of Assets to be Paid upon Exercise of Stock Acquisition Rights The amount of assets to be paid upon exercise of each Stock Acquisition Right shall be the amount obtained by multiplying the amount to be paid per share issued or transferred upon exercise of Stock Acquisition Rights (the "Exercise Price") by the Number of Shares Granted. The Exercise Price shall be as follows. The amount obtained by multiplying the closing price of Toyota's common stock in regular trading on the Tokyo Stock Exchange on the allotment date of the Stock Acquisition Rights (if there is no transaction made on that day, then the closing price of the latest date prior to the allotment date of the Stock Acquisition Rights on which a transaction was made) by 1.025, and any fraction less than one (1) yen arising therefrom shall be rounded up to the nearest one (1) yen. In addition, the Exercise Price shall be adjusted as follows: (i) If Toyota splits or consolidates its shares after the allotment date of the Stock Acquisition Rights, the Exercise Price shall be adjusted according to the following formula, and any fraction less than one (1) yen arising therefrom shall be rounded up to the nearest one (1) yen. 1 Exercise Price = Exercise Price x ------------------------ after adjustment before adjustment Ratio of split (or consolidation)
(ii)If Toyota issues common stock or sells treasury stock of the common stock at a price below the market price after the allotment date of the Stock Acquisition Rights, the Exercise Price shall be adjusted according to the following formula, and any fraction less than one (1) yen arising therefrom shall be rounded up to the nearest one (1) yen. No adjustment shall be made, however, in the event that Stock Acquisition Rights are exercised. Amount to be Number of shares paid newly issued X per share Number of + ---------------------------------------------- Exercise Price = Exercise Price X outstanding shares Market price after adjustment before adjustment ------------------------------------------------------------------------ Number of + Number of shares newly issued outstanding shares
"Number of outstanding shares" provided for in the above formula does not include the number of shares held by Toyota as treasury stock and in the case where the treasury stock is to be sold "Number of shares newly issued" shall be read as "Number of shares of treasury stock to be sold." 54 (iii)In the event that other class of stock is allotted without consideration to the holders of common stock, shares of another company are delivered to the holders of common stock of Toyota as dividends, or in any other similar instance where an adjustment of the Exercise Price is required, in each case after the allotment date of the Stock Acquisition Rights, an appropriate adjustment shall be made to the extent reasonable. (6) Exercise Period of the Stock Acquisition Rights From August 1, 2009 to July 31, 2015 (7) Conditions of Exercise of Stock Acquisition Rights (i) Each Stock Acquisition Right may not be partially exercised. (ii) The grantees of the Stock Acquisition Rights must, at the time of the closing of the Ordinary General Shareholders' Meeting to be held for the last fiscal year ending within two (2) years after the closing of the FY2007 Ordinary General Shareholders' Meeting of Toyota, be a Director, Managing Officer or an employee, etc. of Toyota or its affiliate, to which he or she belongs at the time such right is granted. (iii) The grantee of the Stock Acquisition Rights may exercise his or her Stock Acquisition Rights for up to two (2) years after the grantee loses his or her position as a Director, Managing Officer or an employee, etc. of Toyota or its affiliate to which the grantee belongs at the time of grant. However, if the grantee loses such position due to retirement or resignation for personal reasons, or removal from office or dismissal, the Stock Acquisition Rights will expire immediately. (iv) Stock Acquisition Rights may not be inherited. (v) Other exercise conditions shall be provided for by the resolution of the FY2007 Ordinary General Shareholders' Meeting and the resolution of a meeting of the Board of Directors. (8) Events and Conditions of Acquisition of Stock Acquisition Rights by Toyota Stock Acquisition Rights may be acquired by Toyota without consideration, on a date that shall be provided by the Board of Directors, if a General Shareholders' Meeting approves a proposal on a merger agreement in which Toyota will be dissolved, or a proposal on a share exchange agreement or a share transfer by which Toyota will become a wholly-owned subsidiary of another company. (9) Restriction on Transfer of Stock Acquisition Rights Transfer of Stock Acquisition Rights shall be subject to an approval of the Board of Directors. (10) Matters concerning the Paid-in Capital and Additional Paid-in Capital to be Increased due to the Issuance or Transfer of Shares upon Exercise of Stock Acquisition Rights (i) Amount of capital to be increased due to the issuance of shares upon exercise of the Stock Acquisition Rights shall be half of the maximum amount of paid-in capital increase and others which is calculated in accordance with Article 40, Paragraph 1 of the Corporation Accounting 55 Regulations, and any fraction less than one (1) yen arising therefrom shall be rounded up to the nearest one (1) yen. (ii) Amount of additional paid-in capital to be increased due to the issuance or transfer of shares upon exercise of the Stock Acquisition Rights shall be an amount determined by subtracting the amount of paid-in capital to be increased provided for in the immediately preceding paragraph (i) from the maximum amount of capital increase set forth in the immediately preceding paragraph (i). (11) Handling of Fraction In the case where the number of shares to be issued or transferred to the grantee includes any fraction less than one (1) share, such fraction shall be rounded down. (12) Calculation Method of the Fair Value of Stock Acquisition Rights The fair value of Stock Acquisition Rights shall be calculated by using the Black-Scholes model based on the various conditions of the allotment date. Reference: The fair value of Stock Acquisition Rights as of March 31, 2007 calculated by using the Black-Scholes model is 1,314 yen per share. Proposed Resolution 6: Acquisition of Own Shares In order to improve capital efficiency and to implement flexible capital policies tailored to the business environment, we request authorization to acquire shares of Toyota's common stock up to a maximum of 30 million shares and to a maximum value of 250 billion yen, pursuant to the provisions of Article 156 of the Corporation Act during the one-year period from the day after the conclusion of this Ordinary General Shareholders' Meeting. 56 Proposed Resolution 7: Award of Bonus Payments to Retiring Corporate Auditors In order to compensate the dedicated efforts of the 2 Corporate Auditors who will retire upon the expiration of their terms of office at the conclusion of this General Shareholders' Meeting, bonuses in appropriate amounts will be provided in accordance with Toyota's standards. The amount, timing and method of payment will be determined by the Board of Corporate Auditors. The following is the brief career summary of the Corporate Auditors. ------------------------------------------------------------------------------- Name Brief career summary ------------------------------------------------------------------------------- Hideaki Miyahara June 2000 Toyota's Full-time Corporate Auditor ------------------------------------------------------------------------------- Yasutaka Okamura June 1997 Toyota's Outside Corporate Auditor ------------------------------------------------------------------------------- Proposed Resolution 8: Payment of Executive Bonuses In consideration of the results for FY2007 and other factors, the 25 Directors in office as of the end of FY2007, the 1 Director who resigned on August 31, 2006, and the 7 Corporate Auditors will be paid a total amount of 970,500,000 yen (912,000,000 yen for Directors and 58,500,000 yen for Corporate Auditors) as executive bonuses. 57