Interim Results - Part 1
Toyota Motor Corporation
18 November 1999
Part 1
FY2000 Interim Unconsolidated Financial Results
(Six months ended September 30,1999)
(All financial information has been prepared in accordance with generally
accepted accounting principles In Japan)
English translation from the original Japanese-language document
Company name : Toyota Motor Corporation
Stock exchange on which
the shares are listed : Tokyo, Nagoya, Osaka, Kyoto, Niigata,
Hiroshima, Fukuoka and Sapporo Stock
Exchanges in Japan
Code Number : 7203
Location of head office : 1, Toyota-cho, Toyota City, Aichi Prefecture
Contact person : Takeshi Suzuki, General Manager,
Accounting Division
Tel: (0565)28-2121
Date of board of Directors'
meeting for FY2000 interim
closing accounting : Thursday, November 18, 1999
Provision for interim cash
dividends : Provision exists
Date of starting actual
payment of interim cash
dividends : Friday, November 26, 1999
1. Results of FY2000 Interim (Six months ended September 30, 1999)
(1) Financial results (Amounts less than one million yen are omitted.)
Net (%of change Operating (% of change Ordinary (% of change
sales from income from income from
previous previous previous
interim) interim) interim)
Million yen % Million yen % Million yen %
FY2000 Interim
(April 1,1999
through
Sept 30, 99) 3,570,117 (-5.1) 238,956 (-16.7) 288,301 (-0.1)
FY1999 Interim
(April 1, 1998
through
Sept 30, 98) 3,763,122 (-0.9) 286,873 (0.6) 288,631 (-11.1)
FY1999 (April 1,
1998 through
Mar 31, 1999) 7,525,555 543,814 578,035
Interim net (% of change interim net Basis of preparing interim
income from income per financial statements
previous share
interim)
Million yen % Yen
FY2000 Interim
(April 1, 173,616 (17.4) 46.16 Standards for preparing
1999 through Sept interim financial
30,1999) statements
FY 1999 Interim
(April 1, 147,931 (-21.1) 38.96 Standards for preparing
1998 through interim financial
September statements
30, 1998)
FY1999
(April 1, 1998 267,235 70.61
through
March 31, 1999)
(Notes)
1. Average number of FY2000 Interim (April 1, 1999
shares in each term through Sept 30, 1999) 3,760,650,129 shares
FY1999 Interim (April 1, 1998
through Sept 30, 1998) 3,796,734,240 shares
FY1999 (April 1, 1998 through
March 31, 1999) 3,784,320,184 shares
2. The method of tax effect accounting is applied for the FY2000 interim.
FY2000 Interim Unconsolidated Financial Results
(Six months ended September 30,1999)
(All financial information has been prepared in accordance with generally
accepted accounting principles in Japan)
(2) Cash dividends
Interim cash dividends Cash dividends per
per share share
Yen
FY2000 Interim (April 1, 1999
through September 30,1999) 11.00
FY1999 Interim (April 1, 1998
through September 30, 1998) 10.00
Yen
FY1999 (April 1, 1998
through March 31, 1999) 23.00
(3) Financial position
Total assets Shareholders' Ratio of Shareholders'
equity Shareholders' equity
equity per share
Million yen Million yen % Yen
FY2000 Interim 7,632,243 5,429,269 71.1 1,443.70
(As of September
30,1999)
FY1999 Interim 7,230,881 4,928,375 68.2 1,300.19
(As of September
30,1998)
FY1999 (April 1, 7,258,200 4,923,220 67.8 1,309.14
1998 through March
31, 1999)
(Notes)
1. Number of shares FY2000 Interim (As of
issued at the Sept 30, 1999) 3,760,650,129 shares
end of each
term
(par value stock,
1 Unit=1,000 shares) FY1999 Interim (As of
September 30,1998) 3,790,497,073 shares
FY1999 (April 1, 1998
through March 31, 1999) 3,760,650,129 shares
2. Unrealized gain or (loss) of marketable
securities at the end of this
interim 1,682,130 (Million yen)
3. Unrealized gain or (loss) of derivative
transaction at the end of
this interim 55,512 (Million yen)
2. Estimate of results of FY2000(April 1, 1999 to March 31, 2000)
Net sales Ordinary income Net income
Million yen Million yen Million yen
FY2000 (April 1, 1998 7,400,000 580,000 350,000
through March 31,1999)
Cautionary Statement with Respect to Forward-Looking Statements
This document contains forward-looking statements that reflect our plans
and expectations, including the above forecast of results for the full
fiscal year. These forward-looking statements involve known and unknown
risks, uncertainties and other factors that may cause our actual results,
performance, achievements or financial position to be materially different
from those expressed or implied by these forward-looking statements. These
factors include: (a) changes in economic conditions affecting the automotive
markets in Japan, North America, Europe and other markets in which we
operate; (b) fluctuations in currency exchange rates, particularly with
respect to the value of the Japanese yen, the United States dollar and the
euro. (c) our ability to realize production efficiencies and to implement
capital expenditures at the levels and times planned by management; (d)
changes in the laws, regulations and government policies affecting
our automotive operations, particularly laws, regulations and policies
relating to environmental protection, vehicle emissions, vehicle fuel economy
and vehicle safety, as well as changes in law, regulations and government
policies affecting our other operations, including our
telecommunications operations and the outcome of future litigation and
other legal proceedings; (e) political instability in the markets in which
we operate; (f) our ability to timely develop and achieve market
acceptance of new products; (g) fuel shortages or interruptions in
transportation systems, labor strikes, work stoppages or other
interruptions to or difficulties in the employment of labor in the major
markets where we purchase materials, components and supplies for the
production of our products or where our products are produced,
distributed or sold, and (h) our failure, or the failure of our
dealers, suppliers and other third parties to achieve Year 2000
compliance in a timely and cost-effective manner. A discussion of these
and other factors which may affect our actual results, performance,
achievements or financial position is contained in the 'Management's
Discussion and Analysis of Financial Condition and Results of
Operations' section and elsewhere in our Registration Statement on Form
F-1, which is on file with the United States Securities and Exchange
Commissions.
Attachments to 'FY2000 Interim Unconsolidated Financial Results'
(English translation from the original Japanese-language document)
Management Policy and Unconsolidated Business Results
(All financial information has been prepared in accordance with
generally accepted accounting principles in Japan.)
I. Management Policy
(A) Toyota's basic management policy
Toyota Motor Corporation holds up the 'Guiding Principles at Toyota
Motor Corporation' as its basic management policy and believes that
efforts to achieve the goals set forth in the principles will lead to an
increase in shareholders' value. The 'Guiding Principles at Toyota Motor
Corporation' are as follows:
(1) Honor the language and spirit of the law of every nation and
undertake open and fair corporate activities to be a good corporate
citizen of the world.
(2) Respect the culture and customs of every nation and
contribute to economic and social development through corporate
activities in the communities.
(3) Dedicate ourselves to providing clean and safe products and
to enhancing the quality of life everywhere through all our activities.
(4) Create and develop advanced technologies and provide
outstanding products and services that fulfill the needs of customers
worldwide.
(5) Foster a corporate culture that enhances individual
creativity and teamwork value, while honoring mutual trust and respect
between labor and management.
(6) Pursue growth in harmony with the global community through
innovative management.
(7) Work with business partners in research and creation to
achieve stable, long-term growth and mutual benefits, which keeping
ourselves open to new partnerships.
(B) Toyota's medium- and long-term management strategy
To further promote growth of its automobile business,
Toyota will assemble the joint forces of the entire Toyota Group to
enhance its competitiveness in the global market through developing
advanced technology and product planning, and achieving greater
efficiency in production and sales.
In technological development, the company aims to lead other
automakers in the field of environmental technologies, such as reduced
emissions, improved fuel economy, and higher vehicle recyclability.
Toyota will work hard to further spread the use of hybrid vehicles and
develop fuel cell vehicles and other next-generation motor vehicles with
the aim of commercializing them as quickly as possible.
In product planning, the company will strive to provide products
that precisely meet the changing needs of domestic and overseas markets.
Toyota will continue to promote cost reduction efforts such as
discontinuation and integration of vehicle models, common use of vehicle
platforms, and reductions in component types. It will also seek to
further improve productivity.
Toyota also seeks to nurture non-automotive operations, wherein
it can leverage its technological capabilities and other resources.
Through these varied efforts, Toyota will seek to improve profitability
and increase shareholders' value by practicing more effective management
and by establishing stable management foundations on a long-term basis.
(C) Measures for improvement of corporate management organizations
In addition to statutory functions, including shareholders'
meetings, board of directors' meetings, board of corporate auditors'
meetings, and auditing of year-end financial statements by certified
public accountants, Toyota is taking various measures to ensure a
higher level of corporate governance.
In 1992, the company established a 'Committee of Ethics for
Corporate Conduct' to verify overall corporate activities from the
viewpoints of legal requirements and corporate ethics. The committee
consists of executives of senior managing director level and higher. In
1998, Toyota created guidelines regarding conduct of employees of the
company, which set forth the basic attitudinal approach expected of
employees and established action guidelines to be followed. Efforts are
being made within the organization to ensure employees strictly follow
these guidelines.
As in the past, Toyota continues to disclose information on the
fiscal condition of the company to shareholders, investors, and other
stakeholders when general shareholders' meetings are held and business
results are announced twice a year. In the future, the company will
continue to fulfill its accountability to stakeholders to the full.
Since 1996, Toyota has held annually at least one meeting of
the International Advisory Board, comprised of knowledgeable persons
from overseas who provide advice on management strategy in reference
to Toyota's globualization initiatives.
II. Unconsolidated Business Results
(A) Overview of the FY 2000 interim (April 1999 through September 1999)
(1) Analysis of the overall performance in the first half of the
current term, including production, sales, profits and losses
In the first half of the current term, due to the effects of
economic measures taken by the Japanese government, a portion of final
demand in such areas as housing starts and consumer spending showed trends
toward recovery. Despite such trends, however the economy continued to make
optimistic views scarce, as exemplified by a worsening employment
situation, decreasing non-residential investment in the private sector, and
a rise in the value of the yen in August.
On the other hand, the overall overseas economy remained steady due
to continued U.S. economic strength and a European economic recovery. Asian
economics (excluding Japan) also began to show signs of recovery.
Amidst these circumstances, domestic automobile sales for the first
half of the current term amounted to 793 thousand units and exports for the
same period totaled 749 thousand units. As a result, the total number of
vehicles sold in Japan including those exported was 1.542 million units, an
increase of 19 thousand units over the same period last year. Production by
overseas entities totaled 809 thousand units, an increase of 77 thousand
units over the same period last year. This established a new record for
production by overseas entities for the first half of the fiscal year.
In domestic sales, popularity of the compact car Vitz and other
new models combined with sales efforts of dealers nationwide pushed
Toyota's market share (excluding mini-vehicles) to 41.2%, a 2.5
percentage point increase over the same period last year. Meanwhile,
the number of units sold by overseas entities for the first half of
the year was an all-time high 1.584 million units, This can be attributed to
the strength of the North American, European, and other markets, as well as
to increased local production of models such as the Tundra pickup in the
United States.
Net sales for the first half of the year were 3,570.1 billion
yen, a decrease of 193.0 billion yen compared to the same period last year.
Operating income for the first half of the year was 238.9 billion yen. This
would represent a decrease of 88.9 billion yen if reclassification of
enterprise taxes were applied to financial results of the same period last
year. The major factor for the decrease in operating income was the adverse
effects of exchange rates fluctuations, which amounted to 190.0 billion yen.
Meanwhile, the principal positive factors for operating income were cost
reduction efforts worth 50.0 billion yen, sales efforts worth 30.0 billion
yen and greater efficiency in research and development etc., which were
worth 21.1 billion yen. These gains, totaling 101.1 billion yen, when offset
by the 190.0 billion adverse effect of exchange rate fluctuations, result in
a decrease by 88.9 billion yen in operating income for the first half of the
current term. Net income after tax for the first half of the current term
was 173.6 billion yen, after adapting the method of tax effect accounting
from the current interim term.
In response to the globalization of its business, Toyota listed
its stock on the New York Stock Exchange and the London Stock Exchange in
September of this year. The purpose of these listings is to create an
environment in which overseas investors can have easy access to shares in
Toyota, and to further improve the company's recognition level and corporate
image as it expands its business on a global scale.
(2) Distribution of income for the first half of the current term
Toyota has made it a principle to continue paying dividends in
a consistent manner. The company determines the amount of dividends
after giving comprehensive consideration to its business performance,
ratio of earnings to dividends, and other factors. For the first half
of FY 2000, Toyota will pay an interim dividend of 11 yen per share,
an increase of 1 yen as compared to the same period of the previous
year.
(B) Prospects of The entire FY 2000 (April 1999 through March 2000)
(1) Prospects of the overall business performance for the entire FY
2000, including production, sales, profits and losses
Although the Japanese government is expected to implement
additional economic measures, it is generally believed that it will
take more time before the domestic economy recovers under the
leadership of the private sector. Furthermore, unstable exchange
rates, concern that the U.S. economy may slow down, and other
circumstances that businesses face inhibit accurate forecasting.
As for prospects of unconsolidated business results for the
entire FY 2000, Toyota expects to sell 3.31 million vehicles (1.76
million units for domestic sales and 1.55 million units for exports),
40,000 industrial vehicles, and 3,300 prefabricated houses. The company
also aims to produce 3.25 million vehicles in Japan and 1.65 million
vehicles through overseas entities.
The goal for unconsolidated net sales is 7,400 billion yen, and
for unconsolidated ordinary income is 580 billion yen. The goal for
unconsolidated net income for the entire FY 2000 is 350 billion yen.
(2) Estimated figures for economic indicators that may have major effects
on unconsolidated business results for the entire FY 2000 Prospects are
based on the assumption that the average exchange rate will be 105 yen
to the U.S. dollar for the second half of the year and 111 yen to the
U.S. dollar for the entire FY 2000.
Cautionary Statement with Respect to Forward-Looking Statements
This document contains forward-looking statements that reflect our plans
and expectations. These forward-looking statements include the discussion
of Toyota's strategy and the discussion of Toyota's prospects of the
entire FY 2000. These forward-looking statements involve known and unknown
risks, uncertainties and other factors that may cause our actual results,
performance, achievements or financial position to be materially different from
any future results, performance, achievements or financial position expressed or
implied by these forward-looking statements. These factors include: (i) changes
in economic conditions affecting the automotive markets in Japan, North America,
Europe and other markets in which we operate: (ii) fluctuations in currency
exchange rates, particularly with respect to the value of the Japanese yen, the
U.S. dollar and the euro; (iii) our ability to realize production efficiencies
and to implement capital expenditures at the levels and times planned by
management; (iv) changes in the laws, regulations and government policies
affecting our automotive operations, particularly laws, regulations and policies
relating to environmental protection, vehicle emissions, vehicle fuel economy
and vehicle safety, as well as changes in laws, regulations and
government policies affecting our other operations, including our
telecommunications operations and the outcome of future litigation and
other legal proceedings; (v) polideal instability in the markets in
which we operate; (vi) our ability to timely develop and achieve market
acceptance of new products; (vii) fuel shortages or interruptions in
transportation systems, labor strikes, work stoppages or other interruptions to
or difficulties in the employment of labor in the major markets where we
purchase materials, components and supplies for the production of our products
or where our products are produced, distributed or sold; and (viii) our failure,
or the failure of our dealers, suppliers and other third parties to achieve Year
2000 compliance in a timely and cost-effective manner. A discussion of these and
other factors which may affect our actual results, performance, achievements or
financial position is contained in the 'Management's Discussion and Analysis of
Financial Condition and Results of Operations' section and elsewhere in our
Registration Statement on Form F-1, which is on file with the United States
Securities and Exchange Commission.
Attachment to 'FY2000 Interim Unconsolidated Financial Results'
(English translation from the original Japanese-language document)
State of Readiness for the Year 2000 Computer Issue
(Presented on an Unconsolidated Basis)
(1) Compliance Status
a. Action Policy
Toyota Motor Corporation (TMC) regards decisive measures in
response to the Year 2000 (Y2K) issue to be an important management
issue, and has positioned these measures as priority action items
in terms of company policy. Comprehensive measures are being put in
place by TMC and the Toyota Group to deal effectively with Y2K
issues. In aiming to avoid inconvenience to customers and
shareholders, appropriate tests of critical business systems have
been implemented in all areas of TMC's business, including
production, sales and customer after-sales service, with
contingency management manuals drawn up to cope with problems that
might arise. At the same time, TMC has also developed proposed
responses to a variety of risk scenarios attributable to possible
Y2K-related disruptions within and outside TMC, and will establish
procedures to deal with such Y2K related problems should they occur.
b. Action Systems
TMC began studying Y2K issues in mid-1995, led by its Information
Systems Division. In July l 1996, TMC established the Business
Promotion Secretariat to Respond to the Year 2000 Compliance Issue'
and commenced efforts to ensure the compliance of its information
technology systems. TMC also has established a 'Year 2000
Compliance Committee' from across its various divisions to review
the level of Y2K compliance within each of TMC's divisions from a
risk-management perspective, and to formulate contingency plans to
address any Y2K-related problems which may occur within or outside
the Company. TMC is monitoring the state of progress made in Y2K
compliance efforts, is setting out risk management procedures, and
is working with its third-party business partners to ensure that
they are also Y2K compliant.
C. Response Status
TMC has thus far identified and evaluated potential Y2K issues
and taken measures designed to yield Y2K compliance in its
information technology systems, its production machinery and equipment,
and its automotive and other products. TMC has also been confirming the
state of compliance of its third-party business partners, and supporting
their compliance efforts, as well as drafting contingency plans
and counter-measures to minimize the potential effects of Y2K-related
disruptions that could arise within and outside TMC. Recent
activities in this regard include the completion in August 1999 of
testing which encompassed its third-party business partners, the
drafting of a risk management plan based on the results of this
testing, and the commencement in September 1999 of simulation
drills on coping with emergency situations. TMC is now in the
final stage of preparations for dealing with Y2K-related issues
should they occur.
(2) Cost Outlays for Y2K Response Measures
It is difficult to clearly delineate the costs of Y2K compliance
measures in the case of internal information systems, as these
measures were basically implemented as part of TMC's ordinary
development and upgrading processes. It is estimated, however, that
the cost of implementing these Y2K measures, in addition to the cost
of verification testing and the preparation of contingency plans, is
in the area of Y4 billion. Of this amount, outlays from October
onward will come to about Y300 million. On a consolidated basis, the
total estimated figure is Y24 billion, of which outlays from October
onward will account for approximately Y3 billion.
(3) Risk Management Plan
TMC believes, based on current information, that as a result of its
inspections and tests, and communications with its suppliers and
affiliates, there will be no material adverse Y2K-related results to
TMC arising from situations under TMC's control. However,
Y2K-related disruptions and/or failures could arise from events
outside TMC's control, such as due to failures by public utilities
and/or communications networks or other suppliers. Nevertheless,
to cope with any problems that do occur, TMC is developing a
variety of risk scenarios that include possible disruptions at
third-party business partners and in public infrastructure, and is
setting out contingency plans and processes to enable TMC to
reduce the risk of disruptions in its own operations, and to restore
these to normal as quickly as possible in the event of a problem.
TMC is also conducting simulation drills.
* This discussion of the Year 2000 computer issue contains
forward-looking statements that reflect TMC's plans and
expectations. These forward-looking statements involve known and
unknown risks, uncertainties and other factors that may cause the
various scenarios described above to be materially different from
those expressed or implied by these forward-looking statements. The
various scenarios discussed above were compiled based on information
available at the present time. Consequently, they are subject to
change due to uncertainties in the assumptions for these scenarios
and/or changes in circumstances within or outside the company, and
there is no guarantee that actual results will develop as forecast
in these scenarios.
FY2000 Interim Consolidated Financial Results
(Six months ended September 30, 1999)
(All financial information has been prepared in accordance with
generally accepted accounting principles in Japan)
English translation from the original Japanese-language document
Company name : Toyota Motor Corporation
Stock exchange on which
the shares are listed : Tokyo, Nagoya, Osaka, Kyoto, Niigata,
Hiroshima, Fukuoka and Sapporo Stock
Exchanges in Japan
Code Number : 7203
Location of head office : 1, Toyota-cho, Toyota City, Aichi Prefecture
Contact person : Takeshi Suzuki, General Manager,
Accounting Division
Tel.(0565)28-2121
Date of board of Directors'
meeting for FY2000 interim
consolidated
closing accounting : Thursday, November 18, 1999
Results of FY2000 interim (Six months ended September 30, 1999)
(1) Financial results (Amounts less than one million yen are omitted.)
Net (%of change Operating (% of change Ordinary (% of change
sales from income from income from
previous previous previous
interim) interim) interim)
Million yen % Million yen % Million yen %
FY2000 Interim
(April 1,1999
through
Sept 30, 1999) 6,225,323 (0.6) 362,555 (-10.1) 404,539 (-1.0)
FY1999 Interim
(April 1, 1998
through
Sept 30, 1998) 6,189,562 (11.4) 403,180 (1.2) 408,431 (-8.8)
Interim net (% of change interim net
income from income per
previous share
interim)
Million yen % Yen
FY2000 Interim
(April 1, 1999 201,657 (4.7) 54.47
through Sept
30,1999)
FY 1999 Interim
(April 1, 192,645 (-20.0) 50.76
1998 through
September
30, 1998)
Note 1: Equity in earnings on affiliates 15,150 million yen (FY1999 interim
- 2,695 million yen)
Note 2: The method of tax effect accounting is applied for the FY2000 interim.
FY2000 Interim Consolidated Financial Results
(Six months ended September 30,1999)
(All financial information has been prepared in accordance with
generally accepted accounting principles in japan)
(2) Financial position
Total assets Shareholders' Ratio of Shareholders'
equity shareholders' equity per share
equity
(Million yen)(Million yen) % (Yen)
FY20OO interim 16,078,115 6,684,542 41.6 1,805.57
(As of September 30,
1999)
FY1999 14,753,311 6,175,937 41,9 1,642.90
(As of Mar 31,1999)
(3) Scope of consolidation and equity method
Number of consolidated subsidiaries 416 companies
Number of unconsolidated subsidiaries Nil
Number of affiliates 185 companies (including
50 affiliates accounted
for under the equity
method)
(4) Change in scope of consolidation and equity method
Consolidated
subsidiaries (Addition) 77 companies Toyota Auto Body Co., Ltd.,
Kanto Auto Works, Ltd.,
etc.
(Exclusion) 4 companies A consolidated subsidiary
of Tokyo Toyo-Pet
Motor Sales Ltd., three
consolidated subsidiaries
of Daihatsu Motor Co., Ltd.
(These four companies have
been merged with other
consolidated subsidiaries.)
Affiliates accounted for
under the equity
method (Addition) 2 companies ART Metal Mfg. Co., Ltd.,
UMW Toyota Motor Sdn. Bhd.
(Exclusion) 12 companies Toyota Auto Body Co., Ltd.,
Kanto Auto Works, Ltd.,
etc.
(Along with the
introduction of 'standards
concerning the ability
to dominate or influence,'
all companies have changed
to consolidated
subsidiaries.)
(5) Changes in accounting procedures
Changes in accounting procedures are described below of the
Consolidated Financial Summary.
Unconsolidated financial results of FY2000 interim (Six
months ended September 30, 1999)
Net (% of change from Operating (% of change from Ordinary (% of change
Sales previous interim) income previous interim) income from previous
interim)
(Million yen) % (Million yen) % (Million yen) %
3,570,117 (-5.1) 238,956 (-16.7) 288,301 (0.1)
Interim (% of change from Interim net income per Total assets Shareholders'
net previous interim) share equity
income
(Million yen) % (Yen) (Million yen) (Million yen)
173,616 (17.4) 46.16 7,632,243 5,429,269
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