Notice of AGM

Toyota Motor Corporation 11 June 2003 June 10, 2003 To All Shareholders: President Fujio Cho TOYOTA MOTOR CORPORATION 1, Toyota-cho, Toyota City, Aichi Prefecture Notice of Convocation of FY2003 Ordinary General Shareholders' Meeting (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 FY2003 Ordinary General Shareholders' Meeting. We hope that you will be able to attend this meeting. If you are unable to attend the meeting, it would be appreciated if you could find the time from your busy schedule to vote 'yes' or 'no' on the enclosed ballot form, sign the form, and return it to us after reviewing the enclosed documents no later than Wednesday, June 25, 2003. Thank you very much for your cooperation. 1. Date and time: 10:00 a.m., Thursday, June 26, 2003 2. Venue: Toyota Head Office, 1, Toyota-cho, Toyota City, Aichi Prefecture 3. Meeting Agenda Report: Reports on business review, unconsolidated balance sheet and statement of income for the FY2003 term (April 1, 2002 through March 31, 2003) Resolutions: Proposed Resolution 1: Approval of Proposed Appropriation of Retained Earnings for the FY2003 term Proposed Resolution 2: Amendment of the Articles of Incorporation A summary of this resolution appears among the 'Reference Documents Pertaining to Exercise of Voting Rights,' on pages 30 - 31 to follow. Proposed Resolution 3: Election of 27 Directors Proposed Resolution 4: Election of 6 Corporate Auditors Proposed Resolution 5: Issue of Stock Acquisition Rights without Consideration to Directors, Managing Officers and Employees, etc., of Toyota Motor Corporation and its Affiliates A summary of this resolution appears among the 'Reference Documents Pertaining to Exercise of Voting Rights,' on pages 39 - 41 to follow. Proposed Resolution 6: Amendment to the Conditions of Exercise of the Rights of Stock Options Due to the Introduction of the New Management System A summary of this resolution appears among the 'Reference Documents Pertaining to Exercise of Voting Rights,' on pages 42 - 43 to follow. Proposed Resolution 7: Repurchase of Shares A summary of this resolution appears among the 'Reference Documents Pertaining to Exercise of Voting Rights,' on page 44 to follow. Proposed Resolution 8: Award of Bonus Payments to Retiring Directors and Corporate Auditors Proposed Resolution 9: Proposed Appropriation of Retained Earnings A summary of this resolution appears among the 'Reference Documents Pertaining to Exercise of Voting Rights,' on page 46 to follow. Proposed Resolution 10: Amendment of the Articles of Incorporation (Part 1) A summary of this resolution appears among the 'Reference Documents Pertaining to Exercise of Voting Rights,' on page 47 to follow. Proposed Resolution 11: Amendment of the Articles of Incorporation (Part 2) A summary of this resolution appears among the 'Reference Documents Pertaining to Exercise of Voting Rights,' on page 48 to follow. Note: If you decide to attend the meeting in person, it would be appreciated if you would submit the enclosed voting ballot to the reception desk as your admission pass. Thank you. (Attachment) Business Review (Fiscal Year under review: April 1, 2002 through March 31, 2003) 1. Outlook on Operation (1) Progress and Achievement in Operation Taking a broad look at the economic environment for the term ended March 2003, although TMC believes capital investments by the private sector bottomed out and there were some signs of improvement, consumer spending remained sluggish against a backdrop of severe employment conditions and the overall economic climate in Japan remained difficult. At the same time, although the economic downturn in Europe - particularly in the Euro zone - continued, overall overseas economies were comparatively strong, particularly in the United States and Asia. Given this kind of economic environment, TMC has been making an effort to develop attractive products in order to satisfy its customers worldwide. During FY2003, TMC introduced a broad range of new models to match different customer lifestyles, including the stylish compact car ist, the top class minivan Alphard, and the new generation vehicle WISH. At the same time, TMC also carried out a complete redesign of the Harrier, the vehicle which pioneered the luxury SUV market and has been well received both in Japan and abroad. Toyota's brand strength has also won high acclaim both in Japan and overseas, through such events as the Corolla, adapted to local requirements in each of its markets, having broken annual worldwide sales of 1 million units in 2002. In order to respond to the changing values of customers, in addition to its Toyota brand TMC has decided to introduce the Lexus brand, developed overseas, to Japan. TMC will also reorganize its domestic sales network into four Toyota- brand channels from the current five, next spring. Domestic vehicle sales increased by 4 thousand units (or 0.2%) to 1,724 thousand units in FY2003 compared with FY2002 as a result of the active introduction of new products that met customer needs and earnest sales efforts made by dealers in Japan. The domestic market share, excluding mini-vehicles, rose to 42.3%, exceeding 40% for the fifth consecutive year. Meanwhile, vehicle exports increased by 127 thousand units (or 7.5%) to 1,835 thousand units. With respect to TMC's overseas activities, Tianjin Toyota Motor Co., Ltd. began production of the VIOS (Chinese name: Weichi), representing the first time TMC has initiated passenger car manufacturing operations in China. TMC has also agreed with China's largest automaker, China FAW Group Corporation, to establish a cooperative relationship covering all aspects of automobile business. This agreement will allow TMC to gain solid footing in one of the world's most important markets. With China as an example, through such active business operations overseas TMC's overseas production output during FY2003 reached an all-time high of 2,215 thousand units, increasing by 382,000 units (or 20.8%), compared with FY2002. As a result of this global development of business, the total number of Toyota vehicles sold worldwide reached an all-time high of 5,638 thousand, with an increase of 350 thousand units, or 6.6%, compared to the previous fiscal year. In July last year, cumulative production of Toyota vehicles reached 10 million units in North America. TMC is steadily working to further establish its production network in North America with arrangements underway for construction of new plants in Mexico and Texas. In addition to this, regarding overseas production of pickup trucks and multi-purpose vehicles, TMC has started new initiatives to construct optimum development, procurement and production systems worldwide by promoting efficient utilization of, and mutually complimentary relationships between, manufacturing bases. In order to respond comprehensively to the diversified automobile needs of customers, TMC is actively developing businesses in such fields as information and telecommunications and financial services. In the information and telecommunications field, TMC is carrying out initiatives to create new value in automobiles, beginning with outfitting the new model WiLL CYPHA with the G-BOOK information network service. With regard to financial services, inroads have been made into Hungary and Denmark, among other countries, to promote the construction of a global sales and financial services network in order to further strengthen support systems of Toyota vehicle sales from a financial perspective. In the housing business, a new company was established in April this year, resulting in a structure that is able to plan and offer products which meet customer needs in a more timely manner, through the strengthening of product planning and operational functions. Alongside such business efforts, TMC considers environmental protection as one of the continuing top priorities in management issues. Specifically, in the area of fuel cell vehicles, said to be the ultimate 'eco-cars,' TMC began limited marketing from December last year in both Japan and the U.S. of the TOYOTA FCHV, a fuel cell hybrid vehicle boasting a high performance fuel cell developed by TMC. Furthermore, with regard to hybrid vehicles, where TMC boasts superior technology, worldwide cumulative sales surpassed 130 thousand units by the end of last year. Toyota is leading the world in the field of hybrid vehicles in both technology and sales. And it's not only in Toyota brand vehicles that TMC is making environmental responses. TMC is also actively carrying out initiatives to popularize environmental technology through such efforts as the arrangement reached with Nissan Motor Co., Ltd. regarding transaction of hybrid systems, including technical cooperation. Due to TMC's efforts to improve overall management efficiency and reduce costs, in addition to earnest sales initiatives, net sales have increased to 8,739.3 billion yen, up by 454.3 billion yen (or 5.5%), and ordinary income to 892.6 billion yen, up by 123.7 billion yen (or 16.1%). In addition, net income in FY2003 increased to 634.0 billion yen, up by 163.8 billion yen (or 34.8%) from FY2002. Unit: million yen FY2003 FY2002 Increase (Decrease) (April 2002 (April 2001 through through March 2003) March 2002) Domestic 2,966,471 3,062,209 (95,738) <-3.1> Vehicles Export 3,856,434 3,397,466 458,968 <13.5> Total 6,822,905 6,459,676 363,229 <5.6> Parts & components for overseas Export 863,148 817,106 46,042 <5.6> production Domestic 318,995 330,714 (11,719) <-3.5> Parts Export 198,937 187,361 11,576 <6.2> Total 517,933 518,075 (142) <-0.0> Domestic 153,015 151,433 1,582 <1.0> Others Export 382,308 338,676 43,632 <12.9> Total 535,323 490,109 45,214 <9.2> Domestic 3,438,482 3,544,357 (105,875) <-3.0> Grand total Export 5,300,828 4,740,611 560,217 <11.8> Total 8,739,310 8,284,968 454,342 <5.5> While company-wide efforts were made to improve capital investment efficiency, investments were made to respond to social demands, such as those related to the environmental protection, in developing new technologies and new products, and renewing production equipment. As a result, capital investment for FY2003 amounted to 269.3 billion yen. With respect to financing, last September a total of 150 billion yen in domestic unsecured straight bonds were issued to provide funding for capital investment. (2) Trends in Unconsolidated Income and Assets Unit: million yen otherwise noted FY2000 FY2001 FY2002 FY2003 (April 1999 (April 2000 (April 2001 (April 2002 through through through through March 2000) March 2001) March 2002) March 2003) Net sales 7,408,010 7,903,580 8,284,968 8,739,310 Ordinary income 541,824 621,760 768,920 892,676 Net income 329,268 333,516 470,239 634,059 Net income per 87.81 90.50 130.40 178.12 share (yen) Net assets 5,498,108 5,666,247 5,662,158 5,703,321 Total assets 7,775,276 8,293,450 8,467,930 8,592,823 Notes: 1. Effective from FY2001, the 'Accounting Standards for Retirement Benefits' has been applied. As a result, 'Ordinary income' and 'Net income' decreased by 14,538 million yen and 43,566 million yen, respectively. Effective from FY2001, the 'Accounting Standards for Financial Products' has been applied. As a result, 'Net assets' and 'Total assets' increased by 187,843 million yen and 361,306 million yen, respectively. 2. Effective from FY2003, TMC adopted 'Accounting Standars for Earnigs Per Share' to calculate 'Net income per share.' As a result of this change, 'Net income per share' is down by 5.57 yen per share compared to the previous standards. Up to FY2002, 'Net income per share' was calculated based on the number of shares issued and outstanding at the fiscal year-end (for FY2002, the total number of shares excluding treasury stock). 3. As for FY2003, TMC accounted for 162,457 million yen as 'Gains on return of the substituted portion of the employee pension fund' in extraordinary gains. As a result, 'Net income' increased by 95,395 million yen. (3) Issues facing TMC Looking at the future business environment from the perspective of the harsh income / employment situation in Japan, there continues to be apprehension regarding future consumer spending. Meanwhile, given the unsettled international scene, there is growing anxiety over the future of the U.S. and European economies and TMC is not in a position to make any overall forecasts. Furthermore, while participants of automotive industry face increasing demand in rapid responses sought to address the ever-changing market condition, competition for survival in the market is growing more intense than ever. In order to come out on top of this fierce competition, TMC is promoting management reforms by introducing a new management system intended to speed up the pace of decision making and operations as well as to enhance transparency of management. In addition, the entire group will cooperate to address the following issues in order to contribute to the creation of a more prosperous society in the new century and for our continuous growth in the future. First, TMC is working to launch products that respond precisely to customer needs in a timely manner, thereby providing the fun and convenience of automobiles to ever greater numbers of customers. Next, TMC will promote the further use of hybrid vehicles and will continue its efforts to develop fuel cell vehicles to strengthen our responses to environmental issues. Also, TMC will work towards the realization of an motorized society in which people can live in ease, safety and comfort through the development of advanced technologies in a wide range of fields including information technology. Finally, TMC will work to create systems for the development, production, and sale of products that respond to needs in different regions to establish robust and efficient structures that are truly global. By addressing these issues, TMC will work to increase shareholder value and strive to become a leader in creating automobiles and an motorized society in the 21st century. Going forward, we will continue to adopt a serious and modest attitude in order to become a corporation that earns the respect and support of people all over the world and to promote harmonious growth with society. We thank our shareholders for their continuing support. 2. Company Outline (as of March 31, 2003) (1) Main Business Business Main products Passenger car Century, Celsior, Crown, Aristo, Brevis, Progres, Pronard, Windom, Soarer, Mark II, Verossa, Camry, Comfort, Altezza, Vista, Ipsum, WISH, Gaia, Nadia, Opa, Caldina, Premio, Allion, Succeed Wagon, Prius, Celica, MR-S, Harrier, Kluger V, RAV4 L, RAV4 J, VOLTZ, Cami, Corolla, Allex, Probox Wagon, Raum, Platz, WiLL VS, FunCargo, bB, WiLL CYPHA, ist, Vitz, Duet, Alphard G, Alphard V, Hiace Wagon, Estima T, Estima L, Estima Hybrid, Noah, Voxy, Sparky, Land Cruiser Wagon, Hilux Surf, Volkswagen vehicles Automobile Truck and bus Succeed Van, Probox Van, Dyna, Toyoace, Grand Hiace Van, Hiace, Regiusace Van, Quick Delivery, Urban Supporter, Townace, Liteace, Land Cruiser, Hilux, Coaster Parts & components Various units and parts for overseas production for overseas production Parts Various maintenance parts for both domestic and overseas use Housing Espacio GX, Espacio GR, Espacio EF, Espacio EF Tradage, Since AIII, Since BIII, Since AII, Since Raison-G, Since Raison, Since Neue, Since Oak 21, Since Oak 21-W, Since Smart Stage-f, Since Smart Stage, Vie alpha, Vie alpha mia casa, Vie alpha Tradage (2) Main Sites and Plants Head Office: 1, Toyota-cho, Toyota City, Aichi Prefecture Tokyo Head Office: 1-4-18, Koraku, Bunkyo-ku Tokyo Name Location Name Location Nagoya Office Aichi Prefecture Tokyo Design Research & Laboratory Tokyo Osaka Office Osaka Prefecture Nisshin Training Center Aichi Prefecture Honsha Plant Aichi Prefecture Nagoya Wharf Center Aichi Prefecture Motomachi Plant Aichi Prefecture Tobishima Center Aichi Prefecture Kamigo Plant Aichi Prefecture Tokai Center Aichi Prefecture Takaoka Plant Aichi Prefecture Haruhi Parts Center Aichi Prefecture Miyoshi Plant Aichi Prefecture Inazawa Parts Center Aichi Prefecture Tsutsumi Plant Aichi Prefecture Oguchi Parts Center Aichi Prefecture Myochi Plant Aichi Prefecture Kamigo Logistics Center Aichi Prefecture Shimoyama Plant Aichi Prefecture Tobishima Logistics Center Aichi Prefecture Kinu-ura Plant Aichi Prefecture Kasugai Housing Works Aichi Prefecture Tahara Plant Aichi Prefecture Tochigi Housing Works Tochigi Prefecture Teiho Plant Aichi Prefecture Yamanashi Housing Works Yamanashi Prefecture Hirose Plant Aichi Prefecture Taiwan Office Taipei, Taiwan Higashi-Fuji Technical Shizuoka Prefecture China Office Beijing, China Center Shibetsu Proving Ground Hokkaido (3) Status of Shares 1. Total number of shares authorized 9,740,185,400 shares 2. Total number of shares issued 3,609,997,492 shares Note: Breakdown of increase/decrease in FY2003 - Decrease due to the retirement of shares using retained earnings - 40,000,000 shares 3. Number of shareholders 381,901 4. Major Shareholders (top 10) (unit: thousands of shares otherwise noted) Name Number of Toyota Voting rights Toyota's share Toyota's voting rights shares held ratio (%) holdings ratio (%) The Master Trust Bank of Japan, Ltd. 258,470 7.49 - - Japan Trustee Services Bank, Ltd. 197,467 5.73 - - Toyota Industries Corporation 196,725 5.70 72,316 24.73 Nippon Life Insurance Co. 136,931 3.97 - - Trust & Custody Services Bank, Ltd. 109,944 3.19 - - UFJ Bank Ltd. 104,511 3.03 - - Shinsei Bank, Ltd. 100,506 2.91 - - Sumitomo Mitsui Banking Corp. 95,582 2.77 - - Mitsui Asset Trust and Banking Co., Ltd. 91,314 2.65 4 0.80 Mitsui Sumitomo Insurance Co., Ltd. 81,303 2.36 - - Notes: 1. In addition to the above, Toyota has 158,379 thousand treasury stocks. 2. The percentage of voting rights is calculated based on the total number of shares with voting rights at the end of the term. 3. TMC owns 137 thousand shares, for 2.74% of voting rights, in UFJ Holdings, Inc., a holding company of UFJ Bank Ltd. 4. TMC owns 53 thousand shares, for 0.93% of voting rights, in Sumitomo Mitsui Financial Group, Inc., a holding company of Sumitomo Mitsui Banking Corp. (4) Repurchase, disposal and holding of shares 1. Shares repurchased Repurchases of shares based on the provision of Article 210 of the Commercial Code Common shares 154,576,900 shares Total value of shares repurchased 453,473,138,500 yen Repurchases of shares through the purchase of shares less than a unit (tangen) of shares Common shares 363,726 shares Total value of shares repurchased 1,138,176,670 yen 2. Disposed Shares Not applicable. 3. Shares for which retirement procedures were implemented Common shares 40,000,000 shares 4. Shares held at the end of the fiscal term Common shares 158,379,847 shares Note: On October 1, 2002, in order to effect an exchange of shares to make Toyota Woodyou Home Corporation a wholly-owned subsidiary, 693,659 of TMC shares were transferred and granted in lieu of new shares being issued. (5) Status of Employees Number of employees (changes from end of last term) Average age Average length of service 71,634 (+ 1,143) 37.2 16.1 years (6) Main Subsidiaries and Others 1. Status of main subsidiaries Company Name Capital / Voting rights Main Business subscription ratio million yen % Tokyo Toyota Motor Co., Ltd. 7,537 100.00* Sales of cars Tokyo Toyo-pet Motor Sales Co., Ltd. 7,822 100.00* Sales of cars Osaka Toyopet Co., Ltd. 3,025 100.00 Sales of cars Toyota Tokyo Corolla Co., Ltd. 7,179 100.00* Sales of cars Hino Motors Ltd. 72,717 50.41* Manufacture and sales of automobiles Toyota Motor Kyushu, Inc. 45,000 100.00 Manufacture and sales of automobile bodies Daihatsu Motor Co., Ltd. 28,404 51.41* Manufacture and sales of automobiles Toyota Motor Hokkaido, Inc. 27,500 100.00 Manufacture and sales of automobile parts Araco Corporation 3,188 75.04 Manufacture and sales of automobile bodies & parts Toyota Financial Services Corporation 67,525 100.00 Management of domestic and overseas financial companies Toyota Finance Corporation 9,000 100.00* Finance of automobile sales currencies in thousands Toyota Motor North America, Inc. USD 933,600 100.00 Public relations, and surveys of overall North America Toyota Motor Sales, U.S.A., Inc. USD 365,000 100.00* Sales of cars Toyota Motor Manufacturing North America, USD 1,958,949 100.00* Management of manufacturing Inc. subsidiaries in North America Toyota Motor Manufacturing, Kentucky, USD 1,180,000 100.00* Manufacture and sales of automobiles Inc. Toyota Motor Manufacturing, Indiana, Inc. USD 620,000 100.00* Manufacture and sales of automobiles Toyota Motor Manufacturing Canada Inc. CAD 680,000 100.00 Manufacture and sales of automobiles Toyota Motor Credit Corporation USD 915,000 100.00* Finance of automobile sales Toyota Credit Canada Inc. CAD 60,000 100.00* Finance of automobile sales Toyota Motor Europe S.A./N.V. EUR 1,416,909 100.00 Public relations of overall Europe Toyota Motor Marketing Europe S.A./N.V EUR 95,939 100.00* Sales of cars Toyota Deutschland G.m.b.H EUR 5,726 100.00 Sales of cars Toyota (GB) PLC GBP 2,600 100.00 Sales of cars Toyota France S.A. EUR 2,123 100.00 Sales of cars Toyota Motor Italia S.p.A. EUR 38,958 100.00 Sales of cars Toyota Motor Engineering Manufacturing EUR 1,722,374 100.00* Management of manufacturing Europe S.A./N.V subsidiaries in Europe Toyota Motor Manufacturing (UK) Ltd. GBP 830,000 100.00* Manufacture and sales of automobile parts Toyota Kreditbank G.m.b.H. EUR 28,121 100.00* Finance of automobile sales Toyota Motor Finance (Netherlands) B.V. EUR 908 100.00* Finance of overseas TMC related companies Toyota Financial Services (UK) PLC GBP 94,000 100.00* Finance of automobile sales Toyota Motor Asia Pacific Pte Ltd. SGD 6,000 100.00 Sales of cars Toyota Motor Corporation Australia Ltd. AUD 481,100 100.00 Manufacture and sales of automobiles Toyota Motor Thailand Co., Ltd. THB 7,520,000 86.43 Manufacture and sales of automobiles Toyota Finance Australia Ltd., etc. AUD 120,000 100.00* Finance of automobile sales Toyota Leasing (Thailand), Co., Ltd. THB 3,000,000 75.87* Finance of automobile sales Toyota South Africa Motors (Pty) Ltd. ZAR 700,050 100.00* Manufacture and sales of automobiles Notes: 1. * indicates the ratio of voting rights including voting rights held by subsidiaries. 2. The ratio of voting rights is calculated based on the total number of voting rights at the end of the term. 3. Toyota Motor Europe Marketing & Engineering S.A./N.V. was renamed to Toyota Motor Marketing Europe S.A./N.V. on July 1, 2002. 4. Toyota Motor Europe Manufacturing S.A./N.V. was renamed to Toyota Motor Engineering Manufacturing Europe S.A./N.V. on July 1, 2002. 2. Status of main affiliates Company Name Capital TMC voting rights Main business subscription ratio million yen % Toyota Industries 68,046 *24.74 Manufacture and sales of spinning and weaving machines, industrial Corporation vehicles, and automobiles Aichi Steel Corp. 25,016 *24.80 Manufacture and sales of specialty steel and forged steel products Toyoda Machine Works, 24,805 *24.50 Manufacture and sales of work machine tools and automobile parts Ltd. Toyota Auto Body Co., 8,871 *47.27 Manufacture and sales of automobile bodies Ltd. Toyota Tsusho 26,748 *23.77 Trading and export/import of various products Corporation Aisin Seiki Co., Ltd. 41,140 *24.11 Manufacture and sales of automobiles parts and household appliances Denso Corp. 187,456 *24.68 Manufacture and sales of automobile parts Kanto Auto Works, 6,850 *49.43 Manufacture and sales of automobile bodies Ltd. Toyoda Gosei Co., 25,318 *41.90 Manufacture and sales of automobile parts Ltd. Notes: 1. * indicates the ratio of voting rights including voting rights held by subsidiaries. 2. The ratio of voting rights is calculated based on the total number of voting rights at the end of the term. 3. Results of consolidation â€¢ TMC has 581 consolidated subsidiaries and there are 51 companies accounted for under the equity method. â€¢ Consolidated sales for FY2003 was 16,054.2 billion yen and consolidated net income was 944.6 billion yen. 4. Status of business tie-ups â€¢ October 1966 Reached business tie-up with Hino Motors, Ltd. â€¢ November 1967 Reached business tie-up with Daihatsu Motor Co., Ltd. 5. Status of important joint ventures â€¢ February 1984 Established New United Motor Manufacturing, Inc. for joint production of passenger cars in the U.S. with GM. â€¢ January 2002 Concluded a joint venture contract with Peugeot Citroen Automobiles SA for joint production of compact cars. â€¢ August 2002 Basic agreement signed with China FAW Group Corporation regarding joint automobile operations in China. 6. Status of important sales tie-ups â€¢ July 1991 Reached a basic agreement with Volkswagen AG and its Japanese subsidiary for selling all VW vehicles in the Japanese market. (7) Board of Directors and Corporate Auditors Name Position Main areas of responsibility ( ) indicates position Hiroshi *Chairman of Okuda the Board Iwao *Vice Isomura Chairman Kosuke *Vice Ikebuchi Chairman Fujio Cho *President Noritaka *Executive Housing Group Shimizu Vice President Yoshio *Executive Government & Public Affairs Group / Research Div. Uesaka Vice President Akihiko *Executive Quality Control Group / Research and Development Group / Design Center (General Manager) Saito Vice President Ryuji *Executive General Administration & Personnel Group / Finance & Accounting Group / Information Systems Araki Vice Group / Corporate Planning Div. President Yoshio *Executive Overseas Operations Group Ishizaka Vice President Kosuke *Executive Production Engineering Group / Production Control Transportation Group / TQM Promotion Div. / Shiramizu Vice Environmental Affairs Div. / Operations Management Consulting Div. President Katsuaki *Executive Business Development Group / IT & ITS Group / Purchasing Group / Legal Div. / e-TOYOTA Div. Watanabe Vice President Kazushi *Executive Domestic Sales Operations Group Iwatsuki Vice President Yasuhito Senior Production Engineering Group / Production Control Transportation Group / TQM Promotion Div. / Yamauchi Managing Environmental Affairs Div. / Safety & Health Promotion Div. / Plant Engineering Div. Director Zenji Senior Overseas Operations Group Yasuda Managing Director Senior Government & Public Affairs Group / Environmental Affairs Div. Managing Takashi Director Kamio Hiroyuki Senior Product Management Div. / R&D Management Div. / Technical Administration Div. / Vehicle Watanabe Managing Development Center I / Vehicle Development Center II / Vehicle Development Center III / Director Overseas Product Development Div. / Engineering Administration Div. / Intellectual Property Div. / Prototype Production Div. / Tokyo Engineering Div. / Shibetsu Vehicle Evaluation & Advanced Engineering Div. / Fuel Cell System Development Center (General Manger) Katsuhiro Senior Domestic Sales Operations Group Nakagawa Managing Director Akio Managing Secretarial Div. / General Administration Div. / Global Human Resources Div. / Human Resources Matsubara Director Div. / Nagoya General Administration Div. / Toyota Technical Skills Academy / R&D Management Div. / Technical Administration Div. / Medical Support Div. / Toyota Heritage Div. / Toyota Institute Tokuichi Managing Europe & Africa Operations Center (General Manager) Uranishi Director Tsutomu Managing Power Train Development Center (General Manager) / Motor Sports Div. Tomita Director Yoshito Managing Kinu-ura Plant (General Manager) / Fuel Cell System Development Div. / Fuel Cell Production Kato Director Engineering Div. Kazuo Managing Component & System Development Center (General Manger) / Higashifuji Technical Center Okamoto Director Administration Div. / Future Project Div. / Environmental Affairs Div. / Material Engineering Div. III Shoji Managing Information Systems Group / Corporate Planning Div. / Research Div. / Legal Div. / Business Kondo Director Development Div. / Marine Business Div. / Biotechnology & Afforestation Business Div. Kyoji Managing Vista channel Operations Center (General Manager) / Domestic Sales Planning Div. / Domestic Sasazu Director Marketing Div. Mitsuo Managing Tahara Plant (General Manager) / Global Strategic Production Planning Div. / Production Kinoshita Director Control Div. / Project Planning & Management Div. / Service Parts Administration Div. / Logistics Planning Div. / Production Parts Logistics Div. / Vehicle Logistics Div. / Service Parts Logistics Div. Teruyuki Managing Global Purchasing Center (General Manager) Minoura Director Toshio Managing Takaoka Plant (General Manager) / Miyoshi Plant (General Manager) Mizushima Director Yasuhiko Managing Toyota channel Operations Center (General Manger) / Domestic After Market Operations Center Fukatsu Director (General Manger) / Domestic Advertising/Marketing Div. Takeshi Managing Vehicle Development Center I (General Manger) / Engineering Administration Div. / Tokyo Uchiyamada Director Engineering Div. Masatami Managing R&D Management Div. / Engine Planning Div. / New Engine Development Div. / Engine Engineering Takimoto Director Div. I / Engine Engineering Div. II / Power Train Engineering Div. III / Drive Train Engineering Div. I / Drive Train Engineering Div. II / Electric & Hybrid Vehicle Engineering Div. Akio Managing Asia & China Operations Center (General Manager) / e-TOYOTA Div. / Taiwan Office / China Toyoda Director Office Shoichiro Honorary Toyoda Chairman and Director Toshiaki Director President of Toyota Motor North America, Inc Taguchi Yoshimi Director President of Toyota Motor Sales, U.S.A., Inc. Inaba Shuhei Director President of Toyota Motor Engineering Manufacturing Europe S.A./N.V./ President of Toyota Toyoda Motor Europe S.A./N.V. Shokichi Director Kamigo Plant (General Manager) / Myochi Plant (General Manager) / Shimoyama Plant (General Yasukawa Manager) Tetsuo Director Vehicle Engineering Div. / Chassis System Development Div. (General manager) / Body System Hattori Engineering Div. / Material Engineering Div. I / Material Engineering Div. II Hiroaki Director Network Business Div. / Intelligent Transport Systems Planning Div. / IT & ITS Sales Div. Yoshida Kiyoshi Director Power Train Engineering Div. II (General Manager) / Power Train Management Engineering Div. / Nakanishi Intellectual Property Div. / Higashifuji Technical Administration Div. / Future Project Div. / Fuel Cell System Development Div. Yukitoshi Director The Americas Operations Center (General Manager) / Government & Industrial Affairs Div. Funo Takeshi Director Affiliated Companies Finance Div. / Accounting Div. / Finance Div. (General Manager) Suzuki Atsushi Director President of Toyota Motor Manufacturing North America, Inc. Niimi Hajime Director Global Purchasing Center (Deputy General Manager) / Global Purchasing Planning Div. / Wakayama Purchasing Div. (General Manager) Hiroshi Director Toyopet channel Operations Center (General Manager) / Product Management Div. / DUO Div. Takada Teiji Director Housing Planning Div. (General manager) / Housing Sales Div. / Housing Development Div. / Tachibana Housing Production Div. / Kasugai Housing Works / Tochigi Housing Works / Yamanashi Housing Works Shinichi Director Customer Relations Div. / Quality Div. / Electronics Engineering Div. III / Hirose Plant Sasaki (General Manager) Kazutoshi Director Vehicle Development Center III (General Manager) / Overseas Product Development Div. / Minami Prototype Production Div. Shin Director Public Affairs Administration Dept. / Public Affairs Div. (General Manager) / Tokyo Kanada Secretarial Div. / Tokyo General Administration Div. / Government & Industrial Affairs Div. / Corporate Public Relations Div. Hironobu Director Overseas Customer Service Operations Center (General Manager) / Intelligent Transport Systems Ono Planning Div. / Electronics Engineering Div. I (General Manager) / Electronics Engineering Div. II / Electronics Engineering Div. III Akira Director Oceania, Middle East & Southwest Asia Operations Center (General Manager) Okabe Yoshio Director Vehicle Development Center II (General Manager) / Shibetsu Vehicle Evaluation & Advanced Shirai Engineering Div. (General Manager) Yoichiro Director Corolla channel Operations Center (General Manager) / Domestic Fleet Sales & Conversion Ichimaru Vehicles Div. / Domestic Rental & Leasing Div. Shoji Director Production Engineering Planning Div. (General Manager) / Production Engineering Development Ikawa Div. / Instrumentation Engineering Div. / Production & Logistics Systems Engineering Div. / Power Train & Chassis Components Production Engineering Div. / Engine Production Engineering Div. / Drive Train & Chassis Production Engineering Div. / Casting Engineering Div. / Forging & Stamping Production Engineering Div. / Teiho Plant (General Manager) / Mechatronics Systems Div. / Die & Mold Div. Masuji Director Tsutsumi Plant (General Manager) / Vehicle Planning & Production Engineering Div. / Stamping Arai Production Engineering Div. / Body Assembly Engineering Div. / Surface Finishing Engineering Div. / General Assembly Engineering Div. / Stamping Die & Tool Div. Koichi Ina Director Honsha Plant (General Manager) / Motomachi Plant (General Manager) Yoshikazu Director IT Management Div. / Corporate IT Div. (General Manager) Amano Shinichi Director Netz channel Operations Center (General Manager) / Used Car Business Div. / Dealer Human Kawashima Resources Development Div. Kunio Director Overseas Planning Div. (General Manager) / Overseas Marketing Div. Komada Terukazu Full-time Inoue Corporate Auditor Hideaki Full-time Miyahara Corporate Auditor Yoshiaki Full-time Muramatsu Corporate Auditor Yoshitoshi Corporate Honorary Chairman and Director of Toyota Industries Corporation Toyoda Auditor Yasutaka Corporate Lawyer Okamura Auditor Hiromu Corporate President and C.E.O. of Denso Corporation Okabe Auditor Notes: 1. * indicates that the person can represent the company. 2. Mr. Yoshitoshi Toyoda, Mr. Yasutaka Okamura and Mr. Hiromu Okabe satisfy the qualifications of outside Corporate Auditors as provided in Article 18 Paragraph 1 of 'Special Law of the Commercial Code Concerning the Audit, etc. of Joint Stock Corporations.' 3. Executive Vice President Susumu Miyoshi, Senior Managing Director Koji Hasegawa, Managing Director Akiyoshi Watanabe, Director Tsutomu Kano and Director Katsuyuki Kamio, have resigned upon the expiration of their term of office following FY2002 Ordinary General Shareholders' Meeting on June 26, 2002. (8) Compensation paid to directors and corporate auditors Category No. of Amount paid Remarks persons (million yen) Directors 58 1,228 Directors' compensation: 130 million yen or less per month Auditors' compensation: 13 million yen or less per month Corporate 6 88 Director's compensation does not include that portion of compensation Auditors paid for service as an employee. (Decided by resolution at an extraordinary general shareholders' meeting Total 64 1,317 held on May 13, 1982.) Notes: 1. The above members of persons indicate those as of the end of the term. 2. In addition to the above, the amounts indicated below were also paid. (1) Bonuses for service as an employee: 217 million yen (2) Executive bonuses (decided by resolution at FY2002 Ordinary General Shareholders' Meeting held on June 26, 2002) Directors 600 million yen Corporate Auditors 45 million yen (3) Special service bonuses paid to retiring executives (decided by resolution at FY2002 Ordinary General Shareholders' Meeting held on June 26, 2002) Directors 299 million yen (9) Status of Stock Acquisition Rights Issued Under Preferential Conditions to Persons Other Than Shareholders 1. Number of Stock Acquisition Rights issued: 18,760 (One stock acquisition right represents 100 shares) 2. Class and Number of Shares to be Issued or Transferred upon Exercise of Stock Acquisition Rights Common shares 1,876,000 shares 3. Issue Price of Stock Acquisition Rights No consideration shall be paid at the time of issuance of the Stock Acquisition Rights. 4. The amount to be paid per share issued or transferred upon exercise of each Stock Acquisition Right 2,958.00 yen 5. Conditions of Exercise of Stock Acquisition Rights (i) The exercise period of the Stock Acquisition Rights is from August 1, 2004 to July 31, 2008 (ii) Upon voluntary retirement, age limit retirement, employment transfer or death of a grantee of the Stock Acquisition Right, the exercise of such right will be handled as follows: - In the case of voluntary retirement, age limit retirement or employment transfer: the rights granted to the grantee will be exercisable for up to 6 months following his/her voluntary retirement, age limit retirement or employment transfer. - In the case of death: the rights granted to the grantee shall become void at the time of his/her death. (iii) Other conditions shall be provided for in the stock acquisition right allocation agreements to be executed between TMC and the grantees of the Stock Acquisition Rights. 6. Events and Conditions of Cancellation of Stock Acquisition Rights (i) Stock Acquisition Rights may be cancelled without consideration upon approval by a General Shareholders' Meeting of an agendum on a merger agreement in which TMC is a company to be dissolved, or an agendum on a share exchange agreement or a share transfer by which TMC will become a wholly-owned subsidiary of another company. (ii) TMC may cancel the Stock Acquisition Rights without consideration if a grantee of the Stock Acquisition Rights becomes no longer qualified to exercise such rights pursuant to the provision provided for in (ii) or (iii) of 5 above. 7. Details of Preferential Conditions TMC will issue Stock Acquisition Rights without consideration to directors and employees, etc., of TMC and its affiliates. 8. Names of Persons Who Received Allocations and Number of Stock Acquisition Rights Received Directors of TMC Name Number of Stock Acquisition Rights Name Number of Stock Acquisition Rights Hiroshi Okuda 200 Masatami Takimoto 150 Iwao Isomura 200 Akio Toyoda 150 Kosuke Ikebuchi 200 Shoichiro Toyoda 200 Fujio Cho 200 Toshiaki Taguchi 200 Noritaka Shimizu 200 Yoshimi Inaba 150 Yoshio Uesaka 200 Shuhei Toyoda 150 Akihiko Saito 200 Shokichi Yasukawa 100 Ryuji Araki 200 Tetsuo Hattori 100 Yoshio Ishizaka 200 Hiroaki Yoshida 100 Kosuke Shiramizu 200 Kiyoshi Nakanishi 100 Katsuaki Watanabe 200 Yukitoshi Funo 100 Kazushi Iwatsuki 200 Takeshi Suzuki 100 Yasuhito Yamauchi 150 Atsushi Niimi 100 Zenji Yasuda 150 Hajime Wakayama 100 Takashi Kamio 150 Hiroshi Takada 100 Hiroyuki Watanabe 150 Teiji Tachibana 100 Katsuhiro Nakagawa 150 Shinichi Sasaki 100 Akio Matsubara 150 Kazutoshi Minami 100 Tokuichi Uranishi 150 Shin Kanada 100 Tsutomu Tomita 150 Hironobu Ono 100 Yoshito Kato 150 Akira Okabe 100 Kazuo Okamoto 150 Yoshio Shirai 100 Shoji Kondo 150 Yoichiro Ichimaru 100 Kyoji Sasazu 150 Shoji Ikawa 100 Mitsuo Kinoshita 150 Masuji Arai 100 Teruyuki Minoura 150 Koichi Ina 100 Toshio Mizushima 150 Yoshikazu Amano 100 Yasuhiko Fukatsu 150 Shinichi Kawashima 100 Takeshi Uchiyamada 150 Kunio Komada 100 Directors of TMC's Affiliates, etc. Company Name Number of Stock Acquisition Rights Toyota Motor Sales, U.S.A., Inc. James E. Press 100 Toyota Motor Manufacturing, Kentucky, Inc. Gary L. Convis 50 Bodine Aluminum Inc. Robert W. Lloyd 20 Toyota Motor Manufacturing Canada Inc. Real C. Tanguay 50 Canadian Autoparts Toyota Inc. Gary A. Smallenberg 20 Toyota Motor Credit Corporation George E. Borst 50 Toyota Credit Canada Inc. Kenneth. G. Arnold 20 Toyota Motor Marketing Europe S.A./N.V. Panayiotis J. Athanasopoulos 50 Toyota (GB) PLC Robert G. Smith 20 Toyota Motor Italia S.p.A. Massimo Nordio 20 Toyota Motor Manufacturing (UK) Ltd. Alan J. Jones 50 Toyota Motor Manufacturing (UK) Ltd. Bryan S. Jackson 20 Toyota Motor Manufacturing (UK) Ltd. Carl Klemm 20 Toyota Kreditbank GmbH Andreas Bullock 20 Toyota Kreditbank GmbH Walter Leyendecker 20 Toyota Kreditbank GmbH Peter Pollhammer 20 Toyota Financial Services (UK) PLC David T. Betteley 20 Toyota Motorsport GmbH Ove Andersson 20 Toyota New Zealand Ltd. Robert L. Field 20 Toyota Motor Corporation Australia Ltd. John H. Conomos 20 Toyota Motor Corporation Australia Ltd. David C. Buttner 20 Toyota Motor Corporation Australia Ltd. Micheal D. Harvie 20 Toyota Motor Corporation Australia Ltd. Alan D. McGarrigle 20 Toyota Finance Australia Ltd. Ross P. Springer 20 Executive Technical Advisor of TMC Name Number of Stock Acquisition Rights Ichiro Suzuki 100 Norihiko Nakamura 100 Nanpachi Hayashi 100 Employees of TMC and TMC's Affiliates (top 10) Company Name Number of Stock Acquisition Rights Toyota Motor North America, Inc. James R. Olson 50 Toyota Motor North America, Inc. Douglas M. West 50 Toyota Motor Sales, U.S.A., Inc. Donald V. Esmond 50 Toyota Motor Sales, U.S.A., Inc. J. Davis Illingworth 50 Toyota Motor Corporation Keiji Aoki 20 Toyota Motor Corporation Shinji Aoto 20 Toyota Motor Corporation Takao Akatsuka 20 Toyota Motor Corporation Tetsuo Agata 20 Toyota Motor Corporation Akio Asai 20 Toyota Motor Corporation Makoto Asai 20 UNCONSOLIDATED BALANCE SHEET (Million yen; amounts less than one million yen are omitted.) FY2003 FY2003 (As of (As of March 31, 2003) March 31, 2003) Assets Liabilities Current assets 3,620,881 Current liabilities 2,040,821 Cash and deposits 113,802 Trade notes payable 967 Trade accounts receivable 919,468 Trade accounts payable 765,041 Marketable securities 1,373,742 Current portion of bonds 50,000 Finished goods 140,516 Accrued liabilities 374,758 Raw materials 13,807 Income taxes payable 221,320 Work in process 64,881 Accrued expenses 401,121 Supplies 7,599 Deposits received 184,763 Short-term loans 321,986 Allowance for EXPO 2005 Aichi 644 Deferred income taxes 250,469 Other current liabilities 42,205 Other current assets 423,307 Long-term liabilities 848,679 Less : allowance for doubtful (8,700) Bonds 500,600 accounts Allowance for retirement benefits 293,039 Other long-term liabilities 55,039 Fixed assets 4,971,941 Total liabilities 2,889,501 Property, plant, and equipment 1,269,042 Shareholders' equity Buildings 341,722 Common stock 397,049 Structures 40,908 Capital surplus 416,970 Machinery and equipment 336,077 Capital reserve 416,970 Vehicle and delivery equipment 10,528 Retained earnings 5,287,601 Tools, furniture, and fixtures 81,750 Legal reserve 99,454 Land 400,863 Reserve for losses on overseas 396 investments Construction in progress 57,190 Reserve for special depreciation 1,547 Investments and other assets 3,702,899 Reserve for reduction of 5,004 acquisition cost of fixed assets Investments in securities 1,720,649 General reserve 4,440,926 Investments in subsidiaries 1,242,883 Unappropriated retained earnings at 740,272 end of year Long-term loans 340,999 year> Deferred income taxes 298,167 Net unrealized gains on other 69,019 securities Other investments 111,398 Less: treasury stock (467,320) Less : allowance for doubtful (11,200) Total shareholders' equity 5,703,321 accounts Total assets 8,592,823 Total liabilities and shareholders' 8,592,823 equity Notes: 1. Short-term receivable from subsidiaries: 677,715 million yen 2. Long-term receivable from subsidiaries: 245,301 million yen 3. Short-term payable to subsidiaries: 304,065 million yen 4. Accumulated depreciation for 'property, plant, and equipment': 3,456,807 million yen 5. The breakdown of main investments in securities in foreign currencies (acquisition cost in foreign currencies) is as follows: 411,263 thousand U.S. dollars 306,471,012 thousand Indonesian rupiahs 68,615 thousand pounds sterling (GBP) 139,807 thousand Malaysian ringgit 1,221,753 thousand New Taiwan dollars 1,050,000 thousand Czech koruna 296,209 thousand Chinese yuan 1,265,838 thousand Philippine pesos 121,428 thousand Norwegian kroner 20,046 thousand euros 33,591,048 thousand Colombian pesos 98,250 thousand Pakistan rupees 6,474 thousand Canadian dollars Main subsidiaries' shares, capital in foreign currencies (acquisition cost in foreign currencies), are as follows: 2,665,477 thousand euros 1,098,384 thousand U.S. dollars 694,000 thousand Canadian dollars 513,179 thousand Australian dollars 626,898 thousand Brazilian reals 9,760,000 thousand Indian rupees 8,492,669 thousand Thai baht 1,457,952 thousand South African rand 3,232,233 thousand New Taiwan dollars 102,100 thousand pounds sterling (GBP) 90,699 thousand Argentine pesos 2,150,000 thousand Venezuelan bolivars 452,020 thousand Chinese yuan 950,000 thousand Philippine pesos 189,454 thousand Denmark kroner 291,032 thousand Swedish kroner 6. Assets pledged: 10,124 million yen as investments in securities 7. Guarantees: 119,699 million yen 8. Export bill discounted: 4,725 million yen 9. Balance of stock acquisition rights issued (1) Details of stock acquisition rights (balance, exercise price, and shares to be issued) in accordance with the provisions of the Commercial Code Articles 280-20 and 281-21 Name Balance Exercise price Shares to be issued Stock acquisition rights --- 2,958.00 yen Common stock (2) Details of bonds with warrants (balance, exercise price, and shares to be issued) in accordance with the provisions of the former Commercial Code Article 341-8 Name Balance Exercise price Shares to be issued First series of unsecured bonds with warrants, due 2005 489 million yen 4,203.00 yen Common stock 10. Net income per share for this term: 178.12 yen (Effective FY2003, TMC adopted accounting standards concerning net income per share to calculate 'Net income per share.' As a result of this change, 'Net income per share' is down by 5.57 yen per share compared to the previous standards.) 11. The net increase of assets is 69,019 million yen as they are stated at fair value in accordance with the Commercial Code (Article 290 Paragraph 1 Item 6). 12. The retirement benefit trust is established to be allocated for the retirement benefits of the corporate pension system, not to be allocated for the severance benefits of the severance indemnity plan. 13. The allowance for the Expo 2005 Aichi Japan is an allowance specified in the provisions of the Commercial Code Article 287-2. UNCONSOLIDATED STATEMENTS OF INCOME (Million yen; amounts less than one million yen are omitted.) FY2003 (April 2002 through March 2003) Ordinary profits and losses Operating revenue and expenses Operating revenue 8,739,310 Net sales 8,739,310 Operating expenses 7,877,987 Cost of sales 6,932,356 Selling, general and administrative expenses 945,630 Operating income 861,323 Non-operating income and expenses Non-operating income 167,814 Interest income 20,482 Dividend income 45,240 Other non-operating income 102,090 Non-operating expenses 136,460 Interest expenses 11,023 Other non-operating expenses 125,437 Ordinary income 892,676 Extraordinary gains and losses Extraordinary gains 162,457 Gains on return of substituted portion of 162,457 employee pension fund Income before income taxes 1,055,134 Income taxes - current 432,000 Income taxes - deferred (10,925) Net income 634,059 Unappropriated retained earnings brought forward 306,006 Retirement of shares 142,992 Interim cash dividends 56,801 Unappropriated retained earnings at end of year 740,272 Notes: 1. Sales to subsidiaries: 4,740,627 million yen 2. Purchases from subsidiaries: 838,898 million yen 3. Non-operating transaction with subsidiaries: 69,601 million yen 4. In conjunction with implementation of the Defined Benefit Corporate Pension Plan Law, TMC received approval as of April 1, 2002, from the Minister of Health, Labour and Welfare, for exemption from payment of future benefits regarding the substituted portion of the employee pension fund. TMC applied the transitional provisions specified in paragraph 47-2 of the 'Practical Guidelines of Accounting for Retirement Benefits (Interim Report),' and recognized an extinguishment of retirement benefit obligation with respect to such substituted portion as of the date of the approval. As a result, TMC has accounted for 162,457 million yen as 'Gains on return of substituted portion of the employee pension fund' in extraordinary gains. SIGNIFICANT ACCOUNTING POLICIES 1. Valuation of securities: Stocks of subsidiaries are stated at cost determined using the moving average method. Other securities: Other securities with fair value are stated at fair value based on market prices, etc., at end of year. Other securities not practicable to fair value are stated at cost determined using the moving average method. 2. Valuation of inventories: Finished goods, work in process, and supplies are principally stated at cost, as determined by the periodic average method. Raw materials are stated at the lower of cost or market value, as determined by last-in-first-out method. 3. Depreciation of property, plant and equipment is computed by the declining balance method. 4. Significant reserves: Allowance for doubtful accounts is stated based on evaluation of the collectability of recovery of accounts receivable. To prepare for losses from bad debt from sales and other credits, besides the maximum amount allowed under the Corporation Tax Laws, allowances were also made in consideration of the relative ease or difficulty of collectability. For provision of retirement benefits for employees (including those who have already retired), the amount expected at the end of the term is accounted for on the basis of the estimated retirement benefit obligations and severance benefits at the end of the term. 5. Consumption taxes are computed based on the net-of-tax method. Proposed Appropriation of Retained Earnings Amount (yen) Unappropriated retained earnings at end of year 740,272,789,955 Reversal of reserve for losses on overseas investments 141,439,278 Reversal of reserve for special depreciation 49,052,321 Total 740,463,281,554 The above will be appropriated as follows: Cash dividends 69,032,352,900 per share 20 Bonus to Directors 660,000,000 Bonus to Corporate Auditors 51,000,000 Reserve for reduction of acquisition cost of fixed assets 378,342,271 General reserve 200,000,000,000 Unappropriated retained earnings to be carried forward 470,341,586,383 Note: An interim dividend of /16 per share was paid on November 26, 2002, to shareholders (including the beneficial shareholders notified by Japanese Securities Depository Center) or registered pledgee of record as of September 30, 2002. Total interim dividends were paid in amount of 56,801,448,160 yen. Independent Auditors' Report (English Translation) April 30, 2003 To the Board of Directors Toyota Motor Corporation ChuoAoyama Audit Corporation Kazunori Tajima , CPA Representative and Engagement Partner Masaki Horie , CPA Representative and Engagement Partner Koji Hatsukawa , CPA Representative and Engagement Partner Fusahiro Yamamoto , CPA Representative and Engagement Partner We have audited, pursuant to Article 2 of the 'Special Law of the Commercial Code Concerning the Audit, etc. of Stock Corporations (Kabusiki-Kaisya)' of Japan, the financial statements, which consist of the unconsolidated balance sheet, unconsolidated statement of income, business report (limited to the accounting figures included therein) and the proposed appropriation of retained earnings, and supplementary schedules (limited to the accounting figures included therein) of Toyota Motor Corporation (hereinafter referred to as the 'Company') for the 99th fiscal year from April 1, 2002 to March 31, 2003. The portion of the business report and supplementary schedules subject to our audit are those derived from the accounting books and records of the Company. These financial statements and supplementary schedules are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements and supplementary schedules based on our audit. We conducted our audit in accordance with auditing standards generally accepted in Japan. Those standards require that we obtain reasonable assurance about whether the financial statements and supplementary schedules are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements and supplementary schedules. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. Our audit included auditing procedures applied to subsidiaries of the Company as were considered necessary. As a result of our audit, it is our opinion that: (1) The unconsolidated balance sheet and unconsolidated statement of income present fairly the financial position and results of operation of the Company in conformity with the applicable laws and regulations of Japan and the Articles of Incorporation. (2) The business report of the Company (limited to the accounting figures included therein) presents fairly the Company's affairs in conformity with the applicable laws and regulations of Japan and the Articles of Incorporation. (3) The proposed appropriation of retained earnings is presented in conformity with the applicable laws and regulations of Japan and the Articles of Incorporation. (4) There is nothing in respect of the supplementary schedules (limited to the accounting figures included therein) that is required to be mentioned by the provisions of the Commercial Code of Japan. We have no interest in or relationship with the Company which is required to be disclosed pursuant to the provisions of the Certified Public Accountant Law of Japan. ------------------------------------- Notice to Readers: The original financial statements, which consist of unconsolidated balance sheet, unconsolidated statement of income, business report and proposed appropriation of retained earnings, and supplementary schedules, are written in Japanese. Supplementary schedules have been omitted in the accompanying financial statements. Board of Corporate Auditors' Report (Certified Copy) Audit Report The Board of Corporate Auditors has prepared this Audit Report based on reports from each of the TMC Corporate Auditors on the auditing methods and results pertaining to the conduct of duties by the Directors of Toyota Motor Corporation during FY2003 extending from April 1, 2002 through March 31, 2003, and report as follows. 1. Overview of Corporate Auditors' Auditing Method Based on auditing guidelines and the audit plan adopted by the Board, the Corporate Auditors obtained reports on operational matters from Directors and senior staff people who attended Directors' meetings and other important meetings. The Corporate Auditors also reviewed important documents, surveyed operations and assets at company head offices, production facilities, and business offices, and obtained reports from subsidiaries as needed. In addition, the Corporate Auditors received reports and explanations from the accounting firm to review calculation documents and their attached statements. With respect to 'kyogyo torihiki' (competitive transactions) by Directors, profit-contradictory transactions between Directors and the company, the granting by the company of benefits without consideration, non-regular transactions with subsidiaries or shareholders, acquisition and disposal of treasury stock, and other transactions, the situation of these transactions was reviewed in detail when necessary as well as being subjected to the above mentioned auditing method. 2. Result of Audit (1) The auditing methods employed by the ChuoAoyama Audit Corporation, which was retained to conduct the audit, and the results of the audit are correct. (2) The Business Review accurately represents the company's operating situation as required by law. (3) The proposed appropriation of retained earnings is appropriate in light of the company's asset situation and other circumstances. (4) The supporting materials accurately represent the content listed, and contain nothing contrary to provisions of law. (5) The Directors engaged in no improprieties or violations of law or convention in their conduct of their duties including those duties in subsidiaries. Our audit found no 'kyogyo torihiki' by Directors, no profit-contradictory transactions between Directors and the company, no granting by the company of benefits without consideration, no non-regular transactions with subsidiaries or shareholders, no acquisition or disposal of treasury stock that violate Directors' duties. May 7, 2003 Toyota Motor Corporation Board of Corporate Auditors Full-time Corporate Auditor Terukazu Inoue Full-time Corporate Auditor Hideaki Miyahara Full-time Corporate Auditor Yoshiaki Muramatsu Corporate Auditor Yoshitoshi Toyoda Corporate Auditor Yasutaka Okamura Corporate Auditor Hiromu Okabe Note: Mr. Yoshitoshi Toyoda, Mr. Yasutaka Okamura and Mr. Hiromu Okabe satisfy the qualifications of outside corporate auditors as provided in Paragraph 1, Article 18 of 'Special Law of the Commercial Code Concerning the Audit, etc., of Joint Stock Corporations.' Reference Documents Pertaining to Exercise of Voting Rights 1. Number of the voting rights of all the shareholders: 33,888,281 2. Proposed resolution and reference information < Resolutions 1 to 8 Proposed by the Company > Proposed resolutions 1 through 8 are TMC proposals. Proposed Resolution 1: Approval of Proposed Appropriation of Retained Earnings for the FY2003 Term The proposal calls for profit distribution as described in the appended document (p. 26). TMC regards shareholders' return as one of our most important management goals, and we actively conduct the company's business in such a way as to solidify and enhance the well-being of the company as a whole. We hope to meet shareholders' expectations in terms of dividends, based on the principle of dividend consistency and giving overall consideration to company performance and payout ratio. We would like to offer a dividend of 20 yen per share for year-end dividend. Combined with the interim dividend, this will result in a total shareholder dividend for the fiscal year ended March 31, 2003 of 36 yen per share, representing a payout ratio of 19.8%. Proposed Resolution 2: Amendment of the Articles of Incorporation (Summary of the Proposed Resolution and Reason for the Amendment) In conjunction with the coming into force of the Law Partially Revising the Commercial Code (Law no. 44 of 2002), the quorum requirements for special resolutions under Article 343 of the Commercial Code have been eased in order to form a quorum more steadily, and the necessary changes concerning the system for invalidation of stock certificates will also be made. In addition, in conjunction with the introduction of a new management system centered on streamlining number of directors, introduction of the new positions of managing officers, and making the decision-making structure less vertical intended to increase the speed of managerial processes and operations, the number of directors will be reduced, the term of directors' office shortened, and the position of managing director eliminated. The content of the proposed amendments appears below. The provisions of Articles 13, 15, and 16 of the proposed revisions to the Articles of Incorporation will take effect at the close of this General Shareholders' Meeting. (Amended parts are underlined.) Current Provisions Proposed Amendment CHAPTER II. SHARES CHAPTER II. SHARES (Transfer Agent) (Transfer Agent) Article 6 Article 6 1. (Omitted) 1. (No change) 2 (Omitted) 2. (No change) 3. The register of shareholders (including the 3. The register of shareholders (including the register of beneficial shareholders; hereinafter the same register of beneficial shareholders; hereinafter the same interpretation being applicable) of the Corporation shall interpretation being applicable) ((and the register of lost be kept at the office of the transfer agent. The stock certificates)) shall be kept at the office of the registration of the transfer of shares, the purchase of transfer agent. The registration of the transfer of shares, shares constituting less than one unit (tangen) and any the purchase of shares constituting less than one unit other matters related to the shares shall be handled by (tangen) and any other matters related to the shares shall the transfer agent and not by the Corporation. be handed by the transfer agent and not by the Corporation. CHAPTER III. GENERAL MEETINGS OF SHAREHOLDERS CHAPTER III. GENERAL MEETINGS OF SHAREHOLDERS (Resolutions) (Resolutions) Article 10 Article 10 1. (Omitted) 1. (No change) 2. (Newly established) ((2. Special resolutions as specified by Article 343 of the Commercial Code shall be passed by not less than two-thirds of the voting rights held by the attending shareholders who hold not less than one-third of the voting rights of all shareholders.)) (Amended parts are underlined.) Current Provisions Proposed Amendment CHAPTER IV. DIRECTORS AND BOARD OF DIRECTORS CHAPTER IV. DIRECTORS AND BOARD OF DIRECTORS (Number of Directors) (Number of Directors) Article 13 Article 13 The Corporation shall have no more than sixty The Corporation shall have no more than ((thirty (60) Directors. (30))) Directors. (Term of Office of Directors) (Term of Office of Directors) Article 15 Article 15 1. The term of office of Directors shall expire at 1. The term of office of Directors shall expire at the closing of the ordinary general meeting of shareholders the closing of the ordinary general meeting of to be held for the last fiscal year of the Corporation shareholders to be held for the last fiscal year of the ending within ((two (2))) years after their assumption of Corporation ending within ((one (1) year)) after their office. assumption of office. 2. (Omitted) 2. (No change) (Representative Directors and Executive Directors) (Representative Directors and Executive Directors) Article 16 Article 16 1. (Omitted) 1. (No change) 2. The Corporation may, by a resolution of the Board 2. The Corporation may, by a resolution of the of Directors, appoint one Chairman of the Board, one Board of Directors, appoint one Chairman of the Board, one President and one or more Vice Chairmen of the Board, President and one or more Vice Chairmen of the Board, Executive Vice Presidents, Senior Managing Directors and Executive Vice Presidents ((and)) Senior Managing ((Managing Directors.)) Directors. Proposed Resolution 3: Election of 27 Directors All the Directors will resign at the end of this shareholders' meeting due to the introduction of the new management system. Accordingly, please elect a total of 27 Directors. The candidates for Directors are as follows: Following are the nominees no. Name Main occupation Brief career summary No. of TMC (birth shares date) owned 1 Hiroshi TMC Chairman Apr. 1955 Joined Toyota Motor Sales Co., Ltd. 64,963 Okuda Jul. 1982 TMC Director (12/29/1932) Sep. 1987 TMC Managing Director Sep. 1988 TMC Senior Managing Director Sep. 1992 TMC Executive Vice President Aug. 1995 TMC President Jun. 1999 TMC Chairman 2 Iwao TMC Vice Chairman Apr. 1956 Joined TMC 20,300 Isomura Sep. 1984 TMC Director (12/21/1932) Sep. 1988 TMC Managing Director Sep. 1990 TMC Senior Managing Director Sep. 1992 TMC Executive Vice President Jun. 1996 TMC Vice Chairman 3 Kosuke TMC Vice Chairman Apr. 1960 Joined TMC 15,080 Ikebuchi Sep. 1988 TMC Director (3/4/1937) Sep. 1994 TMC Managing Director Jun. 1996 TMC Senior Managing Director Jun. 1999 TMC Executive Vice President Jun. 2001 TMC Vice Chairman 4 Fujio Cho TMC President Apr. 1960 Joined TMC 25,105 (2/2/1937) Sep. 1988 TMC Director Dec. 1988 Toyota Motor Manufacturing, U.S.A., Inc. President Sep. 1994 TMC Managing Director Oct. 1994 Retired from Toyota Motor Manufacturing, U.S.A., Inc. Jun. 1996 TMC Senior Managing Director Jun. 1998 TMC Executive Vice President Jun. 1999 TMC President 5 Akihiko TMC Executive Vice President Apr. 1968 Joined TMC 116,757 Saito (General Manager, Design Center) (7/24/1940) Sep. 1991 TMC Director Jun. 1996 TMC Managing Director Jun. 1998 TMC Senior Managing Director Jun. 2001 TMC Executive Vice President (Non-TMC Executive Duties) Executive Vice President of Calty Design Research, Inc. 6 Ryuji TMC Executive Vice President Apr. 1962 Joined TMC 108,293 Araki Sep. 1992 TMC Director (1/29/1940) Jun. 1997 TMC Managing Director Jun. 1999 TMC Senior Managing Director Jun. 2001 TMC Executive Vice President (Non-TMC Executive Duties) Chairman of Toyota Finance Corporation Chairman of Toyota Finance Finland Oy Chairman of Toyota Credit Canada Inc. Chairman of Toyota Financial Services (UK) PLC Chairman of Toyota Finance Australia Ltd. 7 Yoshio TMC Executive Vice President Mar. 1964 Joined Toyota Motor Sales Co., Ltd. 12,310 Ishizaka Sep. 1992 TMC Director (1/9/1940) Jun. 1996 Toyota Motor Sales, U.S.A. Inc. President Jun. 1999 Retired from Toyota Motor Sales, U.S.A. Inc. Jun. 1999 TMC Senior Managing Director Jun. 2001 TMC Executive Vice President (Non-TMC Executive Duties) Chairman of Toyota Motor Marketing Europe S.A./N.V. 8 Kosuke TMC Executive Vice President Apr. 1963 Joined TMC 10,000 Shiramizu Sep. 1992 TMC Director (8/28/1940) Jun. 1997 TMC Managing Director Jun. 1999 TMC Senior Managing Director Jun. 2001 TMC Executive Vice President (Non-TMC Executive Duties) Chairman of Toyota Motor Technical Center (China) Co., Ltd. Chairman of Tianjin Toyota Forging Co., Ltd. Chairman of Tianjin Fengjin Autoparts Co., Ltd. Vice Chairman of Tianjin Toyota Motor Engine Co., Ltd. 9 Katsuaki TMC Executive Vice President Apr. 1964 Joined TMC 12,171 Watanabe Sep. 1992 TMC Director (2/13/1942) Jun. 1997 TMC Managing Director Jun. 1999 TMC Senior Managing Director Jun. 2001 TMC Executive Vice President (Non-TMC Executive Duties) Vice Chairman of Gamagori Marine Development Co., Ltd. 10 Kazushi TMC Executive Vice President Apr. 1964 Joined Toyota Motor Sales Co., Ltd. 12,110 Iwatsuki Sep. 1994 TMC Director (6/26/1941) Jun. 1997 Retired from TMC Director Jun. 1997 Osaka Toyopet Co., Ltd. President Jun. 1999 Retired from Osaka Toyopet Co., Ltd. President Jun. 1999 TMC Senior Managing Director Jun. 2001 TMC Executive Vice President 11 Yasuhito TMC Senior Managing Director Apr. 1968 Joined TMC 10,936 Yamauchi Jun. 1995 TMC Director (1/2/1942) Jun. 1999 TMC Managing Director Jun. 2001 TMC Senior Managing Director (Non-TMC Executive Duties) Chairman of Siam Toyota Manufacturing Co., Ltd. President of TERRA Corporation 12 Zenji TMC Senior Managing Director Apr. 1965 Joined TMC 22,675 Yasuda Jun. 1996 TMC Director (4/19/1942) Jun. 1999 TMC Managing Director Jun. 2001 TMC Senior Managing Director 13 Takashi TMC Senior Managing Director Apr. 1965 Joined TMC 15,100 Kamio Jun. 1996 TMC Director (11/27/1942) Jun. 1999 TMC Managing Director Jun. 2001 TMC Senior Managing Director 14 Hiroyuki TMC Senior Managing Director Apr. 1967 Joined TMC 6,315 Watanabe (Fuel Cell Development Center Jun. 1996 TMC Director (3/4/1943) General Manager) Jun. 1999 TMC Managing Director Jun. 2001 TMC Senior Managing Director 15 Katsuhiro TMC Senior Managing Director Apr. 1965 Joined Ministry of International Trade 7,000 Nakagawa and Industry (3/11/1942) Jul. 1997 Ministry of International Trade and Industry Vice-Minister for International Affairs Jun. 1998 Retired from Ministry of International Trade and Industry Vice-Minister for International Affairs Jun. 2001 TMC Managing Director Jun. 2002 TMC Senior Managing Director 16 Akio TMC Managing Director Apr. 1966 Joined Toyota Motor Sales Co., Ltd. 14,044 Matsubara Jun. 1996 TMC Director (1/12/1942) Jun. 2001 TMC Managing Director (Non-TMC Executive Duties) President of OJT Solutions, Inc. President of Toyota Personnel Support Corporation 17 Tokuichi TMC Managing Director Apr. 1966 Joined TMC 15,333 Uranishi (Europe & Africa Operations Center Jun. 1996 TMC Director (5/3/1942) General Manager) Jun. 2001 TMC Managing Director (Non-TMC Executive Duties) Vice Chairman of Bauda A/S Vice Chairman of Toyota Norge AS Chairman of Toyota Nordic A/S 18 Kazuo TMC Managing Director (Component & Apr. 1967 Joined TMC 11,264 Okamoto System Development Center General Jun. 1996 TMC Director Manager) Jun. 2001 TMC Managing Director (2/20/1944) (Non-TMC Executive Duties) Vice Chairman of Toyota Motor Technical Center (China) Co., Ltd. 19 Kyoji TMC Managing Director Apr. 1967 Joined Toyota Motor Sales Co., Ltd. 12,092 Sasazu (Vista channel Operations Center Jun. 1997 TMC Director General Manager) Jun. 2001 TMC Managing Director (6/11/1944) 20 Mitsuo TMC Managing Director Apr. 1968 Joined TMC 10,070 Kinoshita (Tahara Plant General Manager) Jun. 1997 TMC Director (1/1/1946) Jun. 2001 TMC Managing Director 21 Teruyuki TMC Managing Director Apr. 1967 Joined TMC 6,116 Minoura (Global Purchasing Center General Jun. 1998 TMC Director Manager) Jun. 1998 Toyota Motor Manufacturing North America, (10/5/1943) Inc. President Jun. 2002 Retired from Toyota Motor Manufacturing North America, Inc. President Jun. 2002 TMC Managing Director 22 Takeshi TMC Managing Director Apr. 1969 Joined TMC 10,464 Uchiyamada (Vehicle Development Center1 Jun. 1998 TMC Director General Manager) Jun. 2001 TMC Managing Director (8/17/1946) 23 Masatami TMC Managing Director Apr. 1970 Joined TMC 10,100 Takimoto Jun. 1999 TMC Director (1/13/1946) Jun. 2002 TMC Managing Director 24 Akio TMC Managing Director Apr. 1984 Joined TMC 529,891 Toyoda (Asia & China Operations Center Jun. 2000 TMC Director (5/3/1956) General Manager / Jun. 2002 TMC Managing Director e-TOYOTA Div. (Non-TMC Executive Duties) General Manager) President of Gazoo Media Service Co. Chairman of Toyota Motor Asia Pacific Pte. Ltd. Chairman of Toyota Motor (China) Ltd. Chairman of Toyota Motor Vietnam Co., Ltd. Vice Chairman of Tianjin Toyota Motor Co., Ltd. Chairman of Toyota Motor (China) Investment Co., Ltd. Vice President of Sichuan Toyota Motor Co., Ltd. 25 Shoichiro TMC Honorary Chairman and Director Jul. 1952 Joined TMC 15,136,193 Toyoda Jul. 1952 TMC Director (2/27/1925) Jan. 1961 TMC Managing Director Oct. 1967 TMC Senior Managing Director Dec. 1972 TMC Executive Vice President Jun. 1981 TMC Director Jun. 1981 Toyota Motor Sales Co., Ltd. President Jul. 1982 TMC President Sep. 1992 TMC Chairman Jun. 1999 TMC Honorary Chairman and Director (Non-TMC Executive Duties) Director of Toyota Central Research & Development Laboratories, Inc. Director of Genesis Research Institute, Inc. Chairman of Towa Real Estate Co., Ltd. 26 Yoshimi TMC Director (Toyota Motor Sales, Apr. 1968 Joined Toyota Motor Sales Co., Ltd. 15,000 Inaba U.S.A., Inc. President) Jun. 1997 TMC Director (2/24/1946) Jun. 1999 Toyota Motor Sales, U.S.A., Inc. President (Non-TMC Executive Duties) President of Toyota Motor Sales, U.S.A., Inc. President of Toyota Logistics Services, Inc. Chairman of Quality Port Processors, Inc. Vice President of Calty Design Research, Inc. President of TMS Mexico Investment, Inc. 27 Shuhei TMC Director (Toyota Motor Apr. 1977 Joined TMC 222,207 Toyoda Engineering Manufacturing Europe Jun. 1998 TMC Director S.A. /N.V. President / Toyota Motor Jun. 2001 TMC Managing Director Europe S.A./N.V. President) Sep. 2001 TMC Director (6/25/1947) Sep. 2001 Toyota Motor Europe Manufacturing S.A. President Apr. 2002 Toyota Motor Europe S.A. /N.V. President Jul. 2002 Toyota Motor Europe Manufacturing S.A. / N.V. was renamed to Toyota Motor Engineering & Manufacturing Europe S.A. /N.V. (Non-TMC Executive Duties) President of Toyota Motor Engineering & Manufacturing Europe S.A. /N.V. Chairman of Toyota Motor Manufacturing (UK) Ltd. President of Toyota Motor Europe S.A./N.V. Chairman of Toyota Motor Manufacturing Turkey Inc. Chairman of Toyota Motor Industries Poland Sp. zo. o. Note: There are no special interests between each nominee and the company. Proposed Resolution 4: Election of 6 Corporate Auditors The four Corporate Auditors, Mr. Terukazu Inoue, Mr. Hideaki Miyahara, Mr. Yoshitoshi Toyoda and Mr. Yasutaka Okamura, will retire upon the expiration of their term of office at the end of this shareholders' meeting and Corporate Auditor Mr. Yoshiaki Muramatsu will resign at the end of this shareholders' meeting. Accordingly, please elect six new Corporate Auditors. The proposal of this resolution at this Ordinary General Shareholders' Meeting is being made with the agreement of the Board of Corporate Auditors. Following is the nominee no. Name Main occupation Brief career summary No. of TMC (birth shares owned date) 1 Hideaki TMC Full-time Corporate Auditor Apr. 1965 Joined Toyota Motor Sales Co., 19,600 Miyahara Ltd. (7/20/1942) Jun. 1996 TMC Director Jun. 1999 TMC Managing Director Jun. 2000 TMC Full-time Corporate Auditor 2 Yasutaka Lawyer May 1992 The Supreme Public Prosecutors 0 Okamura Office Public Prosecutor General (6/13/1929) Dec. 1993 Retired from the Supreme Public Prosecutors Office Public Prosecutor General Feb. 1994 Registered as a Lawyer Jun. 1997 TMC Corporate Auditor 3 Yoichi Assistant Director, Research Institute of Apr. 1978 The University of Tokyo School of 0 Kaya Innovative Technology for the Earth Engineering Professor (5/18/1934) Mar. 1995 Retired from the University of Tokyo School of Engineering Professor The University of Tokyo Honorary Professor Apr. 1995 Keio University Graduate School Professor Apr. 1998 Research Institute of Innovative Technology for the Earth Assistant Director 4 Tadashi President of Toyota Industries Corporation Apr. 1968 Joined Toyoda Automatic Loom 3,000 Ishikawa Works, Ltd. (10/11/1941) Jun. 1986 Toyoda Automatic Loom Works, Ltd. Director Jun. 1989 Toyoda Automatic Loom Works, Ltd. Managing Director Jun. 1993 Toyoda Automatic Loom Works, Ltd. Senior Managing Director Jun. 1997 Toyoda Automatic Loom Works, Ltd. Vice President Jun. 1999 Toyoda Automatic Loom Works, Ltd. President Aug. 2001 Toyoda Automatic Loom Works, Ltd. was renamed to Toyota Industries Corporation (Non-TMC Executive Duties) President of Toyota Industries Corporation 5 Yoshiro General Manager, TQM Promotion Div. Apr. 1974 Joined TMC 5,000 Hayashi Jan. 1996 Myochi Plant Foundry Div. General (7/2/1948) Manager Jan. 1998 Tahara Plant Manufacturing Div. III General Manager Jan. 1999 TMC TQM Promotion Div. General Manager 6 Chiaki Toyota Finance Corporation Apr. 1972 Joined Toyota Motor Sales Co., 5,000 Yamaguchi Ltd. (12/25/1949) Jan. 1997 TMC Finance Div. Financial Planning & Insurance Dept. General Manager Jan. 1998 TMC Finance Div. Funds & Foreign Exchange Management Dept. General Manager May 1998 Seconded to Toyota Motor Sales, U.S.A., Inc. Apr. 2001 Seconded to Toyota Financial Services Corporation Jun. 2001 Toyota Finance Corporation Senior Managing Director Note1: There are no special interests between each nominee and the company. Note2: Of the nominees above, Mr. Yasutaka Okamura, Mr. Yoichi Kaya and Mr. Tadashi Ishikawa satisfy the qualifications of outside corporate auditors as provided in Paragraph 1, Article 18 of 'Special Law of the Commercial Code Concerning the Audit, etc., of Joint Stock Corporations.' Proposed Resolution 5: Issue of Stock Acquisition Rights without Consideration to Directors, Managing Officers and Employees, etc., of Toyota Motor Corporation and its Affiliates Pursuant to Article 280-20 and Article 280-21 of the Commercial Code, we ask for authorization to issue Stock Acquisition Rights without consideration, for the purpose of granting stock options, to directors, managing officers and employees, etc., of TMC and its affiliates in accordance with the following terms and conditions. 1. Reason for Issue of Stock Acquisition Rights without Consideration TMC will issue rights ('Stock Acquisition Rights') to subscribe for or purchase shares of TMC to Directors, Managing Officers and employees, etc., of TMC and its affiliates in order to enhance enthusiasm and raise morale for improving business performance and thereby contribute to strengthen TMC's international competitiveness. 2. Summary of Terms of Issue of Stock Acquisition Rights (1) Grantees of the Stock Acquisition Rights Directors, Managing Officers and employees, etc., of TMC and its affiliates. (2) Class and Number of Shares to be Issued or Transferred upon Exercise of Stock Acquisition Rights Up to 2,300,000 shares of common stock of TMC. Provided, however, that if the number of shares to be issued or transferred upon exercise of each Stock Acquisition Right is adjusted in accordance with (3) below, such number of shares to be issued or transferred shall be adjusted to the number obtained by multiplying the number of shares after adjustment by the total number of Stock Acquisition Rights to be issued. (3) Total Number of Stock Acquisition Rights to be Issued Up to 23,000 The number of shares to be issued or transferred upon exercise of one Stock Acquisition Right shall be 100; provided, however, that if TMC splits or consolidates its shares, the number of shares to be issued or transferred upon exercise of each Stock Acquisition Right shall be adjusted according to the following formula. Number of shares after = Number of shares x Ratio of split adjustment before adjustment (or consolidation) The adjustment above shall be made only to those remain unexercised at the relevant time. If any fraction less than one (1) share arises as a result of such adjustment, such fraction shall be discarded. (4) Issue Price of Stock Acquisition Rights No consideration shall be paid at the time of issuance of the Stock Acquisition Rights. (5) Amount to be Paid upon Exercise of Stock Acquisition Rights The amount to be paid per share issued or transferred upon exercise of each Stock Acquisition Right (the 'Exercise Price') shall be as follows. The amount obtained by multiplying the closing price of the TMC's common stock in regular trading on the Tokyo Stock Exchange on the issue date of the Stock Acquisition Rights (if there is no transaction made on that day, then the closing price of the latest date prior to the issue date of the Stock Acquisition Rights on which a transaction was made) by 1.025, and any fraction less than one (1) yen arising therefrom shall be rounded up to the nearest one (1) yen. In addition, the Exercise Price shall be adjusted as follows: (i) If TMC splits or consolidates its shares after the issue date of the Stock Acquisition Rights, the Exercise Price shall be adjusted according to the following formula, and any fraction less than one (1) yen arising therefrom shall be rounded up to the nearest one (1) yen. Exercise Price = Exercise Price x 1 after adjustment before adjustment ___________________ Ratio of split (or consolidation) (ii) If new shares are issued or treasury stock is sold at a price below the market price after the issue date of the Stock Acquisition Rights, the Exercise Price shall be adjusted according to the following formula, and any fraction less than one (1) yen arising therefrom shall be rounded up to the nearest one (1) yen. However, no adjustment shall be made in case of the exercise of Stock Acquisition Rights, transfer of treasury stock in accordance with a resolution of past Ordinary General Shareholders' Meetings pursuant to Paragraph 2, Article 210-2 of the former Commercial Code or exercise of the outstanding rights to subscribe for new shares. Exercise Price = Exercise Price X Number of + Number of shares X Amount to be after adjustment before adjustment outstanding shares newly issued paid per share _______________________________________ Market price ______________________________________________________________ Number of + Number of shares increased by outstanding shares issue of new shares 'Number of outstanding shares' provided for in the above formula does not include the number of shares held by TMC as treasury stock and in the case where the treasury stock is to be sold 'Number of shares newly issued' shall be read as 'Number of shares of treasury stock to be sold.' (iii) In the case of a merger with any other company, corporate split or capital reduction of TMC, or in any other case similar thereto where an adjustment shall be required, in each case after the issue date of the Stock Acquisition Rights, the adjustment shall be made appropriately to the extent reasonable. (6) Exercise Period of the Stock Acquisition Rights From August 1, 2005 to July 31, 2009 (7) Conditions of Exercise of Stock Acquisition Rights (i) Each Stock Acquisition Right may not be partially exercised. (ii) The grantees of the Stock Acquisition Rights must, at the time of exercise of such rights, be a Director, Managing Officer or an employee, etc., of TMC or its affiliate of which he/she holds such position at the time such right is granted, unless he/she voluntarily retires, retires due to attaining retirement age or change in employment, during the exercise period provided in (6) above. (iii) Stock Acquisition Rights may not be inherited. (iv) Other exercise conditions shall be provided for by the resolution of the Ordinary General Shareholders' Meeting of this year and the resolution of a meeting of the Board of Directors. (8) Events and Conditions of Cancellation of Stock Acquisition Rights (i) Stock Acquisition Rights may be cancelled without consideration upon approval by a General Shareholders' Meeting of an agendum on a merger agreement in which TMC is a company to be dissolved, or an agendum on a share exchange agreement or a share transfer by which TMC will become a wholly-owned subsidiary of another company. (ii) TMC may cancel the Stock Acquisition Rights without consideration if a grantee of the Stock Acquisition Rights becomes no longer qualified to exercise such rights pursuant to the provision provided for in (7) above. (9) Restriction on Transfer of Stock Acquisition Rights Transfer of Stock Acquisition Rights shall be subject to an approval of the Board of Directors. Proposed Resolution 6: Amendment to the Conditions of Exercise of the Rights of Stock Options Due to the Introduction of the New Management System As measures in conjunction with the introduction of the New Management System, your approval is sought for partial amendments to be made to already approved Proposed Resolution 5 of FY2000 Ordinary General Shareholders' Meeting on June 28, 2000, Proposed Resolution 4 of FY2001 Ordinary General Shareholders' Meeting on June 27, 2001 and Proposed Resolution 5 of FY2002 Ordinary General Shareholders' Meeting on June 26, 2002. Sections and the details of the proposed amendments of each resolution follow. (Amendments are underlined.) FY2000 Ordinary General Shareholders' Meeting which was held on June 28, 2000 Proposed Resolution 5: Acquisition of treasury shares for award to Toyota Directors (preceding text omitted) (7) Conditions on the Exercise of Options (7-1) Cases of retirement or death of eligible Director will be handled as follows: (Before) - Retirement: The options granted to the Director may be exercised for up to 6 months following his/her retirement. - Death: The options granted to the Director shall become void at the time of death. (After) - Retirement: The options granted to the Director may be exercised not beyond 6 months following his/her retirement. ((However, in the case where a Director assumes the office of Managing Officer, or a Managing Officer assumes the office of Director, immediately after his/her voluntary retirement from the original office, this move will not be deemed as retirement.)) - Death: The options granted to the Director shall become void at the time of death. (successive text omitted) FY2001 Ordinary General Shareholders' Meeting which was held on June 27, 2001 Proposed Resolution 4: Acquisition of Treasury Shares to be Awarded to Toyota Directors and Employees (preceding text omitted) (7) Conditions on the Exercise of Options (7-1) Cases of Directors' retirement, employees' mandatory retirement, employment transfer or death of the recipients provided for in (1) above will be handled as follows: (Before) - Directors' retirement, employees' mandatory retirement and employment transfer: The options granted to the recipients may be exercised ((for up to)) 6 months following his/her retirement, mandatory retirement and employment transfer. - Death: The options granted to the recipients shall become void at the time of his/her death. (After) - Directors' retirement, employees' mandatory retirement and employment transfer: The options granted to the recipients may be exercised ((not beyond)) 6 months following his/her retirement, mandatory retirement and employment transfer. ((However, in the case where a Director assumes the office of Managing Officer, or a Managing Officer assumes the office of Director, immediately after his/her voluntary retirement from the original office, this move will not be deemed as retirement.)) - Death: The options granted to the recipients shall become void at the time of his/her death. (successive text omitted) FY2002 Ordinary General Shareholders' Meeting which was held on June 26, 2002 Proposed Resolution 5: Issue of Share Acquisition Rights without Consideration to Directors and Employees, etc., of Toyota Motor Corporation and its Affiliates (preceding text omitted) (6) Conditions of Exercise of Share Acquisition Rights (i) Upon voluntary retirement, age limit retirement, employment transfer or death of a grantee of the Share Acquisition Right, the exercise of such right will be handled as follows: (Before) - In the case of voluntary retirement, age limit retirement or employment transfer: the rights granted to the grantee will be exercisable ((for up to)) 6 months following his/her voluntary retirement, age limit retirement or employment transfer. - In the case of death: the rights granted to the grantee shall become void at the time of his/her death. (After) - In the case of voluntary retirement, age limit retirement or employment transfer: the rights granted to the grantee will be exercisable ((not beyond)) 6 months following his/her voluntary retirement, age limit retirement or employment transfer. ((However, in the case where a Director assumes the office of Managing Officer, or a Managing Officer assumes the office of Director, immediately after his/her voluntary retirement from the original office, this move will not be deemed as retirement.)) - In the case of death: the rights granted to the grantee shall become void at the time of his/her death. (successive text omitted) Proposed Resolution 7: Repurchase of Shares In order to improve capital efficiency and to implement flexible capital policies in accordance with the business environment, we ask for authorization to repurchase shares of TMC common stock, up to 150 million shares and to a maximum value of 400 billion yen, based on provisions of Article 210 of the Commercial Code, with the acquisition to occur between the conclusion of this Ordinary General Shareholders' Meeting and the conclusion of the next Ordinary General Shareholders' Meeting. Proposed Resolution 8: Award of Bonus Payments to Retiring Directors and Corporate Auditors In order to compensate the hard work of the 31 Directors and 3 Corporate Auditors who are resigning or retiring upon the expiration of their term of office at the conclusion of this Ordinary General Shareholders' Meeting, and following TMC's standards, a bonus of an amount within the standards will be presented. The actual amount, time, and method of presentation etc, will be decided by the Board of Directors and the Board of Corporate Auditors respectively. The following is the brief career summary of the Directors and Corporate Auditors. Name Brief career summary Noritaka Shimizu Sep. 1990 TMC Director Jun. 1996 TMC Managing Director Jun. 1998 TMC Senior Managing Director Jun. 1999 TMC Executive Vice President Yoshio Uesaka Sep. 1990 TMC Director Jun. 1996 TMC Managing Director Jun. 1998 TMC Senior Managing Director Jun. 2001 TMC Executive Vice President Tsutomu Tomita Jun. 1996 TMC Director Jun. 2001 TMC Managing Director Yoshito Kato Jun. 1996 TMC Director Jun. 2001 TMC Managing Director Shoji Kondo Jun. 1997 TMC Director Jun. 2001 TMC Managing Director Toshio Mizushima Jun. 1998 TMC Director Jun. 2001 TMC Managing Director Yasuhiko Fukatsu Jun. 1998 TMC Director Jun. 2001 TMC Managing Director Toshiaki Taguchi Sep. 1994 TMC Director Jun. 1998 TMC Managing Director Jun. 1999 TMC Senior Managing Director Jan. 2000 TMC Director Jan. 2000 Toyota Motor North America, Inc. President Shokichi Yasukawa Jun. 1999 TMC Director Tetsuo Hattori Jun. 1999 TMC Director Hiroaki Yoshida Jun. 1999 TMC Director Kiyoshi Nakanishi Jun. 2000 TMC Director Yukitoshi Funo Jun. 2000 TMC Director Takeshi Suzuki Jun. 2000 TMC Director Atsushi Niimi Jun. 2000 TMC Director Hajime Wakayama Jun. 2001 TMC Director Hiroshi Takada Jun. 2001 TMC Director Teiji Tachibana Jun. 2001 TMC Director Shinichi Sasaki Jun. 2001 TMC Director Kazutoshi Minami Jun. 2001 TMC Director Shin Kanada Jun. 2001 TMC Director Hironobu Ono Jun. 2001 TMC Director Akira Okabe Jun. 2001 TMC Director Yoshio Shirai Jun. 2001 TMC Director Yoichiro Ichimaru Jun. 2001 TMC Director Shoji Ikawa Jun. 2001 TMC Director Masuji Arai Jun. 2002 TMC Director Koichi Ina Jun. 2002 TMC Director Yoshikazu Amano Jun. 2002 TMC Director Shinichi Kawashima Jun. 2002 TMC Director Kunio Komada Jun. 2002 TMC Director Terukazu Inoue Sep. 1986 TMC Director Sep. 1991 TMC Managing Director Sep. 1996 TMC Full-time Corporate Auditor Yoshiaki Muramatsu Jun. 2001 TMC Full-time Corporate Auditor Yoshitoshi Toyoda Sep. 1982 TMC Corporate Auditor Proposed resolutions 9 through 11 are shareholder proposals. The number of votes held by the proposing shareholders' (24 persons) is 1,004. Proposed Resolution 9: Proposed Appropriation of Retained Earnings (Summary of Proposal) 1. Content of Proposal The proposed resolution concerns appropriation of retained earnings through the payment of a dividend of 34 yen per share for the term ending March 2003. As an interim dividend of 16 yen per share was paid in September 2002, the total dividend for the year would be 50 yen per share. 2. Reasons for the Proposal Under the principles of management that emphasizes shareholders' interests, when the company realizes substantial profits, it must pay to its shareholders' appropriate dividends. The payment of low dividends may be considered as ignoring stockholder interests. Management that emphasizes shareholders' interests is essential from the perspective of corporate governance. The dividend payout ratio is proposed based on these principles. Over the past seven years, TMC's dividends per share have been 19 yen to 28 yen on an annual basis, and the dividend payout ratio has been in the 21.5% to 32.5% range. For more than 20 years, the dividend payout ratio of publicly traded companies in Japan (excluding companies in the financial and insurance sectors) has been more than 30%. Considering that TMC's financial results for the current fiscal year saw a substantial increase in profits, it would not be a hardship for TMC to pay dividends in the range of 30% of publicly announced forecasted unconsolidated profits. For these reasons, the shareholders' ask that the company pay an annual dividend this fiscal year of 50 yen per share (including a year-end dividend of 34 yen per share). The opinion of the Board of Directors concerning the proposed shareholder resolution The Board of Directors is opposed to this resolution. Based on the principle of dividend consistency and giving overall consideration to company performance and the payout ratio, the Board's proposal concerning the appropriation of retained earnings is as set forth in proposed resolution 1 described on page 29. Proposed Resolution 10: Amendment of the Articles of Incorporation (Part 1) (Summary of Proposal) 1. Content of Proposal Article 9 of the current Articles of Incorporation provide that 'the ordinary general meeting of shareholders of the Corporation shall be convened in June of each year. Extraordinary general meetings of shareholders shall be called whenever necessary.' The following language shall be added to this provision: 'When setting the date for a general meeting of shareholders, it shall be set for a date and time that promotes attendance by a large number of shareholders (i.e. days on which numerous other companies hold their shareholders' meetings shall be avoided and Saturdays and Sundays shall be considered).' 2. Reasons for the Proposal At general shareholders' meetings, not only are decisions made on fundamental matters, the appropriation of retained earning approved, and Directors elected, it is also a forum for management to meet and discuss matters with shareholders. In light of this, general shareholders' meetings must be held on days and at times that allow for the attendance of as large a number of shareholders as possible. Nonetheless, TMC has always held general shareholders' meeting in late June on days that numerous other companies hold their general shareholders' meetings or at around the same time. Although this practice was necessary at one time as a special measure against corporate racketeers, under current conditions it makes it difficult for individual shareholders to attend meetings and limits exchanges of opinions between management and shareholders and causes various adverse effects. As a world-leading company, holding general shareholders' meetings on days that facilitate attendance by shareholders (avoiding days on which numerous other companies hold shareholders' meetings and considering Saturdays and Sundays) will lead to domestic and international praise of TMC for the transparency of management and performance of social responsibility, enhance TMC's image, and raise corporate value. The opinion of the Board of Directors concerning the proposed shareholder resolution The Board of Directors is opposed to this resolution. The date of the Company's ordinary general shareholders' meeting is determined by the Board of Directors taking into account a number of factors including the schedule for announcement of financial results and the procedures for calling a meeting. And the Board of Directors intends to continue such procedure in the future. Therefore the Board believes that it would be inappropriate to add this type of language to the Articles of Incorporation. Proposed Resolution 11: Amendment of the Articles of Incorporation (Part 2) (Summary of Proposal) 1. Content of Proposal (1) Compensation and bonuses paid to each Director and Corporate Auditor for each fiscal year shall be disclosed in the documentation included in the notice of convocation of the general shareholders' meeting for the fiscal year in question. (2) When proposals for retirement bonuses to be paid to Directors and Corporate Auditors are presented at a general shareholders' meeting, the amount to be paid to each Director and Corporate Auditor shall be disclosed. The above language shall be added to the Articles of Incorporation. 2. Reasons for the Proposal The Commercial Code provides that as a general principle, compensation and retirement bonuses paid to executives are to be determined at a general shareholders' meeting. In the case of TMC, however, compensation and retirement bonuses paid to executives are determined by the Board of Directors, and the amount paid to each individual is not disclosed to shareholders. Just as it would be improper for the compensation of members of the Diet to be determined without the knowledge of voters and/or withheld from voters, it is improper for compensation and retirement bonuses paid to executives who are entrusted with the management of the company by the shareholders to be determined without the knowledge of the shareholders. TMC engages in global business activities and is one of the leading Japanese companies on the global scene. Disclosing compensation and retirement bonuses paid to executives ahead of other Japanese companies would enhance its international standing as a company with transparent management and a company that is serious about information disclosures. Responding to shareholder interests would also raise its corporate value. The opinion of the Board of Directors concerning the proposed shareholder resolution The Board of Directors is opposed to this resolution. With respect to compensation paid to Directors and Corporate Auditors, the general framework of monthly amounts paid is proposed and approved at the general shareholders' meeting. The amount of bonuses is disclosed in the proposal concerning the appropriation of retained earnings and also approved at the general shareholders' meeting. With respect to retirement bonuses, such bonuses are paid in accordance with the company's regulations on retirement bonuses and a proposal to give authorization to determine the specific amounts, timing of the payments, method of payment, etc., to the Board of Directors in the case of retiring Directors and to the Board of Corporate Auditors in the case of retiring Corporate Auditors, has been made and approved at the general shareholders' meeting. In addition, each of the total amounts of compensation, bonuses, and retirement bonuses paid to Directors and Corporate Auditors are disclosed in the Business Review in accordance with the laws and regulations. In light of applicable laws and regulations, and taking into consideration business practices in Japan, we believe that this method of disclosure is appropriate and that it is not necessary to add the language of this proposal to the Articles of Incorporation. Memo This information is provided by RNS The company news service from the London Stock Exchange

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Thursday, 23rd May 2024

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Another day and another round of takeover talk with Hargreaves Lansdown being eyed by private equity suitors. AJ Bell also advances on upbeat earnings news whilst QinetiQ upgrades its profit guidance, too.

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