Notice of AGM

Toyota Motor Corporation 07 June 2005 June 7, 2005 To All Shareholders: President Fujio Cho TOYOTA MOTOR CORPORATION 1, Toyota-cho, Toyota City, Aichi Prefecture Notice of Convocation of FY2005 Ordinary General Shareholders' Meeting (Unless otherwise stated, all financial information has been prepared in accordance with generally accepted accounting principles in Japan) English translation from the original Japanese-language document Dear Shareholder, Please refer to the following for information about the upcoming FY2005 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 22, 2005. Thank you very much for your cooperation. 1. Date and time: 10:00 a.m., Thursday, June 23, 2005 2. Venue: Toyota Head Office, 1, Toyota-cho, Toyota City, Aichi Prefecture 3. Meeting Agenda Reports: Report1: Reports on business report, unconsolidated balance sheet and statement of income for the FY2005 term (April 1, 2004 through March 31, 2005) Report2: Reports on consolidated balance sheet and statement of income for the FY2005 term (April 1, 2004 through March 31, 2005) and report by accounting auditors and board of corporate auditors on the audit results of the consolidated financial statements. Resolutions: Proposed Resolution 1: Approval of Proposed Appropriation of Retained Earnings for the FY2005 Term Proposed Resolution 2: Election of 26 Directors Proposed Resolution 3: Election of one (1) Corporate Auditor Proposed Resolution 4: Issue of Stock Acquisition Rights without Consideration to Directors, Managing Officers and Employees, etc., of Toyota Motor Corporation and its Affiliates A summary of this resolution appears among the 'Reference Documents Pertaining to Exercise of Voting Rights,' on pages 40 - 42 to follow. Proposed Resolution 5: Repurchase of Shares A summary of this resolution appears among the 'Reference Documents Pertaining to Exercise of Voting Rights,' on page 43 to follow. Proposed Resolution 6: Award of Bonus Payments to Retiring Directors Proposed Resolution 7: 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 pages 45 - 46 to follow. Proposed Resolution 8: 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 46 to follow. Note: If you attend the meeting in person, please submit the enclosed voting ballot to the reception desk as your admission pass. (Attachment) Business Report (Fiscal Year under review: April 1, 2004 through March 31, 2005) 1. Outlook on Operation (1) Progress and Achievement in Operation Taking a broad look at the economic environment for the fiscal year ended March 2005, the domestic economy has shown signs of moderate recovery, including improvement in corporate profitability and the employment environment. Overseas economies were generally strong, with increases in capital investments and personal consumption in the United States of America, and continuous high rates of economic growth in Asian countries. Given this kind of economic environment, Toyota Motor Corporation ('TMC') has been making an effort to develop attractive products in order to satisfy its customers worldwide. During FY2005, Toyota released the Mark X, a new model of luxury sedan, a completely redesigned version of the Mark II which has long been a favorite of Toyota customers. Toyota also redesigned the Crown Majesta, the top model in the Toyota brand, and the Vitz, in an effort to create the next-generation standard for compact cars. In addition, Toyota launched the Isis, a seven-passenger minivan that features outstanding utility and the Passo, a compact car developed jointly with Daihatsu Motor Co., Ltd. Toyota also integrated its Vista and Netz sales channels to create the new Netz dealership network under our theme 'the Twenty-first century Channel' that aims to provide customers with new value. As a result of the active introduction of new products and the strong sales efforts of domestic dealers, domestic vehicle sales increased by 40 thousand units (or 2.3%) to 1,805 thousand units in FY2005 compared with FY2004. The domestic market share, excluding mini-vehicles, rose to 44.5% in FY2005. Meanwhile, vehicle exports increased by 122 thousand units (or 6.6%) to 1,982 thousand units. With respect to TMC's overseas activities, production of IMV Project vehicles including the Hilux VIGO which is produced in Thailand, started in six countries. The IMV Project creates high quality and comfortable vehicles at an affordable price. In North America, production of the Tacoma pickup truck started in Mexico, and in Europe, Toyota began joint production of the Toyota AYGO with (Peugeot Citroen Automobiles SA) in the Czech Republic. In China, Toyota worked to expand its business with the start of production of the Crown by Tianjin FAW Toyota Motor Co., Ltd and the establishment of a joint venture with Guangzhou Automobile Group to produce and sell vehicles. Through such active business operations, TMC's overseas production output during FY2005 reached a record high of 3,127 thousand units, increasing by 388 thousand units (or 14.2%), compared with FY2004. As a result of this global development of business, the total number of Toyota vehicles sold worldwide reached a record high of 6,799 thousand, with an increase of 529 thousand units(or 8.4%), compared to the previous fiscal year. In North America, Toyota launched the new Scion throughout the United States to target the youth segment, helping spur sales to 2,337 thousand units, while in Europe vehicle sales reached 942 thousand units, both achieving new record highs. In order to respond to the diversified automobile needs of customer, TMC is actively developing businesses in such field as financial services and information and telecommunications. With regard to financial services, we have expanded business as a stable source of revenues for the automobile business by expanding the number of countries with bases of operations to 30. In the telecommunications field, Toyota has expanded basic G-BOOK services, which are information network services that provide customers with security and comfort in the use of automobiles. In the housing business, Toyota launched new Since Cada homes and reinforced marketing foundations, and sales increased to 4,392 units, a new record high. Environmental activities remain a priority management issue, and Toyota is working to reduce substances of concern in all stages of the vehicle lifecycle, from production to use, disposal, and recycling. Following the Prius, Toyota launched the new Harrier Hybrid and Kluger Hybrid. Global sales of hybrid vehicles this fiscal year reached 146 thousand units and cumulative sales exceeded 360 thousand units. Toyota has positioned the hybrid system as a core environmental technology and will continue to enhance its lineup of hybrid products in the future. Due to TMC's strong sales initiatives, net sales have increased to 9,218.3 billion yen, by 254.6 billion yen (or 2.8%) compared to FY 2004. With respect to income, despite improvement in efficiency throughout management and Toyota's earnest effort to reduce costs, the impact of appreciation of the yen and other factors resulted in ordinary income of 856.2 billion yen, down 59.5 billion yen (6.5%) from FY2004 and net income in FY2005 decreased to 529.3 billion yen, by 52.1 billion yen (or 9.0%) compared to FY2004. Unit: million yen FY2005 FY2004 Increase (Decrease) (April 2004 through (April 2003 through March 2005) March 2004) Domestic 3,122,839 3,103,190 19,649 <0.6> Vehicles Export 4,061,132 3,925,151 135,981 <3.5> Total 7,183,972 7,028,341 155,631 <2.2> Parts & Export 831,438 828,088 3,350 <0.4> components for overseas production Domestic 366,936 340,440 26,496 <7.8> Parts Export 206,256 198,294 7,962 <4.0> Total 573,193 538,734 34,459 <6.4> Domestic 165,141 149,511 15,630 <10.5> Others Export 464,640 419,035 45,605 <10.9> Total 629,781 568,547 61,234 <10.8> Domestic 3,654,917 3,593,141 61,776 <1.7> Grand total Export 5,563,468 5,370,570 192,898 <3.6> Total 9,218,386 8,963,712 254,674 <2.8> While company-wide efforts were made to improve capital investment efficiency, as a result of investments in developing new technologies and new products, and continued development of our business foundations in anticipation of future expansion in production and sales globally, capital investments for FY2005 amounted to 290.7 billion yen. (2) Trends in Unconsolidated Income and Assets Unit: million yen otherwise noted FY2002 FY2003 FY2004 FY2005 (April 2001 through (April 2002 through (April 2003 through (April 2004 through March 2002) March 2003) March 2004) March 2005) Net sales 8,284,968 8,739,310 8,963,712 9,218,386 Ordinary income 768,920 892,676 915,728 856,231 Net income 470,239 634,059 581,470 529,329 Net income per share 130.40 178.12 171.08 160.38 (yen) Net assets 5,662,158 5,703,321 5,984,675 6,057,810 Total assets 8,467,930 8,592,823 8,817,164 9,070,991 Notes: 1. Effective from FY2003, TMC adopted 'Accounting Standards for Earnings per Share' and calculates 'Net income per share.' As a result of the adoption, 'Net income per share' decreased by 5.57 yen per share compared to the previous calculation. Up to FY2002, 'Net income per share' was calculated based on the number of shares issued at the fiscal year-end (for FY2002, the total number of shares excluding treasury stock). 2. As for FY2003, TMC accounted for 162,457 million yen as 'Gains on return of the substitutional portion of employee pension fund' in 'Extraordinary gains.' As a result, 'Net income' increased by 95,395 million yen. 3. As for FY2004, TMC accounted for 23,231 million yen as 'Losses on returned assets of substitutional portion of employee pension fund' in 'Extraordinary losses.' As a result, 'Net income' decreased by 13,957 million yen. 4. Effective from FY2005, Toyota adopted the accounting standards on Impairment of Fixed Assets. As a result of the adoption, Toyota accounted for 24,996 million yen as 'Extraordinary Losses', and 'Net Income' decreased by the same amount. (3) Issues for TMC Although we anticipate moderate growth in the global economy, there are various factors adding to instability, including concerns about future developments in the U.S. economy, financial tightening policies in China, and the dramatic increase in oil prices. In Japan, the economy continues to recover, but increases in prices for raw materials and fluctuations in exchange rates continue to prevent us from being optimistic. In addition, automobile manufacturers around the world are introducing new models and reinforcing their development of next-generation technologies in response to energy issues and global warming, resulting in keen global competition. The entire Toyota group will work together to address the following issues in order to come out on top of this fierce competition and for our continuous growth in the future. We introduce the Lexus Brand in Japan, which has been currently marketed in more than 60 countries around the world, to establish Lexus as a global premium brand for the twenty-first century. Toyota has also started on a number of priority projects including the construction of new plants in the United States (Texas), Russia, and Thailand. In the rapidly growing Chinese market, where various auto manufactures are quickly expanding their operations, Toyota is developing integrated structures in conjunction with procurement, production, and sales divisions. As medium- to long-term strategies, first of all, Toyota anticipates customer need and continues providing appealing products that are highly advanced, innovative, and feature superior styling. Toyota also continues to focus on the development of vehicle safety technologies and their incorporation into products. Second, Toyota has adopted the fourth Toyota Environmental Action Plan as one of the medium- to long-term plans looking ahead to 2010. Under this plan, Toyota is reinforcing and expanding on a global scale its responses to issues including global warming, hazardous material management, and recycling. Third, in addition to maintaining the world's highest levels of quality and reinforcing cost competitiveness, Toyota is working to increase overall group capabilities, develop optimal global business structures, and pursue compatibility between growth and efficiency. Finally, based on the idea that the source of corporate competitiveness is human resource development, Toyota is promoting the development of highly creative human resources who can pass on Toyota's technologies and skills to the next generation. By addressing these issues, Toyota will seek increases in shareholder value and work to become a company that can successfully compete on a global scale and continue to grow in the 21st century. In addition, we reaffirm our commitment to corporate ethics, including strict compliance with laws and regulations, and seek to become a global corporation, with sincerity and humility, that contributes to the development of a prosperous society and is trusted around the world. We thank our shareholders for their continuing support. 2. Company Outline (as of March 31, 2005) (1) Main Business Business Main products Auto-mobile Passenger car Century, Celsior, Crown, Brevis, Progres, Windom, Mark X, Camry, Premio, Allion, Altezza, Avensis, Prius, Corolla, Platz, Soarer, Celica, MR-S, Opa, Allex, Raum, Porte, FunCargo, bB, WiLL CYPHA, ist, Vitz, Passo, Mark II Blit, Caldina, Succeed Wagon, Probox Wagon, Estima, Estima Hybrid, Isis, Ipsum, WISH, SIENTA, Alphard, Alphard Hybrid, Hiace Wagon, Noah, Voxy, Land Cruiser Wagon, Hilux Surf, Harrier, Harrier Hybrid, Kluger, Kluger Hybrid, RAV4, Cami, Volkswagen vehicles, etc. Truck and bus Succeed Van, Probox Van, Hiace, Regiusace Van, Townace, Liteace, Dyna, Toyoace, Land Cruiser, Coaster, etc. Parts & Various units and parts for overseas components production for overseas production Parts Housing Various maintenance parts for both domestic and overseas use Espacio GX, Espacio GR, Espacio EF Urban Wind, Espacio EF, Espacio EF Tradage, Since AIII, Since BIII, Since AII, Since Raison, Since Cada, Since Oak 21, Since Oak 21-W, Since Smart Stage-f, Since Smart Stage-L, Since Smart Stage, Vie a, Vie a mia casa, Vie a Tradage (2) Main Sites and Plants Head Office: 1, Toyota-cho, Toyota City, Aichi Prefecture Tokyo Head Office: 1-4-18, Koraku, Bunkyo-ku Tokyo Name Location Name Location Nagoya Office Aichi Prefecture Tokyo Design Research & 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 Kinuura Plant Aichi Prefecture Kasugai Housing Works Aichi Prefecture Tahara Plant Aichi Prefecture Tochigi Housing Works Tochigi Prefecture Teiho Plant Aichi Prefecture Yamanashi Housing Works Yamanashi Prefecture Hirose Plant Aichi Prefecture Taiwan Office Taipei, Taiwan Higashi-Fuji Technical Center Shizuoka Prefecture China Office Beijing, China Shibetsu Proving Ground Hokkaido (3) Status of shares 1. Total number of shares authorized 9,740,185,400 shares 2. Total number of shares issued 3,609,997,492 shares 3. Number of shareholders 352,029 4. Major Shareholders (top 10) (unit: thousands of shares otherwise noted) Name Number of Toyota Ownership Toyota's share Toyota's shares held interest ratio holdings Ownership (%) interest ratio (%) Japan Trustee Services Bank, Ltd. 278,283 7.71 - - The Master Trust Bank of Japan, Ltd. 243,232 6.74 - - Toyota Industries Corporation 196,725 5.45 76,600 23.51 Nippon Life Insurance Co. 130,831 3.62 - - Trust & Custody Services Bank, Ltd. 107,357 2.97 - - Shinsei Bank, Ltd. 100,506 2.78 - - State Street Bank and Trust Company 97,729 2.71 - - Tokio Marine and Nichido Fire 83,821 2.32 - - Insurance Co., Ltd. Mitsui Sumitomo Insurance Co., Ltd. 71,166 1.97 15,410 1.02 Hero and Company 70,021 1.94 - - Notes: 1. In addition to the above, TMC owns 341,918 thousand treasury stocks. 2. TMC owns 6 thousand shares (or 0.36%) of Millea Holdings, Inc., a holding company of Tokio Marine and Nichido Fire Insurance Co., Ltd. 3. Hero and Company is a nominee of The Bank of New York, the trustee organization of the TMC's American Depository Receipt (ADR). (4) Repurchase, disposal and holding of shares 1. Shares repurchased Common shares 63,201,678 shares Total value of shares repurchased 266,717,500,760 yen 2. Disposed Shares Common shares 810,300 shares Total value of reissued shares 2,426,996,400 yen 3. Shares for which retirement procedures were implemented Not applicable. 4. Shares held at the end of the fiscal year Common shares 341,918,553 shares (5) Status of Employees Average length Number of employees (changes from end of prior FY) Average age of service 78,544 (+ 3,755) 36.7 14.8 years (6) Main Subsidiaries and Others 1. Status of main subsidiaries TMC ownership Capital/ interest subscription ratio Company Name million yen % Main Business Toyota Financial Services Corporation 78,525 100.00 Management of domestic and overseas financial companies Hino Motors, Ltd. 72,717 50.21* 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 51.32* Manufacture and sales of automobiles Toyota Finance Corporation 16,500 100.00* Finance of automobile sales, card business Toyota Auto Body Co., Ltd. 10,371 56.08* Manufacture and sales of automobile bodies Toyota Administa Corporation 8,820 100.00 Administration of dealers in the Tokyo region Tokyo Toyo-pet Motor Sales Co., Ltd. 7,822 100.00* Sales of automobiles Kanto Auto Works, Ltd. 6,850 50.46* Manufacture and sales of automobile bodies Currencies in thousands Toyota Motor Manufacturing North America, Inc. USD 1,958,949 100.00* Management of manufacturing subsidiaries in North America Toyota Motor Manufacturing, Kentucky, Inc. USD 1,180,000 100.00* Manufacture and sales of automobiles Toyota Motor North America, Inc. USD 933,600 100.00 Public relations, and surveys of overall North America Toyota Motor Credit Corporation USD 915,000 100.00* Finance of automobile sales Toyota Motor Manufacturing, Indiana, Inc. USD 620,000 100.00* Manufacture and sales of automobiles Toyota Motor Sales, U.S.A., Inc. USD 365,000 100.00* Sales of cars Toyota Motor Manufacturing Canada Inc. CAD 680,000 100.00 Manufacture and sales of automobiles Toyota Credit Canada Inc. CAD 60,000 100.00* Finance of automobile sales Toyota Motor Europe S.A./N.V. EUR 2,588,845 100.00 Public relations of overall Europe Toyota Motor Engineering Manufacturing EUR 2,028,462 100.00* Management of manufacturing Europe S.A./N.V. subsidiaries in Europe Toyota Motor Marketing Europe S.A./N.V. EUR 961,788 100.00* Sales of automobiles Toyota Motor Italia S.p.A. EUR 38,958 100.00* Sales of automobiles Toyota Kreditbank G.m.b.H. EUR 30,000 100.00* Finance of automobile sales Toyota Deutschland G.m.b.H. EUR 5,726 100.00* Sales of automobiles Toyota France S.A. EUR 2,123 100.00* Sales of automobiles 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 (GB) PLC GBP 2,600 100.00* Sales of automobiles Toyota Motor Corporation Australia Ltd. AUD 481,100 100.00 Manufacture and sales of automobiles Toyota Finance Australia Ltd., etc. AUD 120,000 100.00* Finance of automobile sales Toyota Motor Asia Pacific Pte Ltd. SGD 6,000 100.00 Sales of cars Toyota Motor Thailand Co., Ltd. THB 7,520,000 86.43 Manufacture and sales of automobiles Toyota South Africa Motors (Pty) Ltd. ZAR 50 100.00* Manufacture and sales of automobiles Notes: 1.* Indicates that the ownership interest ratio includes such ratio of TMC subsidiaries. 2. The ownership interest ratios are calculated based on the total number of shares issued at the end of the fiscal year. 2. Status of main affiliates TMC ownership Capital/ interest subscription ratio Company Name million yen % Main Business Toyota Industries Corporation 80,462 *23.73 Manufacture and sales of spinning and weaving machines, industrial vehicles, and automobiles Aichi Steel Corp. 25,016 *24.71 Manufacture and sales of specialty steel and forged steel products Toyoda Machine Works, Ltd. 24,805 *23.75 Manufacture and sales of work machine tools and automobile parts Toyota Tsusho Corporation 26,748 *23.34 Trading and export/import of various products Aisin Seiki Co., Ltd. 45,049 *22.36 Manufacture and sales of automobiles parts and household appliances Denso Corporation 187,456 *23.13 Manufacture and sales of automobile parts Toyota Boshoku Corporation 8,400 *49.50 Manufacture and sales of automobile parts Toyoda Gosei Co., Ltd. 28,027 *42.82 Manufacture and sales of automobile parts Notes: 1.* Indicates that the ownership interest ratio includes such ratio of TMC subsidiaries. 2. The ownership interest ratios are calculated based on the total number of shares issued at the end of the fiscal year. 3. Results of consolidation . TMC has 524 consolidated subsidiaries and there are 56 companies accounted for under the equity method. . Consolidated revenues for FY2005 were 18,551.5 billion yen and consolidated net income was 1,171.2 billion yen. (Note: Our consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States of America.) 4. Status of business alliances . October 1966 Reached business with Hino Motors, Ltd. . November 1967 Reached business with Daihatsu Motor Co., Ltd. 5. Status of important joint ventures . February 1984 Established New United Motor Manufacturing, Inc. for joint production of passenger cars in the U.S. with GM. . January 2002 Concluded a joint venture contract with Peugeot Citroen Automobiles SA for joint production of compact cars. . August 2002 Basic agreement signed with China FAW Group Corporation regarding joint automobile operations in China. . June 2004 Concluded a joint venture contract with Guangzhou Automobile Group in order to produce and sell passenger cars in China. 6. Status of important sales alliances . July 1991 Reached a basic agreement with Volkswagen AG and its Japanese subsidiary for selling all VW vehicles in the Japanese market. (7) Board of Directors and Corporate Auditors Name Position Main areas of responsibility ( ) indicates position Hiroshi Okuda *Chairman of the Board Kosuke Ikebuchi *Vice Chairman Katsuhiro Nakagawa *Vice Chairman Fujio Cho *President Akihiko Saito *Executive Vice President Product Management Area / Research & Development Area / Quality Area Ryuji Araki *Executive Vice President Corporate Planning Area / Research Area / Legal Area / General Administration & Human Resources Area / Finance & Accounting Area / Information Systems Area / Global Audit Div. Yoshio Ishizaka *Executive Vice President Overseas Operations Groups Kosuke Shiramizu *Executive Vice President Production & Transportation Area / Production Engineering Area / TQM Promotion Area / Environmental Affairs Area Katsuaki Watanabe *Executive Vice President Business Development Area / IT & ITS Area / Housing Area / Government & Public Affairs Area / Purchasing Area / Tokyo Head Office / e-TOYOTA Area Kazushi Iwatsuki *Executive Vice President Domestic Sales Operations Area Yasuhito Yamauchi Senior Managing Director Production Engineering Group (Chief Production Engineering Officer) / Manufacturing Group (Chief Manufacturing Officer) / TQM Promotion Div. Senior Managing Director Government & Public Affairs Group (Chief Government & Public Affairs Officer) Takashi Kamio Hiroyuki Watanabe Senior Managing Director IT&ITS Group (Chief IT&ITS Officer) / Quality Control Group (Chief Quality Control Officer) / Environmental Affairs Div. Akio Matsubara Senior Managing Director General Administration & Human Resources Group (Chief General Administration & Human Resources Officer) / Information Systems Group (Chief Information Systems Officer) / BR Compliance Support Dept. / Corporate Planning Div. / Research Div. / Product Management Div. / Legal Div. Tokuichi Uranishi Senior Managing Director Overseas Planning Operations Group (Chief Overseas Planning Operations Officer) / Europe & Africa Operations Group (Chief Europe & Africa Operations Officer) Senior Managing Director Design Group (Chief Design Officer) / Product Development Group (Chief Product Development Officer) / R&D Management Div. / Kazuo Okamoto Technical Administration Div. / Toyota Technical Center, U.S.A. Inc. / Intellectual Property Div. / Prototype Production Div. / EQ Planning & Development Div. / Engineering Administration Div. / Tokyo Engineering Div / Higashifuji Technical Administration Div. Kyoji Sasazu Senior Managing Director Domestic Sales Operations Group (Chief Domestic Sales Operations Officer) Mitsuo Kinoshita Senior Managing Director Business Development Group (Chief Business Development Officer) / Purchasing Group (Chief Purchasing Officer) / Housing Group (Chief Housing Officer) Yoshimi Inaba Senior Managing Director The Americas Operations Group (Chief The Americas Operations Officer) / Oceania, Middle East & Southwest Asia Operations Group (Chief Oceania, Middle East & Southwest Asia Operations Officer) / Overseas Customer Service Operations Group (Chief Overseas Customer Service Operations Officer) Takeshi Uchiyamada Senior Managing Director Production Control & Logistics Group (Chief Production Control & Logistics Officer) Senior Managing Director Power Train Development Group (Chief Power Train Development Officer) / Fuel Cell System Development Group (Chief Fuel Cell Masatami Takimoto System Development Officer) Akio Toyoda Senior Managing Director China Operations Group (Chief China Operations Officer) / Oceania, Middle East & Southwest Asia Operations Group (Chief Oceania, Middle East & Southwest Asia Operations Officer) / e-TOYOTA Div. (General Manager) / Taiwan Office / China Office Tetsuo Hattori Senior Managing Director Vehicle Engineering Group (Chief Vehicle Engineering Officer) / Future Project Div. / Motor Sports Div. Takeshi Suzuki Senior Managing Director Finance & Accounting Group (Chief Finance & Accounting Officer) Shoichiro Toyoda Honorary Chairman and Director Yukitoshi Funo Director President of Toyota Motor Sales, U.S.A., Inc. Atsushi Niimi Director President of Toyota Motor Manufacturing North America, Inc. Hideaki Miyahara Full-time Corporate Auditor Yoshiro Hayashi Full-time Corporate Auditor Chiaki Yamaguchi Full-time Corporate Auditor Yasutaka Okamura Corporate Auditor Lawyer Hiromu Okabe Corporate Auditor Chairman and C.E.O. of Denso Corporation Yoichi Kaya Corporate Auditor Assistant Director of Research Institute of Innovative Technology for the Earth Tadashi Ishikawa Corporate Auditor President of Toyota Industries Corporation Notes: 1. * Representative Director 2. Mr. Yasutaka Okamura, Mr. Hiromu Okabe, Mr Yoichi Kaya and Mr. Tadashi Ishikawa satisfy the qualifications of outside Corporate Auditors as provided in Article 18 Paragraph 1 of 'Special Law of the Commercial Code Concerning the Audit, etc. of Stock Corporations (Kabushiki-Kaisha).'3. Senior Managing Director Zenji Yasuda, Senior Managing Director Teruyuki Minoura, Director Shuhei Toyoda, have resigned upon the expiration of their term of office following FY2004 Ordinary General Shareholders' Meeting on June 23, 2004. (8) Compensation paid to directors and corporate auditors Category No. of Amount paid Remarks persons (million yen) Directors 27 938 Directors' compensation: 130 million yen or less per month Corporate 7 100 Auditors' compensation: 13 million yen or less per month Auditors (Decided by resolution at an extraordinary general Total 34 1,039 shareholders' meeting held on May 13, 1982.) Notes: 1. The numbers of persons are as of the end of the fiscal year. 2. In addition to the above, the amounts indicated below were also paid. (1) Executive bonuses (decided by resolution at FY2004 Ordinary General Shareholders' Meeting held on June 23, 2004) Directors 598 million yen Corporate Auditors 50 million yen (2) Condolence money and retirement benefits paid to retiring directors (decided by resolution at FY2004 Ordinary General Shareholders' Meeting held on June 23, 2004) Directors 1,045 million yen (9) Compensation to Accounting Auditor 1. Total compensation and other amounts paid by TMC and subsidiaries: 1,872 million yen 2. Total amount included in 1. above paid for auditing and certification of financial statements: 859 million yen 3. Total amount included in 2. above paid by TMC to accounting auditor: 346 million yen Note: The amount in 3. above includes compensation for audits performed in compliance with the Securities and Exchange Law and so on. (10) Status of Stock Acquisition Rights 1. Stock Acquisition Rights Issued and outstanding (1) Number of Stock Acquisition Rights issued: 50,689 (The number of shares to be issued or transferred upon exercise of one Stock Acquisition Right is 100) (2) Type and Number of Shares to be Issued or Transferred upon Exercise of Stock Acquisition Rights 5,068,900 shares of common stock of TMC (3) Issue Price of Stock Acquisition Rights No consideration shall be paid at the time of issuance of the Stock Acquisition Rights 2. Stock Acquisition Rights Issued Under Especially Preferential Conditions to Persons Other Than Shareholders during the Last Fiscal Year (1) Number of Stock Acquisition Rights issued: 20,210 (The number of shares to be issued or transferred upon exercise of one Stock Acquisition Right is 100) (2) Type and Number of Shares to be Issued or Transferred upon Exercise of Stock Acquisition Rights 2,021,000 shares of common stock of TMC (3) Issue Price of Stock Acquisition Rights No consideration shall be paid at the time of issuance of the Stock Acquisition Rights (4) Amount to be Paid per share upon the Exercise of Stock Acquisition Rights 4,541.00 yen (5) Conditions of Exercise of Stock Acquisition Rights (i) The exercise period of the Stock Acquisition Rights is from August 1, 2006 to July 31, 2010. (ii) No Stock Acquisition Right may be exercised partially. (iii)The grantees of the Stock Acquisition Rights must, at the time of exercise of such rights, be a Director, Managing Officer, an employee or in other similar position of the company at the time such right is granted, unless he/she voluntarily retires, retires due to attaining retirement age or change in employment, during the exercise period. (iv) Stock Acquisition Rights may not be inherited. (v) Other exercise conditions shall be provided for in the contract of Grant of Stock Acquisition Rights between TMC and the grantees of the Stock Acquisition Rights. (6) Events and Conditions of Cancellation of Stock Acquisition Rights (i) Stock Acquisition Rights may be cancelled without consideration upon approval by a General Shareholders' Meeting of an agendum on a merger agreement in which TMC is a company to be dissolved, or an agendum on a share exchange agreement or a share transfer in or by which TMC will become a wholly-owned subsidiary of another company. (ii) TMC may cancel the Stock Acquisition Rights without consideration if a grantee of the Stock Acquisition Rights becomes no longer qualified to exercise such rights pursuant to the provision provided for in (iii) or (v) of (5) above. (7) Details of Preferential Conditions TMC will issue Stock Acquisition Rights without consideration to directors, managing officers and employees, etc., of TMC and its affiliates. (8) Names of Persons Granted and Number of Stock Acquisition Rights Granted Directors of TMC Name Number of Stock Name Number of Stock Acquisition Rights Acquisition Rights Hiroshi Okuda 200 Tokuichi Uranishi 150 Kosuke Ikebuchi 200 Kazuo Okamoto 150 Katsuhiro Nakagawa 200 Kyoji Sasazu 150 Fujio Cho 200 Mitsuo Kinoshita 150 Akihiko Saito 200 Yoshimi Inaba 150 Ryuji Araki 200 Takeshi Uchiyamada 150 Yoshio Ishizaka 200 Masatami Takimoto 150 Kosuke Shiramizu 200 Akio Toyoda 150 Katsuaki Watanabe 200 Tetsuo Hattori 150 Kazushi Iwatsuki 200 Takeshi Suzuki 150 Yasuhito Yamauchi 150 Shoichiro Toyoda 200 Takashi Kamio 150 Yukitoshi Funo 150 Hiroyuki Watanabe 150 Atsushi Niimi 150 Akio Matsubara 150 Managing Officers of TMC Name Number of Stock Name Number of Stock Acquisition Rights Acquisition Rights Hajime Wakayama 100 Mamoru Furuhashi 100 Hiroshi Takada 100 Satoshi Ozawa 100 Teiji Tachibana 100 Seichi Sudo 100 Shinichi Sasaki 100 Yasuhiko Ichihashi 100 Shin Kanada 100 Tadashi Yamashina 100 Akira Okabe 100 Takashi Hata 100 Yoshio Shirai 100 James E. Press 100 Yoichiro Ichimaru 100 Gary L. Convis 100 Shoji Ikawa 100 Alan J. Jones 100 Masuji Arai 100 Wahei Hirai 100 Koichi Ina 100 Tatehito Ueda 100 Yoshikazu Amano 100 Takashi Shigematsu 100 Shinichi Kawashima 100 Yuzo Ushiyama 100 Kunio Komada 100 Yoshikatsu Tanaka 100 Akira Sasaki 100 Nobuyoshi Hisada 100 Takeshi Yoshida 100 Yasumori Ihara 100 Hiroshi Kawakami 100 Mitsuhisa Kato 100 Hitoshi Nishiyama 100 Takahiko Ijichi 100 Iwao Nihashi 100 Toshio Furutani 100 Shinzo Kobuki 100 Tetsuo Agata 100 Tadashi Arashima 100 John H. Conomos 100 Masamoto Maekawa 100 Panagiotis J. Athanasopoulos 100 Executive Technical Advisor of TMC Name Number of Stock Acquisition Rights Hiroshi Ginya 100 Norihiko Nakamura 100 Nanpachi Hayashi 100 Employees of TMC, and Employees and Directors of TMC's Affiliates (top 10) Company Name Number of Stock Acquisition Rights Toyota Motor Credit Corporation George E. Borst 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 Sales, U.S.A., Inc. Dian D. Ogilvie 50 Toyota Motor Manufacturing Canada Inc. Real C. Tanguay 50 Toyota Motor Marketing Europe S.A./N.V. Thierry P. H. B. Dombreval 50 Toyota South Africa Motors (Pty) Ltd. Johan J.van Zyl 50 Toyota Motor Corporation Keiji Aoki 20 Toyota Motor Corporation Shinji Aoto 20 Toyota Motor Corporation Akio Asai 20 (9) Breakdown of Stock Acquisition Rights Granted to Employees of TMC, and Directors, Corporate Auditors, and Employees of TMC's Subsidiaries Number of Stock Type and Number of Shares to be Total Number of Acquisition Rights Issued or Transferred upon Exercise Persons Granted Rights of Stock Acquisition Rights (Common stock) Employees of TMC 9,340 934,000 shares 467 Directors of TMC's 700 70,000 shares 29 subsidiaries and affiliates Auditors of TMC's 0 0 shares 0 subsidiaries and affiliates Employees of TMC's 870 87,000 shares 39 subsidiaries and Affiliates UNCONSOLIDATED BALANCE SHEET (Million yen; amounts less than one million yen are omitted.) FY2005 FY2005 (As of (As of March 31, 2005) March 31, 2005) Assets Liabilities Current assets 3,453,441 Current liabilities 2,180,374 Cash and deposits 60,275 Trade notes payable 1,375 Trade accounts receivable 1,088,735 Trade accounts payable 909,108 Marketable securities 870,735 Current portion on bonds 600 Finished goods 116,864 Other payables 401,464 Raw materials 14,747 Income taxes payable 144,730 Work in process 82,069 Accrued expenses 443,165 Supplies 8,091 Deposits received 250,648 Short-term loans 511,757 Allowance for EXPO 2005 Aichi 67 Deferred income taxes 248,110 Others 29,214 Others 459,153 Long-term liabilities 832,806 Less: Allowance for doubtful (7,100) Bonds 500,000 accounts Allowance for retirement 289,694 benefits Fixed assets 5,617,550 Others 43,111 Property, plant and equipment 1,258,835 Total liabilities 3,013,181 Buildings 371,515 Shareholders' equity Structures 41,537 Common stock 397,049 Machinery and equipment 314,168 Capital surplus 416,970 Vehicle and delivery equipment 16,109 Capital reserve 416,970 Tools, furniture and fixtures 83,012 Retained earnings 6,094,528 Land 388,658 Legal reserve 99,454 Construction in progress 43,834 Reserve for losses on overseas 252 investments Investments and other assets 4,358,714 Reserve for special depreciation 2,457 Investments in securities 1,817,556 Reserve for reduction of 6,475 acquisition cost of fixed assets Investments in subsidiaries and 1,931,634 General reserve 5,040,926 affiliated companies Long-term loans 362,951 Unappropriated retained 944,962 earnings at end of year Deferred income taxes 129,571 Net unrealized gains on other 279,780 securities Others 140,600 Less: treasury stock (1,130,519) Less: Allowance for doubtful (23,600) Total shareholders' equity 6,057,810 accounts Total assets 9,070,991 Total liabilities and 9,070,991 shareholders' equity Notes: 1. Short-term receivables from subsidiaries and affiliated companies: 1,386,610 million yen 2. Long-term receivables from subsidiaries and affiliated companies: 264,739 million yen 3. Short-term payables to subsidiaries and affiliated companies: 989,322 million yen 4. Accumulated depreciation for property, plant and equipment: 3,400,710 million yen 5. Assets pledged as collateral Marketable securities: 20 million yen Investment securities: 11,569 million yen 6. Guarantees: 69,319 million yen 7. Export bill discounted: 3,489 million yen 8. Balance of bonds with warrants issued Details of bonds with warrants (balance, exercise price, and shares to be issued) in accordance with the provisions of the former Commercial Code Article 341-8 Name Balance Exercise price Shares to be issued First series of unsecured bonds 489 million yen 4,203.00 yen Common stock with warrants, due 2005 9. The increase of net assets due to stating fair value of certain assets in accordance with the Commercial Code Enforcement Regulation (Article 124 Item 3) is 279,780 million yen. 10. The retirement benefit trust is established to appropriate the retirement benefits of the corporate pension plan, no portion of the trust offsetting the severance indemnity plan. 11. Allowance for Expo 2005 Aichi is an allowance specified in the provisions of the Enforcement Regulations of the Commercial Code Article 43. UNCONSOLIDATED STATEMENT OF INCOME (Million yen; amounts less than one million yen are omitted.) FY2005 (April 2004 through March 2005) Net sales 9,218,386 Cost of sales 7,506,044 Selling general and administrative expenses 1,010,951 Operating income 701,390 Non-operating income 273,440 Interest income 15,765 Dividend income 152,083 Other non-operating income 105,591 Non-operating expenses 118,598 Interest expenses 10,729 Other non-operating expenses 107,869 Ordinary income 856,231 Extraordinary losses 24,996 Impairment losses 24,996 Income before income taxes 831,235 Income taxes - current 281,700 Income taxes - deferred 20,205 Net income 529,329 Unappropriated retained earnings brought forward 497,867 Loss on reissuance of treasury stock 184 Interim cash dividends 82,049 Unappropriated retained earnings at end of year 944,962 Notes: 1. Sales to subsidiaries and affiliated companies: 5,765,292 million yen 2. Purchases from subsidiaries: 4,184,469 million yen 3. Non-operating transactions with subsidiaries: 310,192 million yen 4. Net income per share: 160.38 yen 5. Accounting Standard on Impairment for Fixed Assets is adopted from this fiscal year. As a result, 24,996 million yen of impairment loss on certain leased real estate is reported as extraordinary losses. 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 the end of each fiscal year. Other securities not practicable to fair value are stated at cost determined using the moving average method. 2. Valuation of inventories: Finished goods, work in process, and supplies are principally stated at cost, as determined by the periodic average method. Raw materials are stated at the lower of cost or market value, as determined by last-in first-out method. 3. Depreciation of property, plant and equipment is computed by the declining balance method. 4. Significant reserves: Allowance for doubtful accounts: To prepare for losses from bad debt, allowance for doubtful accounts is provided in an amount which is determined by considering the historical loss experience and the collectibility of receivables. Allowance for retirement benefits: Principally to provide for the retirement benefits for employees, including those already retired, allowance for retirement benefits is stated based on estimated retirement benefit obligations and estimated pension assets at the end of the year and an amount incurred is changed to income. 5. Consumption taxes are computed based on the net-of-tax method. Changes in Accounting Policies Effective from this fiscal year, Accounting Standards for Impairment of Fixed Assets (Opinions Concerning Establishment of Accounting Standards for Impairment of Fixed Assets (Business Accounting Council, August 9, 2002)) and the Guideline on Accounting Standards for Impairment of Fixed Assets (Financial Accounting Standards Implementation Guidelines No. 6, October 31, 2003) are adopted. Cumulative losses on impairment are deducted directly from the amount for each asset. Proposed Appropriation of Unconsolidated Retained Earnings Amount (yen) Unappropriated retained earnings at end of year 944,962,851,856 Reversal of reserve for losses on overseas investments 55,197,100 Total 945,018,048,956 The proposed appropriation is as follows: Cash dividends 130,723,157,560 per share 40 Bonus to Directors 614,000,000 Bonus to Corporate Auditors 51,500,000 Reserve for special depreciation 739,574,235 Reserve for reduction of acquisition cost of fixed assets 111,153,431 General reserve 300,000,000,000 Unappropriated retained earnings to be carried forward 512,778,663,730 Note: An interim dividend of 25 yen per share amounting to 82,049,383,625 yen was paid on November 26, 2004 to shareholders (including the beneficial shareholders notified by Japanese Securities Depository Center, Inc.) or registered pledgees of record as of September 30, 2004. Independent Auditors' Report (Certified Copy) (English Translation) May 2, 2005 To the Board of Directors Toyota Motor Corporation ChuoAoyama PricewaterhouseCoopers Kazunori Tajima, CPA Engagement Partner Masaki Horie, CPA Engagement Partner Fusahiro Yamamoto , CPA Engagement Partner Akihiko Nakamura, CPA Engagement Partner We have audited, pursuant to Article 2, paragraph 1 of the 'Special Law of the Commercial Code Concerning the Audit, etc. of Stock Corporations (Kabushiki-Kaisha)' 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 unconsolidated retained earnings, and supplementary schedules (limited to the accounting figures included therein) of Toyota Motor Corporation (hereinafter referred to as the 'Company') for the 101st fiscal year from April 1, 2004 to March 31, 2005. 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 statements 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) As disclosed in significant accounting policies, the Company adopted accounting standards for impairment of fixed assets beginning in this business year. This change was appropriate in conjunction with the change that allows the adoption of accounting standards for the impairment of fixed assets beginning in the business year ended after March 31, 2004. (3) 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. (4) The proposed appropriation of unconsolidated retained earnings is presented in conformity with the applicable laws and regulations of Japan and the Articles of Incorporation. (5) 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. We continuously provide to the Company those services that are allowed to be provided simultaneously with audit in accordance with the provisions of Article 2 Paragraph 2 of the Certified Public Accountant Law of Japan. Board of Corporate Auditors' Report (Certified Copy) Audit Report The Board of Corporate Auditors has prepared this Audit Report based on reports from each of the Corporate Auditors on the auditing methods and results pertaining to the conduct of duties by the Directors of Toyota Motor Corporation during FY2005 extending from April 1, 2004 through March 31, 2005, and report as follows. 1. Overview of Corporate Auditors' Auditing Method Based on auditing guidelines and the audit plan adopted by the Board, each of the Corporate Auditors obtained reports on operational matters from Directors and senior executives who attended Directors' meetings and other important meetings. The Corporate Auditors also reviewed important documents, surveyed operations and assets at company head offices, production facilities, and business offices, and obtained reports from subsidiaries as needed. In addition, the Corporate Auditors received reports and explanations from the independent auditor to review financial statements and its supplemental information. With respect to 'kyogyo torihiki' (competitive transactions) by Directors, profit-contradictory transactions between Directors and the company, the granting by the company of benefits without consideration, non-regular transactions with subsidiaries or shareholders, acquisition and disposal of treasury stock, and other transactions, the situation of these transactions was reviewed in detail when necessary as well as being subjected to the above mentioned auditing method. 2. Result of Audit (1) The auditing methods employed by the ChuoAoyama PricewaterhouseCoopers, which was retained to conduct the audit, and the results of the audit are correct. (2) The Business Review accurately represents the company's operating situation as required by law. (3) The proposed appropriation of unconsolidated retained earnings is appropriate in light of the company's asset situation and other circumstances. (4) The supporting materials accurately represent the content listed, and contain nothing contrary to provisions of law. (5) The Directors engaged in no improprieties or violations of law or convention in their conduct of their duties including those duties in subsidiaries. Our audit found no 'kyogyo torihiki' by Directors, no profit-contradictory transactions between Directors and the company, no granting by the company of benefits without consideration, no non-regular transactions with subsidiaries or shareholders, no acquisition or disposal of treasury stock that violate Directors' duties. May 9, 2005 Toyota Motor Corporation Board of Corporate Auditors Full-time Corporate Auditor Hideaki Miyahara Full-time Corporate Auditor Yoshiro Hayashi Full-time Corporate Auditor Chiaki Yamaguchi Corporate Auditor Yasutaka Okamura Corporate Auditor Hiromu Okabe Corporate Auditor Yoichi Kaya Corporate Auditor Tadashi Ishikawa Note: Mr. Yasutaka Okamura, Mr. Hiromu Okabe, Mr. Yoichi Kaya and Mr. Tadashi Ishikawa satisfy the qualifications of outside corporate auditors as provided in Paragraph 1, Article 18 of 'Special Law of the Commercial Code Concerning the Audit, etc., of Stock Corporations.' CONSOLIDATED BALANCE SHEET (Amounts are rounded to the nearest million yen) FY2005 FY2005 (As of (As of March 31, 2005) Liabilities March 31, 2005) Assets Current assets 9,440,105 Current liabilities 8,227,206 Cash and cash equivalents 1,483,753 Short-term borrowings 2,381,827 Time deposits 63,609 Current portion of long-term debt 1,150,920 Marketable securities 543,124 Accounts payable 1,856,799 Trade accounts and notes 1,616,341 Other payables 693,041 receivable, less allowance for doubtful accounts Finance receivables, net 3,010,135 Accrued expenses 1,289,373 Other receivables 438,676 Income taxes payable 292,835 Inventories 1,306,709 Other current liabilities 562,411 Deferred income taxes 475,764 Long-term liabilities 6,557,926 Prepaid expenses and other 501,994 Long-term debt 5,014,925 current assets Noncurrent finance receivables, net 3,976,941 Accrued pension and severance 646,989 costs Investments and other assets 5,122,371 Deferred income taxes 811,670 Marketable securities and other 2,704,142 Other long-term liabilities 84,342 securities investments Affiliated companies 1,570,185 Total liabilities 14,785,132 Employees receivables 49,538 Other 798,506 Minority interest in consolidated 504,929 subsidiaries Property, plant and equipment 5,795,594 Shareholders' equity Land 1,182,768 Common stock 397,050 Buildings 2,935,274 Additional paid-in capital 495,707 Machinery and equipment 7,897,509 Retained earnings 9,332,176 Vehicles and equipment on 1,828,697 Accumulated other comprehensive (80,660) operating leases loss Construction in progress 214,781 Treasury stock, at cost (1,099,323) Less-Accumulated depreciation (8,263,435) Total shareholders' equity 9,044,950 Total assets 24,335,011 Total liabilities and shareholders' 24,335,011 equity Notes: 1. Allowance for doubtful accounts and credit losses: 147,580 million yen 2. Breakdown of accumulated other comprehensive loss Foreign currency translation adjustments: (439,333) million yen Unrealized gains on securities: 375,379 million yen Minimum pension liability adjustments: (16,706) million yen 3. Assets pledged as collateral: 157,438 million yen 4. Guarantees: 1,139,638 million yen CONSOLIDATED STATEMENT OF INCOME (Amounts are rounded to the nearest million yen.) FY2005 (April 2004 through March 2005) Net revenues 18,551,526 Sales of products 17,790,862 Financing operations 760,664 Cost and expenses 16,879,339 Cost of products sold 14,500,282 Cost of financing operations 369,844 Selling, general and administrative 2,009,213 Operation income 1,672,187 Other income (expense) 82,450 Interest and dividend income 67,519 Interest expense (18,956) Foreign exchange gain, net 21,419 Other income, net 12,468 Income before income taxes, minority 1,754,637 interest and equity in earnings of affiliated companies Provision for income taxes 657,910 Income before minority interest and 1,096,727 equity in earnings of affiliated companies Minority interest in consolidated subsidiaries (64,938) Equity in earnings of affiliated companies 139,471 Net income 1,171,260 Note: Net income per share Basic: 355.35 yen Diluted: 355.28 yen SIGNIFICANT ACCOUNTING POLICIES 1. Basis of preparations of Consolidated Financial Statements: Pursuant to the provision of the Commercial Code Enforcement Regulations Article 179 Paragraph 1, TMC's consolidated financial statements are prepared in accordance with generally accepted accounting principles in the United States (U.S. GAAP). Also, pursuant to Paragraph 1 of above-mentioned provision, certain supplementary material and notes required under U.S. GAAP are omitted. 2. Valuation of Securities: Available-for-sale is stated at fair value, and held-to-maturity securities are stated at amortized cost. 3. Valuation of Inventories: Inventories asset's are valued at acquisition cost to the extent it does not exceed market value. The acquisition cost of inventory is calculated by the periodic average method, with the exception of the finished products of certain subsidiaries, which are valued by the specific identification method. 4. Depreciation of Tangible Fixed Assets : The methods of depreciation used for tangible fixed assets are primarily the declining balance method for TMC and subsidiaries in Japan, and straight-line method for overseas subsidiaries. 5. Amortization of Goodwill and Intangible Assets: Goodwill and intangible assets with an indefinite life are not amortized, and are tested once a fiscal year for impairment whenever events or circumstances indicate that a carrying amount of an asset (asset group) may not be recoverable. Intangible assets with a definite life are amortized on a straight-line method. 6. Method of Recoding Main Reserves : Allowance for doubtful accounts and allowance for credit losses: Lease reserves and financial loss reserves : Reserves are recorded based on the frequency of losses and the significance. Severance Pay Reserves : Calculation of severance pay obligations is conducted based on the average number of years of service, and severance pay reserves are recorded after adjusting pension assets, past service cost, and unrecognized actuarial loss. Independent Auditors' Report (Certified Copy) (English Translation) May 17, 2005 To the Board of Directors Toyota Motor Corporation ChuoAoyama PricewaterhouseCoopers Kazunori Tajima, CPA Engagement Partner Masaki Horie, CPA Engagement Partner Fusahiro Yamamoto, CPA Engagement Partner Akihiko Nakamura, CPA Engagement Partner We have audited, pursuant to Article 19-2. paragraph 3 of the 'Special Law of the Commercial Code Concerning the Audit, etc. of Stock Corporations (kabushiki-Kaisha)' of Japan, the consolidated financial statements, ie., which consist of the consolidated balance sheet and the consolidated statements of income, of Toyota Motor Corporation (hereinafter referred to as the 'Company') for the 101st fiscal year from April 1, 2004 to March 31, 2005. These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in Japan. Those standards require that we obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall consolidated 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 the above-mentioned consolidated financial statements of the Company 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. 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. We continuously provide to the Company those services that are allowed to be provided simultaneously with audit in accordance with the provisions of Article 2 paragraph 2 of the Certified Public Accountant Law of Japan. Board of Corporate Auditor's Report concerning Consolidated Financial Statements (Certified Copy) Auditors' Report concerning Consolidated Financial Statements The Board of Corporate Auditors has prepared this Audit Report based on reports from each of the Corporate Auditors on the auditing methods and results pertaining to the conduct of duties by the Directors of Toyota Motor Corporation during FY2005 extending from April 1, 2004 through March 31, 2005, and report as follows. 1. Overview of Corporate Auditors' Auditing Method Each auditor received reports and explanations concerning the consolidated financial statements from directors and accounting auditors and performed audits in accordance with the audit policies and audit implementation plans adopted by the board of auditors. 2. Result of Audit The auditing methods employed by the ChuoAoyama PricewaterhouseCoopers, which was retained to conduct the audit, and the results of the audit are correct. May 24, 2005 Toyota Motor Corporation Board of Corporate Auditors Full-time Corporate Auditor Hideaki Miyahara Full-time Corporate Auditor Yoshiro Hayashi Full-time Corporate Auditor Chiaki Yamaguchi Corporate Auditor Yasutaka Okamura Corporate Auditor Hiromu Okabe Corporate Auditor Yoichi Kaya Corporate Auditor Tadashi Ishikawa Note: Mr. Yasutaka Okamura, Mr. Hiromu Okabe, Mr. Yoichi Kaya and Mr. Tadashi Ishikawa satisfy the qualifications of outside corporate auditors as provided in Paragraph 1, Article 18 of 'Special Law of the Commercial Code Concerning the Audit, etc., of Stock Corporations.' Reference Documents Pertaining to Exercise of Voting Rights 1. Number of the voting rights of all the shareholders: 32,238,160 2. Proposed resolution and reference information < Resolutions 1 to 6 Proposed by the Company > Proposed resolutions 1 through 6 are TMC proposals. Proposed Resolution 1: Approval of Proposed Appropriation of Retained Earnings for the FY2005 Term The proposal calls for profit distribution as described in the appended document (p. 25). TMC deems the benefit of its shareholders as one of its priority management policies and promotes its business aggressively while improving its corporate foundations. With respect to the payment of dividends, TMC seeks to enhance the distribution of profits by striving to raise the consolidated dividend payout ratio to progressively higher levels, while giving due consideration to factors such as the business results of each term and new investment plans. We would like to offer a dividend of 40 yen per share for year-end dividend. Combined with the interim dividend, the total amount of the annual dividends for the fiscal year ended March 31, 2005 will be 65 yen per share, and the dividend payout ratio will be 40.5%. In addition, the consolidated payout ratio for this fiscal year will be 18.3% Proposed Resolution 2: Election of 26 Directors All the Directors will retire upon the expiration of their term of office at the conclusion of this shareholders' meeting. Accordingly, we ask for the election of 26 Directors. The candidates for the Directors are as follows: Following are the nominees no. Name Main occupation Brief career summary No. of TMC (birth date) shares owned 1 Hiroshi Okuda TMC Chairman Apr. 1955 Joined Toyota Motor Sales Co., Ltd. 64,963 (12/29/1932) Jul. 1982 TMC Director Sep. 1987 TMC Managing Director Sep. 1988 TMC Senior Managing Director Sep. 1992 TMC Executive Vice President Aug. 1995 TMC President Jun. 1999 TMC Chairman 2 Katsuhiro Nakagawa TMC Vice Chairman Apr. 1965 Joined Ministry of International Trade 18,000 (3/11/1942) and Industry Jul. 1997 Ministry of International Trade and Industry Vice-Minister for International Affairs Jun. 1998 Retired from Ministry of International Trade and Industry Vice-Minister for International Affairs Jun. 2001 TMC Managing Director Jun. 2002 TMC Senior Managing Director Jun. 2003 TMC Executive Vice President Jun. 2004 TMC Vice Chairman Fujio Cho TMC President Apr. 1960 Joined TMC 29,105 3 (2/2/1937) Sep. 1988 TMC Director Dec. 1988 Toyota Motor Manufacturing, U.S.A., Inc. President Sep. 1994 TMC Managing Director Oct. 1994 Retired from Toyota Motor Manufacturing, U.S.A., Inc. Jun. 1996 TMC Senior Managing Director Jun. 1998 TMC Executive Vice President Jun. 1999 TMC President 4 Katsuaki Watanabe TMC Executive Vice Apr. 1964 Joined TMC 12,171 President (2/13/1942) Sep. 1992 TMC Director Jun. 1997 TMC Managing Director Jun. 1999 TMC Senior Managing Director Jun. 2001 TMC Executive Vice President (Non-TMC Executive Duties) Vice Chairman of Gamagori Marine Development Co., Ltd. 5 Tokuichi Uranishi TMC Senior Managing Apr. 1966 Joined TMC 19,333 Director (5/3/1942) Jun. 1996 TMC Director (Chief Overseas Planning Operations Jun. 2001 TMC Managing Director Officer / Chief Europe & Africa Jun. 2003 TMC Senior Managing Director Operations Officer) (Non-TMC Executive Duties) Chairman of Toyota Motor Marketing Europe S.A./N.V. President of Toyota Motor Europe S.A./N.V. 6 Kazuo Okamoto TMC Senior Managing Apr. 1967 Joined TMC 13,264 Director (2/20/1944) Jun. 1996 TMC Director (Chief Design Officer / Chief Jun. 2001 TMC Managing Director Product Development Officer ) Jun. 2003 TMC Senior Managing Director (Non-TMC Executive Duties) Vice President of Calty Design Research, Inc. 7 Kyoji Sasazu TMC Senior Managing Apr. 1967 Joined Toyota Motor Sales Co., Ltd. 14,092 Director (6/11/1944) Jun. 1997 TMC Director (Chief Domestic Sales Operations Jun. 2001 TMC Managing Director Officer) Jun. 2003 TMC Senior Managing Director 8 Mitsuo Kinoshita TMC Senior Managing Apr. 1968 Joined TMC 15,070 Director (1/1/1946) Jun. 1997 TMC Director (Chief Business Development Officer Jun. 2001 TMC Managing Director / Chief Purchasing Officer / Chief Jun. 2003 TMC Senior Managing Director Housing Officer) 9 Yoshimi Inaba TMC Senior Managing Apr. 1968 Joined Toyota Motor Sales Co., Ltd. 15,000 Director (2/24/1946) Jun. 1997 TMC Director (Chief The Americas Operations Officer Jun. 1999 Toyota Motor Sales, U.S.A., Inc. / Chief Oceania, President Middle East & Southwest Asia Jun. 2003 Retired from Toyota Motor Sales, Operations Officer U.S.A., Inc. President / Chief Overseas Customer Service Jun. 2003 TMC Senior Managing Director Operations Officer) (Non-TMC Executive Duties) Vice President of Sociedad de Fabricacion de Automotores S.A. 10 Takeshi Uchiyamada TMC Senior Managing Apr. 1969 Joined TMC 20,464 Director (8/17/1946) Jun. 1998 TMC Director (Chief Production Control & Logistics Jun. 2001 TMC Managing Director Officer) Jun. 2003 TMC Senior Managing Director 11 Masatami Takimoto TMC Senior Managing Apr. 1970 Joined TMC 14,100 Director (1/13/1946) Jun. 1999 TMC Director (Chief Power Train Development Officer Jun. 2002 TMC Managing Director / Chief Fuel Cell System Development Jun. 2003 TMC Senior Managing Director Officer) 12 Akio Toyoda TMC Senior Managing Apr. 1984 Joined TMC 2,533,891 Director (5/3/1956) Jun. 2000 TMC Director (Chief China Operations Officer Jun. 2002 TMC Managing Director / Chief Oceania, Middle East & Jun. 2003 TMC Senior Managing Director Southwest Asia Operations Officer) (Non-TMC Executive Duties) President of Digital Media Service Corporation Chairman of Toyota Motor Asia Pacific Pte. Ltd. Chairman of Toyota Motor (China) Ltd. Chairman of Toyota Motor (China) Investment Co., Ltd. Vice Chairman of Tianjin FAW Toyota Motor Co., Ltd. Vice President of Sichuan Toyota Motor Co., Ltd. Vice Chairman of FAW Toyota Motor Sales Co., Ltd. Chairman of Guanggi Toyota Engine Ltd. Chairman of Digital Media Service (Thailand) Chairman of Toyota FAW (Tianjin) Dies Co., Ltd. Vice Chairman of FAW Toyota Changchun Engine Co., Ltd. Vice Chairman of Tianjin Toyota Motor Engine Co., Ltd. Vice Chairman of Toyota Motor Technical Center (China) Vice Chairman of Guangzhou Toyota Motor Co., Ltd 13 Tetsuo Hattori TMC Senior Managing Apr. 1971 Joined TMC 5,526 Director (12/2/1946) Jun. 1999 TMC Director (Chief Vehicle Engineering Jun. 2003 TMC Managing Officer Officer) Jun. 2004 TMC Senior Managing Director 14 Takeshi Suzuki TMC Senior Managing Apr. 1970 Joined Toyota Motor Sales Co., Ltd. 7,076 Director (11/18/1947) Jun. 2000 TMC Director Jun. 2003 TMC Managing Officer Jun. 2004 TMC Senior Managing Director (Non-TMC Executive Duties) Chairman of Toyota Finance Finland Oy 15 Shoichiro Toyoda TMC Honorary Jul. 1952 Joined TMC 13,140,193 Chairman and (2/27/1925) Director Jul. 1952 TMC Director Jan. 1961 TMC Managing Director Oct. 1967 TMC Senior Managing Director Dec. 1972 TMC Executive Vice President Jun. 1981 TMC Director Jun. 1981 Toyota Motor Sales Co., Ltd. President Jul. 1982 TMC President Sep. 1992 TMC Chairman Jun. 1999 TMC Honorary Chairman and Director (Non-TMC Executive Duties) Director of Toyota Central Research & Development Laboratories, Inc. Director of Genesis Research Institute, Inc. Chairman of Towa Real Estate Co., Ltd. 16 Yukitoshi Funo TMC Director Apr. 1970 Joined Toyota Motor Sales Co., Ltd. 5,248 (2/1/1947) (Toyota Motor Jun. 2000 TMC Director Sales, U.S.A., Inc. President) Jun. 2003 TMC Managing Officer Jun. 2003 Toyota Motor Sales, U.S.A., Inc. President Jun. 2004 TMC Director (Non-TMC Executive Duties) Vice President of Calty Design Research, Inc. President of Toyota Motor Sales, U.S.A., Inc. President of Toyota Logistics Services, Inc. President of TMS Mexico Investment, Inc. 17 Atsushi Niimi TMC Director Apr. 1971 Joined TMC 7,038 (7/30/1947) (Toyota Motor Jun. 2000 TMC Director Manufacturing North America, Inc. Jun. 2003 Toyota Motor Manufacturing North President) America, Inc. President Jun. 2003 TMC Managing Officer Jun. 2004 TMC Director (Non-TMC Executive Duties) President of Toyota Motor Manufacturing North America, Inc. Chairman of Toyota Motor Manufacturing Canada Inc. President of TABC Inc. Vice President of TSSC, Inc. 18 Hajime Wakayama TMC Managing Jul. 1969 Joined TMC 8,635 Officer (1/27/1946) Jun. 2001 TMC Director Jun. 2003 TMC Managing Officer 19 Hiroshi Takada TMC Managing Apr. 1969 Joined TMC 9,050 Officer (12/22/1946) Jun. 2001 TMC Director Jun. 2003 TMC Managing Officer 20 Teiji Tachibana TMC Managing Apr. 1969 Joined TMC 10,200 Officer (1/18/1947) Jun. 2001 TMC Director Jun. 2003 TMC Managing Officer (Non-TMC Executive Duties) President of Toyota Housing Corporation 21 Shinichi Sasaki TMC Managing Apr. 1970 Joined TMC 8,010 Officer (12/18/1946) Jun. 2001 TMC Director (Toyota Motor Engineering Jun. 2003 TMC Managing Officer Manufacturing Europe S.A./N.V.) Jun. 2004 Toyota Motor Engineering Manufacturing Europe S.A./N.V. President (Non-TMC Executive Duties) President of Toyota Motor Engineering Manufacturing Europe S.A. /N.V. Chairman of Toyota Motor Industries Poland Sp.zo.o. Chairman of Toyota Motor Manufacturing Turkey Inc. 22 Shin Kanada TMC Managing Apr. 1970 Joined TMC 9,578 Officer (1/10/1948) Jun. 2001 TMC Director Jun. 2003 TMC Managing Officer 23 Akira Okabe TMC Managing Apr. 1971 Joined Toyota Motor Sales Co., Ltd. 12,000 Officer (9/17/1947) Jun. 2001 TMC Director Jun. 2003 TMC Managing Officer (Non-TMC Executive Duties) Chairman of Toyota Kirloskar Motor Ltd. Chairman of Toyota Techno Park India Private Limited Chairman of Toyota Kirloskar Auto Parts Private Ltd. Chairman of Toyota Motor Vietnam Co., Ltd. 24 Yoshio Shirai TMC Managing Apr. 1973 Joined TMC 11,000 Officer (5/1/1948) Jun. 2001 TMC Director Jun. 2003 TMC Managing Officer 25 Yoichiro Ichimaru TMC Managing Apr. 1971 Joined Toyota Motor Sales Co., Ltd. 9,568 Officer (10/10/1948) Jun. 2001 TMC Director Jun. 2003 TMC Managing Officer 26 Shoji Ikawa TMC Managing Apr. 1975 Joined TMC 16,236 Officer (9/1/1949) Jun. 2001 TMC Director Jun. 2003 TMC Managing Officer Note: There are no special interests between each candidate and the Company. Proposed Resolution 3: Election of 1 Corporate Auditor The Corporate Auditor Mr. Hiromu Okabe will retire upon the expiration of their term of office at the conclusion of this shareholders' meeting. Accordingly, please elect one Corporate Auditor. The proposal of this resolution at this Ordinary General Shareholders' Meeting was consented by the Board of Corporate Auditors. Following is the nominee no. Name Main occupation Brief career summary No. of TMC (birth date) shares owned 1 Hiromu Okabe DENSO Corporation Apr. 1960 Joined Nippondenso Co., Ltd. 0 Chairman (5/19/1937) Mar. 1989 Nippondenso Co., Ltd. Director Mar. 1995 Nippondenso Co., Ltd. Managing Director Jun. 1996 Nippondenso Co., Ltd. President (Oct. 1996 The company's name was changed to DENSO Corporation) Jun. 2002 TMC Corporate Auditor Jun. 2003 DENSO Corporation Vice Chairman Jun. 2004 DENSO Corporation Chairman (Non-TMC Executive Duties) President of Auto Parts Center Chairman of DENSO Corporation Chairman of DENSO Taiyo Co., Ltd. Note 1: There are no special interests between the candidate and the Company. Note 2: The candidate satisfies the qualifications of outside corporate auditors as provided in Article 18 Paragraph 1 of 'Special Law of the Commercial Code Concerning the Audit, etc., of Stock Corporations (Kabushiki-kaisha).' Proposed Resolution 4: Issue of Stock Acquisition Rights without Consideration to Directors, Managing Officers and Employees, etc., of Toyota Motor Corporation and its Affiliates Pursuant to Article 280-20 and Article 280-21 of the Commercial Code, we ask for authorization to issue Stock Acquisition Rights (as defined below) without consideration, for the purpose of granting stock options, to directors, managing officers and employees, etc., of TMC and its affiliates in accordance with the following terms and conditions. 1. Reason for Issue of Stock Acquisition Rights without Consideration TMC will issue the rights to subscribe for or purchase shares of TMC ('Stock Acquisition Rights'), to Directors, Managing Officers and employees, etc., of TMC and its affiliates in order to enhance enthusiasm and raise morale for improving business performance and thereby contribute to strengthen TMC's international competitiveness. 2. Summary of Terms of Issue of Stock Acquisition Rights (1) Grantees of the Stock Acquisition Rights Directors, Managing Officers and employees, etc., of TMC and its affiliates. (2) Type and Number of Shares to be Issued or Transferred upon Exercise of Stock Acquisition Rights Up to 2,300,000 shares of common stock of TMC. Provided, however, that if the number of shares to be issued or transferred upon exercise of each Stock Acquisition Right is adjusted in accordance with (3) below, such number of shares to be issued or transferred shall be adjusted to the number obtained by multiplying the number of shares after adjustment by the total number of Stock Acquisition Rights to be issued. (3) Total Number of Stock Acquisition Rights to be Issued Up to 23,000 The number of shares to be issued or transferred upon exercise of one Stock Acquisition Right shall be 100; provided, however, that if TMC splits or consolidates its shares, the number of shores to be issued or transferred upon exercise of each Stock Acquisition Right shall be adjusted according to the following formula. Number of shares after = Number of shares x Ratio of split adjustment before adjustment (or consolidation) The adjustment above shall be made only to those rights remaining unexercised at the relevant time. If any fraction less than one (1) share arises as a result of such adjustment, such fraction shall be discarded. (4) Issue Price of Stock Acquisition Rights No consideration shall be paid at the time of issuance of the Stock Acquisition Rights. (5) Amount to be Paid upon Exercise of Stock Acquisition Rights The amount to be paid per share issued or transferred upon exercise of each Stock Acquisition Right (the 'Exercise Price') shall be as follows. The amount obtained by multiplying the closing price of the TMC's common stock in regular trading on the Tokyo Stock Exchange on the issue date of the Stock Acquisition Rights (if there is no transaction made on that day, then the closing price of the latest date prior to the issue date of the Stock Acquisition Rights on which a transaction was made) by 1.025, and any fraction less than one (1) yen arising therefrom shall be rounded up to the nearest one (1) yen. In addition, the Exercise Price shall be adjusted as follows: (i) If TMC splits or consolidates its shares after the issue date of the Stock Acquisition Rights, the Exercise Price shall be adjusted according to the following formula, and any fraction less than one (1) yen arising therefrom shall be rounded up to the nearest one (1) yen. Exercise Price = Exercise Price x 1 after adjustment before adjustment Ratio of split (or consolidation) (ii) If new shares are issued or treasury stock is sold at a price below the market price after the issue date of the Stock Acquisition Rights, the Exercise Price shall be adjusted according to the following formula, and any fraction less than one (1) yen arising therefrom shall be rounded up to the nearest one (1) yen. However, no adjustment shall be made in case of the exercise of Stock Acquisition Rights, transfer of treasury stock in accordance with a resolution of past Ordinary General Shareholders' Meetings pursuant to Paragraph 2, Article 210-2 of the former Commercial Code, or exercise of the outstanding rights to subscribe for new shares. Exercise Price Exercise Price Number of + Number of shares X Amount to be after adjustment before adjustment outstanding shares newly issued paid per share = X Market price Number of + Number of shares newly issued outstanding shares 'Number of outstanding shares' provided for in the above formula does not include the number of shares held by TMC as treasury stock and in the case where the treasury stock is to be sold 'Number of shares newly issued' shall be read as 'Number of shares of treasury stock to be sold.' (iii) In the case of a merger with any other company, corporate split or capital reduction of TMC, or in any other case similar thereto where an adjustment of the Exercise Price shall be required, in each case after the issue date of the Stock Acquisition Rights, the adjustment shall be made appropriately to the extent reasonable. (6) Exercise Period of the Stock Acquisition Rights From August 1, 2007 to July 31, 2011 (7) Conditions of Exercise of Stock Acquisition Rights (i) Each Stock Acquisition Right may not be partially exercised. (ii) The grantees of the Stock Acquisition Rights must, at the time of the closing of the Ordinary General Shareholders' Meeting to be held for the last fiscal year ending within two (2) years after the closing of the 101st Ordinary General Shareholders' Meeting of TMC, be a Director, Managing Officer on an employee, etc. of TMC or its affiliate, to which he/she belongs at the time such right is granted. (iii) Stock Acquisition Rights may not be inherited. (iv) Other exercise conditions shall be provided for by the resolution of this Ordinary General Shareholders' Meeting and the resolution of a meeting of the Board of Directors. (8) Events and Conditions of Cancellation of Stock Acquisition Rights (i) Stock Acquisition Rights may be cancelled without consideration upon approval by a General Shareholders' Meeting of an agendum on a merger agreement in which TMC is a company to be dissolved, or an agendum on a share exchange agreement or a share transfer by which TMC will become a wholly-owned subsidiary of another company. (ii) TMC may cancel the Stock Acquisition Rights without consideration if a grantee of the Stock Acquisition Rights becomes no longer qualified to exercise such rights pursuant to the provision provided for in (7) above. (9) Restriction on Transfer of Stock Acquisition Rights Transfer of Stock Acquisition Rights shall be subject to an approval of the Board of Directors. Proposed Resolution 5: Repurchase of shares In order to improve capital efficiency and to implement flexible capital policies in accordance with the business environment, we ask for authorization to repurchase shares of TMC common stock, up to 65 million shares and to a maximum value of 250 billion yen, pursuant to the provisions of Article 210 of the Commercial Code, after the conclusion of this Ordinary General Shareholders' Meeting and until the conclusion of the next Ordinary General Shareholders' Meeting. Proposed Resolution 6: Award of Bonus Payments to Retiring Directors In order to compensate the dedicated efforts of the 10 Directors who will be retiring upon the expiration of their term of office at the conclusion of this Ordinary General Shareholders' Meeting, bonuses in appropriate amounts will be provided in accordance with TMC's standards. The actual amounts and the timing and method of payment, etc. will be determined by the Board of Directors. The following is the brief career summary of the Directors. Name Brief career summary Kosuke Ikebuchi Sep. 1988 TMC Director Sep. 1994 TMC Managing Director Jun. 1996 TMC Senior Managing Director Jun. 1999 TMC Executive Vice President Jun. 2001 TMC Vice Chairman Akihiko Saito Sep. 1991 TMC Director Jun. 1996 TMC Managing Director Jun. 1998 TMC Senior Managing Director Jun. 2001 TMC Executive Vice President Ryuji Araki Sep. 1992 TMC Director Jun. 1997 TMC Managing Director Jun. 1999 TMC Senior Managing Director Jun. 2001 TMC Executive Vice President Yoshio Ishizaka Sep. 1992 TMC Director Jun. 1999 TMC Senior Managing Director Jun. 2001 TMC Executive Vice President Kosuke Shiramizu Sep. 1992 TMC Director Jun. 1997 TMC Managing Director Jun. 1999 TMC Senior Managing Director Jun. 2001 TMC Executive Vice President Name Brief career summary Kazushi Iwatsuki Jun. 1999 TMC Senior Managing Director Jun. 2001 TMC Executive Vice President Yasuhito Yamauchi Jun. 1995 TMC Director Jun. 1999 TMC Managing Director Jun. 2001 TMC Senior Managing Director Takashi Kamio Jun. 1996 TMC Director Jun. 1999 TMC Managing Director Jun. 2001 TMC Senior Managing Director Hiroyuki Watanabe Jun. 1996 TMC Director Jun. 1999 TMC Managing Director Jun. 2001 TMC Senior Managing Director Akio Matsubara Jun. 1996 TMC Director Jun. 2001 TMC Managing Director Jun. 2003 TMC Senior Managing Director Proposed resolutions 7 through 8 are shareholder proposals. The number of votes held by the proposing shareholders (24 persons) is 840. Proposed Resolution 7: Amendment of the Articles of Incorporation (Part 1) (Summary of Proposal) 1. Content of Proposal (1) Compensation and bonuses paid to each Director and Corporate Auditor for each fiscal year shall be disclosed in the documentation included in the notice of convocation of the general shareholders' meeting for such fiscal year. (2) When proposals for retirement bonuses to be paid to Directors and Corporate Auditors are presented at a general shareholders' meeting, the amount to be paid to each Director and Corporate Auditor shall be disclosed. The above language shall be added to the Articles of Incorporation. 2. Reasons for the Proposal The Commercial Code provides that as a general principle, compensation and retirement bonuses paid to executives are to be determined at a general shareholders' meeting (excluding companies with a special committee for that purpose). In the case of TMC, however, compensation and retirement bonuses paid to executives are determined by the Board of Directors, etc. and the amount paid to each individual is not disclosed to shareholders. Just as it would be improper for the compensation of members of the Diet to be determined without the knowledge of voters and/or withheld from voters, it is improper for compensation and retirement bonuses paid to executives who are entrusted with the management of the company by the shareholders to be determined without the knowledge of the shareholders. TMC engages in global business activities and is one of the leading Japanese companies on the global scene. Disclosing compensation and retirement bonuses paid to executives ahead of other Japanese companies would enhance its international standing as a company with transparent management and a company that is serious about information disclosures. Responding to shareholder interests would also raise its corporate value. The opinion of the Board of Directors concerning the proposed shareholder resolution The Board of Directors is opposed to this resolution. With respect to compensation paid to Directors and Corporate Auditors, the general framework of monthly amounts paid is proposed and approved at the general shareholders' meeting. The amount of bonuses is disclosed in the proposal concerning the appropriation of retained earnings and also approved at the general shareholders' meeting. With respect to retirement bonuses, such bonuses are paid in accordance with the company's regulations on retirement bonuses and a proposal to give authorization to determine the specific amounts, timing of the payments, method of payment, etc., to the Board of Directors in the case of retiring Directors and to the Board of Corporate Auditors in the case of retiring Corporate Auditors, has been made and approved at the general shareholders' meeting. In addition, each of the total amounts of compensation, bonuses, and retirement bonuses paid to Directors and Corporate Auditors are disclosed in the Business Review in accordance with the laws and regulations. In light of applicable laws and regulations, and taking into consideration business practices in Japan, we believe that this method of disclosure is legal and appropriate and that it is not necessary to add the language of this proposal to the Articles of Incorporation. Proposed Resolution 8: Amendment of the Articles of Incorporation (Part 2) (Disclosure of political contributions) (Summary of Proposal) 1. Content of Proposal 'All contributions regarded as political activities to political parties and political fund raising organizations are reported in the business report.' The above language shall be added to the Articles of Incorporation. 2. Reasons for the Proposal TMC and its group companies make political contributions of at least 100 million yen annually. Although certain sphere of contributions regarded as political activities are permitted by law, these types of political contributions may arouse suspicion about collusion between corporations and politicians. Accordingly, in order to enhance transparency of political contributions, all contributions regarded as political activities. Acting as a leader in Japan in disclosing to shareholders its contributions to political parties will increase TMC's transparency, enhance its international credibility as a company with a high transparency that is committed to disclosing information, respond to calls from shareholders, and increase corporate value. The opinion of the Board of Directors concerning the proposed shareholder resolution The Board of Directors is opposed to this resolution. The Political Funds Control Law limits the amount of political contributions and the recipients and obliges political organizations to disclose political contributions in order to ensure fair and open political activities. In order to promote policy-oriented party politics, ensure the sound development of parliamentary democracy, and fulfill corporate social responsibilities, TMC makes political contributions, in strict compliance with the Political Funds Control Law and other applicable laws. Therefore we believe that it is not necessary to add the language of this proposal to the Articles of Incorporation. This information is provided by RNS The company news service from the London Stock Exchange

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