Toyota 2005 Annual Report Download - page 61

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Other Income and Expenses
Interest and dividend income increased by ¥11.9 billion,
or 21.4%, to ¥67.5 billion during fiscal 2005 compared with
the prior year due to an increase in investment securities
in the United States subsidiary.
Interest expense decreased by ¥1.8 billion, or 8.5%, to
¥18.9 billion during fiscal 2005 compared with the prior
year due to a decrease in borrowings in the automotive
operations segment.
Foreign exchange gains, net decreased by ¥16.7 billion,
or 43.9%, to ¥21.4 billion during fiscal 2005 compared
with the prior year. Foreign exchange gains and losses
include the differences between the value of foreign
currency denominated sales translated at prevailing
exchange rates and the value of the sales amounts settled
during the year, including those settled using forward
foreign currency exchange contracts.
Other income, net decreased by ¥13.3 billion, or 51.7%,
to ¥12.4 billion during fiscal 2005 due to an increase in
donations paid to educational institutions.
Income Taxes
The provision for income taxes decreased ¥23.4 billion in
fiscal 2005 compared with the prior year primarily due to
the decrease in income before income taxes. In addition,
the provision decreased as a result of the reduction in the
effective tax rate for fiscal 2005, which decreased to 37.5%
from 38.6% for the prior year mainly attributed to the
reduction in the statutory tax rate in Japan.
Minority Interest in Consolidated Subsidiaries
and Equity in Earnings of Affiliated Companies
Minority interest in consolidated subsidiaries increased by
¥22.3 billion to ¥64.9 billion during fiscal 2005 compared
with the prior year. This increase was mainly due to
favorable operating results at consolidated subsidiaries.
Equity in earnings of affiliated companies during fiscal
2005 increased by ¥19.2 billion to ¥139.4 billion compared
with the prior year due to an increase in net income
attributable to favorable operations at the affiliated
companies, which were partially offset by the decrease in
the net gain on the transfer to the government of the
substitutional portion of an employee pension fund of
affiliated companies in Japan.
Net Income
Toyota’s net income increased by ¥9.2 billion, or 0.8%, to
¥1,171.2 billion during fiscal 2005 compared with the
prior year.
Other Comprehensive
Income and Loss
Other comprehensive income
decreased by ¥275.8 billion
to ¥123.9 billion for fiscal
2005 compared with the
prior year. This change
resulted primarily from a
decrease in unrealized hold-
ing gains on securities during
fiscal 2005 of ¥38.4 billion
compared with unrealized
holding gains of ¥329.7
billion in the prior year
reflected by the recovery of
the Japanese stock exchange
market and the lower gain adjustment in the minimum
pension liability component during fiscal 2005 of ¥9.8
billion compared to a ¥273.3 billion gain adjustment in
the prior year due to the transfer to the government of the
substitutional portion of employee pension funds of
primarily the parent company. These declines in the other
comprehensive income were partially offset by the foreign
currency translation adjustments, which resulted in a ¥75.7
billion of gains in fiscal 2005 compared with losses of
¥203.3 billion in the prior year.
RESULTS OF OPERATIONS — FISCAL 2004
COMPARED WITH FISCAL 2003
Net Revenues
Toyota had net revenues for fiscal 2004 of ¥17,294.7
billion, an increase of ¥1,793.2 billion, or 11.6%, com-
pared with the prior year. This increase principally reflects
the impact of increased vehicle unit sales, the consolida-
tion of the results of subsidiaries previously accounted for
on the equity basis, increased parts and service sales and
the impact of increased financings. These increases were
partially offset by the impact of fluctuations in foreign
currency translation rates particularly against the U.S.
dollar. Eliminating the difference in the yen value used for
translation purposes, net revenues would have been
approximately ¥17,554.3 billion during fiscal 2004, a
13.2% increase compared with the prior year. Toyota’s net
revenues include net revenues from sales of products
which increased during fiscal 2004 by 12.1% to ¥16,578.0
billion compared to the prior year and net revenues from
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS >59
600
300
900
1,200
’01 ’02 ’03 ’04 ’05
0
Net Income and ROE
(¥ Billion)
FY
ROE (Right scale)
10
5
15
20
0
(%)