Toyota 2008 Annual Report Download - page 87

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•Annual Report 2008 • TOYOTA
Performance Messages from the Management &
•Overview •Management •Special Feature •Business Overview •Corporate Information •Financial Section •Investor Information •
unsecured notes and long-term capital lease obligations with
interest rates ranging from 0.17% to 28.00%, and maturity dates
ranging from 2008 to 2047. The current portion of long-term
debt increased during fiscal 2008 by ¥307.3 billion, or 13.0%, to
¥2,675.4 billion and the non-current portion decreased by
¥281.6 billion, or 4.5%, to ¥5,981.9 billion. The increase in total
borrowings reflects the expansion of the financial services oper-
ations. As of March 31, 2008, approximately 34% of long-term
debt was denominated in U.S. dollars, 24% in Japanese yen,
10% in euros and 32% in other currencies. Toyota hedges fixed
rate exposure by entering into interest rate swaps. There are no
material seasonal variations in Toyota’s borrowings requirements.
As of March 31, 2008, Toyota’s total interest bearing debt
was 102.9% of total shareholders’ equity, compared to 102.5%
as of March 31, 2007.
Toyota’s long-term debt was rated “AAA” by Standard &
Poor’s Ratings Group, “Aaa” by Moody’s Investors Services and
“AAA” by Rating and Investment Information, Inc. as of March
31, 2008. These ratings represent the highest long-term debt
ratings published by each of the rating agencies. A credit
rating is not a recommendation to buy, sell or hold securities.
A credit rating may be subject to withdrawal or revision at any
time. Each rating should be evaluated separately of any other
rating.
Toyota’s unfunded pension liabilities increased during fiscal
2008 by ¥128.6 billion, or 45.5%, to ¥411.1 billion. The unfunded
pension liabilities relate primarily to the parent company and its
Japanese subsidiaries. The unfunded amounts will be funded
through future cash contributions by Toyota or in some cases
will be funded on the retirement date of each covered employ-
ee. The unfunded pension liabilities increased in fiscal 2008
compared to the prior year mainly due to the decrease in the
market value of plan assets. See note 19 to the consolidated
financial statements regarding employee benefit plans.
Toyota’s treasury policy is to maintain controls on all expo-
sures, to adhere to stringent counterparty credit standards, and
to actively monitor marketplace exposures. Toyota remains cen-
tralized, and is pursuing global efficiency of its financial services
operations through Toyota Financial Services Corporation.
The key element of Toyota’s financial policy is maintaining a
strong financial position that will allow Toyota to fund its
research and development initiatives, capital expenditures and
financing operations on a cost effective basis even if earnings
experience short-term fluctuations. Toyota believes that it main-
tains sufficient liquidity for its present requirements and that by
maintaining its high credit ratings, it will continue to be able to
access funds from external sources in large amounts and at rel-
atively low costs. Toyota’s ability to maintain its high credit rat-
ings is subject to a number of factors, some of which are not
within Toyota’s control. These factors include general economic
conditions in Japan and the other major markets in which
Toyota does business, as well as Toyota’s successful implemen-
tation of its business strategy.
’04FY ’05 ’06 ’07 ’08
0
1,000
2,000
500
1,500
(¥ Billion)
Cash and Cash Equivalents
at End of Year
’04FY ’05 ’06 ’07 ’08
0
2,000
1,000
3,000
5,000
4,000
* Cash and cash equivalents, time
deposits, marketable debt
securities and investment in
monetary trust funds
(¥ Billion)
Liquid Assets*
0
9,000
3,000
12,000
15,000
6,000
0
60
20
80
100
40
’04FY ’05 ’06 ’07 ’08
(¥ Billion) (%)
Equity ratio (Right scale)
Shareholders’ Equity
and Equity Ratio