Toyota 2015 Annual Report Download

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As filed with the Securities and Exchange Commission on June 24, 2016
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 20-F
(Mark One)
REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT
OF 1934
OR
ÈANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended: March 31, 2016
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
OR
SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
Commission file number: 001-14948
TOYOTA JIDOSHA KABUSHIKI KAISHA
(Exact Name of Registrant as Specified in its Charter)
TOYOTA MOTOR CORPORATION
(Translation of Registrant’s Name into English)
Japan
(Jurisdiction of Incorporation or Organization)
1 Toyota-cho, Toyota City
Aichi Prefecture 471-8571
Japan
+81 565 28-2121
(Address of Principal Executive Offices)
Nobukazu Takano
Telephone number: +81 565 28-2121
Facsimile number: +81 565 23-5800
Address: 1 Toyota-cho, Toyota City, Aichi Prefecture 471-8571, Japan
(Name, telephone, e-mail and/or facsimile number and address of registrant’s contact person)
Securities registered or to be registered pursuant to Section 12(b) of the Act:
Title of Each Class: Name of Each Exchange on Which Registered:
American Depositary Shares* The New York Stock Exchange
Common Stock**
* American Depositary Receipts evidence American Depositary Shares, each American Depositary Share representing two shares of the registrant’s Common Stock.
** No par value. Not for trading, but only in connection with the registration of American Depositary Shares, pursuant to the requirements of the U.S. Securities and
Exchange Commission.
Securities registered or to be registered pursuant to Section 12(g) of the Act:
None
Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act:
None
Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the
annual report: 3,037,675,870 shares of common stock (including 66,933,269 shares of common stock in the form of American Depositary Shares)
and 47,100,000 First Series Model AA class shares as of March 31, 2016
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act: Yes ÈNo
If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934: Yes No È
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days: Yes ÈNo
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File
required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter
period that the registrant was required to submit and post such files): Yes ÈNo
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated
filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer ÈAccelerated filer Non-accelerated filer
Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:
U.S. GAAP ÈInternational Financial Reporting Standards as issued by the International Accounting Standards Board Other
If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to
follow: Item 17 Item 18
If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange
Act): Yes No È

Table of contents

  • Page 1
    ..., Japan (Name, telephone, e-mail and/or facsimile number and address of registrant's contact person) Securities registered or to be registered pursuant to Section 12(b) of the Act: Name of Each Exchange on Which Registered: Title of Each Class: American Depositary Shares* The New York Stock Exchange...

  • Page 2
    ... COUNSEL ...FINANCIAL INFORMATION ...CONSOLIDATED STATEMENTS AND OTHER FINANCIAL INFORMATION ...SIGNIFICANT CHANGES ...THE OFFER AND LISTING ...LISTING DETAILS ...PLAN OF DISTRIBUTION ...MARKETS ...SELLING SHAREHOLDERS ...DILUTION ...EXPENSES OF THE ISSUE ...ADDITIONAL INFORMATION ...SHARE CAPITAL...

  • Page 3
    ... ACCOUNTANT FEES AND SERVICES ...EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES ...PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS ...CHANGE IN REGISTRANT'S CERTIFYING ACCOUNTANT ...CORPORATE GOVERNANCE ...MINE SAFETY DISCLOSURE ...FINANCIAL STATEMENTS ...FINANCIAL...

  • Page 4
    ... statements are identified in "Risk Factors" and elsewhere in this annual report, and include, among others: (i) changes in economic conditions, market demand, and the competitive environment affecting the automotive markets in Japan, North America, Europe, Asia and other markets in which Toyota...

  • Page 5
    ... in the markets in which Toyota operates; (viii) Toyota's ability to timely develop and achieve market acceptance of new products that meet customer demand; (ix) any damage to Toyota's brand image; (x) Toyota's reliance on various suppliers for the provision of supplies; (xi) increases in prices of...

  • Page 6
    ... U.S. GAAP. 2012 Year Ended March 31, 2013 2014 2015 (Yen in millions, except share and per share data) 2016 Consolidated Statement of Income Data: Automotive: Revenues ...Operating income ...Financial Services: Revenues ...Operating income ...All Other: Revenues ...Operating income ...Elimination...

  • Page 7
    ...-term debt, including current portion of long-term debt ...Long-term debt, less current portion ...Toyota Motor Corporation shareholders' equity ...Common stock ...Other Data: Dividends per share (yen) ...Number of vehicles sold Japan ...North America ...Europe ...Asia ...Other* ...Worldwide total...

  • Page 8
    ... its cash reserves. Toyota will pay dividends on the First Series Model AA Class Shares in accordance with a prescribed calculation method. In order to successfully compete in this highly competitive industry, Toyota plans to utilize its internal funds for the early commercialization of technologies...

  • Page 9
    ... to return to shareholders the profits derived from Toyota's business operations in the second half of the fiscal year ended March 31, 2016 by a resolution of the board of directors on May 11, 2016. Exchange Rates In parts of this annual report, yen amounts have been translated into U.S. dollars for...

  • Page 10
    ... and the introduction of new vehicles and technologies. As Toyota's revenues are derived from sales in markets worldwide, economic conditions in such markets are particularly important to Toyota. Reviewing the general economic environment for the fiscal year ended March 2016, with respect to the...

  • Page 11
    ... value risk due to lower used vehicle price, an increase in the ratio of credit losses and increased funding costs are factors which may impact Toyota's financial services operations. If Toyota is unable to adequately respond to the changes and competition in automobile financing, Toyota's financial...

  • Page 12
    ... or support a variety of business processes and activities, including manufacturing, research and development, supply chain management, sales and accounting. In addition, Toyota's vehicles may rely on various digital and information technologies, including information service and driving assistance...

  • Page 13
    ... or delays related to Toyota's business operations occur, it may adversely affect Toyota's financial condition and results of operations. ITEM 4. INFORMATION ON THE COMPANY 4.A HISTORY AND DEVELOPMENT OF THE COMPANY Toyota Motor Corporation is a limited liability, joint-stock company incorporated...

  • Page 14
    ... and manufacture of prefabricated housing and information technology related businesses including a web portal for automobile information called GAZOO.com, etc. Toyota sells its vehicles in approximately 190 countries and regions. Toyota's primary markets for its automobiles are Japan, North America...

  • Page 15
    ...-price vehicles intensifies, and technological development and development of new products become more frequent with a heightened global awareness of the environment and more stringent fuel economy standards. In 2015, China, North America, Europe and Asia were the world's largest automotive markets...

  • Page 16
    ... world-class safety. Toyota will also continue to contribute to environmental quality and to human happiness by using leading environmental technology and by deploying that technology in a growing line of vehicle models. At the same time, Toyota will work through the provision of products, sales...

  • Page 17
    ... engage in cutting-edge technology development. Toyota will work towards offering vehicles around the world that address the needs of today and of tomorrow at affordable prices. "Continued awareness for the Earth and environment" • • Toyota will continue to work towards minimizing environmental...

  • Page 18
    ...companies, streamlined operation from planning through manufacturing enables quick and independent decision-making. Within the region-based business units, Toyota aims to build even more regional operations. The head office will work to formulate a medium- to long-term vision and management strategy...

  • Page 19
    ... and compact cars. Hino Motors, Ltd. ("Hino"), also a subsidiary of Toyota Motor Corporation, produces and sells commercial vehicles such as trucks and buses. Toyota also manufactures automotive parts, components and accessories for its own use and for sale to others. On January 29, 2016, Toyota and...

  • Page 20
    ..., and the Mark X, which was remodeled in October 2009 for the Japanese market. Luxury & Large In North America, Europe, Japan and other regions, Toyota's luxury lineup consists primarily of vehicles sold under the Lexus brand name. Lexus passenger car models include the LS, the GS, the ES, the IS...

  • Page 21
    ...also offers four types of sport-utility vehicles under the Lexus brand, including the LX, the GX, the RX, and the NX. Toyota also manufactures the RX and RAV4 models in Canada. Toyota's pickup truck, the Hilux, has been the bestselling model of all Toyota cars sold in Thailand. In North America, the...

  • Page 22
    ..., Africa and the Middle East, etc. The following table sets forth Toyota's vehicle unit sales and market share in Japan, North America, Europe and Asia on a retail basis for the periods shown. Each market's total sales and Toyota's sales represent new vehicle registrations in the relevant year...

  • Page 23
    ..., it considers Japan to be the source of its good manufacturing practices. Toyota supports its operations worldwide through measures such as the development of new technologies and products, low-volume vehicles to complement local production, production of global vehicle models which straddle...

  • Page 24
    ... year, and the production capacity at the Indiana plant also increased. Toyota commenced production of the RX450h hybrid model at its Cambridge plant in Canada in 2014. Through the business alliance with Mazda Motor Corporation, the production of Toyota brand light vehicles for sale mainly in North...

  • Page 25
    ...In addition, Toyota is actively promoting production and sales measures that meet local demand by strengthening its value chain including used car dealerships, aftersales services and finance and insurance services. In 2015, while the market in Eastern European countries, mainly in Russia, continued...

  • Page 26
    ... to the Middle East. Toyota also constructed a passenger vehicle engine plant that commenced production in February 2016. In Malaysia, Toyota began production of the Camry hybrid in March 2015, and is planning to reorganize its production structure there in 2019 by building a new plant dedicated to...

  • Page 27
    ...by expanding the number of dealers and the product lineup for both locally produced and imported vehicles, particularly inland. In addition, as the market in China develops, Toyota plans to promote the so-called "Value Chain" businesses such as used cars, services, financing and insurance. South and...

  • Page 28
    ... Year Ended March 31, 2014 2015 2016 Units Produced ... 7,435,781 8,698,454 9,032,165 8,929,887 8,575,899 Toyota closely monitors its actual units of sale, market share and units of production data and uses this information to allocate resources to existing manufacturing facilities and to plan...

  • Page 29
    ... efficiency as well as product quality are improved through the application of measures to address the sources of problems. As one method to implement these measures, Toyota utilizes sophisticated information technologies to improve each step of its vehicle development process, from product planning...

  • Page 30
    ... to resolve issues relating to the entire supply chain. Toyota is working company-wide towards the production of "ever-better cars." The production engineering and manufacturing divisions are developing Toyota's own innovative production systems, equipment and processing technologies and deploying...

  • Page 31
    ...environment working with suppliers as one team to dramatically increase the efficiency of development; creating a production structure that can better withstand fluctuations in demand and currency exchange rates; and strengthening sales capabilities in line with local conditions. Toyota also plans...

  • Page 32
    ...G-BOOK, introduced even more useful car navigation services such as "Map-on-Demand" - the world's first technology for automatically updating map data - and "Probe Communication Traffic Information" that provides drivers with highly precise information on traffic congestion. In 2014, Toyota launched...

  • Page 33
    ... safety, security and comfort for T-Connect/G-BOOK and G-Link users in their lifestyle using vehicles. With G-BOOK mX announced in April 2007, Toyota started offering services that allow drivers to use more convenient navigation systems such as "Map-on-Demand" - the world's first technology for...

  • Page 34
    ... to consolidate and analyze information collected from vehicles and to develop new products, and thereby promoting "making ever-better cars" through utilizing big data. In addition, Toyota is collaborating with insurance companies on developing insurance services as well as tying up with a sharing...

  • Page 35
    ..., not just in Japan but around the world, in both developed and emerging countries, and will play a role in the creation of energy and transportation infrastructure to help spread next-generation eco-cars. Financial Services Toyota's financial services include loan programs and leasing programs for...

  • Page 36
    ...risk management and streamline decision-making processes. Toyota has expanded its network of financial services, in accordance with its strategy of developing auto-related financing businesses in significant markets. Accordingly, Toyota currently operates financial services companies in 36 countries...

  • Page 37
    ... the finance companies have the right to liquidate any assets acquired and seek legal remedies. Toyota's finance subsidiaries also make term loans to dealers for business acquisitions, facilities refurbishment, real estate purchases and working capital requirements. These loans are typically secured...

  • Page 38
    ... coverage and related administrative services to affiliated companies of Toyota Motor Credit Corporation. Toyota dealers in Japan and in other countries and regions also engage in vehicle insurance sales. Other Financial Services Toyota Finance Corporation launched its credit card business in April...

  • Page 39
    ...2015, the EPA adopted final rules to limit, in relation to greenhouse gas emissions, the use of various hydroflourocarbons (HFCs) and HFC-containing refrigerant blends used in motor vehicle air conditioning systems for new vehicles, among other applications. Toyota purchases air conditioning systems...

  • Page 40
    ... as light-duty passenger vehicles and small trucks. However, E15 is prohibited for use in other 2000 model year or older vehicles and general purpose engines. As a result, the EPA promulgated regulations in July 2011, effective August 2011, requiring businesses that sell E15 to put a warning label...

  • Page 41
    ...program for model years 2015 to 2025 as part of Advanced Clean Cars. The program covers greenhouse gas standards for cars and light-duty trucks, reductions of smog-forming emissions, zero-emission vehicles regulations and clean fuels outlet regulations. Other States' Standards The states of New York...

  • Page 42
    .... Manufacturers that are unable to develop commercially viable technologies within the time frames set by the new standards will lose their market share and will be forced to decrease the number of types of vehicles and engines in their principal markets. Standards of Other Countries Countries other...

  • Page 43
    ... established CAFE standards applicable to light-duty trucks for model year 2008 and beyond. These CAFE standards aimed at shifting the framework from one that used to be advantageous only to compact car manufacturers to one that is fair to full line manufacturers. The requirements were changed so...

  • Page 44
    ... pursuant to the directive issued by the European Commission in 2005. This trend is expected to continue in accordance with the recent increases in environmental awareness. An EU directive on motor vehicle air conditioning units requires manufacturers to replace currently used refrigerants with...

  • Page 45
    ...being sold in Japan, the application of the requirement to disable automatic steering functions is expected to be suspended for the time being in Japan. With respect to standards that were newly brought in line with the UN regulations, standards for fire prevention will apply to new models beginning...

  • Page 46
    ... and False Statements Act. In 2003, the NHTSA expanded its New Car Assessment Program ("NCAP") to implement consumer information programs for vehicle rollover resistance and child restraints and, beginning in 2003, adopted extensive early warning defect reporting requirements. Regulations regarding...

  • Page 47
    ... these advanced safety systems were discussed in the United Nations. Further, application of UN regulation came into force from November 2012 for new vehicle types and from 2014 for all new vehicles sold in the EU market. The new mandatory measures include electric car safety requirements and gear...

  • Page 48
    ... of new safety technologies. The plan is scheduled to come into effect as an official Communication around June 2016 and the Communication is planned to be sent to the European Council and the European Parliament. At the same time, a process to revise the General Safety Regulation (EC) No 661/2009...

  • Page 49
    ... market environment and the rules differ from the latest UN regulations. As for future safety regulations, standards related to airbag technologies and standards related to batteries, motors and the charging of electric vehicles are currently being planned. Standards of Other Countries Vehicle...

  • Page 50
    ... operations. Toyota expects growing pressure in the next several years to further reduce emissions from motor vehicles and manufacturing facilities. European Standards In October 2000, the European Union brought into effect a directive that requires member states to promulgate regulations...

  • Page 51
    ... to work toward technological innovations to make efficient use of resources and to reduce the burden on the environment. Disclosure of Iranian Activities under Section 13(r) of the Securities Exchange Act of 1934 None. Research and Development The overriding goals of Toyota's technology and product...

  • Page 52
    ... at the same time as keeping total costs at a minimum, Toyota is promoting efforts to optimize each stage of the supply-chain. To this end, Toyota has developed a standardized system of global distribution and is supporting the operation of the system at each production base. The use of 47

  • Page 53
    ... types of vehicles already on sale. In addition, Toyota has been working on the TNGA to achieve sweeping advances in basic performance and product appeal of parts and units as well as seeking cost reductions by sharing more parts and implementing manufacturing reforms. In fiscal 2016, market prices...

  • Page 54
    ...annual Japanese securities report filed with the director of the Kanto Local Finance Bureau. Total Cost (Yen in billions) Primary Method of Financing Description of Activity Location Japan Investment primarily in technology and products by Toyota Motor Corporation ... 827.7 Japan Internal funds...

  • Page 55
    ... and as reported in Toyota's annual Japanese securities report filed with the director of the Kanto Local Finance Bureau. Total Cost (Yen in billions) Primary Method of Financing Description of Activity Location Japan Investment primarily in manufacturing facilities by Toyota Motor Corporation...

  • Page 56
    ... to discovery and toward trial. Toyota has offered the ISP process to plaintiffs in other consolidated actions and in individual cases, as well. Toyota has been named as a defendant in 33 economic loss class action lawsuits, which, together with similar lawsuits against Takata and other automakers...

  • Page 57
    ... Toyota Financial Services Corporation ...Japan Hino Motors, Ltd...Japan Toyota Motor Kyushu, Inc...Japan Daihatsu Motor Co., Ltd...Japan Toyota Finance Corporation ...Japan Toyota Auto Body Co., Ltd...Japan Toyota Motor East Japan, Inc...Japan Toyota Motor Engineering & Manufacturing North America...

  • Page 58
    ...some facilities are on leased premises. Land Area (thousand square Number of meters) Employees Principal Products or Functions Facility or Subsidiary Name Location Japan (Toyota Motor Corporation) Tahara Plant ...Tahara City, Aichi Pref. Higashi-Fuji Technical Center ...Susono City, Shizuoka Pref...

  • Page 59
    ... 89% of Toyota's total revenues before the elimination of intersegment revenues for fiscal 2016. Toyota's primary markets based on vehicle unit sales for fiscal 2016 were: Japan (24%), North America (33%), Europe (10%) and Asia (15%). Automotive Market Environment The worldwide automotive market is...

  • Page 60
    ... and the Middle East, despite an increase in North America. Toyota's share of total vehicle unit sales in each market is influenced by the quality, safety, reliability, price, design, performance, economy and utility of Toyota's vehicles compared with those offered by other manufacturers. The timely...

  • Page 61
    ... mainly include loans and leasing programs for customers and dealers. Toyota believes that its ability to provide financing to its customers is an important value added service. Therefore, Toyota has expanded its network of finance subsidiaries in order to offer financial services in many countries...

  • Page 62
    ...values (less costs to sell) to realize the full carrying values of these receivables. See discussion in "Critical Accounting Estimates - Allowance for Doubtful Accounts and Credit Losses" and note 10 to the consolidated financial statements. Toyota continues to originate leases to finance new Toyota...

  • Page 63
    ...31, 2014, and that as of March 31, 2016 increased by ¥2.7 billion from March 31, 2015 to ¥383.6 billion. Other Business Operations Toyota's other business operations consist of housing (including the manufacture and sale of prefabricated homes), information technology related businesses (including...

  • Page 64
    ... forth Toyota's net revenues in each geographic market based on the country location of the parent company or the subsidiaries that transacted the sale with the external customer for the past three fiscal years. Yen in millions Year ended March 31, 2014 2015 2016 Japan ...North America ...Europe...

  • Page 65
    ...in the Middle East, Africa and Central and South America due mainly to the fall in demand resulting from the low price of crude oil and currency weakness. Under these automotive market conditions, Toyota's consolidated vehicle unit sales decreased by 3.2% compared with the prior fiscal year to 8,681...

  • Page 66
    ... contracts by geographic region at the end of fiscal 2016 and 2015, respectively. Number of financing contracts in thousands Year ended March 31, 2016 v. 2015 Change 2015 2016 Amount Percentage Japan ...North America ...Europe ...Asia ...Other* ...Total ... 1,873 5,046 910 1,382 741 9,952 1,961...

  • Page 67
    ...2015 Change 2015 2016 Amount Percentage Net revenues: Sales of products ...14,283,195 14,638,709 Financial services ...120,672 120,779 Total ...14,403,867 14,759,488 355,514 107 355,621 2.5% 0.1 2.5% Net revenues in Japan increased due primarily to the effect of changes in exchange rates related...

  • Page 68
    ... units Year ended March 31, 2016 v. 2015 Change 2015 2016 Amount Percentage Toyota's consolidated vehicle unit sales ... 1,489 1,345 (144) (9.7)% Yen in millions Year ended March 31, 2016 v. 2015 Change 2015 2016 Amount Percentage Net revenues: Sales of products ...Financial services ...Total...

  • Page 69
    ...was due mainly to decreased sales in the Middle East, Africa and Central and South America. Operating Costs and Expenses Yen in millions Year ended March 31, 2016 v. 2015 Change 2015 2016 Amount Percentage Operating costs and expenses Cost of products sold ...Cost of financing operations ...Selling...

  • Page 70
    ...other various costs. Operating Income Yen in millions 2016 v. 2015 Change Changes in operating income and loss: Effect of cost reduction efforts ...Effect of changes in exchange rates ...Effect of marketing activities ...Effect of increase of miscellaneous costs and others ...Other ...Total ... 390...

  • Page 71
    ...000) 6,046 106,046 North America Yen in millions 2016 v. 2015 Change Changes in operating income and loss: Effect of cost reduction efforts ...Effect of changes in exchange rates ...Effect of marketing efforts ...Effect of increase of miscellaneous costs and others ...Other ...Total ... 75,000 (65...

  • Page 72
    ... 27,407 Other Yen in millions 2016 v. 2015 Change Changes in operating income and loss: Effect of cost reduction efforts ...Effect of changes in exchange rates ...Effect of marketing efforts ...Effect of increase of miscellaneous costs and others ...Other ...Total ... 5,000 (45,000) 45,000 (5,000...

  • Page 73
    ... rates in Japan and a decrease in fair value of plan assets. Segment Information The following is a discussion of the results of operations for each of Toyota's operating segments. The amounts presented are prior to intersegment elimination. Yen in millions Year ended March 31, 2016 v. 2015 Change...

  • Page 74
    ... in the Middle East, Africa, and Central and South America despite the increase in sales in the steady North American market. The increase in miscellaneous costs and others was due mainly to the ¥110.0 billion increase in labor costs, the ¥50.0 billion increase in research and development expenses...

  • Page 75
    ... with Fiscal 2014 Yen in millions Year ended March 31, 2015 v. 2014 Change 2014 2015 Amount Percentage Net revenues: Japan ...North America ...Europe ...Asia ...Other* ...Intersegment elimination/unallocated amount ...Total ...Operating income: Japan ...North America ...Europe ...Asia ...Other...

  • Page 76
    ... contracts by geographic region at the end of fiscal 2015 and 2014, respectively. Number of financing contracts in thousands Year ended March 31, 2015 v. 2014 Change 2014 2015 Amount Percentage Japan ...North America ...Europe ...Asia ...Other* ...Total ... 1,813 4,791 879 1,167 688 9,338 1,873...

  • Page 77
    ... Change 2014 2015 Amount Percentage Net revenues: Sales of products ...Financial services ...Total ... 14,179,710 117,760 14,297,470 14,283,195 120,672 14,403,867 103,485 2,912 106,397 0.7% 2.5 0.7% Net revenues in Japan increased due primarily to the effect of changes in exchange rates related...

  • Page 78
    ... units Year ended March 31, 2015 v. 2014 Change 2014 2015 Amount Percentage Toyota's consolidated vehicle unit sales ... 844 859 15 1.8% Yen in millions Year ended March 31, 2015 v. 2014 Change 2014 2015 Amount Percentage Net revenues: Sales of products ...Financial services ...Total ... 2,630...

  • Page 79
    ...of units Year ended March 31, 2015 v. 2014 Change 2014 2015 Amount Percentage Toyota's consolidated vehicle unit sales ... 1,769 1,755 (14) (0.8)% Yen in millions Year ended March 31, 2015 v. 2014 Change 2014 2015 Amount Percentage Net revenues: Sales of products ...Financial services ...Total...

  • Page 80
    ...in relation to the driver/front passenger airbag inflator. The increase in research and development expenses was due mainly to active investments in advanced technology development to support Toyota's future growth. Cost Reduction Efforts During fiscal 2015, continued cost reduction efforts together...

  • Page 81
    ...'s Office for the Southern District of New York to resolve its investigation recorded in the prior fiscal year. Operating Income Yen in millions 2015 v. 2014 Change Changes in operating income and loss: Effect of changes in exchange rates ...Effect of cost reduction efforts ...Effect of marketing...

  • Page 82
    North America Yen in millions 2015 v. 2014 Change Changes in operating income and loss: Effect of changes in exchange rates ...Effect of cost reduction efforts ...Effect of marketing efforts ...Other ...Total ... (40,000) 70,000 105,000 123,467 258,467 Europe Yen in millions 2015 v. 2014 Change ...

  • Page 83
    ... in prices of marketable securities in stock exchange markets in Japan, and from favorable foreign currency translation adjustments gains of ¥380.4 billion in fiscal 2015 compared with gains of ¥296.9 billion in the prior fiscal year due mainly to depreciation of the yen against the U.S. dollar...

  • Page 84
    ...fiscal 2015 compared with the prior fiscal year. This increase in operating income was due mainly to the ¥280.0 billion favorable impact of changes in foreign currency exchange rates and the ¥280.0 billion impact of cost reduction efforts, partially offset by the ¥70.0 billion impact of marketing...

  • Page 85
    ... 15, 2015. Management is evaluating the impact of adopting this guidance on Toyota's consolidated financial statements. In April 2015, the FASB issued updated guidance that requires debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction...

  • Page 86
    ... fiscal years. Management is evaluating the impact of adopting this guidance on Toyota's consolidated financial statements. In February 2016, the FASB issued updated guidance for leases. This guidance will require lessees to recognize almost all leases on their balance sheet as a right-of-use asset...

  • Page 87
    ...of cost of sales at the time the related sale is recognized. The accrued warranty costs represent management's best estimate at the time of sale of the total costs that Toyota will incur to repair or replace product parts that fail while still under warranty. The amount of accrued estimated warranty...

  • Page 88
    ... value of Toyota's retail receivables and finance lease receivables could experience further downward pressure. If these factors require a significant increase in Toyota's allowance for doubtful accounts and credit losses, it could negatively affect future operating results of the financial services...

  • Page 89
    ... services operations of the change in vehicle return rate and end-of-term market values as those changes have a significant impact on financial services operations. Yen in millions Effect on the residual value losses over the remaining terms of the operating leases on and after April 1, 2016...

  • Page 90
    ... management, and forecasted market conditions. A weighted-average discount rate of 1.1% domestically and 4.0% overseas and a weighted-average expected rate of return on plan assets of 2.5% domestically and 6.3% overseas were used in calculating Toyota's consolidated pension costs for fiscal 2016...

  • Page 91
    ... of safety technologies are required, while companies in other businesses are newly venturing into the development of automated driving technology. Fierce competition is thus intensifying on a global scale. Taking the foregoing external factors into account, Toyota expects that net revenues for...

  • Page 92
    ...cash and cash equivalents on hand, and cash generated by operations. Toyota will use its funds for the development of environment technologies, maintenance and replacement of manufacturing facilities, and the introduction of new products. See "Information on the Company - Business Overview - Capital...

  • Page 93
    ... translation rates. As of March 31, 2016, finance receivables were geographically distributed as follows: in North America 59.1%, in Asia 11.9%, in Europe 10.3%, in Japan 8.3% and in Other 10.4%. Marketable securities and other securities investments, including those included in current assets...

  • Page 94
    ... 113.0% as of March 31, 2015. The following table provides information for credit rating of Toyota's short-term borrowing and long-term debt from rating agencies, Standard & Poor's Ratings Group (S&P), Moody's Investors Services (Moody's), and Rating and Investment Information, Inc. (R&I), as of May...

  • Page 95
    ... Ltd., Toyota Motor East Japan, Inc., and many other Toyota group companies. Overseas, Toyota has a worldwide network of technical centers as well as design and motorsports research and development centers. Toyota established Toyota Research Institute, Inc. in January 2016 to accelerate research and...

  • Page 96
    ......Toyota Research Institute of North America (TRI-NA) ...Toyota Research Institute, Inc...Europe Toyota Motor Europe NV/SA ...Toyota Europe Design Development S.A.R.L...Toyota Motorsport GmbH ...Asia Pacific Toyota Motor Asia Pacific Engineering and Manufacturing Co., Ltd...Toyota Technical Center...

  • Page 97
    ...consortium, for wholesale inventory financing, business acquisitions, facilities refurbishment, real estate purchases, and working capital requirements. Toyota's outstanding credit facilities with dealers totaled ¥2,259.3 billion as of March 31, 2016. Guarantees Toyota enters into certain guarantee...

  • Page 98
    ... each of the next five years, see notes 12, 23 and 24 to the consolidated financial statements. In addition, as part of Toyota's normal business practices, Toyota enters into long-term arrangements with suppliers for purchases of certain raw materials, components and services. These arrangements may...

  • Page 99
    ... covers the Lexus business, "Toyota No. 1," which covers North America, Europe and Japan, "Toyota No. 2," which covers China, Asia & Middle East, East Asia & Oceania, Africa and Latin America & Caribbean and "Unit Center," which covers all unit-related operations. Toyota's executive vice presidents...

  • Page 100
    ... of operations, such as business units, regional operations and key functions. Furthermore, in April 2016, Toyota established seven product-based in-house companies to transition to a corporate organization that promotes the development of "ever-better cars" through the integration of processes from...

  • Page 101
    Name (Date of birth) Position Brief career summary and important concurrent duties Number and kind of shares Mitsuhisa Kato (March 2, 1953) Executive Vice President, Member of the Board of Directors 1975 Joined TMC 2004 Managing Officer of TMC 2006 Toyota Technocraft Co., Ltd. President 2006 ...

  • Page 102
    ... North America, Inc. 2013 Retired from Toyota Motor Engineering & Manufacturing North America, Inc. President and CEO 2013 Retired from Toyota Motor North America, Inc. President and COO 2013 Senior Managing Officer of TMC 2013 Member of the Board of Directors and Senior Managing Officer of TMC 2015...

  • Page 103
    ... Steel Corporation 1977 Joined Toyota Motor Sales Co., Ltd. 2007 Managing Officer of TMC 2007 Toyota Motor North America, Inc. President 2009 Retired from Toyota Motor North America, Inc. President 2012 Senior Managing Officer of TMC 2015 Member of the Board of Directors and Senior Managing Officer...

  • Page 104
    Name (Date of birth) Position Brief career summary and important concurrent duties Number and kind of shares Ikuo Uno (January 4, 1935) Member of the Board of Directors 1959 Joined Nippon Life Insurance Company 1986 Director of Nippon Life Insurance Company 1989 Managing Director of Nippon ...

  • Page 105
    ... Managing Officer of TMC 2011 Retired from Toyota Motor (China) Investment Co., Ltd. President 2011 Audit & Supervisory Board Member of TMC (to present) 5,800 common shares Masahiro Kato (September 17, 1952) Full-time Audit & Supervisory Board Member 7,200 common shares, 1,000 First Series Model...

  • Page 106
    ... Outside Corporate Auditor of Mitsui & Co., Ltd. - None of the persons listed above was selected as member of board of directors, audit & supervisory board member or member of senior management pursuant to an arrangement or understanding with Toyota's major shareholders, customers, suppliers or...

  • Page 107
    ... shares of common stock at an exercise price of ¥3,183 and with an expiration date of July 31, 2018. See "Share Ownership - Stock Options" for a more detailed discussion of Toyota's stock option plans. Toyota's Annual Securities Report filed with the Kanto Local Bureau of Finance on June 24, 2016...

  • Page 108
    ...never been a member of the board of directors, accounting counselor (in the case that an accounting counselor is a legal entity, an employee of such entity who is in charge of its affairs), executive officer, manager or employee of Toyota or its subsidiaries during the 10 year period before becoming...

  • Page 109
    ...Europe ...Asia ...Other* ...Total ... 198,745 45,475 18,866 62,424 23,367 348,877 * "Other" consists of Central and South America, Oceania, Africa and the Middle East. Most regular employees of Toyota Motor Corporation and its consolidated subsidiaries in Japan, other than management, are required...

  • Page 110
    ...-year period that starts two years from the date of grant. The exercise price of each stock acquisition right is 1.025 times the closing price of Toyota's common stock on the Tokyo Stock Exchange on the date of grant. The 2008, 2009 and 2010 plans provide that each member of the board of directors...

  • Page 111
    ... (Years) Exercisable Weightedaverage Number of exercise shares price (Yen) Exercise price range (Yen) 3,153 - 4,682 ... 2,093,500 3,858 1.56 2,093,500 3,858 Toyota also has an employee stock ownership association in Japan for employees and full time and part time company advisors. Members of...

  • Page 112
    ...which certain members of Toyota's board of directors are affiliated. Toyota sold products and services to these affiliated entities in the amount of ¥18,044 billion in fiscal 2016. See note 11 of Toyota's consolidated financial statements for additional information regarding Toyota's investments in...

  • Page 113
    ... shown the reported high and low sales prices of the common stock on the Tokyo Stock Exchange and the ADSs on the New York Stock Exchange. Tokyo Stock Exchange Price per Share High Low Fiscal Year Ended March 31, New York Stock Exchange Price per ADS High Low 2012 2013 2014 2015 2016 ... ¥3,635...

  • Page 114
    ... is information relating to Toyota's common stock and Model AA Class Shares, including brief summaries of the relevant provisions of Toyota's articles of incorporation and share handling regulations, as currently in effect, and of the Companies Act, Act Concerning Book-Entry Transfer of Corporate...

  • Page 115
    ... change of holder in the register of shareholders will require an approval from the board of directors. Corporate Purpose Article 2 of Toyota's articles of incorporation states that its purpose is to engage in the following businesses: • the manufacture, sale, leasing and repair of motor vehicles...

  • Page 116
    ... and publicity, general leasing, security and workers dispatch businesses; the credit card operations, purchase and sale of securities, investment consulting, investment trust operation, and other financial services; the operation and management of such facilities as parking lots, showrooms...

  • Page 117
    ... to the record date. Toyota shall conduct any stock split simultaneously and in the same proportion with respect to the common shares and the Model AA Class Shares. Consolidation of Shares Toyota may at any time consolidate shares in issue into a smaller number of shares by a special shareholders...

  • Page 118
    ... unit may require Toyota to purchase those shares at their market value in the case of common shares and at fair price in the case of Model AA Class Shares in accordance with the provisions of Toyota's share handling regulations and the Companies Act. Surrender of American Depositary Receipts. ADR...

  • Page 119
    ... not required; (2) acquisition of its own shares from a specific party; (3) consolidation of shares; (4) any issue or transfer of its shares at a "specially favorable" price (or any issue of stock acquisition rights or bonds with stock acquisition rights at "specially favorable" conditions by Toyota...

  • Page 120
    ...stock exchanges on the second business day before a record date (or if the record date is not a business day, the third business day prior thereto), for the purpose of dividends or rights offerings. Acquisition by Toyota of Shares Toyota may acquire its own common shares (i) through a stock exchange...

  • Page 121
    ...in exchange for such Model AA Class Shares shall be disregarded, in which case payment of money as provided in the Companies Act shall not be made. Model AA Class Shareholder's Cash Put Option Holders of Model AA Class Shares may, at certain times specified in resolution of the board of directors as...

  • Page 122
    Report of Substantial Shareholdings The Financial Instruments and Exchange Law of Japan and regulations under the Law require any person who has become a holder (together with its related persons) of more than 5% of the total issued shares of a company listed on any Japanese stock exchange (...

  • Page 123
    ... any particular investors, some of which (such as tax-exempt entities, banks, insurance companies, broker-dealers, traders in securities that elect to use a mark-to-market method of accounting for their securities holdings, regulated investment companies, real estate investment trusts, partnerships...

  • Page 124
    ...) to secure funds for reconstruction from the Great East Japan Earthquake. At the date of this annual report, Japan has income tax treaties, conventions or agreements whereby the above-mentioned withholding tax rate is reduced, in most cases to 15 percent or 10 percent for portfolio investors (15...

  • Page 125
    ...so eligible under an applicable tax treaty, but where the required procedures as stated above are not followed. Gains derived from the sale of shares of common stock or ADSs outside Japan by a non-resident Holder holding such shares of common stock or ADSs as portfolio investors are, in general, not...

  • Page 126
    ... that hold shares of common stock or ADSs as capital assets (generally, for investment purposes). Taxation of Dividends Subject to the passive foreign investment company ("PFIC") rules discussed below, the gross amount of any distribution made by Toyota in respect of shares of common stock or ADSs...

  • Page 127
    ...U.S. dollar cost. Subject to the PFIC rules discussed below, gain or loss recognized on the sale or other taxable disposition of shares of common stock or ADSs generally will be capital gain or loss and, if the U.S. Holder's holding period for those shares or ADSs exceeds one year, will be long-term...

  • Page 128
    ...rate that may be prescribed by an applicable income tax treaty. Backup Withholding and Information Reporting In general, information reporting requirements will apply to dividends paid to a U.S. Holder in respect of shares of common stock or ADSs, and to the proceeds received upon the sale, exchange...

  • Page 129
    ... by contacting Toyota at 1 Toyota-cho, Toyota City, Aichi Prefecture 471-8571, Japan, attention: Financial Reporting Department, Accounting Division, telephone number: 81-565-28-2121. 10.I SUBSIDIARY INFORMATION Not applicable. ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK...

  • Page 130
    ... included in the market risk analysis. Although operating leases are not required to be included, Toyota has included these instruments in determining interest rate risk. Foreign Currency Exchange Rate Risk Toyota has foreign currency exposures related to buying, selling and financing in currencies...

  • Page 131
    ... The potential change in the fair value of these investments, assuming a 10% change in prices, would be approximately ¥270.4 billion as of March 31, 2015 and ¥255.8 billion as of March 31, 2016. ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES 12.A DEBT SECURITIES Not applicable. 12...

  • Page 132
    ...also paid Toyota's continuing annual stock exchange listing fees. Fees to be Paid in the Future With regards to the ADS program, the Depositary has agreed to pay the standard out-of-pocket maintenance costs for the ADRs, which includes the expenses of postage and envelopes for mailing annual reports...

  • Page 133
    ... of Model AA Class Shares pursuant to resolutions adopted by its shareholders at the general shareholders' meeting on the same date. The amended articles of incorporation are incorporated by reference as Exhibit 1.1 to Toyota's Annual Report on Form 20-F for the fiscal year ended March 31, 2015...

  • Page 134
    ... on this evaluation, management concluded that Toyota's internal control over financial reporting was effective as of March 31, 2016. PricewaterhouseCoopers Aarata, an independent registered public accounting firm that audited the consolidated financial statements included in this report, has also...

  • Page 135
    ... controls over financial reporting of Toyota and its subsidiaries and affiliated companies; the services associated with SEC registration statements or other documents issued in connection with securities offerings such as comfort letters and consents; and consultations as to the accounting or...

  • Page 136
    ... of Rule 10A-3. ITEM 16E. PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS The following table sets forth purchases of Toyota's common stock by Toyota and its affiliated purchasers during fiscal 2016: (c) Total Number of Shares Purchased as Part of Publicly Announced Plans or...

  • Page 137
    ...Toyota to have any independent directors on its board of directors. While the NYSE Corporate Governance Rules require that the non-management directors of each listed company meet at regularly scheduled executive sessions without management, Toyota currently has no non-management member on its board...

  • Page 138
    ... or manager or other key employee of Toyota. Such qualifications for an "outside" member of the board of directors are different from the director independence requirements under the NYSE Corporate Governance Rules. In addition, pursuant to the regulations of the Japanese stock exchanges, Toyota is...

  • Page 139
    ...of Toyota satisfies the "independent director/ audit & supervisory board member" requirements under the regulations of the Japanese stock exchanges, as described above in "1. Members of the Board of Directors." 4. Corporate Governance Guidelines. Unlike the NYSE Corporate Governance Rules, Toyota is...

  • Page 140
    ... securities report and certain other disclosure documents in accordance with the regulations under the Financial Instruments and Exchange Law and stock exchange rules in respect of timely disclosure. 5. Code of Business Conduct and Ethics. Similar to the NYSE Corporate Governance Rules, under Japan...

  • Page 141
    PART III ITEM 17. FINANCIAL STATEMENTS Not applicable. ITEM 18. FINANCIAL STATEMENTS The following financial statements are filed as part of this annual report on Form 20-F. 136

  • Page 142
    ... MOTOR CORPORATION INDEX TO CONSOLIDATED FINANCIAL STATEMENTS Page Report of Independent Registered Public Accounting Firm ...Consolidated balance sheets at March 31, 2015 and 2016 ...Consolidated statements of income for the years ended March 31, 2014, 2015 and 2016 ...Consolidated statements...

  • Page 143
    ... of Independent Registered Public Accounting Firm To the Shareholders and Board of Directors of Toyota Jidosha Kabushiki Kaisha ("Toyota Motor Corporation") In our opinion, the consolidated financial statements listed in the accompanying index present fairly, in all material respects, the financial...

  • Page 144
    ... CONSOLIDATED BALANCE SHEETS Yen in millions March 31, 2015 2016 Assets Current assets Cash and cash equivalents ...Time deposits ...Marketable securities ...Trade accounts and notes receivable, less allowance for doubtful accounts of ¥40,849 million in 2015 and ¥83,969 million in 2016 ...Finance...

  • Page 145
    ... long-term liabilities ...Total liabilities ...Mezzanine equity Model AA Class Shares, no par value, ...authorized: 0 share in 2015 and 150,000,000 shares in 2016 issued: 0 share in 2015 and 47,100,000 shares in 2016 ...Shareholders' equity Toyota Motor Corporation shareholders' equity Common stock...

  • Page 146
    TOYOTA MOTOR CORPORATION CONSOLIDATED STATEMENTS OF INCOME Yen in millions For the years ended March 31, 2014 2015 2016 Net revenues Sales of products ...Financing operations ...Total net revenues ...Costs and expenses Cost of products sold ...Cost of financing operations ...Selling, general and ...

  • Page 147
    TOYOTA MOTOR CORPORATION CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME Yen in millions For the years ended March 31, 2014 2015 2016 Net income ...Other comprehensive income (loss), net of tax Foreign currency translation adjustments ...Unrealized gains (losses) on securities ...Pension liability ...

  • Page 148
    ... MOTOR CORPORATION CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY Yen in millions Total Accumulated Toyota Motor other Treasury Corporation Total comprehensive stock, shareholders' Noncontrolling shareholders' income (loss) at cost equity interests equity Additional Common paid-in stock capital...

  • Page 149
    ... CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (CONTINUED) Yen in millions Total Accumulated Toyota Motor other Treasury Corporation Total comprehensive stock, shareholders' Noncontrolling shareholders' income (loss) at cost equity interests equity Additional Common paid-in stock capital...

  • Page 150
    ... to Toyota Motor Corporation common shareholders ...(396,030) (554,933) Dividends paid to noncontrolling interests ...(63,065) (69,295) Reissuance (repurchase) of treasury stock ...9,212 (347,784) Net cash provided by (used in) financing activities ...919,480 306,045 Effect of exchange rate changes...

  • Page 151
    TOYOTA MOTOR CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. Nature of operations: Toyota and its affiliated companies are primarily engaged in the design, manufacture, and sale of sedans, minivans, compact cars, sport-utility vehicles, trucks and related parts and accessories throughout ...

  • Page 152
    TOYOTA MOTOR CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued) Revenue recognition Revenues from sales of vehicles and parts are generally recognized upon delivery which is considered to have occurred when the dealer has taken title to the product and the risk and reward of ...

  • Page 153
    ... for credit losses. Deferred origination costs are amortized so as to approximate a level rate of return over the term of the related contracts. The determination of portfolio segments is based primarily on the qualitative consideration of the nature of Toyota's business operations and finance...

  • Page 154
    ...and working capital, based on the risk characteristics associated with the underlying finance receivables. A receivable account balance is considered impaired when, based on current information and events, it is probable that Toyota will be unable to collect all amounts due according to the terms of...

  • Page 155
    TOYOTA MOTOR CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued) Interest income on nonaccrual receivables is recognized only to the extent it is received in cash. Accounts are restored to accrual status only when interest and principal payments are brought current and future payments...

  • Page 156
    ... determination of projected return rates and loss severity include historical and market information on used vehicle sales, trends in lease returns and new car markets, and general economic conditions. Management evaluates the foregoing factors, develops several potential loss scenarios, and reviews...

  • Page 157
    TOYOTA MOTOR CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued) Inventories Inventories are valued at cost, not in excess of market, cost being determined on the "average-cost" basis, except for the cost of finished products carried by certain subsidiary companies which is determined...

  • Page 158
    TOYOTA MOTOR CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued) status of the defined benefit postretirement plans is recognized on the consolidated balance sheets as prepaid pension and severance costs or accrued pension and severance costs, and the funded status change is ...

  • Page 159
    ... 15, 2015. Management is evaluating the impact of adopting this guidance on Toyota's consolidated financial statements. In April 2015, the FASB issued updated guidance that requires debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction...

  • Page 160
    ... fiscal years. Management is evaluating the impact of adopting this guidance on Toyota's consolidated financial statements. In February 2016, the FASB issued updated guidance for leases. This guidance will require lessees to recognize almost all leases on their balance sheet as a right-of-use asset...

  • Page 161
    TOYOTA MOTOR CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued) 3. Supplemental cash flow information: Cash payments for income taxes were ¥411,133 million, ¥1,145,808 million and ¥884,589 million for the years ended March 31, 2014, 2015 and 2016, respectively. Interest payments ...

  • Page 162
    ... in the accompanying consolidated statements of income. In the ordinary course of business, Toyota maintains long-term investment securities, included in "Marketable securities and other securities investments" and issued by a number of non-public companies which are recorded at cost, as their fair...

  • Page 163
    ... TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued) 6. Finance receivables: Finance receivables consist of the following: Yen in millions March 31, 2015 2016 Retail ...Finance leases ...Wholesale and other dealer loans ...Deferred origination costs ...Unearned income ...Allowance for credit losses...

  • Page 164
    ...CONSOLIDATED FINANCIAL STATEMENTS-(Continued) Finance leases consist of the following: Yen in millions March 31, 2015 2016 Minimum lease payments ...Estimated unguaranteed residual values ...Deferred origination costs ...Less - Unearned income ...Less - Allowance for credit losses ...Finance leases...

  • Page 165
    TOYOTA MOTOR CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued) The tables below show the recorded investment for each credit quality of the finance receivable within the wholesale and other dealer loan receivables portfolio segment in the United States and other regions as of March ...

  • Page 166
    TOYOTA MOTOR CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued) Yen in millions March 31, 2016 Real estate Working capital Wholesale Total Performing ...Default ...Total ... 436,839 2,214 439,053 284,512 3,832 288,344 474,731 553 475,284 1,196,082 6,599 1,202,681 The tables ...

  • Page 167
    TOYOTA MOTOR CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued) Yen in millions Average impaired Interest income finance receivables recognized For the years ended March 31, For the years ended March 31, 2015 2016 2015 2016 Total impaired account balances: Retail ...Finance leases ...

  • Page 168
    ... cash collections. 10. Allowance for doubtful accounts and credit losses: The net changes in the allowance for doubtful accounts relating to trade accounts and notes receivable for the years ended March 31, 2014, 2015 and 2016 are as follows: Yen in millions For the years ended March 31, 2014 2015...

  • Page 169
    ... assets in the consolidated balance sheets. The net changes in the allowance for credit losses relating to finance receivables and vehicles and equipment on operating leases for the years ended March 31, 2014, 2015 and 2016 are as follows: Yen in millions For the years ended March 31, 2014 2015 2016...

  • Page 170
    TOYOTA MOTOR CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued) Yen in millions For the year ended March 31, 2016 Wholesale and other dealer Retail Finance leases loans Allowance for credit losses at beginning of year ...Provision for credit losses, net of reversal ...Charge-offs ...

  • Page 171
    ...amounts, the financial condition and near-term prospects of the affiliated companies and Toyota's ability and intent to retain those investments in the companies for a period of time. Toyota did not recognize any impairment loss for the years ended March 31, 2014, 2015 and 2016. Account balances and...

  • Page 172
    ... finance receivables, ¥144,729 million and ¥290,873 million vehicles on operating leases, ¥112,004 million and ¥126,012 million restricted cash and ¥1,572,185 million and ¥1,903,189 million secured debt were included in Toyota's consolidated financial statements as of March 31, 2015 and 2016...

  • Page 173
    TOYOTA MOTOR CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued) Long-term debt at March 31, 2015 and 2016 comprises the following: Yen in millions March 31, 2015 2016 Unsecured loans, representing obligations principally to banks, due 2015 to 2029 in 2015 and due 2016 to 2035 in ...

  • Page 174
    ... ended March 31, 2014, 2015 and 2016 were ¥316,054 million, ¥347,030 million and ¥377,310 million, respectively. Interest expense related to the financial services business is included in "Cost of financing operations" in the accompanying consolidated statements of income. 13. Product warranties...

  • Page 175
    TOYOTA MOTOR CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued) The table below shows the net changes in liabilities for recalls and other safety measures which are comprised in liabilities for quality assurances above for the years ended March 31, 2014, 2015 and 2016. Yen in ...

  • Page 176
    TOYOTA MOTOR CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued) Toyota is subject to a number of different income taxes which, in the aggregate, indicate a statutory rate in Japan of approximately 37.6%, 35.2% and 32.9% for the years ended March 31, 2014, 2015 and 2016, respectively....

  • Page 177
    TOYOTA MOTOR CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued) Significant components of deferred tax assets and liabilities are as follows: Yen in millions March 31, 2015 2016 Deferred tax assets Accrued pension and severance costs ...Accrued expenses and liabilities for quality ...

  • Page 178
    ...MOTOR CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued) The accounting for deferred tax assets represents Toyota's current best estimate based on all available evidence. Unanticipated events or changes could result in re-evaluating the realizability of deferred tax assets. Operating...

  • Page 179
    .... 16. Class Shares: Toyota Motor Corporation ("TMC") issued First Series Model AA Class Shares (the "Model AA Class Shares") on July 24, 2015. Presented below is additional information regarding the Model AA Class Shares: Total number of shares issued Issue price Purchase price Voting rights...

  • Page 180
    ... over a period of time from the issuance date until the Class Shares can first be redeemed. 17. Shareholders' equity: Changes in the number of shares of common stock issued have resulted from the following: 2014 For the years ended March 31, 2015 2016 Common stock issued Balance at beginning of...

  • Page 181
    ...described above, and to promote capital efficiency and agile capital policy in view of the business environment. Details of matters relating to repurchase Number of common shares repurchased ...Total purchase price for repurchase of shares ...Retirement of treasury stock Reason for retiring treasury...

  • Page 182
    ...Series Model AA Class Shares. Details of matters relating to repurchase Number of common shares repurchased ...Total purchase price for repurchase of shares ...Reason for repurchasing treasury stock The repurchase was made to return capital to shareholders in addition to promoting capital efficiency...

  • Page 183
    TOYOTA MOTOR CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued) 18. Accumulated other comprehensive income: Changes in accumulated other comprehensive income (loss) are as follows: Yen in millions Foreign currency translation adjustments Unrealized gains (losses) on securities ...

  • Page 184
    ... the parent company's common stock. Authorized shares for each year that remain ungranted are unavailable for grant in future years. Stock options granted in and after August 2006 have terms of 8 years and an exercise price equal to 1.025 times the closing price of Toyota's common stock on the date...

  • Page 185
    TOYOTA MOTOR CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued) For the years ended March 31, 2014, Toyota recognized stock-based compensation expenses for stock options of ¥23 million, 2015 and 2016 was none, respectively, as selling, general and administrative expenses. The ...

  • Page 186
    ... and regulations. These pension plan assets consist principally of common stocks, government bonds and insurance contracts. Most foreign subsidiaries have pension plans or severance indemnity plans covering substantially all of their employees under which the cost of benefits are currently invested...

  • Page 187
    ... MOTOR CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued) Information regarding Toyota's defined benefit plans is as follows: Yen in millions March 31, Japanese plans Foreign plans 2015 2016 2015 2016 Change in benefit obligation Benefit obligation at beginning of year ...Service...

  • Page 188
    ...,183 Yen in millions For the years ended March 31, Japanese plans Foreign plans 2014 2015 2016 2014 2015 2016 Service cost ...Interest cost ...Expected return on plan assets ...Amortization of prior service costs ...Recognized net actuarial loss ...Amortization of net transition obligation ...Net...

  • Page 189
    TOYOTA MOTOR CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued) Other changes in plan assets and benefit obligations recognized in other comprehensive income (loss) are as follows: Yen in millions For the years ended March 31, Japanese plans Foreign plans 2015 2016 2014 2015 2016 ...

  • Page 190
    ..., 2015 and 2016. See note 27 to the consolidated financial statements for three levels of input which are used to measure fair value. Japanese plans Yen in millions March 31, 2015 Level 2 Level 3 Level 1 Total Equity securities Common stocks ...Commingled funds ...Debt securities Government bonds...

  • Page 191
    TOYOTA MOTOR CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued) Yen in millions March 31, 2016 Level 2 Level 3 Level 1 Total Equity securities Common stocks ...Commingled funds ...Debt securities Government bonds ...Commingled funds ...Other ...Insurance contracts ...Other ......

  • Page 192
    TOYOTA MOTOR CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued) Yen in millions March 31, 2016 Level 2 Level 3 Level 1 Total Equity securities Common stocks ...Commingled funds ...Debt securities Government bonds ...Commingled funds ...Other ...Insurance contracts ...Other ......

  • Page 193
    ... TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued) The following tables summarize the changes in Level 3 plan assets measured at fair value for the years ended March 31, 2014, 2015 and 2016: Japanese plans Yen in millions For the years ended March 31, 2015 2016 Debt Debt Total securities Other Total...

  • Page 194
    ... through various insurance companies, health care providers and others. The costs of these benefits are recognized over the period the employee provides credited service to Toyota. Toyota's obligations under these arrangements are not material. 21. Derivative financial instruments: Toyota employs...

  • Page 195
    TOYOTA MOTOR CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued) Fair value and gains or losses on derivative financial instruments The following table summarizes the fair values of derivative financial instruments as of March 31, 2015 and 2016: Yen in millions March 31, 2015 2016 ...

  • Page 196
    ... the gains and losses on derivative financial instruments and hedged items reported in the consolidated statements of income for the years ended March 31, 2014, 2015 and 2016: Yen in millions For the years ended March 31, 2014 2015 2016 Gains or Gains or Gains or (losses) on (losses) on (losses) on...

  • Page 197
    TOYOTA MOTOR CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued) Cash flows from transactions of derivative financial instruments are included in cash flows from operating activities in the consolidated statements of cash flows. Credit risk related contingent features Toyota enters ...

  • Page 198
    ... speeds and expected credit losses are used to estimate the timing of cash flows to be paid on the underlying securitized assets. As these valuations utilize unobservable inputs, the secured loans are classified in Level 3. See note 11 to the consolidated financial statements for information...

  • Page 199
    TOYOTA MOTOR CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued) 23. Lease commitments: Toyota leases certain assets under capital lease and operating lease arrangements. An analysis of leased assets under capital leases is as follows: Yen in millions March 31, 2015 2016 Class of ...

  • Page 200
    TOYOTA MOTOR CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued) The minimum rental payments required under operating leases relating primarily to land, buildings and equipment having initial or remaining non-cancelable lease terms in excess of one year at March 31, 2016 are as ...

  • Page 201
    ... The major portions of Toyota's operations on a worldwide basis are derived from the Automotive and Financial Services business segments. The Automotive segment designs, manufactures and distributes sedans, minivans, compact cars, sport-utility vehicles, trucks and related parts and accessories. The...

  • Page 202
    TOYOTA MOTOR CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued) segment consists primarily of financing, and vehicle and equipment leasing operations to assist in the merchandising of the parent company and its affiliated companies products as well as other products. The All Other ...

  • Page 203
    ... 1,625,837 4,059,216 As of and for the year ended March 31, 2014: Yen in millions Inter-segment Elimination/ Unallocated Amount Consolidated Japan North America Europe Asia Other Net revenues Sales to external customers ...Inter-segment sales and transfers ... 8,532,875 5,764,595 7,938,615...

  • Page 204
    ...MOTOR CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued) As of and for the year ended March 31, 2015: Yen in millions Inter-segment Elimination/ Unallocated Amount Consolidated Japan North America Europe Asia Other Net revenues Sales to external customers ...Inter-segment sales...

  • Page 205
    ... excluding customers in Japan. In addition to the disclosure requirements under U.S.GAAP, Toyota discloses this information in order to provide financial statements users with valuable information. Yen in millions For the years ended March 31, 2014 2015 2016 North America ...Europe ...Asia ...Other...

  • Page 206
    ... businesses The financial data below presents separately Toyota's non-financial services and financial services businesses. Balance sheets Yen in millions March 31, 2015 2016 Assets Non-Financial Services Businesses Current assets Cash and cash equivalents ...Marketable securities ...Trade accounts...

  • Page 207
    TOYOTA MOTOR CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued) Yen in millions March 31, 2015 2016 Liabilities Non-Financial Services Businesses Current liabilities Short-term borrowings ...Current portion of long-term debt ...Accounts payable ...Accrued expenses ...Income taxes ...

  • Page 208
    TOYOTA MOTOR CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued) Statements of income Yen in millions For the years ended March 31, 2014 2015 2016 Non-Financial Services Businesses Net revenues ...Costs and expenses Cost of revenues ...Selling, general and administrative ...Total ...

  • Page 209
    ...Statements of cash flows Yen in millions Yen in millions For the year ended March 31, 2014 For the year ended March 31, 2015 Non-Financial Financial Non-Financial Financial Services Services Services Services Businesses Business Consolidated Businesses Business Consolidated Cash flows from operating...

  • Page 210
    ... year ended March 31, 2016 Non-Financial Financial Services Services Businesses Business Consolidated Cash flows from operating activities Net income ...Adjustments to reconcile net income to net cash provided by operating activities Depreciation ...Provision for doubtful accounts and credit losses...

  • Page 211
    TOYOTA MOTOR CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued) 26. Per share amounts: Reconciliations of the differences between basic and diluted net income attributable to Toyota Motor Corporation per common share for the years ended March 31, 2014, 2015 and 2016 are as follows: ...

  • Page 212
    ... fair value are recognized at the end of their respective reporting periods: Yen in millions March 31, 2015 Level 2 Level 3 Level 1 Total Assets Cash equivalents ...Marketable securities and other securities investments Public and corporate bonds ...Common stocks ...Other ...Derivative financial...

  • Page 213
    TOYOTA MOTOR CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued) Yen in millions March 31, 2016 Level 2 Level 3 Level 1 Total Assets Cash equivalents ...Time deposits ...Marketable securities and other securities investments Public and corporate bonds ...Common stocks ...Other ......

  • Page 214
    ... at fair value on a recurring basis for the periods ended March 31, 2014, 2015 and 2016: Yen in millions For the year ended March 31, 2014 Marketable securities and Derivative other securities financial investments instruments Total Balance at beginning of year ...Total gains (losses) Included in...

  • Page 215
    ...statements for the fair value measurement. These Level 3 financial assets are not significant. 28. Restructuring charges and asset impairments: In February 2014, TMC and Toyota Motor Corporation Australia Ltd., its production and sales subsidiary in Australia, decided to end their vehicle and engine...

  • Page 216
    ... Structure" in "Item 4. Information on the Company") Code of Ethics of the Registrant applicable to its members of the board of directors and managing officers, including its principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing...

  • Page 217
    ... registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorized the undersigned to sign this annual report on its behalf. TOYOTA MOTOR CORPORATION By: Name: Title: /s/ TETSUYA OTAKE Tetsuya Otake Managing Officer Date: June 24...

  • Page 218
    ... OF THE AUDIT & SUPERVISORY BOARD OF TOYOTA MOTOR CORPORATION Established: September 27, 1994 As last amended on December 16, 2015 Article 1. (Regulations of the Audit & Supervisory Board) Except as provided for by laws, ordinances or the Articles of Incorporation, the matters relating to the Audit...

  • Page 219
    ... the preceding two (2) paragraphs, in case that the Audit & Supervisory Board Member(s), the Member(s) of the Board of Directors or the Accounting Auditor(s) notifies all the Audit & Supervisory Board Members of the matter(s), such matter(s) shall not be required to be reported at the meeting of the...

  • Page 220
    ... Regulations of the Companies Act The Accounting Regulations: the Corporation Accounting Regulations 1. Matters to be resolved (Matters in relation to Article 5 of the Regulations of the Audit & Supervisory Board) (1) Matters provided for in laws or ordinances Items Relevant Articles of Applicable...

  • Page 221
    ... of giving prior consent to the changes of the organization and personnel of the Audit & Supervisory Board Office (4) Prior approval of auditing services and non-audit services pursuant to Section 202 of SarbanesOxley Act (5) Election of the Audit & Supervisory Board Member to be in charge of giving...

  • Page 222
    ... cause serious damage to the Corporation (3) Matters to be reported by Accounting Auditors • Unjust acts or material facts in violation of laws, ordinances or the Articles of Incorporation in relation to the execution of the duties of Members of the Board of Directors (2) Others Items Article 390...

  • Page 223
    ... materially mislead any employee or independent public accountant involved in the preparation of such financial statements. 2. 3. Article 7. (Compliance with Laws and Regulations) The Officers shall comply with all applicable laws, rules and regulations, including those related to the prohibition...

  • Page 224
    ... shall promptly report to the Board of Directors, Representative Director, Disclosure Committee, Corporate Governance Meeting, or other responsible division or person appointed by these committees, in the event that such Officer or other Officers have acted in violation of the applicable laws or...

  • Page 225
    ... Any fraud, whether or not material, that involves management or other employees who have a significant role in the Company's internal control over financial reporting. Date: June 24, 2016 /S/ TAKESHI UCHIYAMADA 3. 4. Takeshi Uchiyamada Chairman of the Board of Directors Toyota Motor Corporation

  • Page 226
    ... or not material, that involves management or other employees who have a significant role in the Company's internal control over financial reporting. Date: June 24, 2016 /S/ TAKAHIKO IJICHI 3. 4. Takahiko Ijichi Executive Vice President, Member of the Board of Directors Toyota Motor Corporation

  • Page 227
    ... Exchange Act of 1934; and 2. Information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. By: Name: Title: /S/ TAKESHI UCHIYAMADA Takeshi Uchiyamada Chairman of the Board of Directors Date: June 24, 2016...

  • Page 228
    ... OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM We hereby consent to the incorporation by reference in the Registration Statements on Form S-8 (No. 333-125977, 333-107322, 333-143955, 333-160081 and 333-175377) of Toyota Motor Corporation of our report dated June 24, 2016 relating to the financial...