TOYOTA REPORT Business Report for the 106Th Fiscal Year for the Period from April 1,2009 to March 31,2010
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TOYOTA REPORT Business Report for the 106th Fiscal Year For the Period from April 1,2009 to March 31,2010 Reference document of the 106th ordinary general meeting 005_0529901172206.indd 1 2010/05/27 10:50:49 This document has been translated from the Japanese original for reference purposes only. In the event of any discrepancy between this translated document and the Japanese original, the original shall prevail. The Company assumes no responsibility for this translation or for direct, indirect or any other forms of damages arising from the translation. Table of Contents To Our Shareholders .............................................................................................................2 (Attachment to the Notice of Convocation of FY2010 Ordinary General Shareholders’ Meeting) Business Report ................................................................................................................ 3 1. Outlook of Associated Companies ................................................................................... 3 2. Status of Shares.......................................................................................................... 14 3. Status of Stock Acquisition Rights, Etc. .......................................................................... 15 4. Status of Directors and Corporate Auditors ..................................................................... 18 5. Status of Accounting Auditor ......................................................................................... 26 6. Basic Policy Regarding the System to Secure the Appropriateness of Business ................. 27 Unconsolidated Financial Statements.............................................................................. 30 UNCONSOLIDATED BALANCE SHEETS................................................................... 30 UNCONSOLIDATED STATEMENTS OF INCOME...................................................... 31 UNCONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETS....................... 32 NOTES TO UNCONSOLIDATED FINANCIAL STATEMENTS .................................... 36 Independent Auditor’s Report (Certified Copy)................................................................ 40 Consolidated Financial Statements ................................................................................. 41 CONSOLIDATED BALANCE SHEETS........................................................................ 41 CONSOLIDATED STATEMENTS OF INCOME ........................................................... 42 CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY............................. 43 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS ................................. 45 Independent Auditor’s Report (Certified Copy)................................................................ 47 Board of Corporate Auditors’ Report (Certified Copy)...................................................... 48 Consolidated Business Results for FY2010 (Reference) .................................................... 49 Segment Operating Results............................................................................................. 49 Geographic Information ................................................................................................... 50 1 To Our Shareholders: first, to terminate the production orders for NUMMI; second, to withdraw from Formula One. With respect to business results, as a result of our continued efforts to improve our profit structure together with suppliers, and dealers, consolidated net income was 209.4 billion yen. We will continue our efforts to further improve our corporate structure to realize sustainable growth. We will also focus on the early commercialization of I would like to express our gratitude for your ongoing technologies for the next-generation environment support and understanding of our company. and safety, giving priority to customer safety and With respect to our recent decision on the recall and security in order to survive tough competition. other measures which have caused concerns to our Considering these factors, we would like to propose shareholders, we plan to take steps to further a year-end dividend of 25 yen per share at the reinforce quality control and enhance FY2010 Ordinary General Shareholders’ Meeting. communication with company-wide efforts. This, combined with the interim dividend of 20 yen Specifically, we will listen carefully to customers’ per share, will result in a total annual dividend of 45 opinions and demands, strengthen yen per share for FY2010. information-sharing capabilities on a global basis The business environment surrounding the based on Toyota’s principle of “Genchi Genbutsu,” automobile industry is expected to continue to and identify areas from the viewpoint of customers undergo significant changes. We intend to respond and implement any necessary measures for to these changes in pursuit of our mission of improvement. “contributing to society through the manufacture of When I assumed the office of president in June of automobile. ” We are always grateful of the support last year, I proposed the motto, “Let’s make better of our many stakeholders, including our cars.” Since then, we have made company-wide shareholders and customers, and will uphold our efforts on (1) manufacturing products from a efforts to be a “trustworthy Toyota” by further customer’s point of view with an emphasis on price enhancing transparency. We look forward to your and design, (2) promoting development of ongoing support. next-generation technologies in the areas of environment and energy to contribute to social Akio Toyoda development, and (3) implementing reforms for our President profit structure and operations. From a medium- to long-term perspective, we made two very difficult decisions: 2 Attachment to the Notice of Convocation of FY2010 Ordinary General Shareholders’ Meeting Business Report (Fiscal Year under review: April 1, 2009 through March 31, 2010) 1. Outlook of Associated Companies We are cognizant that the recalls and other remedial measures for multiple models in multiple countries implemented by Toyota Motor Corporation (“TMC”) and its consolidated subsidiaries (together “Toyota”) during the fiscal year have caused concerns among shareholders, customers, and the public. Therefore, before reporting on the course and results of our business for the fiscal year under review, we would first like to take the opportunity to describe our efforts going forward to respond to these quality-related matters. As part of our efforts, to alleviate customers’ concerns so that they will feel reassured in driving Toyota- and Lexus-brand vehicles, we have established a Special Committee for Global Quality and we plan to review all processes from design, procurement, production, and sales through service from the customers’ perspective, and identify areas and implement any necessary measures for improvement. We will also strengthen our information-sharing capabilities on a global scale and engage outside experts to evaluate and verify the effectiveness of these efforts. The Toyota Group places the safety of our customers above else. All of us in the Toyota Group, from executives to employees, are committed to doing our utmost to strengthen our quality base and to increase customer reliance, by strengthening quality control for our products and, we ask for our shareholders’ understanding and support. (1) Progress and Achievement in Operation General Economic Environment in FY2010 Reviewing the general economic environment for the fiscal year ended March 2010 (“FY2010”), the world economy bottomed out partially due to the effect of economic stimulus measures undertaken by various countries, and the business climate began to improve in Asia and other regions. The Japanese economy also showed strong signs of recovery due to the increase in exports, especially to Asia, and the implementation of emergency economic measures. However, recovery of the Japanese economy has yet to become self-sustaining as unemployment rate is still at a high level and prices remain deflationary. In the automotive industry, the market continued to expand in China, India, and other emerging countries. Meanwhile, the overall market conditions in the developed countries were difficult due to changes in the market structure resulting from shifts in consumer demand to compact cars and low-price cars, despite government efforts to stimulate demand. 3 Overview of Operations In this challenging business environment, the Toyota Group pursued “product-oriented managment,” by reviewing all processes from technological development through manufacturing, sales, and service based on customers’ perspective to provide “good products” at “affordable prices.” For example, the new Prius, which was launched last year, was well received by customers around the world for its outstanding fuel efficiency and its reasonable price, which were achieved by pursuing the most advanced technologies and through a companywide effort for cost improvement. Toyota also promoted production of vehicles, tailored to each region. The new Sienna, which was released in North America, was designed and developed locally to cater to local needs. In addition, in order to meet customer demands for vehicles with satisfactory performance at reasonable prices, Toyota decided to improve and develop current models instead of focusing only on regular model changes and introduction of new models. A major example of such is the decision to sell both the new