SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM 6-K

 

 

Report of Foreign Private Issuer

Pursuant to Rule 13a-16 or 15d-16 under

the Securities Exchange Act of 1934

For the month of August, 2014

Commission File Number 001-14948

 

 

Toyota Motor Corporation

(Translation of Registrant’s Name Into English)

 

 

 

1, Toyota-cho, Toyota City,
Aichi Prefecture 471-8571,
Japan

(Address of Principal Executive Offices)

 

 

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F. Form 20-F       X        Form 40-F              

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):             

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):             

 

 

 


Materials Contained in this Report:

 

I.

Executive Summary of the Japanese-language Quarterly Securities Report, as filed with the Director of the Kanto Local Finance Bureau on August 8, 2014.

 

II.

The registrant’s Unaudited Condensed Consolidated Financial Statements for the periods ended June 30, 2014, prepared in accordance with U.S. generally accepted accounting principles, which materially conform to the Consolidated Financial Statements filed with the Japanese-language Quarterly Securities Report referred to above.

 

III.

English excerpt translation of a Report on Number of Listed Shares, as filed by the registrant with the Tokyo Stock Exchange on August 20, 2014.


SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

Toyota Motor Corporation

By:

 

        /s/    Hiroshi Nishida

 

Name:

 

Hiroshi Nishida

 

Title:

 

Project General Manager of Accounting Division

Date: August 29, 2014


Quarterly Securities Report

Japanese-language Quarterly Securities Report for the period ended June 30, 2014, as filed with the Director of the Kanto Local Finance Bureau of the Ministry of Finance of Japan on August 8, 2014, and which includes the following:

 

  I. Corporate information

 

  A. Corporate overview

 

  1. History of changes in major business indices

 

  2. Overview of business

 

  B. Business

 

  1. Risk factors

 

  2. Material contracts

 

  3. Analysis of financial results, financial position and cash flows

 

  C. Company information

 

  1. Share information

 

  2. Directors and corporate auditors

 

  D. Financial information

 

  1. Quarterly consolidated financial statements and notes

 

  2. Other

 

  II. Information on Guarantors

Auditors Report

Certificate


Unaudited Condensed Consolidated Financial Statements

 

TOYOTA MOTOR

CORPORATION

Unaudited Consolidated Financial Statements

For the period ended

June 30, 2014

 

 

 


TOYOTA MOTOR CORPORATION

Unaudited Consolidated Balance Sheets

At March 31, 2014 and June 30, 2014

 

ASSETS

 

     Yen in millions  
     March 31,
2014
    June 30,
2014
 

Assets

    

Current assets:

    

Cash and cash equivalents

     2,041,170        2,175,052   

Time deposits

     180,207        115,834   

Marketable securities

     2,046,877        2,076,170   

Trade accounts and notes receivable, less allowance for doubtful accounts

     2,036,232        1,793,667   

Finance receivables, net

     5,628,934        5,615,585   

Other receivables

     351,182        373,278   

Inventories

     1,894,704        1,972,856   

Deferred income taxes

     866,386        850,853   

Prepaid expenses and other current assets

     672,014        600,979   
  

 

 

   

 

 

 

Total current assets

     15,717,706        15,574,274   
  

 

 

   

 

 

 

Noncurrent finance receivables, net

     8,102,294        8,143,879   

Investments and other assets:

    

Marketable securities and other securities investments

     6,765,043        6,800,260   

Affiliated companies

     2,429,778        2,391,908   

Employees receivables

     44,966        44,697   

Other

     736,388        735,123   
  

 

 

   

 

 

 

Total investments and other assets

     9,976,175        9,971,988   
  

 

 

   

 

 

 

Property, plant and equipment:

    

Land

     1,314,040        1,314,447   

Buildings

     4,073,335        4,094,213   

Machinery and equipment

     10,381,285        10,307,943   

Vehicles and equipment on operating leases

     3,709,560        3,883,569   

Construction in progress

     286,571        319,489   
  

 

 

   

 

 

 

Total property, plant and equipment, at cost

     19,764,791        19,919,661   
  

 

 

   

 

 

 

Less – Accumulated depreciation

     (12,123,493     (12,154,085
  

 

 

   

 

 

 

Total property, plant and equipment, net

     7,641,298        7,765,576   
  

 

 

   

 

 

 

Total assets

     41,437,473        41,455,717   
  

 

 

   

 

 

 

The accompanying notes are an integral part of these consolidated financial statements.

 

2

 

 


TOYOTA MOTOR CORPORATION

Unaudited Consolidated Balance Sheets

At March 31, 2014 and June 30, 2014

 

 

LIABILITIES AND SHAREHOLDERS’ EQUITY

 

     Yen in millions  
     March 31,
2014
    June 30,
2014
 

Liabilities

    

Current liabilities:

    

Short-term borrowings

     4,830,820        4,587,346   

Current portion of long-term debt

     2,949,663        3,262,313   

Accounts payable

     2,213,218        2,101,543   

Other payables

     845,426        768,521   

Accrued expenses

     2,313,160        2,374,298   

Income taxes payable

     594,829        238,813   

Other current liabilities

     933,569        987,082   
  

 

 

   

 

 

 

Total current liabilities

     14,680,685        14,319,916   
  

 

 

   

 

 

 

Long-term liabilities:

    

Long-term debt

     8,546,910        8,638,078   

Accrued pension and severance costs

     767,618        789,273   

Deferred income taxes

     1,811,846        1,825,053   

Other long-term liabilities

     411,427        425,109   
  

 

 

   

 

 

 

Total long-term liabilities

     11,537,801        11,677,513   
  

 

 

   

 

 

 

Total liabilities

     26,218,486        25,997,429   
  

 

 

   

 

 

 

Shareholders’ equity

    

Toyota Motor Corporation shareholders’ equity:

    

Common stock, no par value,
authorized: 10,000,000,000 shares at March 31, 2014 and June 30, 2014
issued: 3,447,997,492 shares at March 31, 2014 and 3,417,997,492 shares at June 30, 2014

     397,050        397,050   

Additional paid-in capital

     551,308        549,750   

Retained earnings

     14,116,295        14,267,629   

Accumulated other comprehensive income (loss)

     528,161        501,770   

Treasury stock, at cost,
278,231,473 shares at March 31, 2014 and 248,146,459 shares at
June 30, 2014

     (1,123,666     (1,002,166
  

 

 

   

 

 

 

Total Toyota Motor Corporation shareholders’ equity

     14,469,148        14,714,033   
  

 

 

   

 

 

 

Noncontrolling interests

     749,839        744,255   
  

 

 

   

 

 

 

Total shareholders’ equity

     15,218,987        15,458,288   
  

 

 

   

 

 

 

Commitments and contingencies

    

Total liabilities and shareholders’ equity

     41,437,473        41,455,717   
  

 

 

   

 

 

 

The accompanying notes are an integral part of these consolidated financial statements.

 

3

 

 


TOYOTA MOTOR CORPORATION

Unaudited Consolidated Statements of Income and

Unaudited Consolidated Statements of Comprehensive Income

For the first quarter ended June 30, 2014

 

Consolidated Statements of Income

 

     Yen in millions  
     For the first
quarter ended
June 30,
2013
    For the first
quarter ended
June 30,

2014
 

Net revenues:

    

Sales of products

     5,926,535        6,023,590   

Financing operations

     328,784        367,098   
  

 

 

   

 

 

 

Total net revenues

     6,255,319        6,390,688   
  

 

 

   

 

 

 

Costs and expenses:

    

Cost of products sold

     4,802,456        4,896,086   

Cost of financing operations

     219,797        199,089   

Selling, general and administrative

     569,683        602,785   
  

 

 

   

 

 

 

Total costs and expenses

     5,591,936        5,697,960   
  

 

 

   

 

 

 

Operating income

     663,383        692,728   
  

 

 

   

 

 

 

Other income (expense):

    

Interest and dividend income

     38,163        46,483   

Interest expense

     (4,584     (3,914

Foreign exchange gain, net

     9,477        12,985   

Other income, net

     17,724        23,544   
  

 

 

   

 

 

 

Total other income (expense)

     60,780        79,098   
  

 

 

   

 

 

 

Quarterly income before income taxes and equity in earnings of affiliated companies

     724,163        771,826   
  

 

 

   

 

 

 

Provision for income taxes

     210,130        259,973   

Equity in earnings of affiliated companies

     89,938        105,329   
  

 

 

   

 

 

 

Quarterly net income

     603,971        617,182   
  

 

 

   

 

 

 

Less: Quarterly net income attributable to noncontrolling interests

     (41,777     (29,408
  

 

 

   

 

 

 

Quarterly net income attributable to Toyota Motor Corporation

     562,194        587,774   
  

 

 

   

 

 

 
     Yen  

Quarterly net income attributable to Toyota Motor Corporation per share

    

Basic

     177.45        185.43   
  

 

 

   

 

 

 

Diluted

     177.32        185.34   
  

 

 

   

 

 

 

The accompanying notes are an integral part of these consolidated financial statements.

 

4

 

 


TOYOTA MOTOR CORPORATION

Unaudited Consolidated Statements of Income and

Unaudited Consolidated Statements of Comprehensive Income

For the first quarter ended June 30, 2014

 

Consolidated Statements of Comprehensive Income

 

     Yen in millions  
     For the first
quarter ended
June 30,
2013
    For the first
quarter ended
June 30,
2014
 

Quarterly net income

     603,971        617,182   

Other comprehensive income (loss), net of tax

    

Foreign currency translation adjustments

     117,861        (85,510

Unrealized gains (losses) on securities

     260,921        52,495   

Pension liability adjustments

     2,779        451   
  

 

 

   

 

 

 

Total other comprehensive income (loss)

     381,561        (32,564
  

 

 

   

 

 

 

Quarterly comprehensive income

     985,532        584,618   
  

 

 

   

 

 

 

Less: Quarterly comprehensive income attributable to noncontrolling interests

     (50,673     (23,235
  

 

 

   

 

 

 

Quarterly comprehensive income attributable to Toyota Motor Corporation

     934,859        561,383   
  

 

 

   

 

 

 

The accompanying notes are an integral part of these consolidated financial statements.

 

5

 

 


TOYOTA MOTOR CORPORATION

Unaudited Condensed Consolidated Statements of Cash Flows

For the first quarter ended June 30, 2014

 

 

     Yen in millions  
     For the first
quarter ended
June 30,
2013
    For the first
quarter ended
June 30,
2014
 

Cash flows from operating activities:

    

Quarterly net income

     603,971        617,182   

Adjustments to reconcile quarterly net income to net cash provided by operating activities

    

Depreciation

     287,661        316,004   

Provision for doubtful accounts and credit losses

     8,187        11,321   

Pension and severance costs, less payments

     3,738        5,718   

Losses on disposal of fixed assets

     5,607        5,027   

Unrealized losses on available-for-sale securities, net

     2,526        15   

Deferred income taxes

     (19,375     26,828   

Equity in earnings of affiliated companies

     (89,938     (105,329

Changes in operating assets and liabilities, and other

     226,961        (1,170
  

 

 

   

 

 

 

Net cash provided by operating activities

     1,029,338        875,596   
  

 

 

   

 

 

 

Cash flows from investing activities:

    

Additions to finance receivables

     (3,015,498     (3,190,505

Collection of and proceeds from sales of finance receivables

     2,722,212        2,982,259   

Additions to fixed assets excluding equipment leased to others

     (239,446     (264,417

Additions to equipment leased to others

     (403,833     (531,883

Proceeds from sales of fixed assets excluding equipment leased to others

     8,655        13,743   

Proceeds from sales of equipment leased to others

     205,701        181,521   

Purchases of marketable securities and security investments

     (1,702,481     (753,193

Proceeds from sales of and maturity of marketable securities and security investments

     1,081,860        790,883   

Changes in investments and other assets, and other

     33,476        73,664   
  

 

 

   

 

 

 

Net cash used in investing activities

     (1,309,354     (697,928
  

 

 

   

 

 

 

Cash flows from financing activities:

    

Proceeds from issuance of long-term debt

     1,127,431        1,050,791   

Payments of long-term debt

     (821,711     (541,420

Decrease in short-term borrowings

     (43,045     (186,965

Dividends paid to Toyota Motor Corporation shareholders

     (190,046     (316,977

Dividends paid to noncontrolling interests

     (23,581     (29,499

Reissuance (repurchase) of treasury stock

     4,709        330   
  

 

 

   

 

 

 

Net cash provided by (used in) financing activities

     53,757        (23,740
  

 

 

   

 

 

 

Effect of exchange rate changes on cash and cash equivalents

     34,249        (20,046
  

 

 

   

 

 

 

Net increase (decrease) in cash and cash equivalents

     (192,010     133,882   
  

 

 

   

 

 

 

Cash and cash equivalents at beginning of period

     1,718,297        2,041,170   
  

 

 

   

 

 

 

Cash and cash equivalents at end of period

     1,526,287        2,175,052   
  

 

 

   

 

 

 

The accompanying notes are an integral part of these consolidated financial statements.

 

6

 

 


TOYOTA MOTOR CORPORATION

Notes to Unaudited Consolidated Financial Statements

 

 

 

1.

Basis of preparation:

The accompanying unaudited condensed consolidated financial statements of Toyota Motor Corporation (the “parent company”) as of and for the period ended June 30, 2014, have been prepared in accordance with U.S. generally accepted accounting principles (“U.S.GAAP”) and on substantially the same basis as its annual consolidated financial statements except for certain required disclosures which have been omitted. The unaudited condensed consolidated financial statements should be read in conjunction with the Annual Report on Form 20-F for the year ended March 31, 2014. The unaudited condensed consolidated financial statements reflect all adjustments, consisting of only normal recurring adjustments, necessary for a fair presentation of the result for that period and the financial condition at that date. The consolidated results for the three-month period are not necessarily indicative of results to be expected for the full year.

 

2.

Accounting changes and recent pronouncements to be adopted in future periods:

Accounting changes -

In July 2013, the Financial Accounting Standards Board (“FASB”) issued updated guidance on uncertain tax positions. This guidance requires an unrecognized tax benefit, or a portion of an unrecognized tax benefit, to be presented in the financial statements as a reduction to a deferred tax asset for a net operating loss carryforward for tax purposes, a similar tax loss, or a tax credit carryforward. The parent company and its consolidated subsidiaries (“Toyota”) adopted this guidance from the interim period within the fiscal year, begun after December 15, 2013. The adoption of this guidance did not have a material impact on Toyota’s quarterly consolidated financial statements.

Recent pronouncements to be adopted in future periods -

In May 2014, the FASB issued updated guidance on the recognition of revenue from contracts with customers. This guidance will supersede the current revenue recognition guidance. This guidance is effective for annual reporting periods beginning after December 15, 2016, including interim periods within that reporting period. Management is evaluating the impact of adopting this guidance on Toyota’s consolidated financial statements.

 

7

 

 


TOYOTA MOTOR CORPORATION

Notes to Unaudited Consolidated Financial Statements

 

 

 

3.

Accounting procedures specific to quarterly consolidated financial statements:

Provision for income taxes

The provision for income taxes is computed by multiplying quarterly income before income taxes and equity in earnings of affiliated companies by estimated annual effective tax rates. These estimated annual effective tax rates reflect anticipated investment tax credits, foreign tax credits and other items, including changes in valuation allowances, that are expected to affect estimated annual effective tax rates.

 

4.

Derivative financial instruments:

Toyota employs derivative financial instruments, including foreign exchange forward contracts, foreign currency options, interest rate swaps, interest rate currency swap agreements and interest rate options to manage its exposure to fluctuations in interest rates and foreign currency exchange rates. Toyota does not use derivatives for speculation or trading.

Fair value hedges -

Toyota enters into interest rate swaps and interest rate currency swap agreements mainly to convert its fixed-rate debt to variable-rate debt. Toyota uses interest rate swap agreements in managing interest rate risk exposure. Interest rate swap agreements are executed as either an integral part of specific debt transactions or on a portfolio basis. Toyota uses interest rate currency swap agreements to hedge exposure to currency exchange rate fluctuations on principal and interest payments for borrowings denominated in foreign currencies. Notes and loans payable issued in foreign currencies are hedged by concurrently executing interest rate currency swap agreements, which involve the exchange of foreign currency principal and interest obligations for each functional currency obligations at agreed-upon currency exchange and interest rates.

For the first quarter ended June 30, 2013 and 2014, the ineffective portion of Toyota’s fair value hedge relationships was not material. For fair value hedging relationships, the components of each derivative’s gain or loss are included in the assessment of hedge effectiveness.

Undesignated derivative financial instruments -

Toyota uses foreign exchange forward contracts, foreign currency options, interest rate swaps, interest rate currency swap agreements, and interest rate options, to manage its exposure to foreign currency exchange rate fluctuations and interest rate fluctuations from an economic perspective, and for which Toyota is unable to or has elected not to apply hedge accounting.

 

8

 

 


TOYOTA MOTOR CORPORATION

Notes to Unaudited Consolidated Financial Statements

 

 

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, 2014 and June 30, 2014:

 

     Yen in millions  
     March 31,
2014
    June 30,
2014
 

Derivative assets

    

Derivative financial instruments designated as hedging instruments

    

Interest rate and currency swap agreements

    

Prepaid expenses and other current assets

     1,254        2,127   

Investments and other assets - Other

     36,572        35,548   
  

 

 

   

 

 

 

Total

     37,826        37,675   
  

 

 

   

 

 

 

Undesignated derivative financial instruments

    

Interest rate and currency swap agreements

    

Prepaid expenses and other current assets

     23,182        28,924   

Investments and other assets - Other

     159,644        161,795   
  

 

 

   

 

 

 

Total

     182,826        190,719   
  

 

 

   

 

 

 

Foreign exchange forward and option contracts

    

Prepaid expenses and other current assets

     7,052        6,377   

Investments and other assets - Other

              
  

 

 

   

 

 

 

Total

     7,052        6,377   
  

 

 

   

 

 

 

Total derivative assets

     227,704        234,771   

Counterparty netting

     (85,331     (74,792

Collateral received

     (78,554     (99,530
  

 

 

   

 

 

 

Carrying value of derivative assets

     63,819        60,449   
  

 

 

   

 

 

 
    

Derivative liabilities

    

Derivative financial instruments designated as hedging instruments

    

Interest rate and currency swap agreements

    

Other current liabilities

     (1,442       

Other long-term liabilities

            (1,078
  

 

 

   

 

 

 

Total

     (1,442     (1,078
  

 

 

   

 

 

 

Undesignated derivative financial instruments

    

Interest rate and currency swap agreements

    

Other current liabilities

     (32,569     (35,770

Other long-term liabilities

     (132,161     (106,929
  

 

 

   

 

 

 

Total

     (164,730     (142,699
  

 

 

   

 

 

 

Foreign exchange forward and option contracts

    

Other current liabilities

     (9,468     (4,528

Other long-term liabilities

     (5     (3
  

 

 

   

 

 

 

Total

     (9,473     (4,531
  

 

 

   

 

 

 

Total derivative liabilities

     (175,645     (148,308

Counterparty netting

     85,331        74,792   

Collateral posted

     61,680        48,254   
  

 

 

   

 

 

 

Carrying value of derivative liabilities

     (28,634     (25,262
  

 

 

   

 

 

 

 

9

 

 


TOYOTA MOTOR CORPORATION

Notes to Unaudited Consolidated Financial Statements

 

 

The following table summarizes the notional amounts of derivative financial instruments as of March 31, 2014 and June 30, 2014:

 

     Yen in millions  
     March 31, 2014      June 30, 2014  
     Designated
derivative
financial
instruments
     Undesignated
derivative
financial
instruments
     Designated
derivative
financial
instruments
     Undesignated
derivative
financial
instruments
 

Interest rate and currency swap agreements

     151,704         15,135,193         149,405         15,235,321   

Foreign exchange forward and option contracts

        1,965,611            1,621,947   
  

 

 

    

 

 

    

 

 

    

 

 

 

Total

     151,704         17,100,804         149,405         16,857,268   
  

 

 

    

 

 

    

 

 

    

 

 

 

The following table summarizes the gains and losses on derivative financial instruments and hedged items reported in the consolidated statements of income for the first quarter ended June 30, 2013 and 2014:

 

     Yen in millions  
     For the first quarter ended
June 30, 2013
     For the first quarter ended
June 30, 2014
 
     Gains or (losses)
on derivative
financial
instruments
    Gains or
(losses) on
hedged items
     Gains or (losses)
on derivative
financial
instruments
    Gains or
(losses) on
hedged items
 

Derivative financial instruments designated as
hedging instruments – Fair value hedge

         

Interest rate and currency swap agreements

         

Cost of financing operations

     (4,885     4,996         (395     443   
         

Undesignated derivative financial instruments

         

Interest rate and currency swap agreements

         

Cost of financing operations

     (55,989        21,176     

Foreign exchange gain (loss), net

     1,490           1,119     

Foreign exchange forward and option contracts

         

Cost of financing operations

     18,013           (5,277  

Foreign exchange gain (loss), net

     (18,724        24,819     

 

10

 

 


TOYOTA MOTOR CORPORATION

Notes to Unaudited Consolidated Financial Statements

 

 

Undesignated derivative financial instruments are used to manage economic risks of fluctuations in foreign currency exchange rates and interest rates of certain receivables and payables. Those economic risks are offset by changes in the fair value of undesignated derivative financial instruments.

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 into International Swaps and Derivatives Association Master Agreements with counterparties. These Master Agreements contain a provision requiring either Toyota or the counterparty to settle the contract or to post assets to the other party in the event of a ratings downgrade below a specified threshold.

The aggregate fair value amount of derivative financial instruments that contain credit risk related contingent features that are in a net liability position after being offset by cash collateral as of June 30, 2014 is ¥2,768 million. The aggregate fair value amount of assets that are already posted as cash collateral as of June 30, 2014 is ¥24,935 million. If the ratings of Toyota decline below specified thresholds, the maximum amount of assets to be posted or for which Toyota could be required to settle the contracts is ¥2,768 million as of June 30, 2014.

 

11

 

 


TOYOTA MOTOR CORPORATION

Notes to Unaudited Consolidated Financial Statements

 

 

 

5.

Contingencies:

Guarantees

Toyota enters into contracts with Toyota dealers to guarantee customers’ payments of their installment payables that arise from installment contracts between customers and Toyota dealers, as and when requested by Toyota dealers. Toyota is required to execute its guarantee primarily when customers are unable to make required payments. The maximum potential amount of future payments as of June 30, 2014 is ¥2,138,520 million. Liabilities for guarantees totaling ¥6,440 million have been provided as of June 30, 2014. Under these guarantee contracts, Toyota is entitled to recover any amount paid by Toyota from the customers whose original obligations Toyota has guaranteed.

Legal proceedings

Product recalls

From time-to-time, Toyota issues vehicle recalls and takes other safety measures including safety campaigns relating to its vehicles. In November 2009, Toyota announced a safety campaign in North America for certain models of Toyota and Lexus vehicles related to floor mat entrapment of accelerator pedals, and later expanded it to include additional models. In January 2010, Toyota announced a recall in North America for certain models of Toyota vehicles related to sticking and slow-to-return accelerator pedals. Also in January 2010, Toyota recalled in Europe, China and other regions certain models of Toyota vehicles related to sticking accelerator pedals. In February 2010, Toyota announced a worldwide recall related to the software program that controls the antilock braking system in certain vehicle models including the Prius. Set forth below is a description of the claims, lawsuits and government investigations involving Toyota in the United States relating to these recalls and other safety measures.

Class action and consolidated litigation

Approximately 200 putative class actions and more than 500 individual product liability personal injury cases have been filed since November 2009 alleging that certain Toyota, Lexus and Scion vehicles contain defects that lead to unintended acceleration. All of the class actions and many of the product liability personal injury, warranty and lemon law cases were consolidated either in a consolidated action in the United States District Court for the Central District of California or in a consolidated action in California state court.

 

12

 

 


TOYOTA MOTOR CORPORATION

Notes to Unaudited Consolidated Financial Statements

 

 

In July 2013, the federal court signed an order and judgment granting final approval of the December 2012 settlement of the economic loss claims and dismissing the economic loss cases. Various objectors appealed the court’s rulings, but all of these appeals have been dismissed and the settlement is final.

Although the settlement does not cover product liability personal injury claims in the consolidated federal action or pending in various state courts in the United States, the judges overseeing the federal and California consolidated actions have approved an Intensive Settlement Process (“ISP”) for the product liability personal injury claims in those actions. Under the ISP, all cases are stayed pending completion of a process to assess whether they can be resolved on terms acceptable to the parties. Cases not resolved after completion of the ISP will then proceed to discovery and toward trial.

Beginning in February 2010, Toyota was sued in approximately 20 putative class actions alleging defects in the antilock braking system in various hybrid vehicles that cause the vehicles to fail to stop in a timely manner when driving in certain road conditions. These cases were consolidated into two actions, one in the United States District Court for the Central District of California and one in the Los Angeles County Superior Court. In January 2013, the Court in the federal case issued an order denying the plaintiff’s motion for class certification and granting summary judgment in favor of Toyota on the claims of the principal named plaintiff for the cases relating to recalled vehicles. In July 2013, the court denied the motion for class certification for claims related to vehicles that were not recalled, and that ruling has been appealed.

While Toyota has resolved or is attempting to resolve many of the outstanding matters, Toyota believes that it has meritorious defenses to all of them and will vigorously defend those matters not resolved.

Government investigations

In February 2010, Toyota received a subpoena from the U.S. Attorney for the Southern District of New York seeking documents related to unintended acceleration. In March 2014, Toyota announced that it entered into a deferred prosecution agreement (“DPA”) with the U.S. Attorney’s Office to resolve its investigation. The DPA provided for a $1.2 billion payment to the U.S. government, and Toyota recorded a $1.2 billion charge against earnings in fiscal 2014. The agreement also provided for an independent monitor to review and assess policies and procedures relating to Toyota’s safety communications process, its process for sharing vehicle accident information internally and its process for preparing and sharing certain technical reports.

 

13

 

 


TOYOTA MOTOR CORPORATION

Notes to Unaudited Consolidated Financial Statements

 

 

Beyond the amounts accrued for the recall-related matters, Toyota is unable to estimate a range of reasonably possible loss, if any, for the other recall-related matters because (i) many of the proceedings are in evidence gathering stages, (ii) significant factual issues need to be resolved, (iii) the legal theory or nature of the claims is unclear, (iv) the outcome of future motions or appeals is unknown and/or (v) the outcomes of other matters of these types vary widely and do not appear sufficiently similar to offer meaningful guidance. Toyota continues to evaluate these matters and expects that it may have resolution discussions from time to time in some of them. Although Toyota cannot estimate a reasonable range of loss based on currently available information, the resolution of the above-mentioned matters could have an adverse effect on Toyota’s financial position, results of operations or cash flows.

Other proceedings

Toyota has various other legal actions, other governmental proceedings and other claims pending against it, including other product liability claims in the United States. For the same reasons discussed above relating to the recall-related legal proceedings, Toyota is unable to estimate a range of reasonably possible loss, if any, beyond the amounts accrued, with respect to these other proceedings. Based upon information currently available to Toyota, however, Toyota believes that its losses from these matters, if any, would not have a material adverse effect on Toyota’s financial position, results of operations or cash flows.

Environmental matters

The European Union brought into effect a directive that requires member states to promulgate regulations implementing automotive manufacturers shall bear the costs for taking back end-of-life vehicles and dismantling and recycling those vehicles. Currently, there are uncertainties surrounding the implementation of the applicable regulations in different European Union member states, particularly regarding automotive manufacturer responsibilities and resultant expenses that may be incurred. Based on the legislation that has been enacted to date, Toyota has provided for its estimated liability. Although Toyota does not expect its compliance with the directive to result in significant cash expenditures, Toyota is continuing to assess the impact of this future legislation on Toyota’s financial position, results of operations and cash flows.

 

14

 

 


TOYOTA MOTOR CORPORATION

Notes to Unaudited Consolidated Financial Statements

 

 

 

6.

Segment data:

The operating segments reported below are the segments of Toyota for which separate financial information is available and for which operating income/loss amounts are evaluated regularly by executive management in deciding how to allocate resources and in assessing performance.

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 Financial Services 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 segment includes the design, manufacturing and sales of housing, telecommunications and other businesses.

The following tables present certain information regarding Toyota’s industry or geographic segments and overseas revenues by destination for the first quarter ended June 30, 2013 and 2014.

Segment operating results -

For the first quarter ended June 30, 2013:

 

     Yen in millions  
     Automotive      Financial
Services
     All Other      Inter-segment
Elimination
    Consolidated  

Net revenues

             

Sales to external customers

     5,807,049         328,784         119,486                6,255,319   

Inter-segment sales and transfers

     10,956         11,092         114,985         (137,033       
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Total

     5,818,005         339,876         234,471         (137,033     6,255,319   

Operating expenses

     5,209,509         288,607         227,337         (133,517     5,591,936   
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Operating income

     608,496         51,269         7,134         (3,516     663,383   
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

For the first quarter ended June 30, 2014:

     Yen in millions  
     Automotive      Financial
Services
     All Other      Inter-segment
Elimination
    Consolidated  

Net revenues

             

Sales to external customers

     5,900,070         367,098         123,520                6,390,688   

Inter-segment sales and transfers

     14,597         10,330         134,796         (159,723       
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Total

     5,914,667         377,428         258,316         (159,723     6,390,688   

Operating expenses

     5,327,915         279,215         247,517         (156,687     5,697,960   
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Operating income

     586,752         98,213         10,799         (3,036     692,728   
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

 

15

 

 


TOYOTA MOTOR CORPORATION

Notes to Unaudited Consolidated Financial Statements

 

 

Geographic information -

For the first quarter ended June 30, 2013:

 

     Yen in millions  
     Japan      North America      Europe      Asia      Other      Inter-segment
Elimination
    Consolidated  

Net revenues

                   

Sales to external customers

     1,939,067         2,062,276         568,278         1,123,017         562,681                6,255,319   

Inter-segment sales and transfers

     1,517,149         42,857         27,720         95,050         46,337         (1,729,113       
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Total

     3,456,216         2,105,133         595,998         1,218,067         609,018         (1,729,113     6,255,319   

Operating expenses

     3,000,141         2,022,462         590,734         1,113,889         566,512         (1,701,802     5,591,936   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Operating income

     456,075         82,671         5,264         104,178         42,506         (27,311     663,383   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

For the first quarter ended June 30, 2014:

     Yen in millions  
     Japan      North America      Europe      Asia      Other      Inter-segment
Elimination
    Consolidated  

Net revenues

                   

Sales to external customers

     1,908,471         2,196,326         621,370         1,114,044         550,477                6,390,688   

Inter-segment sales and transfers

     1,388,060         62,797         29,288         83,384         41,481         (1,605,010       
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Total

     3,296,531         2,259,123         650,658         1,197,428         591,958         (1,605,010     6,390,688   

Operating expenses

     2,930,568         2,093,587         639,790         1,087,042         557,907         (1,610,934     5,697,960   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Operating income

     365,963         165,536         10,868         110,386         34,051         5,924        692,728   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

“Other” consists of Central and South America, Oceania, Africa and the Middle East.

Revenues are attributed to geographies based on the country location of the parent company or the subsidiary that transacted the sale with the external customer.

Transfers between industry or geographic segments are made at amounts which Toyota’s management believes approximate arm’s-length transactions. In measuring the reportable segments’ income or losses, operating income consists of revenue less operating expenses.

 

16

 

 


TOYOTA MOTOR CORPORATION

Notes to Unaudited Consolidated Financial Statements

 

 

Overseas revenues by destination -

The following information shows revenues that are attributed to countries based on location of customers, excluding customers in Japan. In addition to the disclosure requirements under U.S.GAAP, Toyota discloses this information in order to provide financial statement users with valuable information.

 

     Yen in millions  
     For the first
quarter ended
June 30, 2013
     For the first
quarter ended
June 30, 2014
 

North America

     2,055,050         2,183,929   

Europe

     442,337         590,732   

Asia

     1,165,287         1,046,751   

Other

     1,146,229         1,175,242   

“Other” consists of Central and South America, Oceania, Africa and the Middle East, etc.

 

17

 

 


TOYOTA MOTOR CORPORATION

Notes to Unaudited Consolidated Financial Statements

 

 

 

7.

Per share amounts:

Reconciliations of the differences between basic and diluted net income attributable to Toyota Motor Corporation per share for the first quarter ended June 30, 2013 and 2014 are as follows:

 

     Yen
in millions
    Thousands
of shares
     Yen  
     Net income
attributable
to Toyota
Motor
Corporation
    Weighted-
average
shares
     Net income
attributable
to Toyota
Motor
Corporation
per share
 

For the first quarter ended June 30, 2013

       

Basic quarterly net income attributable to Toyota Motor Corporation per common share

     562,194        3,168,225         177.45   

Effect of dilutive securities

       

Assumed exercise of dilutive stock options

     (42     2,005      
  

 

 

   

 

 

    

 

 

 

Diluted quarterly net income attributable to Toyota Motor Corporation per common share

     562,152        3,170,230         177.32   
  

 

 

   

 

 

    

 

 

 

For the first quarter ended June 30, 2014

       

Basic quarterly net income attributable to Toyota Motor Corporation per common share

     587,774        3,169,812         185.43   

Effect of dilutive securities

       

Assumed exercise of dilutive stock options

     (14     1,389      
  

 

 

   

 

 

    

 

 

 

Diluted quarterly net income attributable to Toyota Motor Corporation per common share

     587,760        3,171,201         185.34   
  

 

 

   

 

 

    

 

 

 

Stock options that were not included in the computation of diluted net income attributable to Toyota Motor Corporation per share for the first quarter ended June 30, 2013 and 2014 were 2,802 thousand shares and 2,341 thousand shares, respectively, because the options’ exercise prices were greater than the average market price per common share during the period.

On June 17, 2014, at the Ordinary General Shareholders’ Meeting, the shareholders of the parent company approved to distribute year-end cash dividends of ¥316,977 million, ¥100 per share, effective on June 18, 2014.

 

18

 

 


TOYOTA MOTOR CORPORATION

Notes to Unaudited Consolidated Financial Statements

 

 

 

8.

Fair value measurements:

In accordance with U.S.GAAP, Toyota classifies fair value into three levels of input as follows which are used to measure it.

 

Level 1:

  Quoted prices in active markets for identical assets or liabilities

Level 2:

  Quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; inputs other than quoted prices that are observable for the assets or liabilities
Level 3:   Unobservable inputs for assets or liabilities

The following table summarizes the fair values of the assets and liabilities measured at fair value on a recurring basis as of March 31, 2014 and June 30, 2014. Transfers between levels of the fair value are recognized at the end of their respective reporting periods:

 

     Yen in millions  
     March 31, 2014  
     Level 1      Level 2     Level 3      Total  

Assets

          

Cash equivalents

     311,582         401,546                713,128   

Marketable securities and other securities investments

          

Public and corporate bonds

     5,234,856         920,975        9,092         6,164,923   

Common stocks

     1,997,196                        1,997,196   

Other

     54,383         517,950                572,333   

Derivative financial instruments

             220,160        7,544         227,704   
  

 

 

    

 

 

   

 

 

    

 

 

 

Total

     7,598,017         2,060,631        16,636         9,675,284   
  

 

 

    

 

 

   

 

 

    

 

 

 

Liabilities

          

Derivative financial instruments

             (175,645             (175,645
  

 

 

    

 

 

   

 

 

    

 

 

 

Total

             (175,645             (175,645
  

 

 

    

 

 

   

 

 

    

 

 

 

 

19

 

 


TOYOTA MOTOR CORPORATION

Notes to Unaudited Consolidated Financial Statements

 

 

 

     Yen in millions  
     June 30, 2014  
     Level 1      Level 2     Level 3      Total  

Assets

          

Cash equivalents

     257,765         564,942                822,707   

Marketable securities and other securities investments

          

Public and corporate bonds

     5,366,450         947,694        8,995         6,323,139   

Common stocks

     2,071,353                        2,071,353   

Other

     54,463         315,678                370,141   

Derivative financial instruments

             226,532        8,239         234,771   
  

 

 

    

 

 

   

 

 

    

 

 

 

Total

     7,750,031         2,054,846        17,234         9,822,111   
  

 

 

    

 

 

   

 

 

    

 

 

 
          

Liabilities

          

Derivative financial instruments

             (148,308             (148,308
  

 

 

    

 

 

   

 

 

    

 

 

 

Total

             (148,308             (148,308
  

 

 

    

 

 

   

 

 

    

 

 

 

The following is description of the assets and liabilities measured at fair value, information about the valuation techniques used to measure fair value, key inputs and significant assumptions:

Cash equivalents and time deposits -

Cash equivalents include money market funds and other investments with original maturities of three months or less. Cash equivalents classified in Level 2 include primarily negotiable certificate of deposit with original maturities of three months or less. These are measured at fair value using observable interest rates in the market.

Marketable securities and other securities investments -

Marketable securities and other securities investments include public and corporate bonds, common stocks and other investments. Public and corporate bonds include primarily government bonds and represent 50% of Japanese bonds, and 50% of U.S., European and other bonds as of March 31, 2014, and 50% of Japanese bonds, and 50% of U.S., European and other bonds as of June 30, 2014. Listed stocks on the Japanese stock markets represent 86% and 87% of common stocks as of March 31, 2014 and June 30, 2014, respectively. Toyota uses primarily quoted market prices for identical assets to measure fair value of these securities. “Other” includes primarily investment trusts. Generally, Toyota uses quoted market prices for similar assets or quoted non-active market prices for identical assets to measure fair value of these securities. These assets are classified in Level 2.

 

20

 

 


TOYOTA MOTOR CORPORATION

Notes to Unaudited Consolidated Financial Statements

 

 

Derivative financial instruments -

See note 4 to the consolidated financial statements about derivative financial instruments. Toyota primarily estimates the fair value of derivative financial instruments using industry-standard valuation models that require observable inputs including interest rates and foreign exchange rates, and the contractual terms. The usage of these models does not require significant judgment to be applied. These derivative financial instruments are classified in Level 2. In other certain cases when market data is not available, key inputs to the fair value measurement include quotes from counterparties, and other market data. Toyota assesses the reasonableness of changes of the quotes using observable market data. These derivative financial instruments are classified in Level 3. Toyota’s derivative fair value measurements consider assumptions about counterparty and our own non-performance risk, using such as credit default probabilities.

The changes in Level 3 assets and liabilities measured at fair value on a recurring basis for the first quarter ended June 30, 2013 and 2014 were not material.

Certain assets and liabilities are measured at fair value on a nonrecurring basis. The assets and liabilities measured at fair value on a nonrecurring basis for the first quarter ended June 30, 2013 and 2014 were not material.

 

21

 

 


TOYOTA MOTOR CORPORATION

Notes to Unaudited Consolidated Financial Statements

 

 

 

9.

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
    Pension
liability
adjustments
    Accumulated other
comprehensive
income (loss)
 

For the first quarter ended June 30, 2013

        

Balance at March 31, 2013

     (813,480     666,813        (209,456     (356,123

Other comprehensive income (loss) before reclassifications

     117,861        266,387        885        385,133   

Reclassifications

            (5,466     1,894        (3,572
  

 

 

   

 

 

   

 

 

   

 

 

 

Other comprehensive income (loss), net of tax

     117,861        260,921        2,779        381,561   

Less: Other comprehensive income attributable to noncontrolling interests

     (4,395     (3,752     (749     (8,896
  

 

 

   

 

 

   

 

 

   

 

 

 

Balance at June 30, 2013

     (700,014     923,982        (207,426     16,542   
  

 

 

   

 

 

   

 

 

   

 

 

 

For the first quarter ended June 30, 2014

        

Balance at March 31, 2014

     (516,538     1,160,563        (115,864     528,161   

Other comprehensive income (loss) before reclassifications

     (85,510     62,683        (54     (22,881

Reclassifications

            (10,188     505        (9,683
  

 

 

   

 

 

   

 

 

   

 

 

 

Other comprehensive income (loss), net of tax

     (85,510     52,495        451        (32,564

Less: Other comprehensive income attributable to noncontrolling interests

     7,951        (2,323     545        6,173   
  

 

 

   

 

 

   

 

 

   

 

 

 

Balance at June 30, 2014

     (594,097     1,210,735        (114,868     501,770   
  

 

 

   

 

 

   

 

 

   

 

 

 

 

22

 

 


TOYOTA MOTOR CORPORATION

Notes to Unaudited Consolidated Financial Statements

 

 

Reclassifications consist of the following:

 

     Yen in millions
     For the first
quarter ended
June 30, 2013
    For the first
quarter ended
June 30, 2014
   

Affected line items

in the consolidated statements of income

Unrealized gains (losses) on securities:

      
     2,507        (1,174   Financing operations
     5,079        (3,235   Foreign exchange gain, net
     (16,593     (12,307   Other income, net
  

 

 

   

 

 

   
     (9,007     (16,716  

Quarterly income before income taxes and equity in earnings of affiliated companies

     3,527        6,527      Provision for income taxes
     14        1      Equity in earnings of affiliated companies
  

 

 

   

 

 

   
     (5,466     (10,188   Quarterly net income
  

 

 

   

 

 

   

Pension liability adjustments:

      

Recognized net actuarial loss

     4,193        1,918      *1

Amortization of prior service costs

     (1,190     (1,160   *1
  

 

 

   

 

 

   
     3,003        758     

Quarterly income before income taxes and equity in earnings of affiliated companies

     (1,109     (253   Provision for income taxes
  

 

 

   

 

 

   
     1,894        505      Quarterly net income
  

 

 

   

 

 

   

Total reclassifications, net of tax

     (3,572     (9,683  
  

 

 

   

 

 

   

Amounts of reclassifications in parentheses indicate gains in the consolidated statements of income.

 

*1:

These components are included in the computation of net periodic pension cost.

 

23

 

 


Report on Number of Listed Shares

(Excerpt Translation)

August 20, 2014

Toyota Motor Corporation

1, Toyota-cho, Toyota City, Aichi Prefecture

Report on Number of Listed Shares

We hereby report changes in the number of listed securities, as a result of the exercise of stock acquisition rights, etc. in July 2014 (the “Current Month”).

1. Summary

 

Number of listed shares as of the end of the preceding month

     3,417,997,492 shares   

Total number of shares changed during the Current Month

     0 shares   

(out of which, as a result of exercise of stock acquisition rights)

     (0 shares

(out of which, as a result of other reasons)

     (0 shares

Number of listed shares as of the end of the Current Month

     3,417,997,492 shares   

2. Stock acquisition rights exercised

<Details of shares delivered (issued or transferred) upon exercise of stock acquisition rights>

(1) Number of shares

 

     Total number of shares
delivered during the
Current Month
     (out of which, number of
newly issued shares)
    (out of which, number
of shares transferred from
treasury shares)
 

5th series

     30,000 shares         (0 shares     (30,000 shares

6th series

     0 shares         (0 shares     (0 shares

7th series

     60,700 shares         (0 shares     (60,700 shares

8th series

     79,200 shares         (0 shares     (79,200 shares

9th series

     17,400 shares         (0 shares     (17,400 shares

(2) Exercise price

 

     Aggregate exercise price
during the Current Month
     (out of which, aggregate
amount of newly issued
shares)
    (out of which, aggregate
amount of shares
transferred from treasury
shares)
 

5th series

     JPY 184,200,000         (JPY 0     (JPY 184,200,000

6th series

     JPY 0         (JPY 0     (JPY 0

7th series

     JPY 286,868,200         (JPY 0     (JPY 286,868,200

8th series

     JPY 332,085,600         (JPY 0     (JPY 332,085,600

9th series

     JPY 55,384,200         (JPY 0     (JPY 55,384,200