Toyota 2005 Annual Report Download - page 98

14. PRODUCT WARRANTIES
Toyota provides product warranties for certain defects
mainly resulting from manufacturing based on warranty
contracts with its customers at the time of sale of products.
Toyota accrues estimated warranty costs to be incurred in
the future in accordance with the warranty contracts. The
net change in the accrual for the product warranties for
the years ended March 31, 2003, 2004 and 2005, which is
included in “Accrued expenses” in the accompanying
consolidated balance sheets, consist of the following:
The other amount primarily includes the impact of
currency translation adjustments and the impact of
consolidation and deconsolidation of certain entities due
to changes in ownership interest.
In addition to product warranties above, Toyota initiates
recall actions or voluntary service campaigns to repair or
to replace parts which might be expected to fail from
products safety perspectives or customer satisfaction
standpoints. Toyota accrues costs of these activities, which
are not included in the reconciliation above, based on
management’s estimates.
96 >NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
At March 31, 2005, property, plant and equipment with
a book value of ¥112,885 million ($1,051 million) was
pledged as collateral by consolidated subsidiaries for
certain debt obligations. In addition, other assets aggregat-
ing ¥44,553 million ($415 million) was pledged as
collateral by consolidated subsidiaries for certain debt
obligations. At March 31, 2005, approximately 38%,
27%, 17% and 18% of long-term debt is denominated in
U.S. dollars, Japanese yen, euros, and other currencies,
respectively.
The aggregate amounts of annual maturities of long-
term debt during the next five years are as follows:
U.S. dollars
Years ending March 31, Yen in millions in millions
2006 .............................................................................................................................................. ¥1,150,920 $10,717
2007 .............................................................................................................................................. 1,251,073 11,650
2008 .............................................................................................................................................. 1,260,228 11,735
2009 .............................................................................................................................................. 927,560 8,637
2010 .............................................................................................................................................. 628,884 5,856
Standard agreements with certain banks in Japan
include provisions that collateral (including sums on
deposit with such banks) or guarantees will be furnished
upon the banks’ request and that any collateral furnished,
pursuant to such agreements or otherwise, will be applicable
to all present or future indebtedness to such banks. During
the year ended March 31, 2005, Toyota has not received
any significant such requests from these banks.
At March 31, 2005, Toyota has unused long-term lines
of credit amounting to ¥3,677,859 million ($34,248 million).
U.S. dollars
Yen in millions in millions
For the year
For the years ended March 31, ended March 31,
2003 2004 2005 2005
Liabilities for product warranties at beginning of year................... ¥225,654 ¥240,634 ¥269,140 $2,506
Payments made during year............................................................. (179,650) (193,979) (209,166) (1,948)
Provision for warranties ................................................................... 200,484 229,578 239,117 2,227
Changes relating to pre-existing warranties.................................... (1,670) (1,910) (3,654) (34)
Other .............................................................................................. (4,184) (5,183) 1,725 16
Liabilities for product warranties at end of year......................... ¥240,634 ¥269,140 ¥297,162 $2,767