Toyota 2006 Annual Report Download - page 122

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Commitments outstanding at March 31, 2006 for the pur-
chase of property, plant and equipment and other assets
totaled ¥103,324 million ($880 million).
Toyota enters into contracts with Toyota dealers to guaran-
tee customers’ payments of their installment payables that
arise from installment contracts between customers and
Toyota dealers, as and when requested by Toyota dealers.
Guarantee periods are set to match maturity of installment
payments, and at March 31, 2006, range from 1 month to 35
years; however, they are generally shorter than the useful lives
of products sold. Toyota is required to execute its guarantee
primarily when customers are unable to make required pay-
ments. The maximum potential amount of future payments as
of March 31, 2006 is ¥1,236,977 million ($10,530 million).
Liabilities for guarantees totaling ¥3,355 million ($29 million)
have been provided as of March 31, 2006. Under these guar-
antee contracts, Toyota is entitled to recover any amount paid
by Toyota from the customers whose original obligations
Toyota has guaranteed.
In February 2003, Toyota, General Motors Corporation,
Ford, DaimlerChrysler, Honda, Nissan and BMW and their U.S.
and Canadian sales and marketing subsidiaries, the National
Automobile Dealers Association and the Canadian Automobile
Dealers Association were named as defendants in purported
nationwide class actions on behalf of all purchasers of new
motor vehicles in the United States since January 1, 2001. 26
similar actions were filed in federal district courts in California,
Illinois, New York, Massachusetts, Florida, New Jersey and
Pennsylvania. Additionally, 56 parallel class actions were filed
in state courts in California, Minnesota, New Mexico, New
York, Tennessee, Wisconsin, Arizona, Florida, Iowa, New
Jersey and Nebraska on behalf of the same purchasers in these
states. As of April 1, 2005, actions filed in federal district
courts were consolidated in Maine and actions filed in the
state courts of California and New Jersey were also consolidat-
ed, respectively.
The nearly identical complaints allege that the defendants
violated the Sherman Antitrust Act by conspiring among
themselves and with their dealers to prevent the sale to United
States citizens of vehicles produced for the Canadian market.
The complaints allege that new vehicle prices in Canada are
10% to 30% lower than those in the United States and that
preventing the sale of these vehicles to United States citizens
resulted in United States consumers paying excessive prices for
the same type of vehicles. The complaints seek permanent
injunctions against the alleged antitrust violations and treble
damages in an unspecified amount. In March 2004, the feder-
al district court of Maine (i) dismissed claims against certain
Canadian sales and marketing subsidiaries, including Toyota
Canada, Inc., for lack of personal jurisdiction but denied or
deferred to dismiss claims against certain other Canadian
companies, and (ii) dismissed the claim for damages based on
the Sherman Antitrust Act but did not bar the plaintiffs from
seeking injunctive relief against the alleged antitrust violations.
The plaintiffs have submitted an amended compliant adding a
claim for damages based on state antitrust laws and Toyota
has responded to the plaintiff’s discovery requests. Toyota
believes that its actions have been lawful. In the interest of
quickly resolving these legal actions, however, Toyota entered
into a settlement agreement with the plaintiffs at the end of
February 2006. The settlement agreement is pending the
approval of the federal district court, and immediately upon
approval the plaintiffs will, in accordance with the terms of
the settlement agreement, withdraw all pending actions
against Toyota in the federal district court as well as all state
courts and all related actions will be closed.
Toyota has various other legal actions, governmental pro-
ceedings and other claims pending against it, including prod-
uct liability claims in the United States. Although the claimants
in some of these actions seek potentially substantial damages,
Toyota cannot currently determine its potential liability or the
damages, if any, with respect to these claims. However, based
upon information currently available to Toyota, Toyota
believes that its losses from these matters, if any, would not
have a material adverse effect on Toyota’s financial position,
operating results or cash flows.
In September 2000, the European Union approved a direc-
tive that requires member states to promulgate regulations
23. Other commitments and contingencies, concentrations and factors that may affect future operations: