Toyota 2006 Annual Report Download - page 123

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implementing the following: (i) manufacturers shall bear all or
a significant part of the costs for taking back end-of-life vehi-
cles put on the market after July 1, 2002 and dismantling and
recycling those vehicles. Beginning January 1, 2007, this
requirement will also be applicable to vehicles put on the
market before July 1, 2002; (ii) manufacturers may not use
certain hazardous materials in vehicles to be sold after July
2003; (iii) vehicles type-approved and put on the market after
December 15, 2008, shall be re-usable and/or recyclable to a
minimum of 85% by weight per vehicle and shall be re-usable
and/or recoverable to a minimum of 95% by weight per vehi-
cle; and (iv) end-of-life vehicles must meet actual re-use of
80% and re-use as material or energy of 85%, respectively, of
vehicle weight by 2006, rising respectively to 85% and 95% by
2015. All of the member states, other than Ireland, which is
currently in the process of legislation domestically, have
adopted legislation to implement the directive. In addition,
countries such as Sweden, Denmark and Belgium have exist-
ing legislation that partially implements the directive.
Currently, there are uncertainties surrounding the implemen-
tation of the applicable regulations in different European
Union member states, particularly regarding manufacturer
responsibilities and resultant expenses that may be incurred.
In addition, under this directive member states must take
measures to ensure that car manufacturers, distributors and
other auto-related economic operators establish adequate
used vehicle collection and treatment facilities and to ensure
that hazardous materials and recyclable parts are removed
from vehicles prior to shredding. This directive impacts
Toyota’s vehicles sold in the European Union and Toyota
expects to introduce vehicles that are in compliance with such
measures taken by the member states pursuant to the direc-
tive.
Based on the legislation that has been enacted to date,
Toyota has provided for its estimated liability related to cov-
ered vehicles in existence as of March 31, 2006. Depending
on the legislation that is yet to be enacted by certain member
states and subject to other circumstances, Toyota may be
required to provide additional accruals for the expected costs
to comply with these regulations. 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 its results of operations, cash
flows and financial position.
Toyota purchases materials that are equivalent to approxi-
mately 10% of material costs from a supplier which is an affili-
ated company.
The parent company has a concentration of labor supply in
employees working under collective bargaining agreements
and a substantial portion of these employees are working
under the agreement that will expire on December 31, 2008.
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 allo-
cate 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, manu-
factures 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 affiliate companies
products as well as other products. The All Other segment
includes the design, manufacturing and sales of housing,
telecommunications and other business.
The following tables present certain information regarding
Toyota’s industry segments and operations by geographic
areas and overseas revenues by destination as of and for the
years ended March 31, 2004, 2005 and 2006. From the year
ended March 31, 2006, in Geographical Segment information
and overseas revenues by destination information, “Asia”
region has been disclosed separately from “Other” region.
Prior year information has also been disclosed for comparative
purposes.
24. Segment data: