Toyota 2007 Annual Report Download - page 126

124 ANNUAL REPORT 2007
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 com-
panies, and (ii) dismissed the claim for damages based on the
Sherman Antitrust Act but did not bar the plaintiffs from seek-
ing 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 plain-
tiffs will, in accordance with the terms of the settlement agree-
ment, 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 product
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 October 2000, the European Union brought into effect a
directive that requires member states to promulgate regula-
tions 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 became applicable to vehicles put on the market
before July 1, 2002; (ii) manufacturers may not use certain haz-
ardous materials in vehicles to be sold after July 2003; (iii) vehi-
cles 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 vehicle; 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. A law to implement the
directive came into effect in all member states including
Bulgaria, Romania that joined the European Union in January
2007. Currently, there are uncertainties surrounding the imple-
mentation 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 directive.
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, 2007. Depending on
the legislation that will be enacted subject to other circum-
stances, 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 direc-
tive to result in significant cash expenditures, Toyota is continu-
ing 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 affiliat-
ed 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 regular-
ly 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, 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 mer-
chandising 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, 2005, 2006 and 2007. 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: