Sustained Innovation and Creativity - Toyota Industries Corporation

10. Shareholders’ equityUnder the Japanese Commercial Code, amounts equalto at least 10% of the sum of the cash dividends and otherexternal appropriations paid by the Company and itsdomestic subsidiaries must be set aside as a legal reserveuntil it equals 25% of common stock. The legal reservemay be used to reduce a defi cit or may be transferred tocommon stock by taking appropriate corporate action.In consolidation, the legal reserves of the Company andits domestic subsidiaries are accounted for as retainedearnings.A year-end cash dividend is approved at the OrdinaryGeneral Meeting of Shareholders of the Company heldafter the close of the fi scal year to which the dividend isapplicable. In addition, interim cash dividends may bepaid upon resolution of the Board of Directors, subject tolimitations imposed by the Japanese Commercial Code.Proceeds from the conversion of convertible bondshave been accounted for in approximately equalamounts as common stock and capital surplus. At least50% of the proceeds have been accounted for ascommon stock, in accordance with the provisions of theJapanese Commercial Code.11. Research and development expensesResearch and development expenses, which areincluded in selling, general and administrative expensesand manufacturing costs, amounted to ¥31,166 million(US$265,310 thousand), ¥30,051 million and ¥29,562 millionfor the years ended March 31, 2006, 2005 and 2004,respectively.12. Other non-operating income and expensesThousands ofMillions of yenU.S. dollars2006 2005 20042006Other non-operating income:Gain on sales of marketable securities ¥ 1,280 ¥ 1,659 ¥ 819 $ 10,896Rental income of fi xed assets 2,110 1,932 1,833 17,962Exchange gain 1,197 500 836 10,190Gain on sales of fi xed assets 838 957 808 7,134Sundries 5,631 4,510 4,873 47,936Total ¥11,056 ¥ 9,558 ¥ 9,169 $ 94,118Other non-operating expenses:Loss on impairment of securities ¥ 1,469 ¥ 56 ¥ 251 $ 12,505Depreciation 1,716 2,381 2,342 14,608Loss on disposal of fi xed assets 4,488 2,381 3,523 38,206Exchange loss 1,745 610 1,283 14,855Bond issuance costs 201 205 502 1,711Sundries 5,685 5,123 6,187 48,395Total ¥15,304 ¥10,756 ¥14,088 $130,28086 Toyota Industries Corporation Annual Report 2006