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Annual Report 1997
Year Ended March 31, 1997

Table of contents

  • Page 1
    Annual Report 1997 Year Ended March 31, 1997

  • Page 2
    ...By continually developing innovative technologies centering on the fields of Electronics and Energy, we strive to create products and services that enhance human life, and which lead to a thriving, healthy society. We constantly seek new approaches that help realize the goals of the world community...

  • Page 3
    ... of yen Toshiba Corporation and its subsidiaries For the years ended March 31, 1997 and 1996 1997 1996 Thousands of U.S. dollars 1997 Net sales - Japan - Overseas Net sales Operating income Income before income taxes and minority interest Net income Research and development expenditures Total...

  • Page 4
    ... in segment sales and a 29 percent drop in operating income. Consumer products and others-Toshiba generated a strong market response with several new models of air conditioners, washing machines, refrigerators and other home appliances. However, intense competition in Japan held back sales gains. As...

  • Page 5
    ...information-oriented consumer products that incorporate digital technology. By taking this selective approach to business development, we plan to restructure these mainstream categories and build a more solid operating base. Developing New Businesses Toshiba's DVD-video players went on sale in Japan...

  • Page 6
    ... Toshiba also played a prominent role in developing an IC card for an electronic commerce system promoted by Japan's Ministry of International Trade and Industry. Supported by many companies, this system is currently in the final stages of testing. We are working on many other equally attractive new...

  • Page 7
    ... seeing new opportunities to apply our expertise in audio and visual technology. This focus on growing fields will be a central theme in the future development of our mainstream business activities. In home appliances, we are increasing overseas production of refrigerators, washing machines, air...

  • Page 8
    ... sales by introducing a super-slim 10X drive and several other models that set new industry standards. Furthermore, with the start-up of production at Toshiba Information Equipment (Philippines), Inc., Toshiba is even better positioned to meet rising demand for PC peripherals. With the number of DVD...

  • Page 9
    ... in Asia, Central and South America, and the Middle East was another reason for the higher sales. Toshiba maintains the number-one position in Japan's diagnostic imaging equipment market. In 1997, Toshiba was first in the world to pass the 100,000 mark in cumulative production of electronic-scan...

  • Page 10
    ...of new technology. We were first to use a 2.5-inch HDD, and first with an LCD. Now we are planning on commercializing a notebook PC with a DVD drive. By tapping all of Toshiba's resources to remain at the forefront of technological progress, we intend to preserve our position at the top of the world...

  • Page 11
    ... access speed. Toshiba was able to develop this device by applying knowledge gained from joint development programs with IBM Corporation and Siemens AG. In February 1997, Toshiba unveiled samples of a 64M synchronous DRAM. The first of its kind in the world, this DRAM has a data transfer rate high...

  • Page 12
    ...years. Toshiba added to its line-up of prismatic batteries by introducing two cylindrical models for notebook PCs. Targeting a new market with immense potential, Toshiba has developed a 15-inch LCD for desktop PCs. Commercial production of these displays started in June 1997. Long one of the world...

  • Page 13
    ... research and production costs. Through strategic alliances, we are spreading the necessary investments among several partners. For example, Toshiba has joined forces with IBM and Siemens in research and development. In Taiwan, we provide the necessary technology to Winbond Electronics Corporation...

  • Page 14
    ... equipment heated up in Japan as utilities reduced outlays for new facilities. In this difficult environment, Toshiba is focusing on highly efficient combined-cycle generation equipment and exports of thermal power plants to rapidly growing overseas markets. In Japan, Toshiba is currently building...

  • Page 15
    ... delivery of equipment for Line No. 1, Toshiba secured similar contracts for Line No. 2. In addition, a joint venture provides maintenance services for rolling stock. Attractive Toshiba elevators and escalators are integral elements of the striking new Tokyo head office building of Fuji Television...

  • Page 16
    ... Sales & Peak Demand (GW) 200 (GWh) 100 Q Asia represents one of the world's largest markets for power generation and distribution systems. How is Toshiba capturing business here in the face of intense competition from companies in Europe and the United States? A With orders slowing in Japan...

  • Page 17
    ... development, manufacturing and head-office activities was completed in April 1996. Toshiba Video Products Pte., Ltd. of Singapore is now in a better position to speed the introduction of new products and hold down costs to become more competitive. The company is placing priority on high-end models...

  • Page 18
    ... high. Toshiba unveiled a series of highly competitive products with improved functions. Nevertheless, competitive forces exerted pressure on prices and held down appliance sales. Toshiba was able to post an increase in washing machine sales, but sales of both air conditioners and refrigerators...

  • Page 19
    ...entirely new lifestyle-based products, like interactive TV. We are withdrawing from unprofitable lines. Audio products and home video cameras are two examples. Toshiba can then concentrate investments on market sectors with more growth potential. We will continue this process to focus a rising share...

  • Page 20
    ... PHS communications with Internet access, including E-mail. The unit can be linked with ease to the Internet using its high-speed, 32kbps modem. The compact, lightweight communicator also has a PHS phone and a full range of personal information manager functions. Images are produced on a 3.5inch LCD...

  • Page 21
    ... products. All draw on our expertise in optelectronics, semiconductor lasers, image compression and many other fields. Information and communications equipment, PCs and electronic components are other strategic fields within our R&D program. LCDs, rechargeable batteries and environmental systems...

  • Page 22
    ... consumption. In February 1997, two Toshiba products received the Commendation of 21st Century Type EnergyConserving Apparatuses and Systems from the Energy Conservation Center, an organization associated with Japan's Ministry of International Trade and Industry. Air conditioners were recognized for...

  • Page 23
    ... divisions and other bases also hold their own environmental conferences. Here, goals and projects are created to address the requirements of specific products and regions. Once every year, Toshiba hosts an Environmental Technology Exhibition that brings together group representatives from Japan...

  • Page 24
    ... 93 94 95 96 97 Consumer Products and Others Heavy Electrical Apparatus Information/Communication Systems and Electronic Devices Europe North America Japan Others Asia Net Income per Share (Â¥) 30 25 20 Common Stock Price Range (Â¥) 1,000 Capital Expenditures (Â¥ billion) 500 800 400 600 15...

  • Page 25
    ... other high-value-added products overseas. In the fall of 1997, production will start at a joint venture with IBM. We plan to make more investments in overseas semiconductor facilities. Toshiba today is a truly global company that derives more than 30 percent of sales from markets other than Japan...

  • Page 26
    ...Yasuo Morimoto Vice President Taizo Nishimuro President and Chief Executive Officer Tadashi Okamura Senior Vice President Kotaro Hyuga Vice President Atsumi...Yoshida Corporate Auditor Tomohiko Sasaki Executive Vice President Tetsuya Mizoguchi Vice President Masayoshi Motoki Corporate Auditor ...

  • Page 27
    ... Section CONTENTS MANAGEMENT' S DISCUSSION & ANALYSIS CONSOLIDATED BALANCE S HEETS C O N S O L I D A T E D ST A T E M E N T S O F O P E R A T I O N S AND RETAINED EARNINGS CONSOLIDATED STATEMENTS OF C ASH FLOWS NOTES TO C ONSOLIDATED FINANCIAL S TATEMENTS R E P O R T O F I N D E P E N D E N T AC...

  • Page 28
    ..., all product sectors where Toshiba has a high market share. Sales of communication equipment were also much higher, with growth paced by strong demand for cellular and PHS phones. Solid demand for X-ray CT equipment in Japan and overseas helped lift sales of medical equipment despite intense...

  • Page 29
    ...the previous fiscal year. In Japan, sales were ¥975.4 billion (US$7,866 million). Washing machines achieved solid sales growth, but a fall in sales prices impacted the performance of refrigerators and TVs. Toshiba achieved record domestic shipments of air conditioners for the third consecutive year...

  • Page 30
    ... equipment to Japanese utilities fell. Consumer products and others reported an operating loss of ¥17.3 billion (US$140 million), an improvement of ¥12.1 billion (US$98 million) compared with one year earlier. Results improved at sales companies in North America and Hong Kong, and sales of washing...

  • Page 31
    ... Thousands of U.S. dollars 1997 Operating income (loss): Information/Communication Systems and Electronic Devices ...Heavy Electrical Apparatus ...Consumer Products and Others ...Eliminations ...Consolidated ...Identifiable assets: Information/Communication Systems and Electronic Devices ...Heavy...

  • Page 32
    ... networking technology, PCs and DVD, achieving finer design rules in semiconductor production, LCDs, combined-cycle power generation, nuclear power plants, rechargeable batteries, fuel cells and environmental systems. Toshiba estimates that fiscal 1997 R&D expenditures will increase 3.7 percent...

  • Page 33
    ... in proceeds from sale of property and securities and a decrease in other investments. Financing activities provided net cash of ¥27.3 billion (US$220 million) as Toshiba and its consolidated subsidiaries increased short-term borrowings by more than the net decrease in long-term debt. As cash used...

  • Page 34
    CONSOLIDATED BALANCE SHEETS Toshiba Corporation and its subsidiaries As of March 31, 1997 and 1996 Millions of yen ASSETS Current assets: Cash and cash equivalents ...Marketable securities (Note 4) ...Notes and accounts receivable, trade- Notes ...Accounts ...Allowance for doubtful notes and ...

  • Page 35
    ...SHAREHOLDERS' EQUITY Current liabilities: Short-term borrowings (Note 7) ...Current portion of long-term debt (Note 7) ...Notes payable, trade ...Accounts payable, trade ...Notes and accounts payable for construction...Accrued income and other taxes ...Advance payments received ...Employees' savings...

  • Page 36
    CONSOLIDATED STATEMENTS Toshiba Corporation and its subsidiaries For the years ended March 31, 1997 and 1996 OF OPERATIONS AND RE T A I N E D E A R N I N G S Millions of yen 1997 1996 Thousands of U.S. dollars (Note 3) 1997 Sales and other income: Net sales ...Other income ... ¥5,453,397 122...

  • Page 37
    ... in affiliated companies ...Decrease in other investments ...Increase in other assets and other ...Net cash used in investing activities ...Cash flows from financing activities: Proceeds from long-term debt ...Repayment of long-term debt...Dividends paid ...Increase in short-term borrowings ...Net...

  • Page 38
    ...1. Company operations: Toshiba Corporation and its subsidiaries are engaged in research and development, manufacture and sales of electronic and energy high-technology products, which span information/communication systems and electronic devices, heavy electrical apparatus, and consumer products and...

  • Page 39
    ... for severance indemnities - The company and its subsidiaries have various retirement benefit plans covering substantially all employees. Current service costs of the retirement benefit plans are accrued in the period. Prior service costs resulting from amendments to the plans are amortized over the...

  • Page 40
    ...,274 At March 31, 1997, debt securities mainly consist of bank and corporate debt securities. Contractual maturities of debt securities classified as available-for-sale were as follows at March 31, 1997: Millions of yen Carrying amount Fair value Thousands of U.S. dollars Carrying amount Fair value...

  • Page 41
    ... financial information of the affiliated companies accounted for by the equity method is shown below: Millions of yen March 31 1997 1996 Thousands of U.S. dollars 1997 Current assets ...Other assets including property, plant and equipment ...Total assets ...Current liabilities ...Long-term...

  • Page 42
    ... for short-term borrowings outstanding at March 31, 1997 and 1996 was approximately 1.8 percent and 2.4 percent, respectively. Long-term debt at March 31, 1997 and 1996 included: March 31 Millions of yen 1997 1996 Thousands of U.S. dollars 1997 Loans, principally from banks and insurance companies...

  • Page 43
    ... discount rate of 4.5 percent and 5.0 percent, an expected long-term rate of return on plan assets of 4.0 percent, and an assumed rate of increase in salary levels of 3.0 percent and 3.5 percent were used in developing the net periodic pension cost for 1997 and 1996, respectively. The funded status...

  • Page 44
    ... Income taxes: The company is subject to a number of different taxes based on income which, in the aggregate, indicate a normal statutory tax rate of approximately 51.4 percent for the years ended March 31, 1997 and 1996. However, the company has realized certain tax credits and incurred certain non...

  • Page 45
    ...' equity: The increases in the common stock and additional paid-in capital accounts resulted from the conversion of debentures. The increases in the legal reserve in the years ended March 31, 1997 and 1996 were appropriations required under the Japanese Commercial Code. No further appropriations...

  • Page 46
    ...majority of these instruments because of their short maturities. Quoted market prices were used for marketable securities, a part of other investments, and publicly held long-term debt. Other techniques, such as estimated discounted value of future cash flows, and replacement cost, have been used to...

  • Page 47
    ...INDEPENDENT ACCOUNTANTS Yebisu Garden Place Tower 20-3, Ebisu 4-chome Shibuya-ku, Tokyo 150 Price Waterhouse June 6, 1997 To the Board of Directors of Toshiba Corporation We have audited the consolidated balance sheets of Toshiba Corporation and its subsidiaries as of March 31, 1997 and 1996, and...

  • Page 48
    ... Buenos Aires Europe Regional Corporate Representative Office Toshiba Corporation Europe Office (London) Vienna Moscow Africa Cairo Asia Beijing Shanghai Guangzhou Taipei Hong Kong Manila Bangkok Jakarta New Delhi Middle East Teheran Baghdad Abu Dhabi Jeddah O VERSEAS SUBSIDIARIES North America...

  • Page 49
    ..., Malaysia WS Elevators Sdn. Bhd. Penang, Malaysia Toshiba Capital (Asia) Ltd. Singapore Toshiba Asia Pacific Pte., Ltd. Singapore Toshiba Medical Systems Asia Pte., Ltd. Singapore Toshiba Data Dynamics Pte., Ltd. Singapore Toshiba Video Products Pte., Ltd. Singapore International Video Products Pte...

  • Page 50
    ... GmbH Toshiba Electronics Malaysia Sdn. Bhd. Toshiba Electronics Taiwan Corporation Toshiba Europe GmbH Toshiba Information Equipment (Philippines), Inc. Toshiba Information Systems (UK) Ltd. Toshiba International Corporation Toshiba International Finance (UK) Plc. Toshiba Medical Systems Asia Pte...

  • Page 51
    ...Ltd. Employees Stock Ownership Plan The Nippon Fire & Marine Insurance Co., Ltd. The Long-Term Credit Bank of Japan, Ltd. The Tokai Bank, Ltd. (As of March 31, 1997) 3.97% 3.72% 3.51% 3.09% 2.36% 2.27% 2.11% 1.84% 1.83% 1.81% For further information, please contact: Corporate Communications Office...