Toshiba 2000 Annual Report Download - page 51

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1. COMPANY OPERATIONS:
Toshiba Corporation and its subsidiaries are engaged in the research and development, manufacturing and sales of high-technology
electronic and energy products, which span (1) information & communications and industrial systems, (2) digital media, (3) power
systems, (4) electronic devices & components, (5) home appliances, and (6) others. For the years ended March 31, 2000 and 1999,
sales in information & communications and industrial systems represented the most significant portion of the company’s total sales,
approximately 30%, and both of sales in digital media and electronic devices & components represented over 20% of the company’s
sales, while sales in power systems and home appliances were approximately equal in amount, each representing approximately 10%
of the company’s sales. Sales in others were relatively small compared to those derived from other business activities. The products
are manufactured and marketed throughout the world with approximately 60 percent of sales in Japan and the remainder in North
America, Asia, Europe and elsewhere.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
PREPARATION OF FINANCIAL STATEMENTS –
The company and its domestic subsidiaries maintain their records and prepare their financial statements in accordance with account-
ing principles generally accepted in Japan, and its foreign subsidiaries in conformity with those of the countries of their domicile.
Certain adjustments and reclassifications have been incorporated in the accompanying consolidated financial statements to con-
form with accounting principles generally accepted in the United States of America. These adjustments were not recorded in the
statutory books.
BASIS OF CONSOLIDATION AND INVESTMENTS IN AFFILIATED COMPANIES –
The consolidated financial statements include the accounts of the company and those of its subsidiaries. All significant intercompany
transactions and accounts are eliminated in consolidation.
Investments in affiliated companies (20 to 50 percent-owned companies) in which the ability to exercise significant influence exists
are stated at cost plus equity in undistributed earnings (losses). Net consolidated income (loss) includes the company’s equity in the
current net earnings (losses) of such companies, after elimination of unrealized intercompany profits.
Goodwill recognized at the time of investments in subsidiaries and affiliated companies is amortized on a straight-line basis over the
estimated period of benefit.
USE OF ESTIMATES –
The preparation of the consolidated financial statements in conformity with accounting principles generally accepted in the United
States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities
and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of
revenues and expenses during the reporting period. Actual results could differ from those estimates.
CONSOLIDATED STATEMENT OF CASH FLOWS –
For purposes of the statement of cash flows, the company considers all highly liquid investments purchased with original maturities of
three months or less to be cash equivalents.
FOREIGN CURRENCY TRANSLATION –
The assets and liabilities of foreign subsidiaries that operate in a local currency environment are translated into Japanese yen at
applicable current exchange rates at year end. Income and expense items are translated at average exchange rates prevailing during
the year. The effects of these translation adjustments are included in the other comprehensive income (loss) and reported as a com-
ponent of shareholders’ equity. Exchange gains and losses resulting from foreign currency transactions and translation of assets and
liabilities denominated in foreign currencies are included in the consolidated statements of income.
REVENUE RECOGNITION –
Sales of finished products, other than under long-term contracts, are recorded in the accounts as shipments are made, except for
sales of certain products which are recorded in the accounts upon customer acceptance.
Sales under long-term contracts are generally recorded in the accounts based upon progress toward completion of the contracts as
measured by achievement of contract milestones.
MARKETABLE SECURITIES AND OTHER INVESTMENTS –
Marketable equity securities included in marketable securities (current) and other investments (non-current) are stated at the lower of
cost or market in the aggregate. Other marketable securities included in marketable securities (current) are stated at the lower of cost
or market in the aggregate and investments other than marketable equity securities in other investments (non-current) are stated at
cost less any significant decline in fair value assessed to be other than temporary.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Toshiba Corporation and its subsidiaries