Toshiba 2002 Annual Report Download

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Year ended March 31, 2003
ANNUAL REPORT 2003
Communication Comes Alive
Anytime
For Anyone
Anywhere

Table of contents

  • Page 1
    For Anyone Anytime Anywhere Communication Comes Alive ANNUAL REPORT 2003 Year ended March 31, 2003

  • Page 2
    ... corporate citizens, we actively contribute to further the goals of society. Commitment to the Future 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...

  • Page 3
    ... A Confident Step toward Earnings Recovery Growth Policies that Make Toshiba a Winner P7-9 P10-11 P12-13 Becoming a Highly Profitable Group with Growth Potential and Earnings Stability Corporate Governance At a Glance Leveraging Optimal Business Models to Accelerate Growth under Competitive...

  • Page 4
    ... sales-Japan -Overseas Net sales Operating income (loss) Income (loss) before income taxes and minority interest Net income (loss) Total assets Shareholders' equity Capital expenditures (property, plant and equipment) Research and development expenditures Return on equity (ROE) (%) Return on total...

  • Page 5
    ...we targeted. The Plan has supported us in raising management efficiency across the Group, promoting asset-light management and developing a clear focus on selected businesses. Achievements of the 01 Action Plan include a 20% reduction in procurement Mid-term Business Plan This year marks the launch...

  • Page 6
    ... economy through digital broadcasting systems and services and content, including digital images and music. In fiscal 2005, the final year of the current mid-term business plan, Toshiba anticipates dynamic Group operations and a strong profit structure. The Company targets consolidated sales of...

  • Page 7
    ... management direction for the overall Group, while supporting individual businesses facing different circumstances and different requirements. A comprehensive review of our operations has made it clear that the time constraints, business cycles and particular demands that our in-house companies face...

  • Page 8
    ... efforts, we will open a new chapter in Toshiba's history, and assure a dynamic Toshiba Group that contributes to society. We will continue to adhere to our slogan, "Innovation-driven, Customer-focused Growth," and to build a highly profitable group of companies that is active in both highgrowth and...

  • Page 9
    ... MAKE TOSHIBA A WINNER TOSHIBA CORPORATION 7 Aiming to be a Highly Profitable Corporate Group that Offers Stability and Growth Potential Vision and Direction Major Business Domains Goals for Fiscal 2005 Policies toward Growth TM1: Compressed Lead Times For Anyone Anytime Anywhere Communication...

  • Page 10
    ...and take our place among other high-profit companies. Vision and Direction Low growth around the world has gradually given way to the current state of global stagnation. Seeking opportunity in adversity, Toshiba has used its 01 Action Plan to promote concerted efforts to boost profitability and to...

  • Page 11
    ...Compressed Lead Times The direction technology will take in coming years is strongly in Toshiba's favor. Industry-leading know-how in the digital, mobile and network areas will sustain us in developing innovative technologies, as growth engines for products that will drive the creation of promising...

  • Page 12
    ... on management, as a vehicle for monitoring Toshiba's activities for compliance with legal and regulatory requirements. The Company with Committees system is positioned to transfer a wide range of authority from directors to executive officers, which will accelerate the speed of management decision...

  • Page 13
    .... And since we also consider the exchange of information to be a mutual process, stakeholder views, opinions and suggestions are routinely reported to Toshiba's management. In other words, we place central importance on increasing shareholder value through positive investor relations activities.

  • Page 14
    ... In-House Companies, Affiliated Companies and Corporate Divisions that Comprise Business Groups Percentage of Net Sales (FY 2002) Digital Products Mobile Com m unications Com pany Digital Media Netw ork Com pany Toshiba TEC Corporation NET SALES 3,000 2,500 2,000 1,500 (Â¥ Billion) OPERATING...

  • Page 15
    ... and affiliates: Home Appliances (White Goods) New Company, Toshiba Lighting & Technology Corporation, Toshiba Carrier Corporation and Toshiba Battery Co., Ltd. (Â¥ billion) Net Sales Operating Income (Loss) The Network Services & Contents Control Center unifies management of the network...

  • Page 16
    ... AVC5 technologies of audio, visual, computer, communications, camera, card and content. This ability supports our continuous delivery of high value-added multimedia mobile phones to key regional markets. We are confident that the know-how we have cultivated and the strategies we are promoting will...

  • Page 17
    ...the home, the office and the public environment. The breadth of our capabilities covers computing, visual imaging, data storage, wireless and security technologies, and finds form in market-defining products, a long list that includes portable PCs, computer network equipment, HDD and ODD drives, TVs...

  • Page 18
    ... demand in fields as diverse as audio-visual products communications, and automotive products; and NAND flash memory, the versatile non-volatile memory that supports rapid advances in memory cards and electronic equipment such as digital still cameras and mobile telephones. By nurturing the growth...

  • Page 19
    .... Discretes Toshiba is determined to focus on two areas: digital consumer and mobile. Advanced SoC now accounts for a little over 25% of Toshiba's system LSI business. Our goal for 2005 is to take that to beyond 30%. We are working to fortify new product proposals and constantly searching for new...

  • Page 20
    ... base that will support early delivery of products that meet the needs of customers in China. Manufacturing Portable PCs for the Global Market Toshiba Information Equipment (Hangzhou) Co., Ltd. became the first company to start operations at the new Hangzhou site. Toshiba was developing to...

  • Page 21
    ... services. PCs produced at the facility will contribute to Toshiba global logistics and cost competitiveness, and support the Company in securing leadership in China's fast growing PC market. Toshiba Mobile Phones Bring Movie Mail to China Over 200 million subscribers make China the world's number...

  • Page 22
    ...method boosts response speeds and cuts communication costs by reducing transmitted data volumes by as much as 90% and increasing transfer rates by up to 60%. The heart of this new technology is a powerful cache function that works alongside a system for monitoring and handling changes in the dynamic...

  • Page 23
    ...'s pioneering work in Systems on Glass, namely the ability to form the components of LTPS displays directly on their glass substrate. Image capture is accomplished by placing the image, a document or a photograph, for example, face-down on the display. The input display differs from a camera in that...

  • Page 24
    ... in Electronic Devices & Components, which includes semiconductors and LCDs, increased 12% compared with fiscal 1990, but CO2 releases to net sales improved 13% against the benchmark. The Company achieved a 26-54% reduction in Information & Communications Systems, Power Systems and Home Appliances...

  • Page 25
    ... management systems to as many people as possible through open communication both within and outside the Company. To this end, the Company publishes an Environmental Report and discloses related information on its Web site. For more information on Toshiba Group environmental protection activities...

  • Page 26
    24 TOSHIBA CORPORATION BOARD OF DIRECTORS AND EXECUTIVE OFFICERS Board of Directors and Executive Officers Taizo Nishimuro Director Chairman of the Board Tadashi Okamura Director Yasuo Morimoto Director Takeshi Iida Director Makoto Nakagawa Director Yuji Kiyokawa Director Atsutoshi Nishida...

  • Page 27
    BOARD OF DIRECTORS AND EXECUTIVE OFFICERS TOSHIBA CORPORATION 25 Takeshi Nakagawa Director Sadazumi Ryu Director Akinobu Kasami Director Susumu Terao Director Sakutaro Tanino Director Yasuhiko Torii Director Eiichi Kakei Director Shunsaku Hashimoto Director Executive Officers, Corporate ...

  • Page 28
    26 TOSHIBA CORPORATION FINANCIAL SECTION Financial Section P27 P34 P36 P37 P38 P39 P55 Management's Discussion and Analysis Consolidated Balance Sheets Consolidated Statements of Operations Consolidated Statements of Shareholders' Equity Consolidated Statements of Cash Flows Notes to ...

  • Page 29
    ... equipment. In Home Appliances, sales were undermined by price erosion and weak consumer demand. Otherwise, however, sales climbed for visual products and mobile phones for digital media, semiconductors for digital consumer products, and NAND flash memories in the Electronic Devices & Components...

  • Page 30
    ...both the public and private sectors. Transportation business sales received a boost despite this climate of restraint, mainly from increased sales of electrical equipment and substation facilities for new lines and bullet trains for JR (Japan Railways) group companies. Sales to private railways also...

  • Page 31
    ... AV equipment applications weakened. In the first half of the fiscal year, system LSI sales were driven by logic devices for digital consumer products, LCD drivers for mobile phones and PCs, and bipolar ICs for audio and other applications. In the second half, sales of custom LSIs for SD Cards, DVCs...

  • Page 32
    30 TOSHIBA CORPORATION MANAGEMENT'S DISCUSSION AND ANALYSIS Millions of yen Thousands of U.S. dollars Year ended March 31 2003 2002 2001 2003 Operating income (loss): Information & Communications Systems Social Infrastructure Systems Power Systems Digital Media Home Appliances Electronic ...

  • Page 33
    ...CORPORATION 31 GEOGRAPHIC SEGMENTS Millions of yen Thousands of U.S. dollars Year ended March 31 2003 2002 2001 2003 Net sales: Japan Unaffiliated customers Intersegment Total North America Unaffiliated customers Intersegment Total Asia Unaffiliated customers Intersegment Total Europe...,500 ...

  • Page 34
    ...nuclear reactor inspection technology and electrical power plant distributed control systems. In Digital Media, R&D expenditures were ¥65.7 billion (US$548 million), chiefly for the development of wireless home media stations and small-form-factor direct-methanol fuel cells (DMFCs) for portable PCs...

  • Page 35
    ...and Building Systems Corporation Toshiba Information Systems (Japan) Corporation Toshiba Logistics Corporation Toshiba Matsushita Display Technology Co., Ltd. Toshiba Plant Kensetsu Co., Ltd. Toshiba TEC Corporation U.S.A. Toshiba America Consumer Products, Inc. Toshiba America Electronic Components...

  • Page 36
    ...BALANCE SHEETS CONSOLIDATED BALANCE SHEETS Toshiba Corporation and its subsidiaries As of March 31, 2003 and 2002 Millions of yen Thousands of U.S. dollars (Note 3) Assets Current assets: Cash and cash equivalents Notes and accounts receivable, trade- Notes (Note 5) Accounts (Note 5) Allowance for...

  • Page 37
    ... BALANCE SHEETS TOSHIBA CORPORATION 35 Millions of yen Thousands of U.S. dollars (Note 3) Liabilities and shareholders' equity Current liabilities: Short-term borrowings (Note 9) Current portion of long-term debt (Note 9) Notes payable, trade Accounts payable, trade Accounts payable, other...

  • Page 38
    36 TOSHIBA CORPORATION CONSOLIDATED STATEMENTS OF OPERATIONS CONSOLIDATED STATEMENTS OF OPERATIONS Toshiba Corporation and its subsidiaries For the years ended March 31, 2003 and 2002 Millions of yen Thousands of U.S. dollars (Note 3) 2003 2002 2003 Sales and other income: Net sales Interest ...

  • Page 39
    ...37 CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY Toshiba Corporation and its subsidiaries For the years ended March 31, 2003 and 2002 Additional paid-in capital Millions of yen Accumulated other comprehensive loss Common stock Retained earnings Treasury stock Total Balance at March 31, 2001...

  • Page 40
    ... in long-term finance receivables, net Increase (decrease) in notes and accounts payable, trade Increase (decrease) in accrued income and other taxes Decrease in advance payments received (Decrease) increase in accounts payable and other liabilities Net cash provided by operating activities Cash...

  • Page 41
    ...technology electronic and energy products, which span (1) information & communications systems, (2) social infrastructure systems, (3) power systems, (4) digital media, (5) home appliances, (6) electronic devices & components, and (7) others. For the year ended March 31, 2003, sales of digital media...

  • Page 42
    ... for property, plant and equipment is computed generally by the declining-balance method at rates based on the following estimated useful lives of the assets: buildings, 3 to 50 years; machinery and equipment, 2 to 20 years. Software is depreciated mainly using the straight-line method over the...

  • Page 43
    ... periodic rate of return on the net investment in the lease. Leases not qualifying as sales-type lease or direct financing lease are accounted for as operating leases and related revenues are recognized over the lease term. Shipping and Handling Costs The Company includes shipping and handling...

  • Page 44
    ... related to otherthan-temporary declines in the marketable and non-marketable equity securities for the years ended March 31, 2003 and 2002 respectively. Investment in financing leases consists of sales-type and direct financing leases mainly for information systems, medical equipment, industrial...

  • Page 45
    ... $1,870,217 The Company has transferred trade accounts receivable, trade notes receivable and finance receivables under several securitization programs. These securitization transactions are accounted for as a sale in accordance with SFAS No. 140, because the Company has relinquished control of the...

  • Page 46
    ... Display Co., Ltd. ("MTPD") (35.5%); Topcon Corporation (41.9%); Toshiba Ceramics Co., Ltd. (41.4%); Toshiba Machine Co., Ltd. (47.7%); and Toshiba Tungaloy Co., Ltd. (38.3%). Of the affiliates which are accounted for by the equity method, the investment in common stock of the listed companies...

  • Page 47
    ...), of which ¥21,035 million ($175,292 thousand) was in support of the Company's commercial paper. The lines of credit expire on various dates from July 2003 through April 2004. Under the agreements, the Company is required to pay commitment fees raging from 0.1 percent to 0.2 percent on the unused...

  • Page 48
    .... Toshiba Corporation and certain subsidiaries in Japan have Employees' Pension Fund Plans ("EPFs"), which are contributory defined benefit pension plans under the Japanese Welfare Pension Insurance Law ("JWPIL"). These plans are composed of a substitutional portion which is the obligation related...

  • Page 49
    ...(296,217) 100,209 (49,767) 243,200 $925,258 A weighted-average discount rate of 3.0 percent and 3.5 percent, an expected long-term rate of return on plan assets of 4.0 percent and 4.0 percent, and an assumed rate of increase in salary levels of 1.9 percent and 2.1 percent were used in measuring the...

  • Page 50
    ... land, buildings and DRAM production equipment. In connection with the sale, certain NAND flash manufacturing equipment was transferred to a Company facility in Japan. Furthermore, the Company determined to liquidate a wholly-owned subsidiary, which had been engaged mainly in the assembly of DRAMs...

  • Page 51
    ... interest and equity in earnings of affiliates by the applicable statutory tax rate is as follows: Thousands of Millions of yen U.S. dollars Year ended March 31 2003 2002 2003 Expected income tax expense (benefit) Increase in taxes resulting from: Non-deductible expenses for tax purposes...

  • Page 52
    ... earnings available for dividends is based on Toshiba Corporation's retained earnings determined in accordance with generally accepted accounting principles in Japan and the Japanese Commercial Code. Retained earnings at March 31, 2003 do not reflect year-end dividends of ¥9,656 million ($80,467...

  • Page 53
    ... or commitments on future trade transactions and the interest rate characteristics of the underlying debt as discussed below. Fair Value Hedge Strategy The forward exchange contracts utilized by the Company effectively reduce fluctuation in fair value of accounts receivable denominated in foreign...

  • Page 54
    52 TOSHIBA CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS The interest rate swap agreements utilized by the Company effectively convert a portion of its floating-rate debt to a fixed-rate basis for the next 10 years. The Company expects to reclassify ¥744 million ($6,200 thousand) of net...

  • Page 55
    ...,417 thousand), respectively. At the end of the lease term, the Company can either purchase the equipment for the estimated fair market value determined at the inception of the lease, or can terminate the agreement by paying the residual value guarantee. In addition, for a certain transaction, the...

  • Page 56
    ... INFORMATION In April 2002, Toshiba Corporation formed Toshiba Matsushita Display Technology Co., Ltd. ("TMD") with Matsushita Electric Industrial Co., Ltd. ("Matsushita"). In connection with this transaction, Toshiba Corporation and Matsushita contributed certain operating facilities, in return...

  • Page 57
    ... The Board of Directors and Shareholders Toshiba Corporation We have audited the accompanying consolidated balance sheets of Toshiba Corporation (the "Company") as of March 31, 2003 and 2002, and the related consolidated statements of operations, shareholders' equity and cash flows for the years...

  • Page 58
    ... Management Div. • Corporate Communications Div. • Human Resources and Administration Div. • Finance & Accounting Div. • Technology Planning Div. (Digital Products Group) (Electronic Devices & Components Group) (Infrastructure Systems Group) Mobile Communications Company • Mobile...

  • Page 59
    ... Center • Software Engineering Center • Environmental Protection Planning Div. • Information Systems Center • Corporate Marketing Planning Group • Design Center • Employee Affairs Service Center • Procurement Center (Consumer Electronics Group) Consumer Electronics Marketing Control...

  • Page 60
    ...Toshiba Electronics Europe GmbH LATIN AMERICA Toshiba de Mexico, S.A. de C.V. Mexico City, Mexico Düsseldorf, Germany Toshiba Medical Systems GmbH Neuss, Germany Toshiba Electromex, S.A. de C.V. Ciudad Juárez, Mexico Toshiba Systèmes (France) S.A. Puteaux, France GE Toshiba Turbine Components...

  • Page 61
    ...of China Taiwan Toshiba International Procurement Corp. Taipei, Taiwan Toshiba Data Dynamics Pte., Ltd. Singapore Shengyang Neusoft Business Software Co., Ltd. Shengyang, The People's Republic of China Toshiba Video Products Pte., Ltd. Singapore Toshiba Information, Industrial and Power Systems...

  • Page 62
    ... GE Toshiba Automation Systems, L.L.C. Taiwan Toshiba International Procurement Corp. TGA Holdings L.L.C. Toshiba (China) Co., Ltd. Toshiba America Business Solutions, Inc. Toshiba America Capital Corporation Toshiba America Consumer Products, Inc. Toshiba America Electronic Components, Inc. Toshiba...

  • Page 63
    ... 105-8001, Japan For further information, please contact: Toshiba Corporation Investor Relations Group Corporate Communications Office 1-1, Shibaura 1-chome, Minato-ku, Tokyo 105-8001, Japan Phone: +81-3-3457-2096 Facsimile: +81-3-5444-9202 E-mail: [email protected] http://www.toshiba.co.jp/about...

  • Page 64
    Printed in Japan This report was printed entirely on recycled paper with soy-based ink.