Toshiba 2002 Annual Report Download - page 56

pledged as collateral for the Company’s guarantees.
Guarantees of unconsolidated affiliates and third party debt
The Company guarantees debt as well as certain financial obligations of unconsolidated affiliates and third parties
to support the sale of the Company’s products and services. Expiration dates vary from 2003 to 2014 or terminate
on payment and/or cancellation of the obligation. A payment by the Company would be triggered by the failure of
the guaranteed party to fulfill its obligation under the guarantee. The maximum potential payment under these guar-
antees, including the amount provided in Note 20, was ¥127,845 million ($1,065,375 thousand) as of March 31, 2003.
Guarantees of employees’ housing loans
The Company guarantees housing loans of its employees. The term of the guarantees is equal to the term of the
related loans which range from 5 years to 30 years. A payment would be triggered by failure of the guaranteed party
to fulfill its obligation covered by the guarantee. The maximum potential payments under these guarantees
were ¥40,289 million ($335,742 thousand) as of March 31, 2003. However, the Company expects that the
majority of such payments would be reimbursed through the Company’s insurance policy.
Guarantees of transferred corporate bonds
The Company entered into a sale and assumption agreement with an SPE during 2001. As a result, the Company was
released from being a primary obligor for ¥20,178 million of the Company’s corporate bonds, which mature on var-
ious dates through 2008, and became secondarily liable for these obligations. The maximum potential payment by
the Company as a secondary obligor was ¥14,529 million ($121,075 thousand) at March 31, 2003.
Residual value guarantees under sale and leaseback transactions
As discussed in Note 20, the Company may be required to make payments for residual value guarantees in con-
nection with certain sale and leaseback transactions. The operating leases will expire on various dates through
September 2007. The maximum potential payments by the Company for such residual value guarantees,
including the amount provided in Note 20, were ¥31,224 million ($260,200 thousand) at March 31, 2003.
Guarantees of defaulted notes receivable
The Company has transferred trade accounts receivable, trade notes receivable and finance receivables under sev-
eral securitization programs. Upon certain sales of trade notes receivable, the Company holds a repurchase oblig-
ation, which the Company is required to perform upon default of the trade notes receivable. The trade notes
receivable generally mature within three months. The maximum potential payment for such repurchase obligation
was ¥12,165 million ($101,375 thousand) as of March 31, 2003.
The carrying amounts of the liabilities for the Company’s obligations under the guarantees described above at March
31, 2003 were not significant.
Warranty
Estimated warranty costs are accrued for at the time the product is sold to a customer. Estimates for warranty costs
are made based primarily on historical warranty claim experience. The following is a reconciliation of the product
warranty accrual: Thousands of
Millions of yen U.S. dollars
March 31 2003 2002 2003
Balance at beginning of year ¥20,886 ¥20,945 $174,050
Warranties issued 19,775 19,120 164,792
Settlements made (20,542) (20,429) (171,183)
Foreign currency translation (628) 1,250 (5,234)
Balance at end of year ¥19,491 ¥20,886 $162,425
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 for 60 percent and 40 percent interests, respectively, in
TMD. The carrying value of the assets and liabilities acquired, net of cash received of ¥2,001 million ($16,675 thou-
sand), was ¥70,666 million ($588,883 thousand), and ¥59,953 million ($499,608 thousand), respectively.
During the year ended March 31, 2003, Toshiba Corporation contributed certain assets and liabilities aggregating
¥55,009 million ($458,408 thousand), and ¥30,568 million ($254,733 thousand), respectively, and formed TM T&D
with Mitsubishi Electric Corporation. As a result of this transaction, Toshiba Corporation obtained a 50 percent inter-
est in TM T&D.
On January 1, 2003, Toshiba Corporation and Matsushita formed MTPD. In connection therewith, Toshiba
Corporation contributed substantially all assets and liabilities of four of its subsidiaries, in exchange for 35.5 per-
cent interest in MTPD, and recognized a gain of approximately ¥6,269 million ($52,242 thousand). The aggregate
book carrying value of the assets and liabilities contributed by Toshiba Corporation amounted to ¥50,622 million
($421,850 thousand) and ¥31,462 million ($262,183 thousand), respectively. The gain of ¥6,269 million ($52,242 thou-
sand), representing the difference between the fair value of the investment obtained in MTPD, and the net book value
of the assets and liabilities contributed, adjusted for Toshiba Corporation’s interest in MTPD, is included in
other income in the accompanying consolidated statement of operations for the year ended March 31, 2003.
During the year ended March 2003, certain operating assets and liabilities were sold to unaffiliated parties in
exchange for marketable securities. In connection with such activity, Toshiba Corporation obtained marketable equity
securities of ¥12,911 million ($107,592 thousand), in return for net assets and liabilities aggregating ¥17,152 mil-
lion ($142,933 thousand), and recorded a loss on disposal of assets of ¥4,241 million ($35,342 thousand).
54 TOSHIBA CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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SUPPLEMENTAL
CASH FLOW
INFORMATION
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