Toshiba 2003 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
    ...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, including ways to improve the global...

  • 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
    ... 300 millimeter wafer lines at the center of Toshiba's production of memory devices and system LSIs. In a move made to enhance the brand value of our digital products businesses, Toshiba acquired Amuse Pictures, Inc., one of Japan's leading independent film producers and distributors. As we worked...

  • 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
    ... 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 are growing increasingly diverse...

  • Page 8
    ... years of operations, Toshiba and Toshiba Group have won a vast number of customers, built up an abundance of technological know-how and assets, and developed a brand name that has become a byword for high quality and trustworthy products. That is our heritage, and the base from which we will work...

  • Page 9
    GROWTH POLICIES THAT 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 ...

  • Page 10
    ...fiscal 2001, the Plan has fostered vigorous reforms in Toshiba's business structure, achieved significant reductions in procurement and fixed costs, and supported an "asset-light" strategy that has trimmed property and other assets. Major Business Domains products and electronic devices domains are...

  • Page 11
    .... TM1: 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...

  • Page 12
    ...our system of corporate governance, we will seek continued enhancement of the value of the company. Building on Accomplishments Increasing Management Agility by Separating Business Supervision and Execution Since improving corporate governance requires higher levels of operating openness and timely...

  • Page 13
    ... timely updates on forecasts and business conditions. 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...

  • 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
    ... four businesses 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...

  • Page 16
    ... business, not least the fusion of movie recording and transmission with the 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...

  • Page 17
    ... 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 and other visual equipment, and new generations of personal mobile devices. In...

  • Page 18
    ... memory that supports rapid advances in memory cards and electronic equipment such as digital still cameras and mobile telephones. By nurturing the growth field of SoC, we look to acquire business from the leading companies we target in each business field. Our business strategy is centered on the...

  • Page 19
    A VIEW TO THE FUTURE TOSHIBA CORPORATION 17 timedia products and technologies. Mobile phones with cameras, digital still cameras and replacement HDDs are expected to continue to be in high demand. Toshiba's basic strategy is to build on its technological strengths and to lead the way in mass-...

  • Page 20
    ... new company gives Toshiba a costefficient production 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...

  • Page 21
    ... one time. port 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...

  • Page 22
    ... that works alongside a system for monitoring and handling changes in the dynamic content of Web pages, such as those for receiving orders or delivering estimates. Previously, the cache function could save and provide high-speed delivery only of those parts of a Web site that were static. Toshiba...

  • Page 23
    ...along with support for NTT DoCoMo's i-mode mobile phone standard that allows remote supervision and operation of ApriAlpha. ApriAlpha can also control certain networked home appliances via a Bluetoothâ„¢ compliant home server. Movement-related capabilities include the ability to input data of a room...

  • Page 24
    ...the Third Voluntary Environmental Plan one year ahead of schedule. Creation and Promotion of Environmentally Conscious Products In the production phase of product life cycles, Toshiba aims to minimize environmental impacts and the use of resources and energy. Efforts here include working to achieve...

  • 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
    ...-use digital products and overseas sales particularly in Asia, electronic device sales centering on semiconductors and overseas PC sales recorded strong growth. On the other hand, sales of industrial-use equipment declined due to weak public works investment as well as private capital expenditures...

  • Page 30
    ...of system business in 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...

  • Page 31
    ... 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, mobile phones and amusement applications remained...

  • 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
    MANAGEMENT'S DISCUSSION AND ANALYSIS TOSHIBA 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...204,500 (...

  • 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
    ... Malaysia Sdn. Bhd. Singapore AFPD Pte., Ltd. TEC Singapore Electronics Pte., Ltd. Toshiba Electronics Asia (Singapore) Pte., Ltd. 100 100 100 100 100 100 100 100 100 100 70 100 100 80 88 100 60 56 51 Affiliated Companies: Japan Flash Vision MT Picture Display Co., Ltd. TM T&D Corporation Toshiba...

  • 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
    ... for pension and severance costs, less payments Deferred income tax benefit Equity in income of affiliates Loss from sales, disposal and impairment of property and securities, net Minority interest in loss of consolidated subsidiaries (Increase) decrease in notes and accounts receivable, trade...

  • 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
    ... remaining service period of employees expected to receive benefits. Additional Paid-in Capital Under the Japanese Commercial Code, the entire amount of the issue price of shares is required to be accounted for in the common stock account although a company in Japan may, by a resolution of its board...

  • Page 43
    ... 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 costs which totaled...

  • 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
    ... receivables for the years ended March 31, 2003 and 2002, respectively. Subsequent to sale, the Company retains collection and administrative responsibilities for the receivables. Servicing fees received by the Company approximated the prevailing market rate. Related servicing assets or liabilities...

  • Page 46
    ...- ¥4,256 Thousands of U.S. dollars Total principal amount of receivables Amount 90 days or more past due Net credit losses Year ended March 31, 2003 March 31, 2003 Accounts receivables Note receivables Lease receivables Other finance receivables Total managed portfolio Securitized receivables...

  • Page 47
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS TOSHIBA CORPORATION 45 A summary of transactions and balances with the affiliates accounted for by the equity method is presented below: Millions of yen Thousands of U.S. dollars Year ended March 31 2003 2002 2003 Sales Purchases ¥79,274 ¥73,455 ...

  • 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
    ...year Actual return on plan assets Employer contribution Plan participants' contributions Benefits paid Divestitures Foreign currency exchange impact Fair value of plan assets at end of year Funded status Unrecognized actuarial loss Unrecognized net obligation at transition Unrecognized prior service...

  • Page 50
    ... tax authorities to file a tax return for the consolidated group starting from the year ending March 2004. As a result of the change in the corporate enterprise tax rate and commencement of the consolidated tax return filing, the Company's normal statutory tax rate will change from 42.1 percent to...

  • Page 51
    ... the income (loss) before income taxes, minority 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...

  • 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
    ... are comprised principally of forward exchange contracts, interest rate swap agreements, currency swap agreements, and currency options to reduce its exposures. The Company has policies and procedures for risk management and the approval, reporting and monitoring of derivative financial instruments...

  • Page 54
    ... which fair values approximate their carrying values and those related to leasing activities. In assessing the fair value of these financial instruments, the Company has used a variety of methods and assumptions, which were based on estimates of market conditions and risks existing at that time. For...

  • Page 55
    ...,625 22,233 $548,792 Lessor The Company is also a lessor to industrial equipment and information systems under operating leases. Future minimum lease payments to be received as of March 31, 2003 are as follows: Year ending March 31 Millions of yen Thousands of U.S. dollars 2004 2005 2006 2007 2008...

  • Page 56
    ... translation Balance at end of year ¥20,886 19,775 (20,542) (628) ¥19,491 ¥20,945 19,120 (20,429) 1,250 ¥20,886 $174,050 164,792 (171,183) (5,234) $162,425 23. SUPPLEMENTAL CASH FLOW INFORMATION In April 2002, Toshiba Corporation formed Toshiba Matsushita Display Technology Co., Ltd. ("TMD...

  • Page 57
    ...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 then ended, all expressed in Japanese yen. These financial statements are the responsibility of the Company's management. Our...

  • Page 58
    ... Center • Hino Operations · Mobile Communications • Personal Computer Div. · International Operations • Thermal Power & Hydroelectric Power · Systems & Services Div. • Server & Network Div. • Storage Device Div. • CTV & Visual Media Equipment Div. • Digital Camera & Imaging...

  • Page 59
    ... 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 Center Social Network & Infrastructure Systems Company...

  • Page 60
    ... Medical Systems Moscow, CIS Toshiba America Information Systems, Inc. Irvine, California, U.S.A. TTI Card Technology Europe Ltd. Northamptonshire, U.K. LLC Toshiba Digital Media Network CIS Moscow, Russia Toshiba America Business Solutions, Inc. Irvine, California, U.S.A Toshiba International...

  • Page 61
    ... of Korea Toshiba Electronics Trading (Malaysia) Sdn. Bhd. Kuala Lumpur, Malaysia Guangzhou Toshiba Baiyun Electrical Equipment Co., Ltd. Guangzhou, The People's Republic of China Toshiba Digital Media Network Korea Corp. Seoul, The Republic of Korea Toshiba Capital (Asia) Ltd. Singapore Korea...

  • Page 62
    ... America, Inc. Toshiba Asia Pacific Pte., Ltd. Toshiba Capital (Asia) Ltd. Toshiba Compressor (Taiwan) Corporation Toshiba Consumer Products (Thailand) Co., Ltd. Toshiba Dalian Co., Ltd. Toshiba Electronics Asia, Ltd. Toshiba Electronics Malaysia Sdn. Bhd. Toshiba Europe Gmbh Toshiba Information...

  • Page 63
    ... 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/ir/index.htm Product names...

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