Toshiba 2003 Annual Report Download - page 55

53
TOSHIBA CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
non-public companies. The aggregate carrying amount of these investments in non-public companies was
¥97,271 million ($810,592 thousand) and ¥94,427 million at March 31, 2003 and 2002, respectively. However, the cor-
responding fair value of these investments at those dates was not computed as such estimation was not practicable.
Lessee
The Company leases manufacturing equipment, office and warehouse space, and certain other assets under oper-
ating leases. Rent expenses under such leases for the years ended March 31, 2003 and 2002 were ¥76,180 mil-
lion ($634,833 thousand) and ¥84,781 million, respectively.
The Company sold certain machinery and equipment for approximately ¥82,732 million ($689,433 thousand) and
¥25,000 million during the years ended March 31, 2003 and 2002, respectively. These assets were leased back from
the purchaser over periods of less than 5 years under operating lease agreements. The gain or loss on these trans-
actions was not significant.
Minimum lease payments for the Company’s non-cancelable operating leases as of March 31, 2003 are as follows:
Thousands of
Year ending March 31 Millions of yen U.S. dollars
2004 ¥17,798 $148,317
2005 15,694 130,783
2006 12,980 108,167
2007 11,240 93,667
2008 5,475 45,625
Thereafter 2,668 22,233
¥65,855 $548,792
Lessor
The Company is also a lessor to industrial equipment and information systems under operating leases. Future min-
imum lease payments to be received as of March 31, 2003 are as follows:
Thousands of
Year ending March 31 Millions of yen U.S. dollars
2004 ¥ 5,088 $ 42,400
2005 4,841 40,342
2006 3,480 29,000
2007 2,876 23,967
2008 2,041 17,008
Thereafter 3,832 31,933
¥22,158 $184,650
The Company has entered into several sale and leaseback transactions with SPEs in which certain manufacturing
equipment was sold and leased back. The transactions were funded through SPEs. The fair value of the equipment
and the outstanding balance of debt of these SPEs in connection with such transactions at March 31, 2003 were
¥68,716 million ($572,633 thousand) and ¥64,370 million ($536,417 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 incep-
tion of the lease, or can terminate the agreement by paying the residual value guarantee. In addition, for a certain
transaction, the Company provided a guarantee to the lender of the SPE for principal and interest payments of por-
tion of debt incurred by the SPE for the purchase of the equipment. The Company’s maximum exposure to loss
with respect to its involvement in these VIEs as of March 31, 2003 was ¥48,269 million ($402,242 thousand), which
is the sum of the outstanding balance of debt guaranteed by the Company in the amount of ¥29,142 million
($242,850 thousand) and the residual value guarantee by the Company in the amount of ¥19,127 million
($159,392 thousand).
Commitments outstanding at March 31, 2003 for the purchase of property, plant and equipment approximated
¥9,065 million ($75,542 thousand).
At March 31, 2003, contingent liabilities, other than guarantees disclosed in Note 22, approximated ¥11,957 mil-
lion ($99,642 thousand) principally for recourse obligations related to notes receivable transferred.
The Company is a defendant in several pending lawsuits with respect to patent infringement, breaches of contract
and warranties and others. The Company’s management believes that there are meritorious defenses to all of these
actions. Based on the information currently available to both the Company and its legal counsel, management
believes that damages from such lawsuits, if any, would not have a material adverse effect on the financial posi-
tion or the results of operations of the Company.
Guarantees of financing arrangements
Certain financing subsidiaries of the Company provide guarantees for installment loans and credit financing
agreements entered into by its customers for product purchases from third parties. The aggregate amount
guaranteed by the Company is ¥349,088 million ($2,909,067 thousand) as of March 31, 2003. The terms of the guar-
antees range from less than 1 year to 8 years. The guarantee fee income, which is recognized over the guarantee
period, was ¥2,862 million ($23,850 thousand) for the year ended March 31, 2003. The products purchased are
19.
LEASES
20.
CONSOLIDATION
OF VIEs
21.
COMMITMENTS
AND
CONTINGENT
LIABILITIES
22.
GUARANTEES
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