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38 Toshiba Corporation 130th Anniversary
The carrying amounts of the liabilities for the Company’s obligations under the guarantees described above at March
31, 2005 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 2005 2004 2005
Balance at beginning of year ¥ 19,938 ¥ 19,491 $ 186,336
Warranties issued 31,568 23,590 295,028
Settlements made (27,211) (21,948) (254,308)
Foreign currency translation adjustments 780 (1,195) 7,290
Balance at end of year ¥ 25,075 ¥ 19,938 $ 234,346
25. LEGAL PROCEEDINGS
In November 2002, a lawsuit was filed by Lexar Media, Inc. against Toshiba Corporation and one of its subsidiaries,
Toshiba America Electronic Components, Inc. at the California Superior Court in San Jose, United States, which accused
the Company of misappropriation and misconduct of trade secret related to NAND flash memory. In connection with
this case, in March 2005, a jury preliminarily found Toshiba Corporation and the subsidiary liable for approximately
¥50,000 million ($465 million).
In addition, the Company is a defendant in other pending lawsuits alleging patent infringement, breaches of contract
and warranties and other matters.
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 position or the results of operations of the Company.
26. ENVIRONMENTAL LIABILITIES
The environmental regulation, “Law Concerning Special Measure against poly chlorinated biphenyl (PCB) waste”
requires PCB waste holders dispose of all PCB waste by July 2016. The Company accrued ¥10,156 million ($94,916
thousand) at March 31, 2005, for environmental remediation and restoration costs for products or equipment with PCB
which some Toshiba operations in Japan have retained. These costs are included as cost of sales in the accompanying
consolidated statements of income.
The accrual will be adjusted as assessment and remediation efforts progress or as additional technical or legal information
available. Management is of opinion that the ultimate costs in excess of the amount accrued, if any, would not have a
material adverse effect on the financial position or the results of operations of the Company.
27. SUPPLEMENTAL CASH FLOW INFORMATION
During the year ended March 31, 2004, Toshiba Corporation and Mitsubishi Electric established TMEIC. In connection
with this transaction, the Company contributed certain assets totaling ¥48,549 million, which included cash of ¥2,719
million, and liabilities of ¥32,801 million, and obtained a 50.0 percent interest in TMEIC.