Toshiba 2006 Annual Report Download - page 83

Download and view the complete annual report

Please find page 83 of the 2006 Toshiba annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 86

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86

37
36
LESSOR
The Company is also a lessor to office buildings and other assets under operating leases. Future minimum lease payments to
be received under the Company’s non-cancelable operating leases as of March 31, 2006 are as follows:
Thousands of
Year ending March 31 Millions of yen U.S. dollars
2007 ¥ 846 $ 7,231
2008 847 7,239
2009 729 6,231
2010 723 6,179
2011 727 6,214
Thereafter 6,203 53,017
¥10,075 $ 86,111
21. CONSOLIDATION OF VIEs
The Company leases certain manufacturing equipment from a VIE. The Company consolidates the VIE in accordance with
FIN 46R. As a result, at March 31, 2006, the Company recorded machinery and equipment of ¥20,119 million ($171,957
thousand), and other current liabilities and other liabilities of ¥23,784 million ($203,282 thousand). At March 31, 2005, the
Company recorded machinery and equipment of ¥27,288 million, and other current liabilities and other liabilities of ¥29,021
million, respectively. The creditors of the VIE do not have recourse to the general credit of the Company.
22. COMMITMENTS AND CONTINGENT LIABILITIES
Commitments outstanding at March 31, 2006 for the purchase of property, plant and equipment approximated ¥23,067 mil-
lion ($197,154 thousand).
At March 31, 2006, contingent liabilities, other than guarantees disclosed in Note 23, approximated ¥6,704 million
($57,299 thousand) principally for recourse obligations related to notes receivable transferred.
Toshiba Corporation has entered into a definitive Purchase and Sale Agreement with British Nuclear Fuels plc and its subsidiary,
under which Toshiba Corporation will acquire BNFL USA Group Inc. and Westinghouse Electric UK Limited (collectively
“Westinghouse” hereafter) at a cost of US$5.4 billion. Although Toshiba Corporation expects to have several minority investors who
wish to participate in this opportunity, it will retain ownership of more than 51% of Westinghouse voting shares. The closing of the
acquisition is subject to certain procedures, including, without limitation, obtaining regulatory approvals from relevant governmental
authorities. Toshiba Corporation has sufficient capital resources and borrowing capacity to fund this acquisition.
The Company will account for this acquisition under the purchase method of accounting in accordance with SFAS
No.141, Business Combinations. The Company expects to record on its consolidated balance sheet a substantial amount of
goodwill as a result of this acquisition. The Company believes this goodwill is appropriate, reflecting Westinghouse’s future
capabilities for profit generation and the synergy to be obtained from combining Westinghouse and the Company.
23. 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 2006 to 2017 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 payments under these guarantees were ¥96,569 million
($825,376 thousand) as of March 31, 2006.
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 to 25 years. A payment would be triggered by failure of the guaranteed party to fulfill its obligation covered by the guar-
antee. The maximum potential payments under these guarantees were ¥20,609 million ($176,145 thousand) as of March 31, 2006.
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 various dates
through 2008, and became secondarily liable for these obligations. The maximum potential payment by the Company as a