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Toshiba Corporation Annual Report 2007 • Operational Review
Toshiba Corporation
Annual Report 2007 • Operational Review
Toshiba Corporation
Annual Report 2007 • Operational Review

Table of contents

  • Page 1
    Toshiba Corporation Toshiba Corporation Annual Report 2007 • Operational Review Annual Report 2007 • Operational Review

  • Page 2
    ... -Overseas Net sales Operating income (Note 2) Income before income taxes and minority interest Net income Total assets Shareholders' equity Capital expenditures (property, plant and equipment) Research and development expenditures Return on equity (ROE) (%) Return on total assets (ROA) (%) 2007...

  • Page 3
    ... Shareholders ...12 An Interview with the President ...14 Mid-term Business Plan and Vision 2010 ...18 Business at a Glance ...20 Business Review ...22 Cover photo: Last stage blades, a key component of thermal steam turbines CSR Management ...36 Research and Development ...39 Intellectual Property...

  • Page 4
    ...by promoting the process innovation that reinforces our competitiveness and the value innovation that offers entirely new value to customers through development of new technologies and products that lead the age, we will shape a vital and vibrant Toshiba Group. Process Innovation + Value Innovation...

  • Page 5
    Toshiba Group is building on the base of the Management Innovation (MI) Activity to bring simultaneous process innovation to product research and development, production and procurement, and sales and marketing. Through that multiplier effect, we will stimulate continuous growth and drive forward ...

  • Page 6
    > SPECI AL FEATURE: Leading Innovation 4

  • Page 7
    ... employ multi-level cell technology to record two or more bits of data in a single memory cell, boosting the performance of applications that use video and audio. In January 2007, we started to deploy 56-nanometer (nm) process technology in mass production, and we will continue to develop advanced...

  • Page 8
    ... and vivid images. > CUSTOMER VALUE THROUGH INNOVATION The start of terrestrial digital broadcasting and growing demand for large-screen TVs have put HD TV technology squarely in the spotlight. Toshiba has developed New Meta-Brain Pro, an HD video processing system capable of showing intricate...

  • Page 9
    7

  • Page 10
    > SPECIAL FEATURE: Leading Innovation 8

  • Page 11
    ... the world's first HD DVD player in March, and bringing to market the first hard disc recorder with HD DVD recorder in July. < HD-XA2 HD DVD PLAYER As a leader in AV products, we wanted to bring enjoyment of HD DVD into the lives of many more customers, and for this reason we developed the HDXA2...

  • Page 12
    ... acclaim and market share, both in Japan and overseas, starting with the world's most advanced medical market, the United States. > CUSTOMER VALUE THROUGH INNOVATION Toshiba Medical Systems Corporation works in close collaboration with major hospitals worldwide to enhance equipment performance and...

  • Page 13
    11

  • Page 14
    ... OUR SHAREHOLDERS TO OUR SHAREHOLDERS In FY2006,Toshiba Group selected "TOSHIBA Leading Innovation"as its new global corporate brand tagline to clearly express the core corporate value that we promise to our customers and society. We are determined to continue to transform our corporate culture and...

  • Page 15
    Tadashi Okamura Chairman of the Board of Directors • Atsutoshi Nishida Director, President and CEO 13

  • Page 16
    ... forward with our new vision and strategies to transform Toshiba into a Group that aims to generate "Sustained Strong Growth with High Profit." I think that each and every employee has now taken this message to heart and is using this new vision to guide their daily work. That led to our positive...

  • Page 17
    ...strides forward at an accelerating pace. Corporate mergers and acquisitions and business alliances now take place at the global level. We live in an age of rapid changes, and the pressures on companies to change will only increase in the coming years. It is now an urgent necessity for management and...

  • Page 18
    ... is a typical case: We are a world leader in miniaturization and multi-level cell technologies, and if we continue to innovate and lead the market, we will minimize the risk from competitors. Toshiba has acquired the Westinghouse Group as an affiliate and sold Toshiba Ceramics and Toshiba EMI. It...

  • Page 19
    ... to be a source of value to all of its stakeholders, including shareholders, customers, clients, employees and regional societies. In the coming years as well, we will continue to work for continuous innovation with the goal of building an even more dynamic Toshiba Group that is filled with vigorous...

  • Page 20
    ... Plan Through FY2008, we will focus on further reinforcing competitiveness and growth in our current businesses by channeling resources to strategic areas. Moving forward to FY2010, we will promote enhanced intra-company collaboration, expand key products, such as NAND, Cell and imaging equipment...

  • Page 21
    ... Expand products that astonish and impress (NAND, Cell, imaging and audio equipment) Enhance contributions to safety and security through our businesses (nuclear power, nextgeneration battery, the environment) > 2010: Achieve high growth and profit in every business domain Vision 2010 Net sales...

  • Page 22
    ... application of management resources. DISPLAY DEVICES & COMPONENTS CONTROL CENTER In the fields of imaging and audio equipment, the Digital Media Network Company offers LCD TVs and HDD & DVD recorders compatible with terrestrial digital broadcasting, digital audio players and LCD projectors. In...

  • Page 23
    ...systems. TOSHIBA ELEVATOR AND BUILDING SYSTEMS CORPORATION 5% We develop, deliver and maintain highly efficient, safe, state-of-the-art elevators and escalators, offer upgrades and provide integrated building management services. TOSHIBA SOLUTIONS CORPORATION 391.6 379.8 TOSHIBA MEDICAL SYSTEMS...

  • Page 24
    ... sales of TV and portable digital music players. The Mobile Phones business saw sales decrease from the previous year, on lower sales in the Japanese market, while the Retail Information and Office Document Processing Systems business saw increased sales on higher sales of POS systems and multi...

  • Page 25
    ... camera, a large 3-inch LCD and integrated music player. gigabeat® U Series Digital Audio Player The newly expanded gigabeat line-up features compact, light bodies, a Toshiba-developed high-end processor, an FM radio tuner and direct recording from other audio equipment. Noise suppression adds to...

  • Page 26
    ... manufacturing facility for LCD TVs for the European market. Prices of flat panel TVs are falling fast in a very tough, demanding market environment, but as the shift to larger screens and full HD continues to progress, we will develop the breadth of the "REGZA" and work for further sales expansion...

  • Page 27
    ... to enhance Toshiba's name in the digital AV business sector, the company will energize the market through persistent release of leading-edge products leveraging Toshiba's distinct technologies. PERSONAL COMPUTER & NETWORK COMPANY In FY2006, we saw significant increases in overseas sales in the...

  • Page 28
    ... the result of focusing sales on high value-added products and of thorough cost reduction programs. Through a joint venture with SanDisk Corp., we expanded production of NAND Flash memories. Toshiba signed a contract with Micron Technology Inc. regarding the transfer and licensing of semiconductor...

  • Page 29
    ...Construction of a new 300mm wafer manufacturing facility, Fab 4, started at Yokkaichi Operations in August 2006. Mass production is scheduled to start in the third quarter of FY2007. Direct Methanol Fuel Cell (DMFC) We are advancing development of DMFC for mobile equipment with a strong emphasis on...

  • Page 30
    ... in center place, the Discrete business generated higher sales. We expect to see continued growth in demand for power devices, and in readiness for that Kaga Toshiba Electronics Corporation started construction of new production facilities in September 2006. The project was completed in March 2007...

  • Page 31
    ...-in input function when operating under wide lighting conditions. Our capital investment is directed to assuring that we can meet the growth of the mobile phone market. Towards this, we are raising capacity at Ishikawa Works, our TFT LCD panel facility, with a new line that will produce 12,000 TFT...

  • Page 32
    ... Infrastructure Systems and IT Solutions businesses all posted solid performances. The main organizational change came with the October 2006 completion of the Westinghouse Group acquisition, which is expected to generate synergies and significantly advance global development of the nuclear power...

  • Page 33
    ..., while in overseas growth markets, particularly Asia, China, and North America, we will take measures to enhance our competitive power, including strategic alliances where appropriate. We will continue to refine our technologies, and to promote nuclear power as a solution to problems facing...

  • Page 34
    ... of video production and editing, promote overseas expansion in broadcasting equipment, and start up new business in next-generation wireless communication equipment. In radio application systems, including radar and information processing systems, we will anticipate changes in customer requirements...

  • Page 35
    ... sales by concentrating on leading-edge technologies for medical equipment and systems. Above all, we focused on the 64 multi-slice CT system, a breakthrough product that enhances medical care while promoting efficiencies in hospital management. Since its launch, the system has won highly positive...

  • Page 36
    ...at the end of September 2007. We further plan to transfer refrigerator development and design to Aichi Operations, which will be positioned as our global product and manufacturing technology development center, by the end of March 2008. With the objective of increasing overseas sales, we market drum...

  • Page 37
    ...ten years of operation. E-CORE Highly Efficient LED Downlight In terms of energy efficiency and long life, LED offer unsurpassed environmental friendliness. We have developed the E-CORE downlight as the industry's most efficient general lighting LED product with 50lm/W output. Daiseikai SDR Series...

  • Page 38
    ...highest priorities to human life, safety and legal compliance in all business activities, Toshiba Group is addressing human rights, environmental management, enhancement of customer satisfaction, corporate citizenship and promotion of supplier CSR activities, both in Japan and overseas. FOR A BETTER...

  • Page 39
    37

  • Page 40
    ... energy demand is expected to increase to 1.5 times that of today. For Toshiba Group, contributing to securing a stable energy supply while controlling emissions of CO2 and mitigating climate change is a major mission. We have expertise in mainstream thermal and nuclear power generation systems...

  • Page 41
    ..., and promoting research activities in Toshiba research facilities in Europe, 101.7 108.3 19.0 61.7 17.7 70.9 CEO (President) Electronic Devices & Components Group Infrastructure Systems Group Process & Manufacturing Engineering Center Center for Semiconductor Research & Development Power and...

  • Page 42
    40

  • Page 43
    ... support the Company in efforts to raise corporate profitability. Toshiba Group's diverse high-tech capabilities have earned a very positive evaluation by society. In FY2006, the invention of an electron beam writing technology for semiconductor masks won "The Prize of the Minister of Economy, Trade...

  • Page 44
    > CORPORATE GOVERNANCE > Corporate Governance TOSHIBA'S GOVERNANCE SYSTEM Toshiba promotes corporate governance based on the fundamental policy and objectives of enhancing management efficiency, increasing transparency, and seeking to maximize corporate value from the shareholders' perspective. In...

  • Page 45
    ...event of any largescale purchase of Toshiba stock, to ensure that shareholders are provided with all necessary information and sufficient time to make appropriate decisions, and that the Company has sufficient opportunity to negotiate with the acquirer. When an acquirer proposes or starts to make an...

  • Page 46
    ... Director Toshio Yonezawa Director Executive Officers Representative Executive Officer President and Chief Executive Officer Representative Executive Officer Corporate Executive Vice President Atsutoshi Nishida Representative Executive Officers Corporate Senior Executive Vice Presidents Fumio...

  • Page 47
    ...Hirabayashi Outside Director Takeshi Sasaki Outside Director Executive Officers Corporate Senior Vice Presidents Executive Officers Corporate Vice Presidents Yoshihide Fujii Toshinori Moriyasu Ichiro ... Miura Hideo Kitamura Shoji Yoshioka Kosei Okamoto Kazuyoshi Yamamori (As of June 25, 2007) 45

  • Page 48
    46

  • Page 49
    ... ...54 Geographic Segment Performance ...55 Long-term Debt ...55 Stock / Shareholders Information ...56 Organization Chart...58 Global Network / Consolidated Subsidiaries / Affiliated Companies Accounted for by the Equity Method ...60 Corporate History...62 Major indices of the Data Section...

  • Page 50
    ... rate changes on cash and cash equivalents Net increase (decrease) in cash and cash equivalents Cash and cash equivalents at end of year Liquidity Indicators Debt/cash flow ratio (%)*9 Interest coverage ratio (Times)*10 Corporate Value Free cash flow*11 Market capitalization*12 Other Data Number...

  • Page 51
    ...-bearing debt X 100 *10. Interest coverage ratio (Times) = (Operating income (loss) + Interest and dividends) / Interest expense *11. Free cash flow = Net cash provided by operating activities - Net cash used in investing activities *12. Market capitalization = Common stock price [Year-end/Yen...

  • Page 52
    ...621,216 Long-term Receivables and Investments: Long-term receivables Long-term finance receivables, net Investments in and advances to affiliates Marketable securities and other investments 209,374 683,573 Property, Plant and Equipment: Land Buildings Machinery and equipment Construction in progress...

  • Page 53
    ... yen) '03/3 LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities: Short-term borrowings Current portion of long-term debt Notes payable, trade Accounts payable, trade Accounts payable, other and accrued expenses Accrued income and other taxes Advance payments received Other current liabilities...

  • Page 54
    ... and Other Income: Net sales Subsidy received on return of substitutional portion of Employees' Pension Fund Plan, (net of settlement loss of ¥188,106 million in '04/3, ¥7,992 million in '05/3 and ¥5,045 million in '06/3) Interest and dividends Equity in earnings of affiliates Other income - 13...

  • Page 55
    ... in notes and accounts payable, trade Increase (decrease) in accrued income and other taxes Increase (decrease) in advance payments received Other Net cash provided by operating activities Cash Flows from Investing Activities: Proceeds from sale of property, plant and equipment Proceeds from sale of...

  • Page 56
    ...Digital Products Net sales Share of net sales (%) Operating income (loss) Operating income ratio (%) Number of employees R&D expenditures Depreciation Capital expenditures Total assets Electronic Devices Net sales Share of net sales (%) Operating income Operating income ratio (%) Number of employees...

  • Page 57
    ... March 31, 2007 ¥150,197 ¥ - 89,818 116,290 115,588 220,692 174,536 228,506 72,558 174,608 138,405 - - 119,558 - 184,498 ¥741,102 ¥1,044,152 For more information on corporate bond and ratings, please refer to the following URL: http://www.toshiba.co.jp/about/ir/en/stock/bond.htm 55

  • Page 58
    ...Note: Common stock price is based on Tokyo Stock Exchange, Inc.'s market quotation. Distribution of Shareholders (Percentage of total voting rights) (As of March 31) (%) '03/3 â- Individuals and others in Japan 37.8% â- Overseas investors â- Companies in Japan â- Securities companies in Japan...

  • Page 59
    ... Limited Mizuho Corporate Bank, Limited 6.8% 4.1 3.7 3.6 3.4 2.6 1.6 1.6 1.5 1.4 Rank of Japanese Companies in the Electrical Equipment Sector Rank in the Electrical Equipment Sector Rank among the Companies Listed in Tokyo Stock Exchange Company Name (As of April 30, 2007) Market Capitalization...

  • Page 60
    ...Operations > Electronic Devices Sales & Marketing Div. > Process & Manufacturing Engineering Center > Center For Semiconductor Research & Development & Components Control Center Device Div. > Mobile > Storage Device Div. Communications > TV & Visual Media Development Equipment Div. Center > Digital...

  • Page 61
    ... America, Europe, Asia, China > Corporate Strategic Planning Div. > Regional Business Strategy Div. > Corporate Communications Office > Finance & Accounting Group > Productivity > Finance & Accounting Div. > Internal Control Promotion Div. > Technology Planning Div. > Corporate Productivity...

  • Page 62
    ... Air-Conditioning Equipment Co., Ltd. • T.G.BATTERY Co., (China) Ltd. Germany • Toshiba Europe GmbH • Toshiba Electronics Europe GmbH • Toshiba TEC Germany Imaging Systems GmbH • Toshiba Medical Systems GmbH MIDDLE EAST Baghdad Abu Dhabi Overseas Subsidiaries & Affiliates NORTH AMERICA...

  • Page 63
    ... Asia, Ltd. • Toshiba Electronics Europe GmbH • Toshiba Electronics Malaysia Sdn. Bhd. • Toshiba Electronics (Shanghai) Co., Ltd. • Toshiba Europe GmbH • Toshiba HA Manufacturing (Nanhai) Co., Ltd. • Toshiba Hydro Power (Hangzhou) Co., Ltd. OVERSEAS • Guangdong Midea Air-Conditioning...

  • Page 64
    ... methanol fuel cell (DMFC). Released a 64 multi-slice CT system. 2005 2006 Developed 8Gb NAND Flash memory. Westinghouse Group joined the Toshiba Group (acquired shares of Westinghouse from British Nuclear Fuels (BNFL)). Developed 16Gb NAND Flash memory. Released the world's first HD DVD players and...

  • Page 65
    ... Tokyo Stock Exchange: . . 6502 Shareholder Registration Agent: ...The Chuo Mitsui Trust and Banking Company, Limited For Further Information, Please Contact: ...Toshiba Corporation Corporate Communications Office Investor Relations Group 1-1, Shibaura 1-chome, Minato-ku, Tokyo 105-8001, Japan Phone...

  • Page 66
    The white-colored pages of this report are printed on FSC certified paper.

  • Page 67
    2007 FINANCIAL REVIEW Annual Report 2007 • Financial Review TOSHIBA CORPORATION

  • Page 68
    ... Net income (loss) Per share of common stock: Net income (loss) (Note 3) -Basic -Diluted Cash dividends Total assets Shareholders' equity Capital expenditures (Property, plant and equipment) Depreciation (Property, plant and equipment) R&D expenditures Number of employees 2007 ¥7,116,350 5,312,179...

  • Page 69
    Millions of yen, except per share amounts 2003 ¥5,655,778 4,146,460 1,393,776 115,542 ...555 186,000 2 3 2. Management's Discussion and Analysis 15. Consolidated Balance Sheets 17. Consolidated Statements of Income 18. Consolidated Statements of Shareholders' Equity 19. Consolidated Statements of ...

  • Page 70
    ... Products, 57 in Electronic Devices, 202 in Social Infrastructure, 75 in Home Appliances and 73 in Others. The consolidated subsidiaries listed on the first Section of Tokyo Stock Exchange are Toshiba TEC Corporation and Toshiba Plant Systems & Services Corporation. 153 were affiliates accounted...

  • Page 71
    ... of TV and portable digital music players. The Mobile Phones business saw sales decrease from the previous year, on lower sales in the Japanese market, while the Retail Information and Office Document Processing Systems business saw increased sales on higher sales of POS systems and digital multi...

  • Page 72
    ... from the year earlier period. Segment information is based on Japanese accounting standards. INDUSTRY SEGMENTS Millions of yen Year ended March 31 Thousands of U.S. dollars 2007 2006 2005 2007 Sales: Digital Products Unaffiliated customers Intersegment Total Electronic Devices Unaffiliated...

  • Page 73
    ... Home Appliances Others Corporate Consolidated Impairment of long-lived assets: Digital Products Electronic Devices Social Infrastructure Home Appliances Others Corporate Consolidated Capital expenditures: Digital Products Electronic Devices Social Infrastructure Home Appliances Others Corporate...

  • Page 74
    ...Millions of yen Year ended March 31 Thousands of U.S. dollars 2007 2006 2005 2007 Sales: Japan Unaffiliated customers Intersegment Total Asia Unaffiliated customers Intersegment Total North America Unaffiliated customers Intersegment Total Europe Unaffiliated customers Intersegment Total Others...

  • Page 75
    ... Products Electronic Devices Social Infrastructure Home Appliances Others 118.5 174.2 82.2 18.7 0.4 CAPITAL EXPENDITURES CAPITAL EXPENDITURE OVERVIEW The Group's basis strategy stresses "concentration of management resources in growing fields." In the term under review, overall plant and equipment...

  • Page 76
    ... 31, 2007 Percentage held by the Group Subsidiaries: Japan Toshiba Building Co., Ltd. Toshiba Elevator and Building Systems Corporation Toshiba Medical Systems Corporation Toshiba Plant Systems & Services Corporation Toshiba TEC Corporation U.S.A. Toshiba America, Inc. Westinghouse Electric Company...

  • Page 77
    ..., the Group completed the $5.4 billion acquisition of all the stock of BNFL USA Group Inc. (currently TSB Nuclear Energy USA Group Inc.) and Westinghouse UK Limited (collectively "Westinghouse"), which has its primary operations in the nuclear power systems business. In this connection, the Company...

  • Page 78
    ... the Company's consolidation. Mobile Broadcasting Corporation accounts for a significant loss, and any failure to make favorable progress in reforming its business could have an adverse effect on Group results. (8) Success of joint ventures and other business alliances A key strategy of the Group in...

  • Page 79
    ... Group and Toshiba brand products. (15) Securing human resources Success of the Group's businesses depend in large part on securing excellent human resources in every business area and process, including product development, production, marketing and business management. Competition to secure human...

  • Page 80
    ... economic or other factors, or returns on plan assets may be lower than anticipated. (21) Financing environment The Group has substantial amounts of interest-bearing debt for financing, highly susceptible to the market environment, including interest rate and supply and demand of funds. Changes in...

  • Page 81
    Consolidated Balance Sheets Toshiba Corporation and Subsidiaries As of March 31, 2007 and 2006 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 doubtful notes ...

  • Page 82
    ... Toshiba Corporation and Subsidiaries As of March 31, 2007 and 2006 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 (Notes 9 and 19) Notes payable, trade Accounts payable...

  • Page 83
    ... Statements of Income Toshiba Corporation and Subsidiaries For the years ended March 31, 2007 and 2006 Millions of yen Thousands of U.S. dollars (Note 3) 2007 Sales and other income: Net sales Subsidy received on return of substitutional portion of Employees' Pension Fund Plan, net of settlement...

  • Page 84
    Consolidated Statements of Shareholders' Equity Toshiba Corporation and Subsidiaries For the years ended March 31, 2007 and 2006 Common stock Additional paid-in capital Millions of yen Accumulated other Retained comprehensive earnings loss Treasury stock Total Balance at March 31, 2005 ¥ 274,...

  • Page 85
    ... activities Proceeds from sale of property, plant and equipment Proceeds from sale of securities Acquisition of property, plant and equipment Purchase of securities (Increase) decrease in investments in affiliates Acquisition of Westinghouse, net of cash acquired Purchase of other businesses...

  • Page 86
    ...BUSINESS Toshiba Corporation and its subsidiaries (collectively, the "Company") are engaged in research and development, manufacturing and sales of high-technology electronic and energy products, which span (1)Digital Products, (2)Electronic Devices, (3)Social Infrastructure, (4)Home Appliances, and...

  • Page 87
    .... Depreciation for property, plant and equipment is computed generally by the declining-balance method at rates based on the following estimated useful lives of the assets: buildings, 3 to 50 years; machinery and equipment, 2 to 20 years. IMPAIRMENT OF LONG-LIVED ASSETS Long-lived assets, other...

  • Page 88
    ... of loss have transferred. Revenue from services, such as maintenance service for plant and other systems, that are priced and sold separately from the equipment is recognized ratable over the contract term or as the services are provided. Revenue from the development of custom software products is...

  • Page 89
    ... the funded status (i.e., the difference between the fair value of plan assets and the benefit obligations) of their postretirement benefit plans in the statement of financial position, measure the fair value of plan assets and benefit obligations as of the date of the fiscal year-end statement of...

  • Page 90
    ... Statements Toshiba Corporation and Subsidiaries March 31, 2007 4 . MARKETABLE SECURITIES AND OTHER INVESTMENTS The aggregate cost, gross unrealized holding gains and losses, and aggregate fair value for marketable equity securities and debt securities classified as available-for-sale securities...

  • Page 91
    ... life and residual cash flow discount rate used to compute the fair value of retained interests were 0.18 years and 3.67 percent, respectively. Quantitative information about delinquencies, net credit losses, and components of securitized receivables as of and for the years ended March 31, 2007...

  • Page 92
    ...31, 2007 and 2006, respectively, based on quoted market prices at those dates. Summarized financial information of the affiliates accounted for by the equity method is shown below: Millions of yen March 31 Thousands of U.S. dollars Current assets Other assets including property, plant and equipment...

  • Page 93
    Millions of yen March 31 Thousands of U.S. dollars Notes and accounts receivable, trade Other receivables Long-term loans receivable Notes and accounts payable, trade Other payables Capital lease obligations ¥ 2007 46,642 16,875 12,550 182,748 53,388 39,999 ¥ 2006 26,804 11,238 7,300 136,236...

  • Page 94
    ...160,568 Goodwill represents the excess of the purchase price over the fair value of the net assets acquired. The changes in the carrying amount of goodwill for the years ended March 31, 2007 and 2006 are as follows: Millions of yen Year ended March 31 Thousands of U.S. dollars Balance at beginning...

  • Page 95
    ... portion of the lines of credit. Long-term debt at March 31, 2007 and 2006 consist of the following: Millions of yen March 31 Thousands of U.S. dollars 28 29 2007 2006 2007 Loans, principally from banks and insurance companies, due 2007 to 2029 with weighted-average interest rate of 1.18% at...

  • Page 96
    ... pledged as collateral for long-term debt at March 31, 2007 were property, plant and equipment with a book value of ¥12,814 million ($108,593 thousand). The aggregate annual maturities of long-term debt, excluding those of capital lease obligations are as follows: Year ending March 31 Millions of...

  • Page 97
    ... uses a March 31 measurement date for the majority of its plans. On March 31, 2007, the Company adopted SFAS 158. SFAS 158 required the Company to recognize the funded status (i.e., the difference between the fair value of plan assets and the benefit obligations) of its pension plan in the March 31...

  • Page 98
    ... Return of substitutional portion to the government Foreign currency exchange impact Fair value of plan assets at end of year Funded status Amounts recognized in the consolidated balance sheet at March 31, 2007 are as follows: Millions of yen March 31 Other current liabilities Accrued pension...

  • Page 99
    ...The components of the net periodic pension and severance cost for the years ended March 31, 2007 and 2006 are as follows: Millions of yen Year ended March 31 Thousands of U.S. dollars Service cost-benefits earned during the year Interest cost on projected benefit obligation Expected return on plan...

  • Page 100
    ...: Equity securities Debt securities Life insurance company general accounts Other Total The other category includes hedge funds and real estate. The Company's investment policies and strategies are to assure adequate plan assets to provide for future payments of pension and severance benefits...

  • Page 101
    ...,754 thousand) for the year ended March 31, 2007. 15 . IMPAIRMENT OF LONG-LIVED ASSETS Due to general price erosion, severe market competition and others, the Company recorded impairment charges of ¥8,616 million ($73,017 thousand) related primarily to the manufacturing facilities of the Digital...

  • Page 102
    ...of retained earnings available for dividends is based on Toshiba Corporation's retained earnings determined in accordance with generally accepted accounting principles in Japan and the Corporation Law of Japan. Retained earnings at March 31, 2007 do not reflect current year-end dividends of ¥20,888...

  • Page 103
    ...57,246 $ $ 2007 485,135 199,619 684,754 Net unrealized gains and losses on securities: Balance at beginning of year Current year change Balance at end of year Foreign currency translation adjustments: Balance at beginning of year Current year change Balance at end of year Minimum pension liability...

  • Page 104
    ... Toshiba Corporation and Subsidiaries March 31, 2007 Tax effects allocated to each component of other comprehensive income (loss) for the years ended March 31, 2007 and 2006 are shown below: Pre-tax amount Millions of yen Tax benefit (expense) Net-of-tax amount For the year ended March 31, 2007...

  • Page 105
    ...interests of shareholders. Specifically, if an acquirer starts or plans to start an acquisition or a takeover bid that would result in the acquirer holding 20% or more of the Company's total outstanding shares, the Company will require the acquirer to provide certain necessary information in advance...

  • Page 106
    ... on future trade transactions and the interest rate characteristics of the underlying debt as discussed below. Fair Value Hedge Strategy The forward exchange contracts and currency swap agreements utilized by the Company effectively reduce fluctuation in fair value of accounts receivable and payable...

  • Page 107
    ... accounts receivable-trade, short-term borrowings, notes payable-trade, accounts payable-trade and accounts payable-other and accrued expenses, it is assumed that the carrying amount approximated fair value for the majority of these instruments because of their short maturities. Quoted market prices...

  • Page 108
    ... Financial Statements Toshiba Corporation and Subsidiaries March 31, 2007 20 . LEASES LESSEE The Company leases manufacturing equipment, office and warehouse space, and certain other assets under operating leases. Rent expenses under such leases for the years ended March 31, 2007 and 2006...

  • Page 109
    ...31, 2007. 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...

  • Page 110
    ... and its U.S. subsidiary, Toshiba America Electronic Components, Inc., alleging misappropriation for NAND flash-related trade secrets and related misconduct. On September 15, 2006, Toshiba Corporation entered into agreements with Micron Technology, Inc. ("Micron"), the parent company of Lexar, under...

  • Page 111
    ...), Toshiba completed its procedure to acquire all the shares of BNFL USA Group Inc., the holding company for the Westinghouse Group whose main business is nuclear power systems, and of Westinghouse Electric UK Limited (collectively "Westinghouse") for $5.4 billion. On acquiring Westinghouse, Toshiba...

  • Page 112
    Notes to Consolidated Financial Statements Toshiba Corporation and Subsidiaries March 31, 2007 The acquired assets did not include any research and development in progress. Pursuant to the terms of the agreement among the shareholders of TNEHs, Shaw and IHI will not be allowed to assign their ...

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    ...audited the accompanying consolidated balance sheets of Toshiba Corporation and subsidiaries (the "Company") as of March 31, 2007 and 2006, and the related consolidated statements of income, shareholders' equity, and cash flows for the years then ended, all expressed in Japanese yen. These financial...

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