Toshiba 2011 Annual Report Download - page 122

56
Notes to Consolidated Financial Statements
Toshiba Corporation and Subsidiaries
March 31, 2011
WARRANTY
Estimated warranty costs are accrued for at the time a product is sold to a customer. Estimates for warranty costs are
made based primarily on historical warranty claim experience.
The following is a reconciliation table of the product warranty accrual for the years ended March 31, 2011 and 2010:
Millions of yen
Thousands of
U.S. dollars
Year ended March 31 2011 2010 2011
Balance at beginning of year ¥ 44,181 ¥ 38,837 $ 532,301
Warranties issued 29,969 35,080 361,072
Settlements made (34,875) (33,948) (420,181)
Foreign currency translation adjustments (2,314) (975) (27,879)
Other —5,187 —
Balance at end of year ¥ 36,961 ¥ 44,181 $ 445,313
Other includes the warranties assumed in the acquisition of hard disk drive (“HDD”) business from Fujitsu.
25. LEGAL PROCEEDINGS
In January 2007, the European Commission adopted a decision imposing fines on 19 companies, including the Company,
for violating EU competition laws in the gas insulated switchgear market. The Company was individually fined €86.25
million and was also fined €4.65 million jointly and severally with Mitsubishi Electric Corporation. Following its own
investigation, the Company contends that it has not found any infringement of EU competition laws, and it is bringing an
action to the European Court of First Instance seeking annulment of the European Commission’s decision.
The Group undertakes global business operations and is involved from time to time in disputes, including lawsuits and
other legal proceedings and investigations by relevant authorities. There is a possibility that such case may arise in the
future. Due to differences in judicial systems and the uncertainties inherent in such proceedings, the Group may be
subject to a ruling requiring payment of amounts far exceeding its expectations. Any judgement or decision unfavorable to
the Group could have a materially adverse effect on the Group’s business, results of operations or financial condition. The
possibility cannot be stated as nil that, under certain circumstances, an action is filed that has an extremely remote chance
of a ruling that requires payment but involves an appeal for a significant amount of money.
The Group’s Management believes that there are meritorious defenses to all of these legal procedures, including
lawsuits and investigations. Based on the information currently available to both the Group and its legal counsel,
Management believes that such legal procedures, if any, would not have a material adverse effect on the financial position
or the results of operations of the Group.
26. ENVIRONMENTAL LIABILITIES
The Japanese environmental regulation, “Law Concerning Special Measure against poly chlorinated biphenyl (“PCB”)
waste” requires PCB waste holders to dispose of all PCB waste by July 2016. The Group accrued ¥9,213 million ($111,000
thousand) and ¥9,030 million at March 31, 2011 and 2010, respectively, for environmental remediation and restoration
costs for products or equipment with PCB which some Group’s operations in Japan have retained.
The Westinghouse Group, consolidated subsidiaries of the Company, is subject to federal, state and local laws and
regulations relating to the discharge of pollutants into the environment, the disposal of hazardous wastes and other
related activities affecting the environment, and which have had and will continue to have an impact on the Group. It is
difficult to estimate the timing and ultimate costs to be incurred in the future due to uncertainties about the status of
laws, regulations and technology; the adequacy of information available for individual sites; the extended time periods
over which site remediation occurs; the availability of waste disposal capacity; and the identification of new sites.
The Group has, however, recognized an estimated liability of ¥6,569 million ($79,145 thousand) and ¥6,695 million as of
March 31, 2011 and 2010, respectively, measured in current dollars, for those sites where it is probable that a loss has been
incurred and the amount of the loss can be reasonably estimated.
The accrual will be adjusted as assessment and remediation efforts progress or as additional technical or legal
information become available. Management is of the 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 Group.