Toshiba 2012 Annual Report Download - page 129

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TOSHIBA Annual Report 2012
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 brought an
action to the General Court of the European Union seeking annulment of the European Commission's decision in April
2007. In July 2011, the General Court of the European Union handed down a judgment and annulled the entire fine
imposed on the Company, but upheld the European Commission's determination about alleged anti-competitive
behavior. The Company appealed to the European Court of Justice in September 2011, since there was certain
inconsistency between the contents of the judgment and the facts as recognized by the Company. The Company will
assert its position in the appeal.
In August 2007, General Electric Capital Leasing Corporation (currently General Electric Japan Inc.(“GE Japan”)) filed a
lawsuit against six companies including the Company and its two subsidiaries for compensation of damages caused by
false transactions. Although such transactions were conducted by a former employee of the Group without any relation
to the business operation of the Group, GE Japan alleged the damages in accordance with the employer liability clause of
Civil Code. In October 2010, GE Japan settled the case with Transcosmos Inc. and Parametric Technology Corporation
Japan, both of which were defendants, and assigned the claims to them. In July 2011, Tokyo District Court ordered the
Company to pay approximately ¥4,550 million ($55,488 thousand) but the Company immediately appealed against this
court ruling because the Company believes it is not responsible for the illegal transactions conducted by the former
employee.
In February 2011, the Ministry of Defense of Japan (“MOD”) cancelled contract for development and manufacture of
“reconnaissance system for F-15” between MOD and the Company. In July 2011, the Company filed a lawsuit against MOD
to Tokyo District Court seeking payment of approximately ¥9,319 million ($113,646 thousand) including payment for parts
which have been already completed. The Company properly executed its duties pursuant to conditions of the contract.
Therefore, the Company thinks that MOD's cancellation of the contract is unreasonable and will assert its position in the
Court.
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 judgment 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 ¥9,021 million ($110,012
thousand) and ¥9,213 million at March 31, 2012 and 2011, 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 ¥6,491 million ($79,159 thousand) and ¥6,569 million as of March
31, 2012 and 2011, 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.