Toshiba Corp. Annual Report 2002

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FY2002 Annual Report · Toshiba Corp.

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Printed in Japan

TOSHIBA ANNUAL REPORT 2002
Year ended March 31, 2002

Basic Commitment of the TOSHIBA Group

We, the Toshiba Group companies, based on our total

commitment to people and to the future, are deter-

mined to help create a higher quality of life for all

people, and to do our part to help ensure that progress

continues within the world community.

COMMITMENT TO PEOPLE

We endeavor to serve the needs of all people, especially our

customers, shareholders, and employees, by implementing

forward-looking corporate strategies while carrying out respon-

sible and responsive business activities. As good corporate

citizens, we actively contribute to further the goals of society.

COMMITMENT TO THE FUTURE

By continually developing innovative technologies centering

on the fields of Electronics and Energy, we strive to create

products and ser vices that enhance human life, and which

lead to a thriving, healthy society. We constantly seek new

approaches that help realize the goals of the world commu-

nity, including ways to improve the global environment.

Financial Highlights

To Our Shareholders

Regeneration of TOSHIBA

Wireless & Seamless office

Mobile Communications

An Age of New Advances

Review of Operations

Toward Sustainable Development

Board of Directors,

Executive Officers and Statutory Auditors

Management’s Discussion and Analysis

Consolidated Financial Statements

Global Network

Consolidated Subsidiaries

Investor Reference

TOSHIBA CORPORATION

FOUNDED

July 1875

CAPITAL

¥274,926 million

(US$2,067 million)

EMPLOYEES

176,398

COMMON STOCK

Authorized:
10,000,000,000 shares

Issued:
3,219,027,165 shares

No. of shareholders:
475,649
Average holding: 6,768 shares

TRANSFER AGENT:
The Chuo Mitsui Trust and
Banking Co., Ltd.

HEADQUARTERS

1-1, Shibaura 1-chome,
Minato-ku, Tokyo 105-8001,
Japan

PRINCIPAL SHAREHOLDERS

(%)

Sumitomo Mitsui Banking Corporation. .......................................... 3.88

The Dai-ichi Mutual Life Insurance Company .................................. 3.75

Nippon Life Insurance Company .................................................... 3.36

Japan Trustee Service Bank, Ltd. .................................................. 2.94

State Street Bank and Trust Company ........................................... 2.37

The Mitsubishi Trust and Banking Corporation ................................ 1.81

UFJ Trust Bank Limited ................................................................. 1.80

The Chase Manhattan Bank NA London ......................................... 1.71

Employees Stock Ownership Plan .................................................. 1.63

NIPPONKOA Insurance Company, Limited ....................................... 1.55

As of March 31, 2002

Web site information

Toshiba is vigorously carrying out Internet-based IR activities to ensure timely and fair

www.toshiba.co.jp/about/ir/index.htm

www

including press releases and investors' guides. There is also a section that allows site

disclosure to all investors. Our investor relations site features information for investors,

visitors to express their opinions and ask questions, part of our efforts to improve the

quality of our IR activities through interactive communications with investors.

FORWARD-LOOKING STATEMENTS
This annual report contains forward-looking statements concerning Toshiba’s fu-

ture plans, strategies and per formance. These for ward-looking statements are

not historical facts, rather they represent assumptions and beliefs based on eco-

nomic, financial and competitive data currently available. Furthermore, they are

subject to a number of risks and uncertainties that, without limitation, relate to

economic conditions, worldwide mega-competition in the electronics business,

customer demand, foreign currency exchange rates, tax rules, regulations and

other factors. Toshiba therefore wishes to caution readers that actual results may

differ materially from our expectations.

For further information, please contact:
Toshiba Corporation
Investor Relations Group
Corporate Communications Office
1-1, Shibaura 1-chome, Minato-ku, Tokyo 105-8001, Japan
Phone: +81-3-3457-2096 Facsimile: +81-3-5444-9202
Mail: ir@toshiba.co.jp
or via the Internet at:
http://www.toshiba.co.jp/about/ir/index.htm
Product names may be trademarks of their respective companies.

Printed on recycled paper

Financial Highlights
Toshiba Corporation and its subsidiaries
Years ended March 31, 2002 and 2001

Net sales–Japan

–Overseas

Net sales

Operating income (loss)

Income (loss) before income taxes and minority interest

Net income (loss)

Research and development expenditures

Total assets

Shareholders’ equity

Per share of common stock:

Net income (loss)

–basic

–diluted

Cash dividends

Number of employees

Millions of yen

Thousands of U.S. dollars

2002

2001

2002

¥3,340,491

¥3,753,052

$25,116,474

2,053,542

5,394,033

(113,575)

(376,687)

(254,017)

326,170

5,407,782

705,314

2,198,305

5,951,357

232,133

188,099

96,168

327,915

5,724,564

1,047,925

15,440,165

40,556,639

(853,947)

(2,832,233)

(1,909,902)

2,452,406

40,660,015

5,303,113

yen

U.S. dollars

¥(78.91)

(78.91)

----

¥29.88

29.71

10.00

176,398

188,042

$(0.593)

(0.593)

----

Notes: 1. Unless indicated other wise, all dollar figures herein refer to U.S. currency. Yen amounts have been translated into U.S. dollars, for conve-

nience only, at the rate of ¥133=US$1.

2. Basic earnings per share is computed based on the weighted-average number of shares of common stock outstanding during the period.
Diluted earnings per share assumes the dilution that would occur if dilutive conver tible debentures were conver ted into common stock.

N E T S A L E S
(Billions of yen)

5,749

5,951

5,394

N E T I N C O M E ( L O S S )
(Billions of yen)

S H A R E H O L D E R S ’ E Q U I T Y
(Billions of yen)

1,060

1,048

--33

705

'00

'01

'02

'00

'01

--254
'02

'00

'01

'02

To Our Shareholders

Summary of Fiscal 2001 Operating Results

Progress of the 01 Action Plan

Harsh business conditions prevailed throughout fiscal 2001,

Our ef for ts for an enhanced business structure have been

to March 31, 2002. In the aftermath of the U.S. Internet bubble,

bolstered by the 01 Action Plan we launched in August 2001.

a slump in demand for IT—in recent years a driver of world

The Plan targets intensified competitiveness and streamlined

economic growth—tipped high-tech industries into global re-

management, suppor ted by corporate initiatives. The 01 Ac-

cession. The Japanese economy faced a host of difficulties,

tion Plan is proving successful in many ways, but four I con-

chief among them lackluster demand and the tightening grip

sider par ticularly notewor thy are:

of deflation. Declines in corporate earnings and accompany-

1) The use of Toshiba Value Created (TVC) to monitor per-

ing cuts in capital investment made the domestic situation

formance, develop strategy and suppor t allocation of

worse, as did employment and wage adjustments that damp-

resources.

ened consumer spending.

2) Cutting procurement costs by 20%

At Toshiba, we continued the restructuring program initi-

3) Reducing the Group workforce by 10%

ated several years ago and took vigorous steps to strengthen

4) Cutting assets by ¥800 billion (US$6,015 million)

competitiveness and streamline management with the 01 Ac-

TVC has given us a power ful tool for analyzing business

tion Plan. In this connection, we decided to withdraw from the

per formance and developing strategy. Application of stringent

commodity DRAM business, long a source of volatility in Group

TVC standards persuaded us to withdraw from the commodity

profits and a severe drag on results in the current economic

DRAM business, to establish a joint venture for LCDs with

downturn. In our core growth businesses, we promoted mea-

Matsushita Electric Industrial Co., Ltd., and to integrate our

sures designed to allow us to prosper and prevail in the face

power transmission and distribution business with that of

of fierce global mega-competition.

Mitsubishi Electric Corporation.

Despite these effor ts, Toshiba could not avoid the reality

In October 2001, we established the Procurement Innova-

of a depressed market and we repor ted disappointing busi-

tion Division. This specialist organization is charged with re-

ness results for fiscal 2001. Consolidated Group net sales

ducing procurement costs by applying innovations that will

were ¥5,394.0 billion (US$40,557 million), a 9% decline on a

achieve dramatic reform of Toshiba Group’s procurement struc-

year-on-year basis. An operating loss of ¥113.6 billion (US$854

ture. More than 600 engineers from across the Group have

million), ¥345.7 billion lower than the operating income re-

been appointed to the division, to build a bridge between de-

corded in the previous fiscal year, resulted in the Group’s first

velopment and sourcing. They are promoting cost reduction

ever operating loss. As a result of restructuring charges of

measures based on Management Innovation (MI) methodolo-

¥208.9 billion (US$1,571 million) incurred in restructuring and

gies, assuring the widest possible use of standard par ts and

a one-off voluntar y early retirement program, Toshiba posted

materials from the development stage, expanding electronic

a loss before income taxes of ¥376.7 billion (US$2,832 mil-

procurement, and extending multi-vendor procurement. In fis-

lion), ¥564.8 billion below the level of income before income

cal 2001, all these yielded cost savings of ¥340 billion

taxes recorded in the previous fiscal year. Toshiba recorded a

(US$2,556 million), approximately a 10% reduction of total

net loss of ¥254.0 billion (US$1,910 million), a ¥350.2 bil-

procurement costs. We aim for the same kind of achievement

lion decline from the previous fiscal year.

this fiscal year.

Total retirement payments, which include additional

The 01 Action Plan envisages a Toshiba Group workforce

payments for our limited-term voluntar y early retirement pro-

of 170,000 by the end of March 2004, a 10% reduction against

gram, amounted to ¥174.9 billion (US$1,315 million). This

the end of March 2001. Toward fulfilling this target, we initi-

resulted in negative free cash flows of ¥176.4 billion (US$1,326

ated a shor t-term voluntar y early retirement program in fiscal

million).

2001 that, along with natural attrition, allowed us to cut our

headcount in Japan by some

12,000. At the end of March

2002, the Group had approxi-

mately 176,400 employees,

and we are on course to

achieve our target reduction

with a year to spare, by the

end of March 2003. Although

this resulted in major restruc-

turing charges in fiscal 2001,

it will yield savings this fis-

cal year and in years to come

that add to the bottom line.

During fiscal 2001, we

reduced total assets by

¥219.4 billion (US$1,650

million) through a wide rang-

ing Asset Light program: ¥31

billion by securitization,

¥54.3 billion by liquidating

1. Rapid Growth Businesses:

Digital Media, Mobile, Semi-

conductors, LCDs, Solutions

and Platforms

Breathtaking advances in IT

are making a reality of digital

convergence. And putting the

focus on areas where Toshiba

has industr y-defining capabili-

ties. The emergence of high-

capacity broadband networks,

especially advances in wire-

less and video communica-

tions, will suppor t our growth

in digital, mobile and broad-

casting technologies, products

and systems.

Toshiba can boast of cut-

ting-edge experience and

Taizo Nishimuro, Chairman of the Board (Left),

Tadashi Okamura, President and Chief Executive Officer (Right)

real estates, ¥25 billion through leasing schemes, and ¥107.6

strong competitiveness in products. Chip sets, displays, com-

billion by expanding our global cash management systems.

puting, imaging know-how and high-capacity storage devices

are all must-haves for the broadband age. To these, Toshiba

Collaboration and Joint Ventures

can also add technologies in areas as diverse as image com-

Across our businesses, we are open to collaboration with other

pression, wireless networking and voice synthesis. Adroit inte-

leading-edge companies, in order to maximize allocation of

gration of these technologies opens the way for Toshiba to

assets, reinforce know-how and build market presence and

bring to market new value-added products and ser vices. To

profitability. In fiscal 2001, we entered into joint ventures that

sum up, Toshiba has the ability to meet increasingly diverse

will support future growth in key business areas. We have agreed

customer needs with total solutions.

to develop third-generation (3G) cellular phones with Mitsubishi

Our energies will not be confined to manufacturing. The

Electric Corporation. In semiconductors, we are working on a

collapse of the dot-com bubble was not the failure of the vir-

next-generation microprocessor with IBM Corporation and Sony

tual economy but of an over-optimistic business model. There

Computer Enter tainment Inc., and we are investigating a com-

can be no doubt that, in coming years, people will increasingly

prehensive tie-up with Fujitsu Ltd., par ticularly in system-on-

turn to the Internet for information, education, entertainment,

chip (SoC) solutions.

shopping and much more. We will suppor t this with platform

businesses that create e-platforms, the vir tual infrastructure

Future Business Development

for B2B and B2C, and with ASP and other ser vices. We will

Toshiba defines two broad business areas: Rapid growth businesses

also realize the wider world of anytime, anywhere deliver y of

and consistent growth businesses, and we will follow the strategies

information and ser vices by suppor ting development in

necessary to enhance both.

mobile broadcasting and ITS. We see these as areas where

we must make a long-term commitment, and as an oppor tu-

sult of further efforts to reduce procurement costs, the launch

nity to innovate new solutions businesses for new markets.

of new attractive products and strengthened marketing capa-

bilities, we project a ¥243.6 billion (US$1,832 million) rise in

2. Consistent Growth Businesses: Social Infrastructure, Medi-

operating income, to ¥130.0 billion (US$977 million). We an-

cal Systems, Power Systems and Home Appliances

ticipate income before income taxes of ¥40 billion (US$301

As we promote advances in our growth industries, we are

million) and net income of ¥23 billion (US$173 million).

also under taking structural reforms in businesses that pro-

vide essential social infrastructure. Our goal here is to rein-

The First Year of “Regeneration of Toshiba”

force consistent growth by developing globally and enhancing

We foresee sharp and significant changes in the business en-

competitiveness by entering new areas of business. We will

vironment in coming years. As the IT revolution enters its sec-

take the following measures:

ond phase, the divergence between companies that succeed

1) In Japan, we will fur ther promote alliances even with

and those that flounder will become even more pronounced.

competitors in the market for better profitability.

In responding quickly and flexibly to this shifting landscape

2) Overseas, we will accelerate business development by

we are executing the reforms necessar y to build a strong cor-

strengthening marketing capabilities.

porate group and restore profitability. Our market-driven busi-

3) We will for tify our ser vice and maintenance operations

ness strategies, grounded in the “voice of customers (VOC),”

in these consistent growth businesses.

allow us to develop innovative products that enhance our glo-

We are acting vigorously to promote these measures. For

bal competitiveness. Our goal is to add to the quality of life of

instance, an alliance with AB Electrolux of Sweden is adding a

all our customers by ensuring that, in all of Toshiba Group's

new dimension to our home appliance business, while a com-

diverse businesses, we use our extensive capabilities and ad-

prehensive business relationship with Finland’s Kone Corpo-

vanced know-how to provide products, ser vices, and solutions

ration in elevators and escalators is allowing us to strengthen

that meet real needs and provide true satisfaction. We believe

our presence in Asia. Our medical systems business was origi-

we can enhance brand identity through these activities.

nally grounded in hardware, but we have now developed an

As we make 2002 the year of Toshiba’s regeneration, we

extensive ser vice capability, including a comprehensive hospi-

hope we may continue to enjoy the trust and suppor t of our

tal information system to support hospital and clinic management.

shareholders, customers and employees.

Management Forecast for Fiscal 2002

July 2002

In fiscal 2001, Toshiba recorded restructuring charges of ¥208.9

billion (US$1,571 million), a significant propor tion of the loss

before income taxes of ¥376.7 billion (US$2,832 million).

However, these restructuring charges are expected to yield

¥182 billion (US$1,368 million) in cost reductions in the cur-

rent fiscal year, suppor ting our return to the black in fiscal

2002. We will continue to implement the 01 Action Plan in

fiscal 2002 and give top priority to achieving profitability in all

business segments. Our aim is a V-shaped recover y in our

business results.

On a consolidated basis, Toshiba forecasts an 8% increase

in net sales, to ¥5,850 billion (US$43,985 million). As a re-

Taizo Nishimuro

Chairman of the Board

Tadashi Okamura

President and Chief Executive Officer

Regeneration of TOSHIBA

Leveraging tomorrow’s growth with the 01 Action Plan

5
5

Withdrawal from commodity DRAMs and strategies to promote

the semiconductor business

Q: What factors underpinned your December 2001 de-
cision to withdraw from commodity DRAMs?

A: We thought long and hard about it. Commodity DRAMs have
been a significant business, one in which we led the market in

the transition to megabit devices. But it is also characterized by

highly volatile price fluctuations, to a point that could even un-

dermine the profits of the entire Toshiba Group. Our assess-

ment also showed us that it was no longer possible to achieve

the profit level we used to enjoy as an industry frontrunner and

the first company to release a high-density DRAM. When we added

it all up, we concluded that the benefits from continuing in the

business were too small to justify the large risks that came with

them. So we decided to withdraw.

6
6

Q: What are your strategies for system LSIs and dis-

crete devices?

A: In system LSIs our focus is on system-on-chip (SoC). I know
this is a highly competitive field, but we will deploy four strate-

gies designed to make Toshiba a winner in this sector in the

years ahead.

First of all, we will strengthen design technology and pro-

cess development capabilities. We will pay par ticular attention

to design technology, and plan to invest an additional ¥10 bil-

lion (US$75 million) a year to strengthen our capabilities.

We are also strengthening our product lines. In addition to

the TX series, our MIPS-based processor cores, we are working

to reinforce and expand sales of embedded memory and analog

SoC with power ful processor cores. These effor ts are suppor ted

by quickened development of the “Cell,” a new and power ful

microprocessor core we are currently developing with IBM Cor-

poration and Sony Computer Entertainment Inc. And, of course,

Toshiba will also continue to develop DRAM technologies neces-

sar y for SoC.

Q: You are now concentrating on NAND flash memo-
ries. Will this sector also see severe competition?

A: That is ver y possible, if we just stand pat and do not act.
But we will not do that. We have advanced plans to quickly build

In our third strategy, Toshiba will concentrate on four areas

where significant growth can be reasonably anticipated: digital

a solutions-provider business. One aspect of this will be provi-

consumer products, mobile products, intelligent of fices, and

sion of controller technologies that promote the optimal use of

automotive devices. We will also suppor t the networks that will

NAND flash memories in individual applications. Our strategy

link these four, and do all we can to strengthen our relations

here is to avoid a focus on just selling memories themselves,

with leading customers.

as that is easily affected by price competition.

Finally, we will reorganize our manufacturing in two ways.

At the same time, we will work for superior cost competi-

We will increase outsourcing of our wafer fabrication and as-

tiveness, using multi-level cell process technology to do so. That

sembly processes, and expand overseas production, par ticu-

will allow us to realize lower costs and lower prices that can

larly in China, where we are building up our manufacturing struc-

suppor t an expansion of applications for NAND. Even as we do

ture and capabilities and increasing product assembly.

that, we want to avoid stimulating the cutthroat competition that

In discrete devices, we will take full advantage of our supe-

plagued our commodity DRAM business, by securing IP, includ-

riority in small and multi-pin-count packages and low-voltage

ing patents, and by developing leading-edge technologies and a

operation to sustain our worldwide No. 1 market share and main-

steady stream of distinctive products our competitors cannot

tain high profitability.

easily match. I think I can safely say that we have no concerns

for a repeat of the situation that occurred with commodity DRAMs.

The LCD business

Portable PCs

Q: Toshiba and Matsushita Electric Industrial Co., Ltd.
have a new joint venture for LCDs that began

operation in April. What outlook do you see for the

future development of this business?

Q: What are your strategies for your por table PC

business?

A: Toshiba Matsushita Display Technology Co., Ltd. (TMDT) com-
bines our LCD development, manufacturing, and sales opera-

A: This is one of Toshiba’s core businesses and one I want to
see fur ther strengthened in all areas, from development to lo-

tions with those of Matsushita’s. It’s an excellent match, be-

gistics. For instance, in 2001 we established a system for di-

cause it brings together our know-how in large-sized, low-tem-

rect delivery to the North American market of portable PCs manu-

perature polysilicon (LTPS) TFT LCDs and Matsushita’s high-speed,

factured at our Philippine facility. However, we know that suc-

high-resolution LCD technologies for TVs. That combination gives

cess depends on offering great products that win in the market

us the potential to be a leader in the world market. Our leader-

place. To support us in this we established two technology cen-

ship in LTPS TFT LCDs also gives us an edge in development of

ters at our main PC facility, Ome Operations in Tokyo, the Core

full color organic light emitting displays (OLEDs), next-genera-

Technology Center and the Digital Media Development Center.

tion displays that offer higher resolution and a slimmer display.

These integrate our development and engineering capabilities

We are making progress in OLED development and mass pro-

in computing, visual imaging, communications and storage de-

duction is now slated to start in 2003. In the interim, TMDT will

vices and will help assure that Toshiba continues the timely launch

open a new production facility in Singapore in August 2002 that

of distinctive products that integrate innovative technologies.

will produce large-sized LTPS TFT LCDs for por table PCs, moni-

These measures are already bearing fruit. In the Januar y-March

tors, and TVs. All-in-all, we are well positioned, with the right

quar ter of 2002, Toshiba regained the worldwide No. 1 share of

products and the right road map to the future.

the por table PC market for the first time in nine months*.

We are also working to enhance the profitability of the por-

table PC business by sharpening our cost competitiveness.

Toshiba Information Equipment (Hangzhou) Co., Ltd. in Hangzhou,

Zhejian, China, will contribute to this. We established this com-

pany in June 2002, and it will star t mass production in April

2003. Toshiba will sharpen its cost competitiveness in global

markets and reduce product development lead times while in-

dependently developing leading-edge technologies, including fuel

cells and Voice over IP technologies, a step ahead of competi-

tors. We will also emphasize the integration of these technolo-

gies into new products to strengthen product competitiveness

as we fur ther expand our por table PC business.

*(Source: IDC Sur vey)

TVC

Q: What exactly is Toshiba Value Created and how do

you use in restructuring your business?

A: TVC is management tool that we developed to gauge the
value creation of our businesses. Basically, it measures results

against the cost of capital invested in each business. Any busi-

ness that shows worsening TVC for two consecutive fiscal halves

is designated as requiring monitoring and is encouraged to imple-

ment improvement measures. If TVC continues to worsen for a

fur ther two consecutive fiscal halves, the business becomes a

“selected business” that is subject to measures that include

merger in a joint venture with another company, sale, or with-

drawal from the business.

•Withdrawal from business

Withdrawal from commodity DRAM business

•Established JV to assure survival

Aerospace business JV with NEC Corporation

Power transmission and distribution JV with Mitsubishi

Electric Corporation

•Established JV to strengthen competitiveness

LCD business JV with Matsushita Electric Industrial Co., Ltd.

Improvement of the financial structure

Q: There is some concern about a weakening of Toshiba’s
financial structure. What measures is Toshiba tak-

ing in this area?

A: Toshiba is focused on reducing debt and improving the debt-
to-equity ratio. Unfortunately, our per formance in the harsh busi-

ness conditions of fiscal 2001, plus heavy restructuring charges,

resulted in a sharp drop in shareholders’ equity. Although we

minimized the rise in debt, thanks to moves to improve asset

efficiency and advance our Asset Light asset-reduction program

through our 01 Action Plan, the debt-to-equity ratio rose to 258%,

due to the decline in shareholders’ equity. If we exclude debt

held by Toshiba Group financial companies, that ratio was still

191%. In these circumstances, Toshiba has to bolster its finan-

cial structure by generating cash flows. That means moves to

strengthen profitability and to fur ther reduce assets. We expect

that the measures we are taking under the 01 Action Plan will

allow Toshiba to reduce debt from fiscal 2002 on, to improve

the debt-to-equity ratio, and also raise our credibility in global

capital markets.

10
10

Toshiba’s vision of the digital, mobile, networked society

The emergence of Korean, Taiwanese,

and Chinese companies

Q: The spread of broadband and wireless communica-
tions is spurring digital convergence. What prod-

Q: Recently there has been a conspicuous emergence
of Korean, Taiwanese, and Chinese companies, par-

ucts and services will this allow Toshiba to offer?

ticularly in semiconductors and LCDs. What strate-

gies will Toshiba implement to compete with these

companies?

A: Toshiba remains committed to leading the industry in creat-
ing new-concept products and in innovative products that inte-

A: Our Asian competitors enjoy competitive advantages—out-
standing technologies for mass production and the suppor t of

grate digital and mobile communications technologies. I have

low-cost, capable labor forces—that pose severe challenges to

already mentioned the new development centers at Ome. They

Toshiba. That said, we are moving ahead with strategies focused

bring together about 3,000 development and design engineers

on utilizing the technology and production technologies of ver y

from our Digital Media Network Company and Mobile Communi-

aggressive Asian companies to preser ve our international com-

cations Company who used to be located at five locations, with

petitiveness. We also recognize the growing impor tance of

little contact with one another. At Ome, they will be able to work

benchmarking the outstanding aspects of these companies.

together, allowing people from different fields to share know-

However, I believe that we maintain superiority over these com-

how and ideas. I expect this to enhance technology develop-

petitors in product creation, including applications and software.

ment, par ticularly in software. It will cer tainly suppor t us in de-

Take our Semiconductor Company. It has a wide range of know-

veloping products that integrate diverse technologies and in

how, from world-leading discrete products to SoC, and it can

developing technologies that anticipate market needs. We ex-

enhance this by working with our in-house set makers, our PC

pect significant results in this area.

and TV businesses, for example. This gives us a chance to pro-

vide a knowledge edge in suppor ting other customers. In addi-

tion, we will strengthen our close, long-term ties with leading

domestic and overseas companies. I am confident that we have

the technological capabilities needed to respond to the demands

of our customers in a timely manner.

Business

Offices
Hotels
Conference Halls
Convention Centers
Shopping Centers
Restaurants

Hub/Router

xDigital
Subscriber Line,
Cable, Modem

Lease Line,
xDigital Subscriber Line
Cable
Backhaul

Public

Station Terminals
Airport Terminals
Scheduled Flights
Educational
Institutions

Home

Apartments and
Condominium
Complexes
Housing

The Internet

Enterprise
Information
Sharing
Environment

“MAGNIA Z300”

IA Server

12
12

Wireless & Seamless Office

1) THE “WIRELESS & SEAMLESS” OFFICE

Toshiba’s “Wireless & Seamless” office technology gives users simple anywhere, anytime network connectivity. It’s an innova-

tive solution that allows us to make a major contribution to enhancing the flexibility of business life.

BluetoothTM and wireless LAN technology suppor t wireless connections between por table PCs and cellular phones, PDAs,

printers, projectors and access points. And the office and its tools are with you wherever you go, as wireless capabilities allow

direct links from hotels, airpor ts—ever ywhere.

Once setup is done, operation is completely routinized. For example, e-mail can be automatically received at a portable PC

via a cellular phone in your pocket. A por table PC and PDA can synchronize and update one another—even while they are in a

briefcase.

Toshiba is the vanguard of directing advanced technologies to the development of networked devices that enhance the

workplace and productivity. Our diverse product line-up include wireless ser vers that free work groups from the spatial limita-

tions of cables, and a multi-platform electronic conferencing system that provides a forum for open discussion.

When Toshiba introduced the world’s first por table PCs, it brought undreamed of mobility and flexibility to the workplace.

With the wireless & seamless office, Toshiba takes this to the next level, bringing all the advantages of power ful networking

capabilities to the office environment without the compromises to freedom that come with the ties of cables. The wireless &

seamless system is the office of tomorrow, and a Toshiba solution today.

Toshiba suppor ts the wireless & seamless office with industr y-leading technologies for por table

PCs, including 1.8-inch HDDs, ultra-thin magnesium cases, LTPS TFT LCDs and advanced cooling

and power-management technologies.

13
13

Information
Service
(Worldwide Web,
i-mode)

The Internet

Home and Office
Cellular Phones,
PDAs

Outdoors

Cellular Phones
PDAs

14
14

Mobile Communications

2) MOBILE COMMUNICATIONS

The Mobile Communications Concept

The essence of broadband is always-on connectivity, and Toshiba is making that possible through products and technologies

that allow anywhere, anytime connection to the Internet. Toshiba’s extensive know-how in mobile communications ranges from

essential ICs to advanced products, systems, and market-defining ser vices. Toshiba draws on the diverse capabilities of its

in-house companies, subsidiaries and affiliates to create high value-added products and ser vices.

Wireless enter tainment net-
works enter the home with the
“TransCube 10”. It brings TV
and video to por table PCs,
suppor ts video and data re-
cording to an HDD, and pro-
vides access to multiple high-
speed Internet connections.

“FEMINITY” home appliances
are linked to the Internet via
BluetoothTM. The industr y’s
first wireless network for the
home, “FEMINITY” can even
download suggested dinner
menus from its dedicated web
site to the network’s home
terminal.

This new 64-bit RISC micropro-
cessor, designed with 0.13µm
process technology, brings the
power of 300MHz operation to
digital consumer applications.

Mobile Network Devices

Toshiba’s por table PCs have long been the world’s favorite. These PCs, and our PC ser vers and related

devices, are suppor ted by cutting-edge technological capabilities and a dedication to excellence. The ad-

vent of broadband communications makes it possible to access and download high-resolution motion pic-

tures and high-quality sound recordings anywhere and at any time. Toshiba responds to these needs with

advanced technologies, including MPEG4 imaging and high-resolution TFT LCDs.

Ubiquitous Headset

Our BluetoothTM headset provides hands-free operation of PCs, PDAs and home appliances. It is the first

device of its kind to combine wireless communications and voice recognition technologies.

TransCube

With the May 2002 release of the “TransCube 10” wireless home media station, Toshiba brought a new

level of capability to networked home entertainment. “TransCube 10” integrates a TV tuner, a 72-hour HDD

video recorder and suppor t for multiple high-speed Internet connections. Its wireless LAN connectivity al-

lows transmission of TV or video images to a portable PC anywhere in the home wireless network. “TransCube

10” is just the first of a series of wireless home media stations Toshiba will introduce.

Internet Home Appliances

The April 2002 release of the “FEMINITY” series of networked home products is the first step toward a

complete wireless home management system. Remote control via a PC, PDA or cellular phone of the BluetoothTM-

enabled refrigerator, washing machine and microwave oven now available will soon be extended to air-

conditioning, lighting and more. Increasingly advanced ser vices will be suppor ted by the “FEMINITY” web

site, as par t of a continuing evolution that will make “FEMINITY” the centerpiece of the electronic

household.

Electronic Components and Core Technologies

SEMICONDUCTORS

Mobile networking equipment must be versatile enough to access the Web and allow downloads of image

and music files, yet it also has to be small, slim, light and, most of all, truly mobile. Toshiba semiconductors

deliver all these capabilities, along with high-speed operation and low power consumption. Toshiba products

span three key areas: NAND flash memories, LSIs for image compression and high-speed communications,

and discrete devices mounted in ultra-small, multi-pin-count packages.

DISPLAYS AND BATTERIES

Toshiba’s lithium-ion secondar y batteries bring smaller sizes, weight reductions and longer batter y times to

mobile information equipment. Pioneering capabilities in LTPS TFT LCDs and position Toshiba for early

leadership in OLEDs, scheduled for commercialization in 2003.

WIRELESS TECHNOLOGIES

Toshiba is in the forefront in promoting wireless communications technologies, such as BluetoothTM and

wireless LAN, and their integration in home networks and home appliances.

BLUETOOTHTM

As the only Japanese founder member of the BluetoothTM Special Interest Group (SIG), the trade association

that defines and promotes the specification, Toshiba is working to advance the worldwide penetration of

BluetoothTM and sees it as a prime solution for wireless links between all kind of products, from PCs to

cellular phones, peripheral equipment and home appliances.

15
15

An Age of New Advances

April 1999 saw Toshiba lay the cornerstone of its continuing
structural reforms: adoption of the in-House Company System.
Ten in-house companies operate today. Each one covers a
clearly defined segment of Toshiba’s wide ranging business
interests in Information & Communications Systems, Social
Infrastructure Systems, Power Systems, Digital Media, Home
Appliances, and Electronic Components. Each has the operat-
ing autonomy required to develop the business strategies and
operating style that best suits the realities of its market.

To facilitate business development and market success,
Toshiba has defined two overarching businesses categories,
Rapid Growth and Consistent Growth, and assigned the in-house
companies to their appropriate categor y.

Rapid Growth: Digital Media Network, Mobile Communications,
iValue Creation, Semiconductor, Display Devices & Components,
and e-Solutions

IT offers seemingly endless oppor tunities for innovation.
Most recently that has translated into the deployment of broad-
band communications, including striking progress in wireless
communications. Toshiba contributes to advances in IT through
its vast experience and competitiveness in computing, image
processing, communications, and data storage. To this, Toshiba
adds a wide range of elemental technologies in areas as di-
verse as image compression and wireless networks. The re-

Information and Communications Systems

16%

Social Infrastructure Systems

16%

Newly Defined

sult of their integration is value-added products that define
new capabilities and markets and that suppor t drives into ar-
eas with high growth potential that strengthen Toshiba’s over-
all business.

Toshiba defines two broad business domains that it sees
as drivers for rapid growth and future business: the Individual
domain, embracing such products as por table PCs and per-
sonal mobile equipment; and the Components domain, includ-
ing semiconductors and displays. The in-house companies di-
rect their advanced know-how in these two domains toward
the early development of products and total solutions that meet
diversifying customer needs.

Consistent Growth: Social Infrastructure Systems, Medical Sys-
tems, Power Systems, and Home Appliances

The Industrial and Social domains are stable fields where
Toshiba is devising mechanisms to guarantee consistent prof-
its. Toshiba is promoting three strategies to enhance competi-
tiveness in Japan and on the global scale:

* Japan: Continue to promote alliances that contribute to
enhanced profitability, including alliances with competitors.
* Overseas: Promote business development by strengthen-

ing marketing capabilities.

* For tify ser vice and maintenance operations, par ticularly

through the application of IT know-how.

Power Systems

Digital Media

24%

Home Appliances

11%

Electronic Devices & Components

17%

Others

16
16

(%: Share of Sales in Fiscal 2001)

Consistent
Growth
Businesses

Growth
Businesses

e-SOLUTIONS COMPANY

SOCIAL INFRASTRUCTURE SYSTEMS COMPANY

MEDICAL SYSTEMS COMPANY

POWER SYSTEMS & SERVICES COMPANY

Strategic Business Domains

DIGITAL MEDIA NETWORK COMPANY

MOBILE COMMUNICATIONS COMPANY

iVALUE CREATION COMPANY

HOME APPLIANCES COMPANY

SEMICONDUCTOR COMPANY

DISPLAY, DEVICES & COMPONETS C0MPANY

17
17

Review of Operations

e-SOLUTIONS COMPANY President SHINSUKE KAWAMURA

（右）e-ソリューウーション社 社長 奥原 弘夫

Information & Communications Systems

e-SOLUTIONS COMPANY
The e-Solutions Company supports the public and
private sectors with a wide range of services. The
diversity of our capabilities can be seen in corpo-
rate SI and solutions services, e-government sys-
tems for both national and regional governments,
“digital media solutions” for the digitization of
broadcasting, newspapers and other mass media,
and in ASP outsourcing and network integration
services. At the heart of our business is “collabo-
rative innovation,” close relations with our cus-
tomers and business partners in which we draw
on our experience as an IT user and develop and
support an extensive range of technologies. We
are ready for the second phase of the IT revolu-
tion and its dynamic integration of information, tele-
communications, broadcasting and imaging.

The Information & Communications Systems is a
new segment established in April 2001. It brings
together the IT-related businesses of the former
Information, Communications & Social Systems
segment.

Consolidated sales in the Information & Com-
munications Systems segment were 2% lower year-
on-year, at ¥956.7 billion (US$7,193 million). This
is largely attributable to continued sluggishness
in private sector demand for equipment and sys-
tems, the result of the prolonged economic turn-
down, and fur ther cur tailment of capital expendi-
ture. As intensified competition drove prices down,
segment operating income declined 59% against
the year-earlier period, to ¥9.7 billion (US$73
million).

N E T S A L E S
(Billions of yen)

O P E R A T I N G I N C O M E
(Billions of yen)

986

972

957

'00

'01

'02

'00

'01

'02

The e-Solutions Company is at the heart of
the segment. It operates system integration (SI) and
solutions businesses that provide services related
to the overall life cycle of computer systems, and
platform businesses that supply components that
suppor t SI and solutions businesses and related
integration services. The company emphasizes four
core business areas:
* Solutions that use Toshiba’s own systems as ref-
erences, including Enterprise Resource Planning
(ERP) and Supply Chain Management (SCM), and
solutions developed through our exper tise as a
manufacturer.
* “e-Japan,” which develops e-government systems
for both local and national government.
* Digital media solutions for establishing new busi-
ness models through tie-ups with broadcasting,
newspapers and other media.
* ITS, which aims to develop SI businesses based on
our core technologies for voice and image processing.

We are making effor ts to enhance our ser-
vices and solutions capabilities across diverse busi-
ness as an Application Service Provider (ASP) and a
provider of other outsourcing services, network in-
tegration services and security.

In this connection, we promote alliances that
strengthen our capabilities. In June 2001, we es-
tablished Enterprise Business System Solutions
Corporation, a joint venture with Accenture and
Oracle Corporation Japan that provides solutions ser-
vices to clients wishing to take advantage of ERP.
Ser vices provided range from consultation to sys-
tem design, development and extension. We also
established Toshiba T.D. Education Co., Ltd., a joint
venture with TAKARA Co., Ltd. and Dai Nippon Print-
ing Co., Ltd. that has developed and distributes an
innovative educational platform and related
materials.

Toshiba has taken an aggressive approach
to upgrading Group business systems in the face of
a fast-changing information and communications
systems market. In October 2001, to bolster our
competence in IT-related engineering and market-
ing capabilities, Toshiba spun off the Tokyo System
Center, an engineering section of the e-Solutions
Company, integrating it with three other companies
in Toshiba IT-Solutions Corporation. More recently,
Toshiba Communication Systems Co., Ltd. was es-
tablished in July 2002. This move enhanced our total
engineering capabilities in communications systems
by bringing together two group companies and part
of Hino Operations in Tokyo.

In digital media solutions, the move to digi-
tal broadcasting is driving demand for equipment
for broadcasting satellite (BS) and communications
satellite (CS) and terrestrial broadcasting. At the
same time, demand for systems solutions for
present media platforms is being stimulated by digi-
tization of broadcast content.

Toshiba is a major shareholder in Mobile
Broadcasting Corporation, a digital satellite broad-
casting company that will broadcast programming,
music and information to vehicles, car navigation
systems and newly developed portable information
terminals when it starts service in early 2004. The
company has attracted considerable investor inter-
est, and SK Telecom, a South Korean cellular phone
ser vice provider and NTT Data Corporation are re-
cent members of the consortium.

ep Broadcasting Corporation and ep Corpo-
ration, joint ventures between Toshiba, Matsushita
Electric Industrial Co., Ltd. and other major Japa-
nese companies, have started the world's first stor-
age-type interactive services. These services allow
viewers and listeners to record their favorite BS and
CS programs to an HDD and provide interactive func-
tions allowing users to enjoy TV shopping and infor-
mation services via the Internet.

Our commitment to developing new capabili-
ties and services can be seen in the paperless tick-
eting ser vice. “Fresh Ticket,” an e-ticket/coupon
system will be adopted by major Japanese broad-
casting companies, including BS Nippon, TBS and
TVK.

Toshiba will continue to develop an effective
IT-solutions business by concentrating resources on
profitable areas and by promoting alliances and
structural reforms in our businesses. We will de-
liver advanced technologies that provide essential
infrastructure for manufacturing, distribution, finan-
cial institutions, mass media and government and
add value to these with total SI and solutions
services.

With the “ArrayFor t Series”
of disk arrays, companies
can configure highly reliable
s t o r a g e a r e a n e t w o r k s
(SANs).

Toshiba’s production moni-
toring and control system for
a brewing company realizes
an open, streamlined sys-
tem. Close integration with
the host system realizes real-
time process management.

High-speed, huge-volume,
secure stock transactions
are assured by the trading
system Toshiba developed to
support front-end operations
at a leading Japanese secu-
rities company. The system
suppor ts customization of
information by users.

SOCIAL INFRASTRUCTURE SYSTEMS COMPANY
Our mission is simple but essential: to build the
infrastructure that society depends on.

To do that, we provide comprehensive
support, from systems development through to
servicing and operations, for a wide range of es-
sential infrastructure: community infrastructure
such as water supply and sewerage systems; build-
ing management; public facilities; environmen-
tal protection; transportation infrastructure for
roads, railroads and airports; and industrial in-
frastructure that supports plant and equipment
for manufacturing industries.

Today’s infrastructure demands higher levels
of safety, usability and convenience, as well as
consideration of the global environment and im-
proved system efficiency. We achieve these tar-
gets with advanced technology, reliable systems
and components, and top-quality services. Working
together with our customers, we create value
that provides a bridge to a more prosperous
tomorrow.

SOCIAL INFRASTRUCTURE SYSTEMS COMPANY President TSUYOSHI KIMURA

Social Infrastructure Systems

The Social Infrastructure Systems is a new segment
established in April 2001. It brings together the
Social Infrastructure Systems Company, the Medical
Systems Company and Toshiba Elevator Corporation.

Cuts in domestic public spending combined
with weak public sector demand and reduced capital
expenditure in the private sector, par ticularly by
manufacturing companies, reduced revenues in our
social and industrial systems businesses. Trans-
por tation businesses also saw large revenue de-
creases due to the cur tailed facility investments
by the Japan Railway Group and other railroad
companies.

The medical systems business overcame se-
vere conditions in its domestic and overseas mar-
kets to generate profits. In Japan, reforms to the
medical ser vice system made health-care provid-
ers more concerned for cost effectiveness. That,
combined with inroads made by overseas manu-
facturers, intensified price competition. The medi-
cal information systems business grew, reflecting
the national government’s initiatives to promote
the use of IT and networking at medical institu-
tions. The elevator and escalator business saw
lower sales, largely because of declines in sales
prices. Overseas, business was hit by deteriorat-
ing market conditions that accompanied the eco-
nomic slowdown in the United States and Asia, as
well as by sharp drop in facility investment in the
United States.

Toshiba supplies the carbody
and all electrical and electronic
systems for Japan Freight Rail-
way Company’s “EH500” type
electric locomotive.

Consolidated sales in the Social Infrastructure
Systems segment reached ¥955.3 billion
(US$7,183 million), a 2% decrease against the
previous fiscal year. However, operating income in-
creased 46% from the previous fiscal year, to ¥13.6
billion (US$102 million), on the strength of new
products in the medical systems and elevator and
escalator businesses and far-reaching initiatives
to cut costs.

Looking to the long term, the Social Infrastruc-
ture Systems Company is bolstering profitability
in key areas of infrastructure provision. Demand
is growing for efficient infrastructure that fully meets
demands for safety, comfort and convenience while
showing ever y consideration for environmental
impacts. Toshiba has developed comprehensive
businesses that deliver the latest technologies,
reliable system components, diverse ser vices and
operations in the following areas:

* Public systems: Our goal here is to promote new
service businesses supporting public systems such
as water supply and sewerage systems, in areas
including Operation & Maintenance (O&M) and Pri-
vate Finance Initiatives (PFIs).
* Buildings and public facilities: Building and Energy
Management System (BEMS), our new energy con-
servation services for buildings, started to offer an
IT-based total solution in improving the efficiency of
air-conditioners, light and other facilities.
* Railroad infrastructure: Japan’s first integrated
Micro-Electronics (ME) system, deploys a single

processor to conduct digital processing across the
range of functions—protection, connection, super-
vision, measurement and collection of data for
archiving—required to operate the substations used
by railroad companies. We are also developing new
types of ser vices, including distribution of infor-
mation to station facilities.

* Manufacturing infrastructure: Our new applica-
tion software package allows remote control of
instrumentation in production plants using i-mode
cellular phones as a par t of the remote sur veil-
lance and control systems. We are aggressively
marketing the package.

MEDICAL SYSTEMS COMPANY
The Medical Systems Company provides medi-
cal institutions around the world with medical
imaging diagnosis instruments, including X-ray
equipment, X-ray CT scanning devices, ultrasonic
equipment, MRI machines and nuclear medical
equipment, as well as advanced medical solutions
systems, such as medical image storage and man-
agement systems and hospital information
systems.

With the advantage of having a broad array
of customers as Japan’s leading solutions pro-
vider, we provide not only imaging diagnosis
machines but also medical-related “enterprise
solutions” that help medical organizations stream-
line their management. Always aware of just how
precious life is, we strive to create new value in
medical care, health and welfare so that people
can enjoy healthy lives.

MEDICAL SYSTEMS COMPANY President MASAMICHI KATSURADA

“The Aquilion Multislice” pro-
vides detailed diagnostic im-
age data on vessels as fine
as the capillaries and supports
urgent treatment for emer-
gency patient. From the aspect
of hospital management, the
system shor tens patient ex-
amination times, contributing
to increased ef ficiency and
cost reductions.

In our medical system business, fiscal 2001
saw a severe market environment in Japan, though
ultrasound diagnostic equipment and MRI systems
achieved good sales. Exports of CT, ultrasound di-
agnostic equipment and MRI systems generated
stable profits, helped in par t by the depreciation
of the yen.

Toshiba is the Japanese market leader in X-
ray CT scanning system. We strengthened that
position with the launch of “Aquilion Multislice
System,” the world's first multiple-slice CT scan-
ner capable of simultaneous imaging of 16 slices,
with a minimum width of 0.5mm per slice and a
speed of 0.5sec per rotation. Among our ultrasound
diagnostic systems, full-color “Nemio” enjoyed ro-
bust sales. Our many years of experience in Japan
and overseas allows Toshiba to promote research
and development projects with medical institutions

N E T S A L E S
(Billions of yen)

O P E R A T I N G I N C O M E
(Billions of yen)

968

975

955

'00

'01

'02

'00

'01

'02

of world renown. We will also use our global sales
network to further develop our position in the world
market for image diagnostic imaging equipment.
The Technical Assistance Center was estab-
lished in December 2001, integrating the functions
of the medical service and engineering divisions to
provide high value-added “preventive maintenance”
of medical equipment using remote maintenance
systems.

Toshiba Elevator Corporation concluded a capi-
tal tie-up with Kone Corporation of Finland in De-
cember 2001, with which Toshiba has had a tech-
nical alliance with since 1998. The capital tie-up
reinforces this and is a step toward closer coop-
erative relations in the overall elevator and esca-
lator business. The world elevator and escalator
market, including maintenance, is estimated to be
wor th ¥3,000 billion (US$22,556 million) a year.
Kone’s mechanical engineering capabilities, and
firm roots in the European and U.S. markets,
complements Toshiba Elevator Corporation’s high-
speed and inver tor technologies and its presence
in Asia. The par tnership will enhance our compe-
tencies while reducing costs and improving ser-
vice capabilities, enabling us to take our business
to the global scale.

POWER SYSTEMS & SERVICES COMPANY
With the worldwide trend toward deregulation,
the market for electric power is becoming increas-
ingly borderless. The Power Systems & Services
Company is stepping up global operations in all
aspects of its activities, including manufactur-
ing, sales, R&D and services. In doing so, we
call on the depth of experience the company has
built up over the course of its long history and
on the world-class technical capabilities we en-
joy today. We are aggressively seeking new busi-
ness opportunities for our services and energy
solutions, so that we can continue our evolution
from a leading Japanese company to a leading
global company.

Power Systems

POWER SYSTEMS & SERVICES COMPANY President TOSHIYUKI OSHIMA

The Power Systems segment recorded sales of
¥579.6 billion (US$4,358 million) in fiscal 2001, only
1% lower than for the year-earlier period. Although
the squeeze on capital spending by Japanese power
utilities continued to make itself felt, overseas busi-
ness expanded significantly, especially in Nor th
America. Operating income increased 54% from the
previous year, to ¥26.8 billion (US$202 million),
thanks to successful cost reduction measures and
the yen depreciation.

Among major projects completed in the domes-
tic market were the installation of power generating
equipment at Tokyo Electric Power Co. Inc.’s
Shinagawa No. 1 Thermal Power Station and Tohoku
Electric Power Co., Inc.’s Unit No. 1 of Higashidori
Nuclear Power Station. We also constructed nuclear
reactor facilities at Unit No. 3 of Tohoku Electric Power
Co., Inc.’s Onagawa Nuclear Power Station and Unit
No. 5 of Chubu Electric Power Co., Inc.’s Hamaoka
Nuclear Power Station. Major overseas projects in-
cluded thermal power generation facilities in plants
in Nor th America and substation facilities in Abu
Dhabi.

In Japan, deregulation and a slump in elec-
tricity demand continue to buffet the electric power

Chubu Electric Power Co., Ltd.’s
No. 5 Unit at Hamaoka Power
Station, currently under con-
struction, integrates Toshiba’s
most advanced ABWR. (Picture:
Installation of nuclear reactor
vessel)

Toshiba’s No.3 position in the
2001 global market for steam
turbines has recently been
strengthened by supply of equip-
ment to many thermal power
plants in Nor th America.

N E T S A L E S
(Billions of yen)

O P E R A T I N G I N C O M E
(Billions of yen)

571

583

580

'00

'01

'02

'00

'01

'02

industry market. Toshiba responded with measures
to bolster global competitiveness. We strengthened
our business systems and reorganized our over-
seas bases for sales, manufacturing and ser vice
provision. We also developed new technologies that
assure we can respond quickly and appropriately
to customer demands. One result of this is a posi-
tive upward trend in overseas orders for power
generating equipment that we will use as a basis
for future expansion of overseas business.

We consider China an impor tant growth mar-
ket and continue to cultivate our presence there.
We star ted fiscal 2001 with four manufacturing
operations in China and entered fiscal year 2002
with six. A joint venture for the manufacture, sales
and maintenance of gas-insulated switchgears for
electric power facilities started full-scale operation
in March 2002. A month later, a joint venture with
the Electric Power Research Institute of China be-
gan production of surge arresters. The addition of
these new facilities positions us to supply most of
the systems and equipment required for China’s
transmission and distribution grid.

In another move to reinforce global competi-
tiveness, we entered into a March 2002 agree-
ment with Mitsubishi Electric Corporation, under
which we will integrate our distribution and trans-
mission businesses in an equally-owned joint ven-
ture that will start operation in October 2002. The
new company will be the world’s third largest manu-
facturer of distribution and transmission facilities,
and will have the product development, manufac-
turing, sales and marketing resources required to
reinforce a leading presence in the world
market.

DIGITAL MEDIA NETWORK COMPANY President ATSUTOSHI NISHIDA

Digital Media

DIGITAL MEDIA NETWORK COMPANY
The Digital Media Network Company product line-
up embraces portable PCs, computer network
equipment, storage devices, such as HDDs and
ODDs, and visual instruments and mobile devices.
At the concept and design stage, we fully ana-
lyze the “voice of customers (VOC)” and use it to
provide highly practical and original products and
services. Based on differentiated innovative tech-
nologies unique to Toshiba, we effectively lever-
age our experience with portable PCs to create
inspirational products, to propose new home
lifestyles and new ways of working in office and
mobile environments, and offer wireless system
solutions that enrich the daily life of our customers.

“DynaBook G series” por-
table PCs offer the most ad-
vanced CPU available, a 15-
inch SuperView LCD and su-
perb stereo sound: a rich
feast of high quality audio
and vivid visual images.

N E T S A L E S
(Billions of yen)

O P E R A T I N G I N C O M E
(Billions of yen)

1,435

1,486

1,469

'00

'01

'02

'00

'01

-15

'02

Although consolidated sales in the Digital Media seg-
ment were only 1% lower than in the previous year,
at ¥1,468.6 billion (US$ 11,042 million), there was
an operating loss of ¥14.9 billion (US$ 112 million).
Sales of HDDs, CD-R/RWs, DVD-ROM drives and
other PC peripherals all recorded advances, as did
sales of visual products, including DVD video play-
ers. However, reduced spending on IT combined with
intensive price competition to impact on sales of por-
table PCs and overall segment results.

The Digital Media Network Company is posi-
tioned at the heart of digital convergence. Its mis-
sion is as simple as it is essential: to develop inno-
vative products that bring advances in wireless, im-
aging, storage and other technologies to por table
PCs, computer network equipment, PC peripherals
and visual products and mobile equipment. A key
part of its work is the creation of new products, yet
unnamed products, that will change the way we do
work and add to the way we enjoy life. Toward achiev-
ing this, development of advanced digital products
has been concentrated at Ome Operations in subur-
ban Tokyo. In November 2001, Ome celebrated the
opening of a new “Core Technology Center” and a
“Digital Media Development Center.” They bring to-
gether more than 3,000 researchers and engineers
in an environment designed to encourage cross-fer-
tilization of ideas.

Fiscal 2001 saw the por table PC business
weather a severe slump. Domestic shipments fell
away by 10% from the previous fiscal year, to 0.9
million units, while overseas shipments tumbled 13%,
to 2.35 million units. A sharp downturn in IT spend-

The “Digital Face Plasma
35P2700” is an all-in-one
model with a 35-inch screen
that fits into the same space
as a conventional 21-inch TV.

Combination HDD and DVD
digital video recorders are
g r o w i n g i n p o p u l a r i t y.
Toshiba’s latest, the “RD-X2,”
can store up to 35 hours of
programming on an 80GB
HDD and save selected pro-
grams to a DVD-R.

ing in the United States spurred intensive price com-
petition as demand weakened, a reality that soon
spread to Europe and beyond. Toshiba’s position in
these severe conditions was not helped by delays in
product launches.

We took decisive measures to meet these
challenges, and independent figures confirm that we
regained the leading share in the world portable PC
market in the first calendar quarter of 2002. We will
seek to retain this by continuing to introduce differ-
entiated products to the market ahead of our com-
petitors, and by proactively pursuing regional strate-
gies rooted in local wants and preferences. Our goals
are a larger market share, accompanied by higher
sales and profit.

Broadband technologies and wireless solu-
tions are finally ready for the main stage and we are
ready to deploy them. Our strategy for the office is
centered on wireless LAN technology; a completely
seamless office environment equipped with portable
PCs, tablet PCs, PDAs, mobile IPs and security tech-
nologies. In the home, we have already launched
“TransCube,” which stands at the heart of a versa-
tile wireless environment supporting por table PCs
and other equipment.

Toshiba is an established technology and
market leader in storage devices, and this was re-
flected in significant sales growth in our newest prod-
uct, the 1.8-inch HDD that is increasingly popular in
smaller portable PCs, mobile MP3 players and PCI-
card HDDs. Combination DVD-ROM and CD-R/RW
drives, another product that we pioneered in the
market, also recorded notable sales growth, particu-

larly in slim models for incorporation in portable PCs.
Our key magnetic drive over the last few years
has been the 2.5-inch HDD. Constant innovation
pushed data storage capacity to 60 gigabytes in fis-
cal 2001, and earned the 2.5-inch drive new applica-
tions in car navigation systems and digital home
appliances. This latter area is particularly promising
as digital convergence makes itself felt in the home.

In the visual products business, Toshiba de-
livers a complete range of products for the home:
flat-screen TVs for analog and BS digital broadcasts,
projection TVs, LCD data projectors and DVD players
and recorders.

Lower hardware prices and an ever-increas-
ing selection of software products fueled rapid growth
in demand for DVD players. However, price competi-
tion has grown with demand and was par ticularly
fierce in the North American market, which accounts
for half of worldwide demand. This brought about a
sharp decline in profit margins. The same combina-
tion of lower prices and more software triggered a
remarkable expansion in the Japanese market, which
soared 200 percent from the previous year.

VHS video and DVD players combined in a
single unit attracted many customers. Demand for
DVD recorders has also shown rapid growth, and the
single-unit HDD/DVD-RAM, which we introduced
ahead of our rivals, has been very popular.

MOBILE COMMUNICATIONS COMPANY
The Mobile Communications Company offers a
wide range of products that allows everyone to
access the network environment at the heart of
today's broadband age. In the next generation
cellular phone market we will support both major
platforms, W-CDMA and cdma2000 1x. As we do
so, we will promote our advantage in multimedia
features such as moving pictures and GPS func-
tions. In addition to the Japanese and the North
American markets, we will penetrate the Euro-
pean and Chinese markets. In the mobile products
market, we have already launched the “GENIO e”
PDA as well as wireless PDAs. We will further
enhance our product lineup in this field in order
to position Toshiba as an innovator and industry
leader.

MOBILE COMMUNICATIONS COMPANY President TETSUYA MIZOGUCHI

The future of cellular phones: The
J-T07 (l.) and TT21 (r.) both have
a CCD camera, the A3013T (c.)
suppor ts GPS. All three employ
a high-resolution low temperature
polysilicon TFT LCD.

Established in April 2001, the Mobile Com-
munications Company has recorded solid results
in sales of cellular phones for the domestic mar-
ket. That was, however, undercut by the slowdown
in the North American market. In the final result,
shipments in fiscal 2001 declined 29% against
the previous fiscal year, to 6.35 million units, while
sales fell to ¥192.0 billion ($US 1,444 million),
down 6%.

Our eye is firmly fixed on the future and the
unfolding promise of cellular communications. With
this in mind, we entered into a technical partner-
ship agreement with Mitsubishi Electric Corpora-

tion in March 2002, under which we will develop
third-generation (3G) cellular phones. Joint devel-
opment work started in April 2002.

Our immediate goal is to launch a series of
cutting-edge products on the Japanese market that
will maintain our high-profit structure. In addition,
we will cultivate new markets by releasing i-mode
terminals in Europe and CDMA terminals in China.
In the North American market, we will bolster our
product lineup and launch aggressive operations
in our alliance with Audiovox Communications Cor-
poration, to further increase CDMA market share
and profits.

iVALUE CREATION COMPANY
Through provision of information services based
on mobile and Internet communications, the
iValue Creation Company is making progress in
the three areas of web services for portal sites,
content production and distribution, and ASP
services.

Drawing on all we have learned in the last
two years, we will enhance existing services and
expand our service competitiveness, and extend
our business to reach clearly defined business
sectors. Focusing on strategies relating to the
mobile broadband Internet, an area promising rapid
growth, we will strive to establish a network busi-
ness that satisfies customer requirements in
terms of quality, price and performance.

iVALUE CREATION COMPANY President TSUTOMU KAWADA

The iValue Creation Company is responsible for
developing new information and content services,
primarily for delivery via the Internet. Its most popu-
lar portal, with over 500,000 cellular phone users
subscribing for the pay service, is “Ekimae Tanken
Club”, which provides information on entertainment
and shopping around Japan’s railroad stations. The
company’s other ventures include offering naviga-
tion ser vices for owners of cellular phones
equipped with a global positioning system (GPS)
and operation of “Nippon Daihyo.com,” the offi-

cial Web site of the Japan Football Association.
iValue Creation also supports the business mar-
ket as an Application Ser vice Provider (ASP), in-
cluding information provision services and software
licensing ser vices for overseas network service
providers, especially in Asia. In October 2001,
Business Travel Japan Inc., a wholly-owned Toshiba
subsidiar y, star ted full-scale operation, offering
system solutions for small- and medium-sized travel
agents in the business travel market.

HOME APPLIANCES COMPANY
The Home Appliances Company aims at being a
“high-profit company with sustainable growth,”
a core business that uses the Toshiba brand to
appeal to consumers. Our main product areas
cover refrigerators, washing machines, microwave
ovens, and other household appliances. Based
on pioneering technical capabilities—which sup-
ported us in developing chlorofluorocarbon (CFC)-free
refrigerators and DD inverter motors—we will cre-
ate products that satisfy customers and so main-
tain our position as a leader in market share in
our domestic market. Overseas, we will seek to
extend our business operations, particularly into
China, other parts of Asia, and the Middle East.
To ensure long-term profitability, we will continue
efforts to introduce innovative products ahead
of our competitors in the promising area of net-
worked home appliances, dishwashers, induction
heating (IH) cookers and 200-volt home
appliances.

Home Appliances

HOME APPLIANCES COMPANY President TAKESHI NAGASAKA

ronment, Japan’s aging population and declining birth-
rate, and continue to develop products that can sup-
port new lifestyles. We also expect this approach to
help us to revamp our businesses and ensure stable
profits.

Although demand for refrigerators fell 18%
year-on-year, sales of the “Hikari Plasma Senzo” se-
ries were favorable. Launched in September 2001,
one sales point of these refrigerators is a hundred-
fold increase in the ability to decompose ethylene,
which damages fresh vegetables. Sales were also
healthy for the “Non-Freon Hikari Plasma Senzo” se-
ries, the first environmentally friendly refrigerators
offered by any Japanese manufacturer.

Among washing machines, our “Kaisoku Ginga
21,” a fully automatic drum-type washing machine
and dryer, enjoyed market success, thanks in part
to a high rotational speed during spin-drying that gets
clothes dr y faster. Another hit was “Aqua Bihaku,”
which is equipped with an aquatic controller that in-

Domestic demand for home appliances suffered a
sharp drop, one anticipated in the aftermath of a
sales spike in fiscal 2000, prior to the April 2001
enforcement of the Home Appliance Recycling Law.
Consequently, consolidated sales in the Home Appli-
ances segment decreased 4% against the previous
fiscal year, to ¥680.7 billion (US$5,118 million), while
operating income was down 38% to ¥11.4 billion
(US$85 million).

However, even in this tough environment there
were positive signs. Efforts to differentiate Toshiba
products from conventional home appliances proved
successful, as our series of “Lifestyle Creation” prod-
ucts won increased market shares in washing ma-
chines, vacuum cleaners and microwave ovens. In
this year and beyond, we will continue to address
such social issues as energy conservation, the envi-

N E T S A L E S
(Billions of yen)

O P E R A T I N G I N C O M E
(Billions of yen)

660

708

681

'00

'01

'02

'00

'01

'02

With 200V of power, the fully
automatic “Kaisoku Ginga 21”
assures faster washing and
dr ying cycles. DD inver ter mo-
tors damp down noise and vi-
bration.

“Non-Fr eon Hikari Plasma
Senzoko” refrigerators are the
industry’s first to be free of CFC
substitutes that are now seen
as imposing burdens on the
environment.

creases washing power while keeping the drum clean.
As a result, we were able to register stronger overall
sales of our washing machines.

Among the innovative products we introduced
in response to user needs are a garbage processor
with greatly reduced odor that can be stored indoors,
a speedy dishwasher and dryer, and an IH cooking
heater with an LED display showing heat intensity.
In Februar y 2002, we launched the “FEMINITY se-
ries,” the first BluetoothTM-based wireless network
for home appliances. Controlled by a portable PC, it
really brings the advantages of the IT revolution in
the home and points the way to the lifestyle of to-
morrow. Products in the series, including a refrigera-
tor and a microwave oven, have been on the market

since April.

Since June 2001, we have developed a stra-
tegic alliance with Sweden’s AB Electrolux. One as-
pect of this has been our selection, sales and ser-
vice of products that we think suit the Japanese
lifestyle. Marketed under the brand name “Electrolux
by TOSHIBA,” these products are enjoying increas-
ing popularity.

We see potential for positive growth overseas,
especially in Asia. With that in mind, we established
Toshiba Vietnam Home Appliances Co., Ltd. and
forged technical alliances with major home-
appliance manufacturers in China. These initiatives
represent reinforcement of an Asian strategy that we
are sure will produce growth in coming years.

SEMICONDUCTOR COMPANY
The Semiconductor Company offers a broad
array of products such as discrete devices, bi-
polar ICs and memories, including NAND flash
memories, with a particular emphasis on sys-
tem-on-chip (SoC) solutions in which total sys-
tems are realized on a single silicon chip. With
these products, we are accelerating a rapid shift
to our new Integrated Device Manufacturer (IDM)
model, where different groups of products are
linked to create an operating synergy that ad-
vances our overall business. We make maximum
use of the most advanced semiconductor tech-
nologies and offer total system solutions, includ-
ing software support, to promote technical in-
novation and the development of all kinds of
electronic equipment for the broadband age.

SEMICONDUCTOR COMPANY President TAKESHI NAKAGAWA

Electronic Devices & Components

N E T S A L E S
(Billions of yen)

1,551

1,373

O P E R A T I N G I N C O M E
(Billions of yen)

116

1,075

–24

'00

'01

'02

'00

'01

–176
'02

The collapse of the IT market in the second half of
fiscal 2000 continued to echo throughout the
fiscal 2001, with no sign of the recovery widely ex-
pected to emerge in the third calendar quar ter of
2001. As demand for semiconductors remained ane-
mic, suffering an unprecedented year-on-year decline
of 32%, Toshiba saw dramatic declines in demand
for discrete devices, memories and system LSIs.
Sales of LCDs failed to reach forecasts, despite a
slight recovery in demand for displays for portable
PCs, monitors and cellular phones in the fiscal sec-
ond half. Consolidated sales for the segment

decreased 31% from the previous fiscal year, to
¥1,074.8 billion (US$8,082 million), and Toshiba
posted an operating loss of ¥176.3 billion (US$1,325
million).

Sales of the Semiconductor Company de-
creased 34% from the previous fiscal year, to ¥725
billion (US$5,451 million), with an operating loss of
¥122 billion (US$917 million) that reflected the de-
clines in sales volumes and fall in prices of commod-
ity DRAMs.

As the shape of the year became clearer, the
Semiconductor Company responded with vigorous
and wide-ranging reforms implemented as a part of
the Toshiba Group’s 01 Action Plan. Steps taken by
the company included withdrawal from the commod-
ity DRAM business, the unification and shuttering of
domestic production lines and accelerated person-
nel reductions. As a result, the semiconductor busi-
ness is now capable of generating a profit even if
sales remain at the ¥700 billion level recorded in
fiscal 2001.

Even with the withdrawal and other measures
taken under the 01 Action Plan, the Semiconductor
Company expects to retain a position within the
industr y’s top three, and to do so confident of its
positioning as an Integrated Device Manufacturer
(IDM). Put more specifically, Toshiba will now con-
centrate on three product areas: discrete devices,
where we are the world No. 1; memories, particu-
larly NAND flash memories, which we invented and
where we lead the world; and SoC that will pave the
way for our advance into the digital consumer and
mobile and broadband network markets.

A substantial slide in sales of discrete
Discretes:
devices was inevitable in fiscal 2001, given overall
market conditions. Even so, gallium nitride-based
LEDs, four-element LEDs, red visible laser diodes
(VLDs) and other optical devices sold well. We will
fully leverage our advantages in small packages and
a broad product lineup for small signal and power
devices to encourage their application in cellular
phones, PC peripherals, PDAs, and a range of other
products. We will also aggressively promote VLDs
for DVD pickups, high luminosity LEDs for cellular
phones, and other optical devices. Through these
efforts, we are confident of remaining the world's
leading manufacturer and supplier of discrete devices.

Memories:
Toshiba has long been recognized for
its technological and manufacturing prowess in com-
modity DRAMs. However, while a strong source of
sales during times of rising demand, the commodity
DRAM business is extremely volatile and feast is more
often than not followed by famine—and damage to
the bottom line. The Semiconductor Company looked
long and hard at the business in light of TVC and

decided on a complete exit, including the sale of its
U.S. memor y manufacturing base, Dominion Semi-
conductor, L.L.C., to Micron Technology, Inc. Need-
less to say, we will maintain the leading-edge DRAM
technologies needed for DRAM-embedded SoC.

Demand for high-density NAND flash memo-
ries for digital audio equipment did not produce the
growth we expected. However, demand for applica-
tion in digital still cameras did begin to rise in early
2002. We will continue to concentrate our energies
on NAND flash memories, as we expect demand for
application in cellular phones and as a replacement
for HDDs to produce a surge in sales in the near
future. We are confident of success in the NAND area.
Toshiba invented the product and owns key IP that
will prevent commoditization. We will also use the
potential of flash memories to the full by promoting
sales of multi-chip packages (MCPs) for cellular
phones. These devices mount NAND and NOR flash
memories with SRAMs.
Highlight:
• December 2001: Agreement to transfer low-power
consumption SRAM process technology to China's
Semiconductor Manufacturing International Corp.

System LSIs: Difficult market condition also under-
mined our forecasts for sales of system LSIs. We did
see favorable moves in the fiscal second half in CPUs
for digital consumer products, LCD drivers and bipolar
ICs for audio and visual products, and power supply
ICs for automotive systems and TX Reduced Instruc-
tion Set Computer (RISC) processors both proved to
be hit products. Our focus from now on will be on
embedded memory/analog SoC products. Some spe-
cific examples include SoC for digital consumer equip-
ment, wiress systems, intelligent office and automo-
tive systems—all of which are expected to see very
positive demand growth in the near future.

In the course of the year, Toshiba took initia-
tives to promote technology advances that will help
the Semiconductor Company stand out among sys-
tem solutions providers and further bolster competi-
tiveness in system LSIs.
Highlights:
• May 2001: Agreement on joint development with
Sony Corporation of leading-edge 0.1µm and 0.07µm
process and design technologies for system LSIs. The
two companies shared a recognition of the need to
reduce power consumption and to achieve high per-
formance process and device technologies.
• October 2001: Agreement on joint development
with Canon Inc. of Silicon-on-Insulator (SOI) wafers
required for high-performance system LSIs.
• Februar y 2002: Agreement on joint development
with MIPS Technologies, Inc. on the next-
generation high performance RISC processor core,
the TX99 series. Toshiba participates in core devel-

Toshiba’s industr y-defining
par tnership in NAND flash
memories with SanDisk Corpo-
ration saw joint introduction of
the world’s first commercial 1-
Gbit NAND flash memor y chip.

The highly advanced Media-
embedded Processor (MeP)
suppor ts a high degree of
customization across diverse
applications.

Toshiba’s new mass production
technology using copper wiring
achieves fur ther miniaturiza-
tion and faster operation of
SoC.

opment and seeks the early launch of the highest-
performance microprocessors in the industry, with
operating frequencies of above 1GHz.
• February 2002: Successful design of LSI circuits
using “X Architecture,” the world’s first design tech-
nique that allows LSIs to be wired diagonally as well

as horizontally and vertically. Jointly developed with
Simplex Solutions, Inc. of the U.S., this new design
method achieves LSIs capable of operating 20%
faster than their conventionally wired counterparts,
while having a 10% smaller layout area.

DISPLAY DEVICES & COMPONENTS COMPANY
The Display Devices & Components (DDC) Com-
pany produces a lineup of products that bring
cutting-edge technologies to meet customer
needs. To maintain our position at the forefront
of technological innovation, we integrated our LCD
business with that of Matsushita Electric Indus-
trial Co., Ltd. in Toshiba Matsushita Display Tech-
nologies Co., Ltd. in April 2002. This new com-
pany will optimize the resources obtained from
both parents to develop into a leading global com-
pany. The DDC Company will continue to market
appealing products as a company providing key
technologies that support the digital and mobile
age. Products under development and poised to
make a difference include fuel cells for mobile
terminals and surface-conduction electron-emit-
ter displays (SEDs), which we are currently de-
veloping with Canon Inc. We see SED technology
as a major force in the next-generation large-
screen displays.

DISPLAY DEVICES & COMPONENTS COMPANY President EISABURO HAMANO

The 17-inch organic light emit-
ting display (OLED) developed by
Toshiba Matsushita Display
Technology is scheduled for
mass production in calendar
2003. OLED will first find a mar-
ket in small- and medium-sized
displays.

Price erosion in amorphous silicon TFT LCDs
for portable PCs and displays made itself felt until the
end of 2001. Sales prices also fell in small-sized dis-
plays for cellular phones, as inventory levels remained
high in Japan and many new suppliers entered the
market. As a result, Toshiba’s sales declined to ¥125
billion (US$940 million), 17% down year-on-year.
However, Toshiba is moving away from reli-
ance on amorphous silicon TFTs, and is the clear
technology and market leader in low-temperature
polysilicon (LTPS) TFT LCDs. These offer richer satu-
ration, higher resolution and faster refresh times than
amorphous silicon TFT LCDs, and are better suited
to display of video images on cellular phones and
portable PCs and PDAs. They are also an essential
stepping stone to next generation organic light emit-
ting displays (OLEDs). Toshiba reinforced its posi-
tion in LTPS TFTs with the June 2001 start of produc-
tion of small-sized LCDs for cellular phone applica-
tions at Fukaya Operations, in Saitama, Japan, and
the October 2001 launch of a second line for larger
displays there. The company expects to see strong
demand for all its LTPS TFT products.

Fiscal 2001 saw us initiate a series of struc-
tural changes that will promote the continued growth
and prosperity of our LCD business. In August, we
ended our joint venture with IBM Corporation, Dis-
play Technologies Inc. (DTI). One of the longest lived
and most successful JVs in the industr y, DTI pio-
neered development and manufacturing of amor-
phous silicon TFTs, and brought great benefits to both
par tners. The decision to wind down the company
was mutually agreed and reflected the strategic di-
vergence of its parents. DTI’s Himeji Operations’
small- and medium-sized TFT lines in Hyogo, Japan,
became a wholly-owned Toshiba subsidiary, TFPD Co.,
Ltd.

A more extensive restructuring was initiated
in October 2001, when Toshiba and Matsushita Elec-
tric Industrial Co., Ltd. agreed to merge all aspects
of their TFT businesses—from development through
sales and marketing—into a new joint venture. This
was brought to fruition in April 2002, when Toshiba
Matsushita Display Technology Co., Ltd. (TMDT)
star ted operation. The company will be a forceful
presence in the global LCD market, and will reinforce

its leadership in LTPS TFT LCDs in August 2002 when
it opens a new factory in Singapore, AFPD Pte., Ltd.
This will be the world's largest LTPS TFT manufactur-
ing facility, with a monthly capacity of 55,000 720 x
920mm glass substrates by the end of fiscal 2003.

TMDT’s initial targets are to consolidate and
improve on its position as the world's No. 3 supplier
of LCDs and to achieve profit from fiscal 2003 on. To
do this, it will direct its attentions to three major
areas of LCD applications—portable PCs and displays,
TVs, and cellular phones and PDAs—using its capa-
bilities to reinforce ties with present customers and
to expand its customer base. The company anticipates
particular growth in small- and medium-sized TFTs for
cellular phones, PDAs, car navigation systems and

entertainment products.

A key concern in the cathode ray tube (CRT)
business was to reinforce cost competitiveness. In
this connection, production of CRTs for monitors
was shifted from Japan to Thailand. In procurement,
Toshiba and Matsushita Electric Industrial Co., Ltd.
agreed to establish MT Display Procurement Co.,
Ltd., a joint venture to purchase parts and materi-
als for the respective operations of its parent com-
panies throughout the world. The company started
operation in April 2002.

In January 2002, Toshiba sold its Sur face
Acoustic Wave (SAW) filter business to Fujitsu Media
Devices Limited.

Others

N E T S A L E S
(Billions of yen)

477

468

426

O P E R A T I N G I N C O M E
(Billions of yen)

'00

'01

'02

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This segment’s primary revenue streams are leas-
ing and other financial services, real estate opera-
tions, including leasing and sales, and logistics op-
erations. Consolidated net sales for fiscal 2001
decreased 9% to ¥426.4 billion (US$3,206 million),
and operating income was ¥15.3 billion (US$115
million), down 44% year-on-year. In financing ser-
vices, we are vigorously reducing debts through
securitization.

Research and
Development

The Corporate R&D Center regards itself as responsible for the Toshiba Group’s future, in the sense
that it has the singular mission of creating growth and profit drivers for the entire Group. In addition
to this basic and explorator y work the R&D Center also engages in research and development that
contributes to the Group’s current businesses.

To date, the R&D center has focused most of its effor ts on three areas: IT, materials and devices,
and production technologies. To gear itself for the 21st centur y, the R&D Center has adopted six-
sigma-based Management Innovation methodology in all aspects of its work. One example of what
this means can be seen in the October 2001 establishment of a company-wide BluetoothTM project
that provides a suppor t framework for all aspects of BluetoothTM-related research. We plan to push
ahead with similar research projects through other initiatives with group companies.

Some Recent Research Projects

1. A BluetoothTM-based ubiquitous headset
There is a lot of talk about ubiquitous computing—the fact that
the future will see computing and communications adding to ev-
er y aspect of life. Toshiba is contributing to this with its ubiqui-
tous headset for next-generation communications. It makes pos-
sible voice control of equipment and high-quality audio input and
output in a hands-free, wireless environment. The headset suppor ts wireless communications based
on BluetoothTM and voice recognition technology.

2. Multilingual voice recognition system
Toshiba has developed a multilingual voice recognition system that can recognize different languages
simply by replacing the language database. Currently, the system works with Japanese, American
English, British English, French, German, Spanish, Italian, Dutch and Mandarin. With a compact
design and high-speed operating capabilities, the system can be applied to car navigation systems,
cellular phones and other equipment with limited CPU per formance and memor y size. Other aspects
of the system’s versatility are a high level of resistance to noise, which can degrade voice recogni-
tion, and a recognition algorithm that guarantees a wide array of practical applications.

The development of simple, versatile recognition of various languages will bring voice recogni-
tion to home appliances, PDAs and other mobile equipment and allow users to choose different
languages at different times. Toshiba is working on early development of high-per formance, multi-
functional, multilingual voice recognition systems at R&D centers in Japan, China and Europe.

3. Digital printer with simultaneous four-color transfer
The R&D Center and Toshiba Machine Co., Ltd. have developed an offset printing method that trans-
fers toner to paper without generating an electric field, thus enabling color printing of high-image
quality onto standard plain paper, thick paper, rough paper and cloth, as well as metal plates.
“image-on-image color processing” allows colors to be overlaid and developed on a photosensitive
material and then immediately transferred onto paper, realizing rapid output of high-quality color
images without color displacement.

4. Multi-layer interconnection technology using nanotechnology
New wiring technology enables low-cost production of wiring boards with fine-pitch, multi-layer inter-
connections. The technology features inter-layer connections with fine three-dimensional wiring, formed
on a porous substrate with nanascopic holes using photo-induced selective plating. Filling the de-
sired areas on the substrate with metal forms wires to run through the vias on the board. If insulat-
ing material is used instead, an insulating layer is formed. Using only a simple process of exposure
and plating, the wiring technology enables successful formation of vias only 15µm in diameter—
world-leading accuracy.

The wiring technology also enables simultaneous formation of wires and
vias, a process that eliminates dislocation between wires and vias, thereby
improving yield.

5. Development of a small fuel cell for portable equipment
Toshiba has been conducting R&D into small-sized direct methanol fuel cells
(DMFCs) for mobile equipment, and achieved enhanced cell per formance with
newly developed materials. Required peripheral equipment and electric driver
circuits mounted with the cells have also been developed, and a prototype for
Toshiba’s PDA has been completed. The DMFC features a maximum 8W output
and continuous display for 40 hours with ten cubic centimeters of fuel—about
five times longer than the secondar y lithium-ion batteries in wide use today.

We are now working to raise output and make the fuel cell even smaller, in

readiness for the star t of mass production in 2003.

Toward Sustainable Development

Toshiba Group appreciates that all its products bring with them environmental impacts. Guided by the
Group slogan, “Committed to People, Committed to the Future, TOSHIBA,” Toshiba is dedicated to
minimizing such impacts and maximizing environmental awareness and concerns in all aspects of
our business. We will promote technological innovations and awareness as we work toward sustain-
able development. That means encouraging environmental consciousness and making full and effec-
tive use of the minimum possible resources. Turning to par ticulars, we will continue our effor ts to
reduce energy consumption, promote a positive commitment to environmental protection and take
leadership in establishing a recycling-based society. In fiscal 2001, we launched our “Third Voluntar y
Environmental Plan,” which sets corporate targets for the period to fiscal 2005.

Strengthening Environment-related Communications
We believe it is essential to communicate Toshiba Group’s environment-related work. We issue an-
nual environmental repor ts, and The Toshiba Environmental Repor t 2002 details the actual environ-
mental impacts of our activities on a site-by-site basis, quantifying the costs and effects of environ-
mental protection. We seek to account for the costs of environmental measures by considering four
areas: real benefit, deemed benefit, customer benefit and risk aversion benefit. In addition to this,
we welcome the general public to our environmental exhibitions. The most recent, the 11th Toshiba
Environment Technology Exhibition, was held in Februar y 2002.

Targets of the Third Voluntary Environmental Plan and First Year Results
Initiated in fiscal 2001, the Third Voluntar y Environmental Plan promotes eight targets for fiscal
2005. These include the attainment of zero waste emission and the creation of environmentally
conscious products through such measures as adoption of lead-free solder. We recorded satisfac-
tor y progress in the first year of the plan.

Efforts to Prevent Global Warming
Heightened energy efficiency is central to all of our development activities. This approach also ex-
tends to energy conser vation at our facilities and moves to prevent global warming through dedicated
effor ts to reduce CO2 release. With that in mind, we have set ourselves the target of reducing “CO2
releases to net sales” by 25% in fiscal 2010, with fiscal 1990 as our benchmark.

Reducing the Environmental Impacts from Production to Recycling
Toshiba is a manufacturer, and we believe that means we should make utmost effor ts to reduce
environmental impacts in all product processes, from manufacturing to use and through to reuse. We
are also committed to maximizing recycling. The following par ts of this section looks at some of our
effor ts.

Zero Emission of Waste
The volume of waste generated by Toshiba Group in fiscal 2001 totaled 180,000 tons, a 20,000-ton
decrease against fiscal 2000. We are pleased to record that 94% of this was recycled. However, our
ultimate target is “zero emission” of waste, which means that waste undergoing final disposal to
landfill must be less than 1% of the total waste emitted. We expect to reach that under the Third
Voluntar y Environmental Plan, by fiscal 2003.

Creation and Promotion of Environmentally Conscious Products
Toshiba Group’s fundamental concern in manufacturing is the creation of environmentally conscious
products (ECPs) that impose fewer environmental impacts. We focus on environmentally conscious
design, life cycle assessment and environmental labels. One way we reinforce this is with our own
Ear th Protection Mark: this can be displayed on products meeting our 20-plus criteria for environ-
mentally conscious products. Our design process seeks to promote the use of lead-free solder—by
fiscal 2001 it was used in 18 products including washing machines and por table PCs, and it will be
found in all Toshiba products by fiscal 2003. In December 2000, our por table PCs became the first
in their product categor y to receive Germany’s “Blue Angel RAL-UZ 93” cer tification. This was wel-
come recognition of our outstanding eco-friendly products from one of the world’s major environmen-
tal labeling standards.

Recycling End-of-Life Products
Recycling is another essential aspect of our activities, and we promote development of recycling
schemes to stand alongside the Group-wide recycling system we are developing. In fiscal 2001,
Japan introduced a recycling law requiring manufacturers to take back four kinds of products at the
end of their life: TVs, refrigerators, washing machines and air-conditioners. In that first year, we
collected a total of 1,350,000 units. We also set up recycling centers to collect and recycle PCs from
companies in ten major cities across the countr y.

Toshiba’s Standards of Conduct
A central tenet of the Toshiba Group’s approach to management is that we not only obser ve the laws
of the countries and regions in which we do business but also respect their social mores and ethics
and seek to contribute to society. To clarify what this means in practice, we published our Standards
of Conduct in 1990. They establish a clear, shared code of conduct for Toshiba Group management
and employees, wherever in the world they may be. Full compliance with legal, social, ethical stan-
dards, and strict adherence to these standards of conduct constitute the core of our risk manage-
ment strategy and provide essential conditions for Toshiba’s continued growth and success as a
global enterprise.

Activities for Local Communities
Toshiba Group companies are active in contributing to the societies in which they operate, as can be
seen in suppor t for educational programs and philanthropic and voluntar y activities.

Toshiba Science Museum in Kawasaki, Japan, is a showcase for our advanced technologies and
a place where kids can enjoy interactive exhibitions and experiments that stimulate their interest in
science. That same concern explains why we suppor t science competitions in Nor th America, the
U.K. and China. Other cultural and educational programs are supported by our three charitable foun-
dations, two overseas and one in Japan, the Toshiba International Foundation.

In Japan, Toshiba employees are active in their local communities. We promote a volunteering
spirit among employees by providing volunteer recruitment information and other information related
to voluntar y activities. We also offer financial suppor t to volunteer organizations in which our employ-
ees par ticipate. One example is our provision of financial assistance to a Japanese organization
working for physically-challenged children. In the aftermath of the September 11 attacks in the United
States, employees of 109 group companies offered suppor t to a victims aid fund.

For more information on Toshiba Group environmental activities and social contributions, please visit
our web sites at:
Environment
Citizenship

http://www.toshiba.co.jp/env/english/index.htm
http://www.toshiba.co.jp/worldwide/about/philanthropy.html

Board of Directors, Executive Officers
and Statutory Auditors
BOARD OF DIRECTORS

Taizo Nishimuro*
Director
Chairman of the Board

Tadashi Okamura*
Director
President and Chief
Executive Officer

Kiyoaki Shimagami*
Director

Yasuo Morimoto*
Director

Tetsuya Mizoguchi
Director

Takeshi Iida
Director

Makoto Nakagawa
Director

Tadashi Matsumoto
Director

Kosaku Inaba
Director

Sakutaro Tanino
Director

Yasuhiko Torii
Director

*Representative Director

EXECUTIVE OFFICERS

STATUTORY AUDITORS

Corporate

Kiyoaki Shimagami
Senior Executive Vice President
Yasuo Morimoto
Senior Executive Vice President
Tetsuya Mizoguchi
Executive Vice President
Takeshi Iida
Executive Vice President
Makoto Nakagawa
Executive Vice President
Yuji Kiyokawa
Senior Vice President
Tadashi Matsumoto
Senior Vice President

Masaki Matsuhashi
Senior Vice President
Toshitake Takagi
Vice President
Sadazumi Ryu
Vice President
Toshio Yonezawa
Vice President
Makoto Azuma
Vice President
Yoshiaki Sato
Vice President
Shunsuke Kobayashi
Vice President

Company

Shinsuke Kawamura
Vice President
Tsuyoshi Kimura
Senior Vice President
Tsutomu Miyamoto
Vice President
Atsutoshi Nishida
Senior Vice President
Ginzo Yamazaki
Vice President
Yoshihiro Nitta
Vice President
Toshiyuki Oshima
Senior Vice President

Masao Niwano
Vice President
Takeshi Nakagawa
Senior Vice President
Susumu Kohyama
Senior Vice President
Shigeo Koguchi
Vice President
Katsuji Fujita
Vice President
Eisaburo Hamano
Vice President
Masamichi Katsurada
Vice President

Akinobu Kasami

Susumu Terao

Shunsaku Hashimoto

Eiichi Kakei

(As of June 26, 2002)

p35-p66（英）3.3J 02.8.12 4:51 PM ページ 35

Management’s Discussion and Analysis

FIVE-YEAR SUMMARY
Toshiba Corporation and its subsidiaries
Years ended March 31

Net sales
Cost of sales
Selling, general and administrative expenses
Operating income
Income (loss) before income taxes
and minority interest
Income taxes
Net income (loss)

Per share of common stock:

Net income (loss)

—Basic
—Diluted
Cash dividends

Total assets
Shareholders’ equity

Capital expenditures
(property, plant and equipment)
Depreciation
R&D Expenditures

Number of employees

Millions of yen, except per share amounts

2002

2001

2000

1999

1998

¥5,394,033
4,070,130
1,437,478
(113,575)

¥5,951,357
4,323,525
1,395,699
232,133

¥5,749,372
4,254,444
1,393,959
100,969

¥5,300,902
3,890,622
1,379,797
30,483

¥5,458,498
3,960,158
1,416,046
82,294

(376,687)
(113,915)
(254,017)

188,099
96,145
96,168

(44,844)
(4,530)
(32,903)

11,218
20,901
(9,095)

18,748
17,313
14,723

¥(78.91)
(78.91)
—
¥5,407,782
705,314

¥29.88
29.71
10.00
¥5,724,564
1,047,925

¥(10.22)
(10.22)
3.00
¥5,780,006
1,060,099

¥(2.83)
(2.83)
6.00
¥6,101,929
1,128,753

¥4.57
4.57
10.00
¥6,166,323
1,305,946

348,235
311,208
326,170

176,398

269,545
308,294
327,915

188,042

298,512
329,630
334,398

190,870

375,464
309,836
316,703

198,000

339,584
291,418
322,928

186,000

Note: Basic earnings per share is computed based on the weighted-average number of shares of common stock outstanding during the period.

Diluted earnings per share assumes the dilution that would occur if dilutive convertible debentures were converted into common stock.

RESULTS OF
OPERATIONS
NET SALES

Consolidated net sales in fiscal 2001, ended March 31, 2002, declined 9% from the previous fiscal year, to ¥5,394.0
billion (US$40,557 million). This decline was influenced by a steep drop in demand for electronic devices, mainly
for DRAMs and other semiconductors, resulting from the global IT slowdown. Moreover, sales of equipment to pub-
lic utilities and industry and of digital information products, including PCs, fell short of targets, as IT-related
investment was postponed and sales prices declined. In terms of average exchange rates, the yen dropped by ¥17
against the U.S. dollar from ¥109 to ¥126, which increased sales by about ¥220.0 billion. Consolidated figures include
the results of 206 domestic subsidiaries and 123 overseas.

By region, sales in Japan decreased by 11%, to ¥3,340.5 billion (US$25,116 million). Overseas sales were down 7%
from the previous fiscal year, to ¥2,053.5 billion (US$15,440 million), and accounted for 38% of net sales, up from
37% in the previous fiscal year. Overseas production rose 1%, from ¥1,040.0 billion to ¥1,050.0 billion
(US$7,895 million).

Information & Communications Systems—Sales decreased 2% from the previous fiscal year, to ¥956.7 billion
(US$7,193 million). This decline reflected the absence of sales of BS digital broadcasting equipment that was record-
ed in the previous year as well as decreases in sales of optical submarine systems, railway station service systems,
and postal-service equipment that resulted from curtailments in capital investment. In addition, such factors as a con-
tinued downtrend in sales prices led to a steep fall in income. Overseas sales rose 3% from the previous fiscal year,
to ¥237.2 billion (US$1,783 million), owing to firm sales in electronic imaging business.

Social Infrastructure Systems—Sales decreased 2% from the previous fiscal year, to ¥955.3 billion (US$7,183 mil-
lion). Sales declined owing to decreases in public- and private-sector capital investment. However, sales of medical
systems increased from the previous fiscal year, due to the introduction of new products. Overseas sales
increased 9% from the previous year, to ¥176.0 billion (US$1,324 million).

Power Systems—Sales decreased 1%, to ¥579.6 billion (US$4,358 million). The overall decline in sales, which is
attributable to the effects of restraints in capital investment by domestic power companies. While sales for thermal
power generating devices for overseas increased, and overseas sales in power systems soared 64%, from ¥73.1 bil-
lion, to ¥119.6 billion (US$899 million).

Digital Media—Sales decreased 1%, to ¥1,468.6 billion (US$11,042 million). This decrease in sales was due to lower
sales of PCs in Japan and overseas, underscoring the effects of curbs in IT investments resulting from economic slow-
downs as well as price reductions. It was also caused by a decline in sales of cellular phones in North America owing
to stagnation of market demand. On the other hand, growth in sales of such PC peripheral equipment as DVD-ROMs
and CD-R/RWs, together with higher sales in North America, mainly televisions, enabled sales in this segment to be
maintained at the same level as the previous year, at ¥971.0 billion (US$7,301 million).

Home Appliances—Sales decreased 4% from the previous fiscal year, to ¥680.7 billion (US$5,118 million). This is
based on a shrinking of the market which resulted from a decline in consumer spending and a falloff in demand after
a one-time surge in demand at the end of the previous year prior to the implementation of the Law for Recycling of

p35-p66（英）3.3J 02.8.12 4:51 PM ページ 36

Specified Kinds of Home Appliances, despite sturdy performances that included principal products increasing mar-
ket share. Overseas sales soared 13%, to ¥45.2 billion (US$340 million).

Electronic Devices & Components—Sales decreased 31%, to ¥1,074.8 billion (US$8,082 million). Despite a slow
recovery in demand for semiconductors, the sales of IT-related products, mainly such semiconductors as DRAMs,
declined sharply because of the global IT slump. Sales of semiconductors declined ¥375.0 billion from the previous
fiscal year, owing to drops in memory prices. And LCD sales decreased owing to a decrease in demand for
digital-related devices. Overseas sales declined 35%, to ¥442.3 billion (US$3,325 million).

Others—Sales decreased 9% from the previous fiscal year, to ¥426.4 billion (US$3,206 million), due to a large drop
in sales by Shibaura Mechatronics Corporation and Toshiba Chemical Corporation.

NET SALES BY
REGION

Year ended March 31

Japan
North America
Asia
Europe
Other
Net sales

Millions of yen

2002

2001

2000

¥3,340,491
825,902
659,820
453,093
114,727
¥5,394,033

¥3,753,052
828,671
728,969
519,186
121,479
¥5,951,357

¥3,514,068
906,165
636,317
546,645
146,177
¥5,749,372

Note: Net sales by region are determined based upon the location of the customers. Therefore, this information is

different from the net sales for geographic segments in segment information on page 39, which are determined
based upon where the sales originated.

Japan—Domestic sales amounted to ¥3,340.5 billion (US$25,116 million) amid a difficult operating environment
resulting from sluggish economic conditions throughout the fiscal year and continued weakness in personal
consumption. Sales declined sharply as a result of a deterioration of IT-related demand accompanied by a worse-
than-expected fall in demand for electronic devices. Other factors undermining performance included lower sales
in information and communications systems caused by curtailments in capital investment as well as a decrease
in home appliance sales due to a natural falloff in demand following a temporary upsurge prior to the
implementation of the Law for Recycling of Specified Kinds of Home Appliances.

North America—With the worsening business results of companies in the United States and a severe downturn in
the U.S. market in the wake of the terrorist attacks, sales amounted to ¥825.9 billion (US$6,210 million), virtually
the same as in the previous year. Although sales of semiconductors, cellular phones, and PCs were down from the
previous year owing to the adverse effects of the slump in IT, sales were maintained at the same level in the previous
year thanks to favorable performances by thermal power generating devices, steam turbines and visual equipment.

Asia—The slowdown in IT in Asia resulted in lower sales of semiconductors and CRTs. Despite higher sales of PC
devices and electric power equipment, overall sales in Asia declined 9%, to ¥659.8 billion (US$4,961 million).

Europe—Sales decreased 13% in Europe from the previous year, to ¥453.1 billion (US$3,407 million) due to the mar-
ket recession and a steep decrease in sales of semiconductors and PCs.

Along with the large decrease in net sales, gross profit shrank 19% from the previous fiscal year, to ¥1,323.9 billion
(US$9,954 million). Selling, general and administrative expenses rose ¥41.8 billion, to ¥1,437.5 billion
(US$10,808 million), due principally to the effects of exchange rates and expenses from an increase in newly con-
solidated companies.

Toshiba posted a ¥113.6 billion (US$854 million) operating loss, a ¥345.7 billion drop compared with the previous
fiscal year. This reflected a decrease in sales resulting from falling sales prices and decrease in sales volumes, which
exceeded a 9.5% reduction in procurement costs equivalent and reductions in personnel, depreciation, and other fixed
costs.

By segment, operating income in Information & Communications Systems declined 59%, to ¥9.7 billion (US$73 mil-
lion). This decrease resulted from lower sales to public and private-sector markets amid curbs in capital investment
as well as the sharp downtrend in sales prices.

Operating income in Social Infrastructure Systems expanded ¥4.3 billion, to ¥13.6 billion (US$102 million).
Despite lower operating income in social infrastructure systems resulting from cutbacks in public and private-sector
investment, favorable performance of medical equipment buoyed by the introduction of new products and the imple-
mentation of new measures to improve costs as well as higher income in the elevator business supported overall
growth in operating income in this segment.

Although sales remained at approximately the same level as in the previous fiscal year, Power Systems posted a 54%
surge in operating income, to ¥26.8 billion (US$202 million). This increase was underpinned by cost reductions as
well as the effects of the weakening of the yen.

Digital Media reported an operating loss of ¥14.9 billion (US$112 million), a ¥32.9 billion difference from operating
income recorded in the previous fiscal year. Despite a favorable performance by optical disk-related products, the sharp
declines in sales prices for PCs in Japan and overseas conspired with lower sales volumes for PCs to outpace reduc-
tions in procurement costs, leading to the operating loss in this segment.

In Home Appliances, operating income shrank 38%, to ¥11.4 billion (US$85 million), mirroring a decline in sales

NET INCOME

p35-p66（英）3.3J 02.8.12 4:51 PM ページ 37

resulting from a shrinking of the market.

Electronic Devices & Components recorded a ¥176.3 billion (US$1,325 million) operating loss, attributable to plum-
meting sales prices, beginning with those for memories that resulted from the global slump in IT, as well as worsening
market conditions such as waning demand for LCDs and other devices.

Operating income in Others declined 44%, to ¥15.3 billion (US$115 million), owing to deteriorating performances by
Shibaura Mechatronics Corporation and Toshiba Chemical Corporation.

The net effect of foreign exchange movements during the fiscal year was a ¥31.0 billion increase in operating income.
This consisted of a ¥220.0 billion increase in net sales and a ¥189.0 billion rise in procurement costs, including for
the purchase of components. The company posted a non-operating loss of ¥263.1 billion (US$1,978 million), ¥219.1
billion lower than in the previous fiscal year. This non-operating loss is attributable to non-operating expenses of ¥208.9
billion (US$1,571 million), consisting of ¥111.3 billion (US$837 million) in restructuring charges that included the
withdrawal from the DRAM business, ¥97.6 billion (US$734 million) with respect to additional termination benefits
for voluntary early retirement of employees and the absence of a gain from the contribution of marketable securities
to employee retirement benefit trusts that was recorded in the previous fiscal year. The company recorded a ¥7.7 bil-
lion improvement in its net financial expenses, to ¥15.2 billion (US$114 million), from ¥22.9 billion (US$172 mil-
lion) in net expenses in the previous fiscal year, due to a large decline in interest expenses, which exceeded a decrease
in interest and dividend income received.

As a result, loss before income taxes, minority interest and equity in earnings of affiliates amounted to ¥376.7 bil-
lion (US$2,832 million), a change of ¥564.8 billion from ¥188.1 billion in income before income recorded in the pre-
vious year.

SEGMENT
INFORMATION

The following segment information is based on Japanese accounting standards. Along with a review of internal man-
agement jurisdictions made in April 2001, Toshiba has reclassified its former Information & Communications and
Industrial Systems into Information & Communications Systems and Social Infrastructure Systems as well as reviewed
a portion of its business classifications in Digital Media and Others. Consolidated financial data for previous
years have been reclassified to conform with the current segments.

INDUSTRY SEGMENTS

Year ended March 31

Net sales:

Information & Communications Systems

Unaffiliated customers
Intersegment

Total

Social Infrastructure Systems

Unaffiliated customers
Intersegment

Total
Power Systems

Unaffiliated customers
Intersegment

Total
Digital Media

Unaffiliated customers
Intersegment

Total

Home Appliances

Unaffiliated customers
Intersegment

Total

Electronic Devices & Components

Unaffiliated customers
Intersegment

Total

Others

Unaffiliated customers
Intersegment

Total
Eliminations
Consolidated

Millions of yen

2002

2001

2000

Thousands of
U.S. dollars

2002

¥ 784,071
172,643
956,714

¥ 800,941
171,048
971,989

¥ 797,279
188,474
985,753

$ 5,895,271
1,298,067
7,193,338

890,718
64,632
955,350

565,973
13,587
579,560

925,351
49,787
975,138

568,244
14,423
582,667

918,350
49,410
967,760

553,322
17,359
570,681

1,405,328
63,271
1,468,599

1,398,161
88,242
1,486,403

1,361,191
73,367
1,434,558

656,905
23,777
680,682

676,820
31,497
708,317

636,054
23,840
659,894

905,178
169,674
1,074,852

1,332,711
218,640
1,551,351

1,204,047
169,204
1,373,251

6,697,128
485,955
7,183,083

4,255,436
102,158
4,357,594

10,566,376
475,722
11,042,098

4,939,135
178,775
5,117,910

6,805,850
1,275,744
8,081,594

185,860
240,511
426,371
(748,095)
¥ 5,394,033

249,129
219,143
468,272
(792,780)
¥ 5,951,357

279,129
197,871
477,000
(719,525)
¥ 5,749,372

1,397,444
1,808,353
3,205,797
(5,624,775)
$ 40,556,639

p35-p66（英）3.3J 02.8.12 4:51 PM ページ 38

Year ended March 31

2002

2001

2000

Millions of yen

Operating income (loss):
Information & Communications Systems
Social Infrastructure Systems
Power Systems
Digital Media
Home Appliances
Electronic Devices & Components
Others
Eliminations

¥ 9,662
13,601
26,828
(14,873)
11,358
(176,277)
15,314
812

¥ 23,744
9,338
17,457
18,041
18,429
116,354
27,153
1,617

¥ 24,084
16,377
9,342
46,002
5,354
(23,524)
26,694
(3,360)

Thousands of
U.S. dollars

2002

$ 72,647
102,263
201,714
(111,827)
85,399
(1,325,391)
115,143
6,105

Consolidated

¥ (113,575)

¥ 232,133

¥ 100,969

$ (853,947)

Identifiable assets:
Information & Communications Systems
Social Infrastructure Systems
Power Systems
Digital Media
Home Appliances
Electronic Devices & Components
Others
Corporate and Eliminations

¥ 679,932
878,829
597,794
598,894
381,563
1,386,600
907,652
(23,482)

¥ 639,880
855,684
632,643
643,045
417,088
1,441,406
1,138,414
(43,596)

¥ 590,083
789,554
668,068
584,974
366,029
1,468,014
1,268,282
45,002

$ 5,112,271
6,607,737
4,494,692
4,502,962
2,868,895
10,425,564
6,824,451
(176,557)

Consolidated

¥ 5,407,782

¥ 5,724,564

¥ 5,780,006

$40,660,015

Depreciation and amortization:
Information & Communications Systems
Social Infrastructure Systems
Power Systems
Digital Media
Home Appliances
Electronic Devices & Components
Others
Corporate

¥ 34,033
25,088
18,153
27,456
18,646
163,141
39,722
—

¥ 29,339
22,030
15,572
27,107
21,884
184,496
39,388
—

¥ 31,641
23,820
16,725
24,275
22,822
192,254
37,224
—

Consolidated

¥ 326,239

¥ 339,816

¥ 348,761

Capital expenditures:
Information & Communications Systems
Social Infrastructure Systems
Power Systems
Digital Media
Home Appliances
Electronic Devices & Components
Others
Corporate

¥ 41,286
16,885
10,370
32,460
21,683
210,918
45,230
—

¥ 37,571
11,399
12,467
25,568
20,713
157,879
37,152
—

¥ 40,749
12,412
7,236
41,170
16,377
156,671
44,157
—

Consolidated

¥ 378,832

¥ 302,749

¥ 318,772

$ 255,887
188,632
136,489
206,436
140,195
1,226,624
298,662
—

$ 2,452,925

$ 310,421
126,955
77,970
244,060
163,030
1,585,850
340,075
—

$ 2,848,361

p35-p66（英）3.3J 02.8.12 4:51 PM ページ 39

GEOGRAPHIC SEGMENTS

Year ended March 31

Net sales:

Japan

Millions of yen

2002

2001

2000

Thousands of
U.S. dollars

2002

Unaffiliated customers

¥ 3,716,437

¥ 4,168,795

¥ 3,889,623

$ 27,943,135

Intersegment

Total

North America

Unaffiliated customers

Intersegment

Total

Asia

Unaffiliated customers

Intersegment

Total

Europe

Unaffiliated customers

Intersegment

Total

Other

Unaffiliated customers

Intersegment

Total

Eliminations

Consolidated

Operating income (loss):

Japan

North America

Asia

Europe

Other

Eliminations

Consolidated

Indentifiable assets:

Japan

North America

Asia

Europe

Other

999,914

1,004,448

1,050,500

7,518,151

4,716,351

5,173,243

4,940,123

35,461,286

728,595

86,334

814,929

470,518

429,904

900,422

426,089

13,026

439,115

52,394

5,220

57,614

738,294

77,994

816,288

508,888

299,224

808,112

484,721

14,269

498,990

50,659

2,819

53,478

816,804

53,062

869,866

478,269

265,593

743,862

506,595

10,649

517,244

58,081

4,918

62,999

5,478,158

649,128

6,127,286

3,537,729

3,232,361

6,770,090

3,203,676

97,940

3,301,616

393,940

39,248

433,188

(1,534,398)

(1,398,754)

(1,384,722)

(11,536,827)

¥ 5,394,033

¥ 5,951,357

¥ 5,749,372

$ 40,556,639

¥ (166,231)

¥ 193,258

¥ 58,734

$ (1,249,857)

19,189

22,844

(128)

10,737

6,642

31,246

5,493

655

(5,161)

12,411

23,216

2,989

742

2,877

144,278

171,760

(962)

105

80,729

¥ (113,575)

¥ 232,133

¥ 100,969

$ (853,947)

¥ 4,430,716

¥ 4,783,739

¥4,975,486

$ 33,313,654

360,366

434,112

186,900

36,061

413,777

323,183

205,960

34,276

261,545

276,451

188,000

28,558

49,966

2,709,519

3,264,000

1,405,263

271,135

(303,556)

Corporate and Eliminations

(40,373)

(36,371)

Consolidated

¥ 5,407,782

¥ 5,724,564

¥5,780,006

$ 40,660,015

Note: Geographic segment information for the fiscal years ended March 31, 2001 and 2000 have been reclassified to conform with the current

classification.

p35-p66（英）3.3J 02.8.12 4:51 PM ページ 40

RESEARCH AND
DEVELOPMENT

Consolidated R&D expenditures declined 1% from the previous fiscal year, to ¥326.2 billion (US$2,452 million). This was
equivalent to 6% of net sales, up from 5.5% in the previous fiscal year. Looking at principal R&D achievements and expen-
ditures by segment, in Information & Communications Systems, R&D expenditures were ¥49.1 billion (US$369 million),
and were mainly for digital broadcasting and knowledge management support software. R&D expenditures in Social
Infrastructure Systems totaled ¥31.5 billion (US$237 million), and were for the development of a new type of remote mon-
itoring system using IT and for the development of diagnostic ultrasound systems. In Power Systems, R&D expenditures
amounted to ¥21.1 billion (US$159 million) and were for the joint development of a steam turbine blade together with
General Electric Company, as well as the development of technologies for electric power plant maintenance. R&D expen-
ditures in Digital Media amounted to ¥58.3 billion (US$438 million) and were for PCs and cellular phones with CCD cam-
eras, BS digital plasma TVs, and PDAs. In Home Appliances, R&D expenditures were ¥19.1 billion (US$143 million) and
covered the development of network home appliances using BluetoothTM as well as home appliances that offer higher per-
formance capabilities and greater energy conservation. In Electronic Devices & Components, R&D expenditures
amounted to ¥140.6 billion (US$1,057 million), and were for organic EL panels, large-sized low-temperature polysilicon
LCDs, various LSIs, and the development of high-density cubic wiring technologies that utilize nanotechnologies, as well
as the development of long-life batteries for digital cameras. In Others, R&D expenditures were ¥6.5 billion (US$49 mil-
lion), and consisted mainly of research carried out at Shibaura Mechatronics Corporation and Toshiba Chemical
Corporation.

CAPITAL
EXPENDITURES

Toshiba’s basic strategy for capital expenditures is to concentrate the allocation of its management resources in
growth fields. Capital expenditures, which included investments in property, plant and equipment of ¥348.2 billion (US$2,619
million), amounted to ¥378.8 billion (US$2,848 million), and were made primarily in Electronic Devices &
Components and IT-related business.

Capital expenditures in Electronics Devices & Components amounted to ¥210.9 billion (US$1,586 million), and were for
the development and increased production capacity of semiconductors and LCD displays. Principal facility completions
during the fiscal year included manufacturing facilities for low-temperature polysilicon LCDs at Fukaya Operations,
facilities for manufacturing advanced system LSI at Oita Operations, and NAND flash memory manufacturing facilities at
Yokkaichi Operations.

In Digital Media, capital expenditures amounted to ¥32.4 billion (US$244 million), and were for the development and man-
ufacturing of new PC and cellular phone-related facilities. Principal facilities completed during the fiscal year included a new
facility for the development of mobile network technologies at Ome Operations.

Capital expenditures in Information & Communications Systems totaled ¥41.3 billion (US$310 million), and were allocated
mainly for the development of systems as well as for the broadcast and network service business. Capital expenditures
amounted to ¥16.9 billion (US$127 million) in Social Infrastructure Systems and were concentrated on social and gov-
ernment-related infrastructure businesses, ¥10.4 billion (US$78 million) in Power Systems, including for the renovation
and upgrading of infrastructure; ¥21.7 billion (US$163 million) in Home Appliances, including for the development and man-
ufacture of new types of appliances, and ¥45.2 billion (US$340 million) in Others.

As of March 31, 2002, total assets amounted to ¥5,407.8 billion (US$40,660 million), a decrease of ¥316.8 billion from
the previous fiscal year-end. Current assets declined ¥415.6 billion from the end of the previous fiscal year, to
¥2,674.5 billion (US$20,109 million). Among principal changes, cash and cash equivalents were down ¥117.2 billion,
to ¥370.4 billion (US$2,785 million), due to a reduction in cash on hand to cover a worsening of cash flow. Notes and
accounts receivable declined ¥69.0 billion and ¥41.6 billion, respectively, owing to the effects of a decline in sales at the
end of year. Inventories shrank 15%, to ¥693.4 billion (US$5,213 million). Long-term deferred tax assets rose
¥254.1 billion, to ¥487.5 billion (US$3,666 million), due to an increase in net operating loss carried forward as a result
of the net loss.

On the liabilities side, total current and long-term liabilities amounted to ¥4,512.8 billion (US$33,931 million), a
decline of ¥25.2 billion from the previous fiscal year-end. Total interest-bearing liabilities rose ¥30.9 billion from the end
of the previous fiscal year end, to ¥1,818.5 billion (US$13,673 million), due to the securing of cash on hand because of
the worsening of cash flow as well as the effects of the weakening of the yen. Notes and accounts payable declined ¥41.5
billion and ¥60.1 billion, respectively.

In shareholders’ equity, consolidated retained earnings declined ¥270.1 billion, to ¥443.6 billion (US$3,335 million).
Accumulated other comprehensive loss worsened ¥72.4 billion, to ¥298.8 billion (US$2,247 million), due to such factors
as a decline in minimum pension liability adjustment as a result of a decline in yields on pension funds under management.

FINANCIAL
CONDITION

p35-p66（英）3.3J 02.8.12 4:51 PM ページ 41

CASH FLOWS

Net cash provided by operating activities amounted to ¥149.2 billion (US$1,122 million), a steep ¥304.4 billion
decline from ¥453.6 billion recorded in the previous fiscal year. Despite a rise in cash inflows resulting from a decline in
notes and accounts receivables and inventories, net cash provided by operating activities declined because of the large
net loss as well as a decrease in such non-cash items as deferred tax expenses. Net loss for fiscal year 2001 included
a ¥94.6 billion non-cash loss from sales disposal and impairment of property and securities, net, and that was eliminated
in adjustment to net cash.

Net cash used in investing activities rose ¥148.9 billion from the previous fiscal year, from ¥176.7 billion, to ¥325.6 bil-
lion (US$2,448 million), owing to such factors as increases in property, plant and equipment.

Net cash provided by financing activities amounted to ¥53.5 billion (US$402 million), compared with ¥285.6 billion in net
cash used in financing activities in the previous fiscal year.

This was due to a ¥30.9 billion rise in interest-bearing liabilities and ¥52.4 billion (US$394 million) in proceeds from stock
offering by subsidiaries despite Toshiba’s continued efforts to reduce interest-bearing liabilities.

In addition, the effect of exchange rate changes was to increase cash by ¥5.7 billion (US$43 million). Cash and cash equiv-
alents at the end of the fiscal year declined ¥117.2 billion from ¥487.6 billion the end of the previous fiscal year, to ¥370.4
billion (US$2,785 million).

PRINCIPAL SUBSIDIARIES AND AFFILIATED COMPANIES

As of March 31, 2002

Consolidated Subsidiaries:

Japan

Toshiba Building & Lease Co., Ltd.

Toshiba Elevator and Building System Corporation

Toshiba Plant Kensetsu Co., Ltd.

Toshiba TEC Corporation

U.S.A

Semiconductor America, Inc.

Toshiba America Electronic Components, Inc.

Toshiba America, Inc.

100

Affiliated Companies:

Japan

Toshiba Ceramics Co., Ltd.

U.S.A.

Flash Vision, L.L.C.

Percentage held by Group

p35-p66（英）3.3J 02.8.12 4:51 PM ページ 42

Consolidated Balance Sheets
Toshiba Corporation and its subsidiaries
As of March 31, 2002 and 2001

Assets

Current assets:

Cash and cash equivalents

Notes and accounts receivable, trade —

Notes (Note 5)

Accounts (Note 5)

Allowance for doubtful notes and accounts

Finance receivables, net (Note 5)

Inventories (Note 6)

Prepaid expenses and other current assets (Note 15)

Millions of Yen

2002

2001

Thousands of
U.S. dollars
(Note 3)

2002

¥ 370,432

¥ 487,595

$ 2,785,203

136,890

976,037

(26,780)

190,912

693,350

333,686

205,844

1,018,246

(27,410)

222,976

819,633

363,207

1,029,248

7,338,624

(201,353)

1,435,429

5,213,158

2,508,917

Total current assets

2,674,527

3,090,091

20,109,226

Long-term receivables and investments:

Long-term receivables

Long-term finance receivables, net (Note 5)

Investments in and advances to affiliates (Note 7)

Marketable securities and other investments (Notes 4 and 8)

Property, plant and equipment (Note 8):

Land

Buildings

Machinery and equipment

Construction in progress

Less—Accumulated depreciation

14,523

313,058

132,974

230,300

690,855

18,957

341,492

132,485

252,303

745,237

175,682

1,168,861

2,712,073

92,594

175,873

1,157,875

3,046,897

66,539

4,149,210

4,447,184

(2,794,888)

(3,007,428)

109,194

2,353,820

999,805

1,731,579

5,194,398

1,320,917

8,788,429

20,391,526

696,195

31,197,067

(21,014,195)

1,354,322

1,439,756

10,182,872

Deferred tax assets (Note 15)

Other assets (Note 9)

487,524

200,554

233,391

216,089

3,665,594

1,507,925

The accompanying notes are an integral part of these statements.

¥5,407,782

¥5,724,564

$40,660,015

p35-p66（英）3.3J 02.8.12 4:51 PM ページ 43

Liabilities and shareholders’ equity

Current liabilities:

Short-term borrowings (Note 8)

Current portion of long-term debt (Note 8)

Notes payable, trade

Accounts payable, trade

Accounts payable, other and accrued expenses

Accrued income and other taxes

Advance payments received

Other current liabilities

Total current liabilities

Long-term liabilities:

Long-term debt (Note 8)

Accrued pension and severance costs (Note 9)

Other liabilities

Millions of Yen

2002

2001

Thousands of
U.S. dollars
(Note 3)

2002

¥ 658,854

¥526,865

$ 4,953,789

270,924

140,879

837,141

340,232

36,768

273,107

314,588

270,466

182,377

897,245

336,153

55,239

283,074

329,431

2,037,023

1,059,241

6,294,293

2,558,135

276,451

2,053,436

2,365,324

2,872,493

2,880,850

21,597,692

888,755

709,233

42,324

990,305

633,642

33,231

6,682,368

5,332,579

318,226

1,640,312

1,657,178

12,333,173

Minority interest in consolidated subsidiaries (Note 16)

189,663

138,611

1,426,037

Shareholders’ equity (Note 17)

Common stock, without par value:

Authorized—10,000,000,000 shares

Issued and outstanding:

2002—3,219,027,165 shares

2001—3,219,014,736 shares

Additional paid-in capital

Retained earnings

Accumulated other comprehensive loss

Treasury stock, at cost 225,288 shares

Commitments and contingent liabilities (Note 20)

274,926

—

285,736

443,555

—

274,921

285,732

713,667

2,067,113

—

2,148,391

3,335,000

(298,792)

(226,395)

(2,246,556)

(111)

—

(835)

705,314

1,047,925

5,303,113

¥5,407,782

¥5,724,564

$40,660,015

p35-p66（英）3.3J 02.8.12 4:51 PM ページ 44

Consolidated Statements of Operations
Toshiba Corporation and its subsidiaries
For the years ended March 31, 2002 and 2001

Sales and other income:

Net sales

Interest and dividends

Other income (Notes 4 and 9)

Costs and expenses:

Cost of sales (Notes 10 and 12)

Selling, general and administrative (Notes 10, 11 and 12)

Restructuring charges (Note 14)

Interest

Other (Notes 4 and 13)

Income (loss) before income taxes, minority

interest and equity in earnings of affiliates

Income taxes (Note 15):

Current

Deferred

Millions of Yen

2002

2001

Thousands of
U.S. dollars
(Note 3)

2002

¥5,394,033

¥5,951,357

$40,556,639

14,704

59,100

18,230

110,601

110,556

444,361

5,467,837

6,080,188

41,111,556

4,070,130

1,437,478

208,954

29,891

98,071

4,323,525

1,395,699

—

41,102

131,763

30,602,481

10,808,105

1,571,083

224,744

737,376

5,844,524

5,892,089

43,943,789

(376,687)

188,099

(2,832,233)

36,185

(150,100)

(113,915)

53,223

42,922

96,145

272,068

(1,128,572)

(856,504)

Income (loss) before minority interest and equity in

earnings of affiliates

(262,772)

91,954

(1,975,729)

Minority interest in income (loss) of consolidated subsidiaries

Income (loss) before equity in earnings of affiliates

Equity in earnings of affiliates (Note 7)

(6,315)

(256,457)

2,440

5,140

86,814

9,354

(47,481)

(1,928,248)

18,346

Net income (loss)

¥ (254,017)

¥ 96,168

$ (1,909,902)

Per share (Note 18):

Net income (loss):

Basic

Diluted

Cash dividends

The accompanying notes are an integral part of these statements.

Yen

U.S. dollars
(Note 3)

¥(78.91)

(78.91)

¥29.88

29.71

$(0.593)

(0.593)

—

¥10.00

—

p35-p66（英）3.3J 02.8.12 4:51 PM ページ 45

Consolidated Statements of Shareholders’ Equity
Toshiba Corporation and its subsidiaries
For the years ended March 31, 2002 and 2001

Millions of yen

Common
stock

Additional
paid-in
capital

Retained
earnings

Accumulated
other
comprehensive
income (loss)

Treasury
stock

Total

Balance at March 31, 2000

¥274,919

¥285,729

¥643,250

¥(143,799)

¥1,060,099

Conversion of convertible debentures
Comprehensive income (loss):

Net income
Other comprehensive income (loss),
net of tax (Note 17)—

Unrealized gains on securities (Note 4)
Foreign currency translation adjustments
Minimum pension liability
adjustment (Note 9)

Comprehensive income

Cash dividends

96,168

(41,959)
50,052

(90,689)

(25,751)

96,168

(41,959)
50,052

(90,689)

13,572

(25,751)

Balance at March 31, 2001

274,921

285,732

713,667

(226,395)

1,047,925

Conversion of convertible debentures
Comprehensive income (loss):

Net loss
Other comprehensive income (loss),
net of tax (Note 17)—

Unrealized gains on securities (Note 4)
Foreign currency translation adjustments
Minimum pension liability
adjustment (Note 9)
Unrealized losses on derivative
instruments

Comprehensive loss

Cash dividends
Purchase of treasury stock, at cost

(254,017)

(3,542)
13,987

(80,754)

(2,088)

(16,095)

¥(111)

(254,017)

(3,542)
13,987

(80,754)

(2,088)

(326,414)

(16,095)
(111)

Balance at March 31, 2002

¥274,926

¥285,736

¥ 443,555

¥(298,792)

¥(111) ¥ 705,314

Thousands of U.S. dollars (Note 3)

Common
stock

Additional
paid-in
capital

Retained
earnings

Accumulated
other
comprehensive
income (loss)

Treasury
stock

Total

Balance at March 31, 2001

$2,067,075 $2,148,361 $ 5,365,917

$(1,702,218)

$ 7,879,135

Conversion of convertible debentures
Comprehensive income (loss):

Net loss
Other comprehensive income (loss),
net of tax (Note 17):

Unrealized gains on securities (Note 4)
Foreign currency translation adjustments
Minimum pension liability
adjustment (Note 9)
Unrealized losses on derivative
instruments

Comprehensive loss

Cash dividends
Purchase of treasury stock, at cost

(1,909,902)

(26,632)
105,166

(607,173)

(15,699)

(2,454,240)

(121,015)
(835)

$(835)

(121,015)

Balance at March 31, 2002

$2,067,113 $2,148,391 $ 3,335,000 $(2,246,556)

$(835) $ 5,303,113

The accompanying notes are an integral part of these statements.

p35-p66（英）3.3J 02.8.12 4:51 PM ページ 46

Consolidated Statements of Cash Flows
Toshiba Corporation and its subsidiaries
For the years ended March 31, 2002 and 2001

Cash flows from operating activities:

Net (loss) income
Adjustments to reconcile net (loss) income to net cash provided by
operating activities—

Depreciation and amortization
Provisions for pension and severance costs, less payments
Deferred income tax provision (benefit)
Equity in income of affiliates
Loss (gain) from sales, disposal and impairment of property
and securities, net
Minority interest in (loss) income of consolidated subsidiaries
Decrease in notes and accounts receivable, trade
Decrease in finance receivables, net
Decrease in inventories
Decrease (increase) in other current assets
Decrease in long-term receivables
Decrease (increase) in long-term finance receivables, net
(Decrease) increase in notes and accounts payable, trade
(Decrease) increase in accrued income and other taxes
Decrease in advance payments received
Increase (decrease) in accounts payable and other liabilities

Net cash provided by operating activities

Cash flows from investing activities:
Proceeds from sale of property
Proceeds from sale of securities
Acquisition of property and equipment
Purchase of securities
Decrease in investments in affiliates
(Increase) decrease in other assets and other

Net cash used in investing activities

Cash flows from financing activities:

Proceeds from long-term debt
Repayment of long-term debt
Increase (decrease) in short-term borrowings
Dividends paid
Proceeds from stock offering by subsidiaries

Net cash provided by (used in) financing activities

Effect of exchange rate changes on cash and cash equivalents

Net (decrease) increase in cash and cash equivalents

Millions of Yen

2002

2001

Thousands of

U.S. dollars
(Note 3)

2002

¥(254,017)

¥ 96,168

$(1,909,902)

326,239
(45,621)
(150,100)
(2,440)

94,579
(6,315)
118,775
32,056
141,137
4,354
4,366
28,434
(108,060)
(19,038)
(16,964)
1,780

149,165

65,604
29,714
(364,671)
(39,489)
4,956
(21,693)

(325,579)

322,941
(420,726)
114,913
(16,045)
52,412

53,495

5,756

(117,163)

339,816
(10,667)
42,922
(9,354)

(30,758)
5,140
34,857
22,255
51,755
(70,750)
695
(6,639)
13,804
8,672
(17,415)
(16,860)

453,641

12,565
23,774
(257,448)
(13,126)
19,272
38,216

(176,747)

233,929
(398,669)
(95,310)
(25,598)
—

(285,648)

31,112

22,358

2,452,925
(343,015)
(1,128,572)
(18,346)

711,121
(47,481)
893,045
241,023
1,061,180
32,737
32,827
213,789
(812,481)
(143,143)
(127,549)
13,383

1,121,541

493,263
223,414
(2,741,887)
(296,910)
37,263
(163,105)

(2,447,962)

2,428,128
(3,163,353)
864,007
(120,639)
394,075

402,218

43,278

(880,925)

Cash and cash equivalents at beginning of year

Cash and cash equivalents at end of year

487,595

¥ 370,432

465,237

¥ 487,595

3,666,128

$ 2,785,203

Supplemental disclosure of cash flow information:

Cash paid during the year for—

Interest

Income taxes

The accompanying notes are an integral part of these statements.

¥ 39,347

¥ 55,340

¥ 52,789

¥ 61,161

$ 295,842

$ 416,090

p35-p66（英）3.3J 02.8.12 4:51 PM ページ 47

Notes to Consolidated Financial Statements
Toshiba Corporation and its subsidiaries

1.
COMPANY
OPERATIONS

2.
SUMMARY OF
SIGNIFICANT
ACCOUNTING
POLICIES

Toshiba Corporation and its subsidiaries (the “Company”) is engaged in research and development, manufacturing
and sales of high-technology electronic and energy products, which span (1) information & communications systems,
(2) social infrastructure systems, (3) power systems, (4) digital media, (5) home appliances, (6) electronic
devices & components, and (7) others. For the year ended March 31, 2002, sales of digital media represented approx-
imately 24 percent, the most significant portion, of the Company’s total sales and information & communications sys-
tems, social infrastructure systems, and electronic devices & components each represented slightly over 15
percent of the Company’s total sales, while sales of power systems and home appliances were approximately equal
in amount, each representing approximately 10 percent of the Company’s total sales. Sales from other lines of busi-
ness were small compared to those noted above. The products are manufactured and marketed throughout the world
with 62 percent of sales in Japan and the remainder in North America, Asia, Europe and elsewhere.

Preparation of Financial Statements
Toshiba Corporation and its domestic subsidiaries maintain their records and prepare their financial statements in
accordance with accounting principles generally accepted in Japan, and its foreign subsidiaries in conformity with those
of the countries of their domicile.

Certain adjustments and reclassifications have been incorporated in the accompanying consolidated financial
statements to conform with accounting principles generally accepted in the United States of America. These
adjustments were not recorded in the statutory books of account.

Basis of Consolidation and Investments in Affiliates
The consolidated financial statements include the accounts of Toshiba Corporation and those of its majority
owned subsidiaries. All significant intercompany transactions and accounts are eliminated in consolidation.

Investments in affiliates (20 to 50 percent-owned companies) in which the ability to exercise significant influence exists
are stated at cost plus equity in undistributed earnings (losses). Net consolidated income (loss) includes the Company’s
equity in the current net earnings (losses) of such companies, after elimination of unrealized intercompany profits.

Use of Estimates
The preparation of the consolidated financial statements in conformity with accounting principles generally
accepted in the Untied States of America requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the con-
solidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual
results could differ from those estimates.

Cash Equivalents
All highly liquid investments with original maturities of three months or less are considered to be cash equivalents.

Foreign Currency Translation
The assets and liabilities of foreign consolidated subsidiaries and affiliates that operate in a local currency environment
are translated into Japanese yen at applicable current exchange rates at year end. Income and expense items are
translated at average exchange rates prevailing during the year. The effects of these translation adjustments are includ-
ed in other comprehensive income (loss) and reported as a component of shareholders’ equity. Exchange gains and
losses resulting from foreign currency transactions and translation of assets and liabilities denominated in foreign
currencies are included in other expenses in the consolidated statements of operations.

Marketable Securities and Other Investments
The Company classifies its marketable equity securities and all debt securities as available-for-sale which are report-
ed at fair value, with unrealized gains and losses included in accumulated other comprehensive income (loss), net
of taxes. Other investments without quoted market prices are stated at cost. Realized gains or losses on the sale
of securities are based on the average cost of a particular security held at the time of sale.

Marketable securities and other investment securities are regularly reviewed for other-than-temporary declines in car-
rying value based on criteria that include; the length of time and the extent to which the market value has been less
than cost, the financial condition and near-term prospects of the issuer and the Company’s intent and ability to retain
marketable securities and investment securities for a period of time sufficient to allow for any anticipated recovery
in market value. When such a decline exists, the Company recognizes an impairment loss to the extent of such decline.

p35-p66（英）3.3J 02.8.12 4:51 PM ページ 48

Inventories
Raw materials, finished products and work in process for stock sales items are stated at the lower of cost or mar-
ket, cost being determined principally by the average method. Finished products and work in process for contract items
are stated at the lower of cost or estimated realizable value, cost being determined by accumulated production costs.

In accordance with general industry practice, items with long manufacturing periods are included among inventories
even when not realizable within one year.

Property, Plant and Equipment and Depreciation
Property, plant and equipment, including significant renewals and additions, are carried at cost. Maintenance and
repairs, including minor renewals and betterments, are expensed as incurred.

Depreciation is computed generally by the declining-balance method at rates based on the following estimated use-
ful lives of the assets: buildings, 3 to 50 years, machinery and equipment, 2 to 18 years.

Impairment of Long-Lived Assets
Long-lived assets including goodwill and other intangible assets are evaluated for impairment using an estimate of
undiscounted cash flows whenever events or changes in circumstances indicate that the carrying amount of such asset
may not be recoverable. If the estimate of undiscounted cash flows is less than the carrying amount of the
assets, an impairment loss is recorded based on the fair value of the asset. Assets to be disposed of are reported
at the lower of the carrying amount or fair value less costs to sell.

Income Taxes
The provision (benefit) for income taxes is computed based on the pre-tax income (loss) included in the consolidated
statements of operations. Deferred income taxes are recorded to reflect the expected future tax consequences of
temporary differences between the tax basis of assets and liabilities and their reported amounts in the financial state-
ments, and are measured by applying currently enacted tax laws. Valuation allowances are recorded to reduce deferred
tax assets when it is more likely than not that a tax benefit will not be realized.

Accrued Pension and Severance Costs
The Company has various retirement benefit plans covering substantially all employees. Current service costs of the
retirement benefit plans are accrued in the period. The unrecognized net obligation existing at initial application of
SFAS No. 87 and prior service costs resulting from amendments to the plans are amortized over the average remain-
ing service period of employees expected to receive benefits. Unrecognized actuarial losses that exceed 10 percent
of the greater of the projected benefit obligation or the fair value of plan assets are also amortized over the average
remaining service period of employees expected to receive benefits.

Additional Paid-in Capital
Under the Japanese Commercial Code, the entire amount of the issue price of shares is required to be accounted
for in the common stock account although a company in Japan may, by a resolution of its board of directors, account
for an amount not exceeding one-half of the issue price of the shares as additional paid-in capital.

Issuance of Stock by a Subsidiary
When a subsidiary issues stock to an unrelated third party, the Company’s ownership interest in the subsidiary decreas-
es; however, if the price per share is more or less than the Company’s average carrying amount per share, the
Company is required to adjust the carrying amount of its investment in the subsidiary. The Company recognizes such
gains or losses in income for the year in which the change in ownership interest occurs.

For the year ended March 31, 2002, a subsidiary sold its newly-issued common stock to a third party investor. In con-
nection with this transaction, the Company recognized a gain of ¥9,185 million ($69,060 thousand) and deferred taxes
on this gain of ¥3,867 million ($29,075 thousand).

Net Income Per Share
Basic net income per share (EPS) is computed based on the weighted-average number of shares of common stock
outstanding during each period. Diluted EPS assumes the dilution that could occur if dilutive convertible debentures
were converted into common stock, unless their inclusion would have an antidilutive effect.

Revenue Recognition
Revenue of mass-produced standard products is recognized when there is persuasive evidence of an arrangement,
the product has been delivered, the sales price is fixed or determinable, and collectibility is reasonably assured. The
mass-produced standard products are considered delivered to customers once they have been shipped, and the title
and risk of loss have transferred.

Revenue from services is recognized as the services are provided.

p35-p66（英）3.3J 02.8.12 4:51 PM ページ 49

Revenue from development of custom software products is recognized when the software products have been deliv-
ered and accepted by the customer.

Revenue related to equipment that requires installation is recognized upon the completion of the installation of the
equipment.

Revenue under long-term contracts is recorded under the percentage of completion method.

Shipping and Handling Costs
The Company includes shipping and handling costs which totaled ¥88,332 million ($664,150 thousand) and
¥96,180 million for the years ended March 31, 2002 and 2001, respectively in selling, general and administrative
expenses.

Derivative Financial Instruments
The Company uses a variety of derivative financial instruments, which include forward exchange contracts, interest
rate swap agreements and currency swap agreements, for the purpose of currency exchange rate and interest rate
risk management. Refer to Note 19 for descriptions of these financial instruments.

Effective April 1, 2001, the Company adopted the Statement of Financial Accounting Standards (“SFAS”) No. 133,
“Accounting for Derivative Instruments and Hedging Activities”, as amended by SFAS No. 138, “Accounting for
Certain Derivative Instruments and Certain Hedging Activities, an amendment of FASB Statement No. 133”.
Adoption of SFAS No. 133 and 138 was not significant to the operating results and the financial position of the Company.

As a result of the adoption of SFAS No. 133 and 138, the Company recognizes all derivative financial instruments,
such as forward exchange contracts, interest rate swap agreements and currency swap agreements, in the consolidated
financial statements at fair value regardless of the purpose or intent for holding the derivative financial instruments.
Changes in the fair value of derivative financial instruments are either recognized periodically in income or in share-
holders’ equity as a component of other comprehensive income (loss) depending on whether the derivative financial
instruments qualify for hedge accounting, and if so, whether they qualify as a fair value hedge or a cash flow hedge.
Changes in fair values of derivative financial instruments accounted for as fair value hedges are recorded in
income along with the portion of the change in the fair value of the hedged item that relates to the hedged risk.
Changes in fair value of derivative financial instruments accounted for as cash flow hedges, to the extent they are
effective as a hedge, are recorded in other comprehensive income (loss), net of tax. Changes in the fair value of deriv-
ative financial instruments not qualifying as a hedge are reported in income.

Prior to April 1, 2001, the Company used forward exchange contracts, interest rate swap agreements and currency
swap agreements for hedging purposes. For forward exchange contracts, gains and losses explicitly deferred, aris-
ing from contracts related to future trade transactions, were insignificant. As these forward exchange contracts were
utilized solely for hedging purposes, the resulting gains or losses were offset against foreign exchange gains or loss-
es on the underlying hedged assets and liabilities. Gains and losses related to qualifying hedges of firm commitments
denominated in foreign currencies were deferred and were recognized in income when the hedged transaction occurred.
For interest rate swap agreements, the related differentials to be paid or received under the interest rate swaps were
recognized in interest expense over the terms of the agreements. Currency swaps were accounted for in a manner
similar to the accounting for forward exchange contracts.

Sales of Receivables
The Company enters into transactions to sell certain trade accounts receivable, trade notes receivable and
finance receivables. The Company may retain certain interests in these transactions. Gain or loss on the sale of receiv-
ables is based on the carrying amount of the receivables sold, allocated between the receivables sold and the retained
interests based on their relative fair values at the date of sale. Retained interests are carried at fair value and are
included in finance receivables in the consolidated financial statements. The Company estimates fair value
based on the present value of future expected cash flows less credit losses. Transactions entered into prior to April
1, 2001 were accounted for under SFAS No. 125, “Accounting for Transfers and Servicing of Financial Assets and
Extinguishments of Liabilities”. SFAS No. 140, “Accounting for Transfers and Servicing of Financial Assets and
Extinguishments of Liabilities, a replacement of FASB Statement 125” was effective for the transactions occurring
after March 31, 2001. SFAS No. 140 revised criteria for accounting for securitizations, other financial asset
transfers and collateral, and introduces new disclosures, but otherwise carries forward most of the provisions of SFAS
No. 125. The adoption of SFAS No. 140 did not have a material effect on the Company’s financial position and results
of operations.

Recent Pronouncements
The Company has adopted SFAS No. 141, “Business Combinations” and will adopt SFAS No. 142, “Goodwill and Other
Intangible Assets” on April 1, 2002. Under the new rule, goodwill and other indefinite lived intangible assets will no

p35-p66（英）3.3J 02.8.12 4:51 PM ページ 50

3.
U.S. DOLLAR
AMOUNTS

4.
MARKETABLE
SECURITIES AND
OTHER
INVESTMENTS

longer be amortized but will be reviewed annually for impairment. Separable intangible assets that are not
deemed to have an indefinite life will continue to be amortized over their useful lives. The Company does not antic-
ipate that adoption of SFAS No. 142 will have a material effect on the Company’s financial position and results of
operations.

In August 2001, FASB issued SFAS No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets”. SFAS
No. 144 addresses financial accounting and reporting for the impairment or disposal of long-lived assets and super-
sedes SFAS No. 121, “Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be
Disposed Of”, and the accounting and reporting provisions of APB Opinion No. 30, “Reporting the Results of
Operations” for a disposal of a segment of a business. SFAS No. 144 is effective for the year beginning after December
15, 2001, with earlier application encouraged. The Company will adopt SFAS No. 144 effective April 1, 2002. The
Company does not anticipate that adoption of SFAS No. 144 will have a material effect on the Company’s financial
position and results of operations.

Reclassifications
Certain reclassifications to the prior year’s consolidated financial statements and related footnote amounts have been
made to conform to the presentation for the current year.

U.S. dollar amounts are included solely for convenience. These translations should not be construed as a repre-
sentation that the yen could be converted into U.S. dollars at this rate or any other rate. The amounts shown in U.S.
dollars are not intended to be computed in accordance with generally accepted accounting principles for the
translation of foreign currency amounts. The rate of ¥133 = U.S.$1, the approximate current rate of exchange at March
31, 2002, has been used throughout for the purpose of presentation of the U.S. dollar amounts in the accompanying
consolidated financial statements.

The aggregate cost, gross unrealized holding gains and losses, and aggregate fair value for marketable equity secu-
rities and debt securities classified as available-for-sale securities by security type at March 31, 2002 and 2001 are
as follows:

March 31, 2002:

Equity securities
Debt securities

March 31, 2001:

Equity securities
Debt securities

March 31, 2002:

Equity securities
Debt securities

Millions of yen

Gross
unrealized
holding gains

Gross
unrealized
holding losses

Fair value

¥50,952
—
¥50,952

¥62,308
342

¥62,650

¥6,553
9
¥6,562

¥129,000
2,356
¥131,356

¥12,736
161

¥138,833
4,489

¥12,897

¥143,322

Cost

¥84,601
2,365
¥86,966

¥89,261
4,308

¥93,569

Thousands of U.S. dollars

Gross
unrealized
holding gains

Gross
unrealized
holding losses

Cost

Fair value

$636,098
17,782

$653,880

$383,098
—
$383,098

$49,271
68

$969,925
17,714

$49,339

$987,639

At March 31, 2002, debt securities mainly consist of corporate debt securities.

Contractual maturities of debt securities classified as available-for-sale were as follows at March 31, 2002:

Due within one year
Due after one year

Millions of yen

Thousands of U.S. dollars

Cost

¥1,100
1,265

¥2,365

Fair value

¥1,099
1,257

¥2,356

Cost

$ 8,271
9,511

$17,782

Fair value

$ 8,263
9,451

$17,714

p35-p66（英）3.3J 02.8.12 4:51 PM ページ 51

The proceeds from sales of available-for-sale securities for the years ended March 31, 2002 and 2001 were ¥29,714
million ($223,414 thousand) and ¥23,774 million, respectively. The gross realized gains on those sales for the years
ended March 31, 2002 and 2001 were ¥9,474 million ($71,233 thousand) and ¥5,443 million, respectively. The
gross realized losses on those sales for the years ended March 31, 2002 and 2001 were ¥644 million ($4,842 thou-
sand) and ¥1,992 million, respectively.

The Company recorded a charge of ¥27,572 million ($207,308 thousand) related to other-than-temporary
declines in the marketable and non-marketable equity securities for the year ended March 31, 2002, which is includ-
ed in other expenses.

5.
FINANCE
RECEIVABLES AND
SECURITIZATIONS

Investment in financing leases consists of sales-type and direct financing leases mainly for information systems, med-
ical equipment, industrial equipment and others.

Other finance receivables represent transactions in a variety of forms, including commercial loans, and installment
sales of consumer products manufactured by the Company.

Finance receivables comprise the following:

March 31

Investment in financing leases:

Total minimum lease payments receivable
Estimated executory costs
Unearned income
Estimated residual values

Less—allowance for doubtful accounts

Less—current portion

Other finance receivables
Less—allowance for doubtful accounts

Less—current portion

Millions of yen

2002

2001

¥ 286,019
(10,471)
(11,771)
2,417

266,194

(1,161)

265,033
(81,464)

¥ 321,444
(12,579)
(15,576)
3,725

297,014

(1,339)

295,675
(97,475)

Thousands of
U.S. dollars

2002

$ 2,150,519
(78,729)
(88,504)
18,173

2,001,459

(8,729)

1,992,730
(612,512)

¥ 183,569

¥ 198,200

$ 1,380,218

¥ 250,223

(11,286)

238,937
(109,448)

¥ 278,658

(9,865)

268,793
(125,501)

$ 1,881,376
(84,857)

1,796,519
(822,917)

¥ 129,489

¥ 143,292

$ 973,602

At March 31, 2002, the contractual maturities of minimum lease payments of the investment in financing leases and
the other finance receivables are as follows:

Year ending March 31

2003
2004
2005
2006
2007
Thereafter

Investment in financing leases

Other finance receivables

Millions of yen

¥ 88,504
78,585
58,220
37,620
18,047
5,043

¥286,019

Thousands of
U.S. dollars

$ 665,444
590,865
437,744
282,857
135,692
37,917

$2,150,519

Millions of yen

¥116,045
47,290
27,115
17,323
10,127
32,323

¥250,223

Thousands of
U.S. dollars

$ 872,519
355,564
203,872
130,248
76,143
243,030

$1,881,376

p35-p66（英）3.3J 02.8.12 4:51 PM ページ 52

The allowance for doubtful accounts is provided based upon past loss experience and the estimation of value of the
underlying collateral for certain loans.

The Company has several securitization programs under which trade accounts receivable, trade notes receivable and
finance receivables are transferred to a special purpose entity (“SPE”) or the financial institutions. Upon the sale of
receivables, the Company holds subordinated retained interests for certain trade account and finance receivables which
are not material to the Company’s financial position. Credit losses related to the securitized receivables have not been
material. The Company recognized gains of ¥669 million ($5,030 thousand) and losses of ¥965 million on the secu-
ritizations of receivables for the years ended March 31, 2002 and 2001, respectively.

Subsequent to sale, the Company retains collection and administrative responsibilities for the receivables. The
Company received servicing fees of ¥447 million ($3,361 thousand) and ¥405 million for the years ended March 31,
2002 and 2001, respectively. Servicing assets or liabilities are immaterial to the Company’s financial position.
Proceeds from new securitizations of trade receivables, including notes receivable, and finance receivables for the
year ended March 31, 2002 are ¥824,339 million ($6,198,038 thousand) and ¥103,818 million ($780,586
thousand), respectively. Proceeds from new securitizations of trade receivables, including notes receivable, and finance
receivables for the year ended March 31, 2001 are ¥767,147 million and ¥93,040 million, respectively.

6.
INVENTORIES

Inventories comprise the following:

March 31

Finished products
Work in process:

Long-term contracts
Other

Raw materials

Millions of yen

2002

2001

Thousands of
U.S. dollars

2002

¥280,178

¥345,183

$2,106,601

128,486
163,782
120,904

148,462
201,060
124,928

¥693,350

¥819,633

966,060
1,231,444
909,053

$5,213,158

7.
INVESTMENTS
IN AND
ADVANCES TO
AFFILIATES

Of the affiliates which are accounted for by the equity method, the investment in common stock of the listed com-
panies (five companies) is carried at ¥60,174 million ($452,436 thousand) and ¥62,327 million at March 31, 2002
and 2001, respectively. The Company’s investments in these companies had a market value of ¥58,330 million
($438,571 thousand) and ¥78,671 million at March 31, 2002 and 2001, respectively, based on quoted market prices
at those dates.

Summarized financial information of the affiliates accounted for by the equity method is shown below:

March 31

Current assets
Other assets including property, plant
and equipment

Total assets

Current liabilities
Long-term liabilities
Shareholders’ equity

Total liabilities and shareholders’ equity

Year ended March 31

Sales

Net income

Millions of yen

2002

2001

Thousands of
U.S. dollars

2002

¥450,226

¥412,480

$3,385,158

262,323

¥712,549

¥323,950
66,072
322,527

¥712,549

251,477

¥663,957

¥296,864
71,908
295,185

¥663,957

Millions of yen

2002

¥614,580

¥ 11,002

2001

¥688,527

¥ 18,636

1,972,353

$5,357,511

$2,435,714
496,782
2,425,015

$5,357,511

Thousands of
U.S. dollars

2002

$4,620,902

$ 82,722

p35-p66（英）3.3J 02.8.12 4:51 PM ページ 53

A summary of transactions and balances with the affiliates accounted for by the equity method is presented
below:

Year ended March 31

Sales

Purchases

March 31

Accounts receivable, trade

Other receivables

Accounts payable, trade

Millions of yen

2001

¥ 16,450

¥122,261

Millions of yen

2001

¥ 7,201

¥ 4,265

¥30,433

2002

¥22,164

¥63,355

2002

¥15,033

¥ 3,349

¥44,618

Short-term borrowings at March 31, 2002 and 2001 comprise the following:

Millions of yen

2002

2001

Thousands of
U.S. dollars

2002

$166,647

$476,353

Thousands of
U.S. dollars

2002

$113,030

$ 25,180

$335,474

Thousands of
U.S. dollars

2002

8.
SHORT-TERM
BORROWINGS
AND LONG-TERM
DEBT

March 31

Loans, principally from banks, including bank
overdrafts, with weighted-average interest
rate of 0.84% at March 31, 2002 and 1.13%
at March 31, 2001:

Secured
Unsecured

Commercial paper with weighted-average
interest rate of 0.15% at March 31, 2002
and 5.31% at March 31, 2001
Euro yen or U.S. dollar medium-term notes
of a subsidiary, with weighted-average interest
rate of 0.36% at March 31, 2002 and 0.57%
at March 31, 2001 (swapped for floating
rate (LIBOR, etc.) or fixed rate U.S. dollar,
yen or Euro obligations)

¥ 3,516
456,510

¥ 7,940
468,918

$ 26,436
3,432,406

168,693

27,731

1,268,368

30,135

¥658,854

22,276

¥526,865

226,579

$4,953,789

Substantially all of the short-term borrowings are with banks which have written basic agreements with the
Company to the effect that, with respect to all present or future loans with such banks, the Company shall provide
collateral (including sums on deposit with such banks) or guarantors immediately upon the bank’s request and that
any collateral furnished pursuant to such agreements or otherwise will be applicable to all indebtedness to such banks.

At March 31, 2002, the Company had unused committed lines of credit from short-term financing arrangements aggre-
gating ¥513,514 million ($3,861,008 thousand), of which ¥31,314 million ($235,444 thousand) was in support of
the Company’s commercial paper. These lines of credit have commitment fee requirements.

p35-p66（英）3.3J 02.8.12 4:51 PM ページ 54

Long-term debt at March 31, 2002 and 2001 comprise the following:

Millions of yen

2002

2001

Thousands of
U.S. dollars

2002

March 31

Loans, principally from banks and insurance
companies, due 2002 to 2034 with interest
ranging from zero % to 16.50% at March 31,
2002 and due 2001 to 2034 with interest
ranging from zero % to 13.50% at March 31,
2001:

Secured
Unsecured

¥ 19,268
574,838

¥ 57,883
538,697

$ 144,872
4,322,090

Unsecured yen bonds, due 2002 to 2008 with
interest ranging from 0.6% to 3.025% at March
31, 2002 and due 2001 to 2008 with interest
ranging from 0.7% to 3.025% at March 31,
2001
Euro yen medium-term notes, due 2002 to 2008
with interest ranging from zero % to 2.34%
at March 31, 2002 and due 2001 to
2008 with interest ranging from zero % to
2.34% at March 31, 2001 (swapped for
floating rate (LIBOR, etc.) or fixed rate yen
obligations)
6.75% Euro U.S. dollar medium-term notes
due 2008 (swapped for fixed rate yen
obligations)
1.8% unsecured yen convertible
debentures due 2002 convertible at
¥724 per share
Unsecured yen bonds of subsidiaries,
due 2002 to 2004 with interest ranging
from 0.95% to 3.0% at March 31, 2002
and due 2002 to 2004 with interest
ranging from 0.95% to 3.0% at March 31,
2001
1.825% secured yen bonds of a
subsidiary due 2004
Euro yen or U.S. dollar medium-term notes
of subsidiaries, due 2002 to 2012 with
interest ranging from zero % to 4.0% at
March 31, 2002 and due 2001 to 2011
with interest ranging from zero % to 7.26%
at March 31, 2001 (swapped for floating
rate (LIBOR, etc.) U.S. dollar, Yen or Euro
obligations)
2.2% secured yen convertible debentures
of a subsidiary due 2002 convertible at
¥1,095.8 per share
Zero % unsecured yen convertible
debentures of a subsidiary due 2004
convertible currently at ¥803 per share

Less—Portion due within one year

420,622

438,422

3,162,571

39,375

58,925

296,053

—

630

17,736

—

14,000

19,000

105,263

300

2,256

88,456

118,341

665,083

—

8,017

—

2,820

1,159,679
(270,924)

1,260,771
(270,466)

21,203

8,719,391
(2,037,023)

¥ 888,755

¥ 990,305

$ 6,682,368

p35-p66（英）3.3J 02.8.12 4:51 PM ページ 55

9.
ACCRUED
PENSION AND
SEVERANCE
COSTS

Certain of the secured loan agreements contain provisions which permit the lenders to require additional collateral.
Substantially all of the unsecured loan agreements permit the lenders to require collateral or guarantors for such loans.
Certain of the secured and unsecured loan agreements require prior approval by the banks and trustees before any
distributions (including cash dividends) may be made from current or retained earnings.

Assets pledged as collateral for short-term borrowings and long-term debt at March 31, 2002 are property, plant and
equipment with a book value of ¥55,087 million ($414,188 thousand) and marketable securities and other
investments of ¥4,509 million ($33,902 thousand).

The aggregate annual maturities of long-term debt are as follows:

Year ending March 31

2003
2004
2005
2006
2007
Thereafter

Millions of yen

¥ 270,924
304,989
201,337
113,129
94,329
174,971

¥1,159,679

Thousands of
U.S. dollars

$2,037,023
2,293,150
1,513,812
850,594
709,241
1,315,571

$8,719,391

All employees whose services with the Company are terminated are usually entitled to lump-sum severance
indemnities determined by reference to their current basic rate of pay, length of service and conditions under which
the termination occurs. The obligation for the severance indemnity benefits is provided for through accruals and fund-
ing of tax-qualified non-contributory pension plans and contributory trusteed employee pension funds.

Certain subsidiaries have tax-qualified non-contributory pension plans which cover all or a part of the indemnities
payable to qualified employees at the time of termination. The funding policy for the plans is to contribute
amounts required to maintain sufficient plan assets to provide for accrued benefits, subject to the limitation on
deductibility imposed by Japanese income tax laws.

The Company also has contributory trusteed employee pension funds. The contributory employee pension funds are
comprised of a portion covering part of the severance indemnity benefits and another portion covering social
security benefits, to which the Company and employees make contributions. For the year ended March 31, 2001, the
Company has amended the regulations of the lump-sum severance indemnities and the severance indemnity benefits
portion under the contributory trusteed employee pension funds. For the year ended March 31, 2002, the
Company has amended the regulations of the social security benefits portion under the contributory trusteed
employee pension funds in accordance with the revisions of the Japanese Welfare Pension Insurance Law. These
amendments resulted in the reduction of the projected benefit obligations of the funds.

Net periodic pension and severance cost for the years ended March 31, 2002 and 2001 included the following com-
ponents:

Year ended March 31

Service cost—benefits earned during the year
Interest cost on projected benefit obligation
Expected return on plan assets
Amortization of unrecognized net obligation
at transition
Amortization of prior service cost
Recognized actuarial loss

Millions of yen

2002

2001

¥ 62,687
61,439
(37,864)

¥ 62,801
60,380
(40,788)

12,025
(4,202)
18,693

12,025
(3,212)
13,350

Thousands of
U.S. dollars

2002

$ 471,331
461,947
(284,692)

90,414
(31,594)
140,549

Net periodic pension and severance cost

¥ 112,778

¥ 104,556

$ 847,955

A weighted-average discount rate of 3.5 percent, an expected long-term rate of return on plan assets of 4.0 percent,
and an assumed rate of increase in salary levels of 2.1 percent were used in measuring the pension obligations at
March 31, 2002 and 2001.

The changes in the benefit obligations and plan assets and reconciliations of net amount recognized to funded sta-
tus and accrued pension and severance costs for the years ended March 31, 2002 and 2001 were as follows:

p35-p66（英）3.3J 02.8.12 4:51 PM ページ 56

March 31

Change in benefit obligation:

Benefit obligation at beginning of year
Service cost
Interest cost
Plan participants’ contributions
Plan amendments
Actuarial loss
Benefits paid
Foreign currency exchange impact

Millions of yen

2002

2001

¥ 1,823,810
62,687
61,439
8,745
(39,154)
67,633
(169,461)
957

¥ 1,752,086
62,801
60,380
9,210
(15,838)
52,602
(99,042)
1,611

Benefit obligation at end of year

1,816,656

1,823,810

Change in plan assets:

Fair value of plan assets at beginning of year
Actual return on plan assets
Employer contribution
Plan participants’ contributions
Benefits paid
Foreign currency exchange impact

Fair value of plan assets at end of year

Funded status
Unrecognized actuarial loss
Unrecognized net obligation at transition
Unrecognized prior service cost

1,044,142
(55,441)
40,371
8,745
(50,648)
943

988,112

828,544
(638,072)
(49,163)
78,740

987,517
(56,975)
138,782
9,210
(36,108)
1,716

1,044,142

779,668
(495,740)
(61,189)
43,690

Thousands of
U.S. dollars

2002

$ 13,712,857
471,331
461,947
65,752
(294,391)
508,519
(1,274,142)
7,195

13,659,068

7,850,692
(416,850)
303,541
65,752
(380,811)
7,090

7,429,414

6,229,654
(4,797,533)
(369,647)
592,030

Net amount recognized

¥ 220,049

¥ 266,429

$ 1,654,504

Amounts recognized in the consolidated
balance sheets consist of:

Accrued pension and severance costs
Intangible asset
Accumulated other comprehensive loss,
pre-tax

¥ 709,233
—

¥ 633,642
(17,499)

$ 5,332,579
—

(489,184)

(349,714)

(3,678,075)

Net amounts recognized

¥ 220,049

¥ 266,429

$ 1,654,504

Accumulated benefit obligation at end of year

¥ 1,696,572

¥ 1,677,784

$ 12,756,180

For the year ended March 31, 2001, the Company contributed certain marketable equity securities, not including those
of its subsidiaries and affiliates, and cash to employee retirement benefit trusts, with no cash proceeds thereon. The
securities and the cash held in these trusts are qualified as plan assets. The fair value of these securities at the time
of contribution, including the contributed cash, was ¥89,016 million. Upon contribution of these available-for-sale secu-
rities, a net unrealized gain of ¥35,942 million was realized and included in other income for the year ended March
31, 2001.

Research and development costs are expensed as incurred and amounted to ¥ 326,170 million ($2,452,406 thou-
sand) and ¥327,915 million for the years ended March 31, 2002 and 2001, respectively.

Advertising costs are expensed as incurred. Advertising expenses amounted to ¥59,390 million ($446,541 thousand)
and ¥57,106 million for the years ended March 31, 2002 and 2001, respectively.

The Company leases office and warehouse space, and certain other assets under operating leases. Rent expenses
under such leases for the years ended March 31, 2002 and 2001 are ¥84,781 million ($637,451 thousand) and
¥81,503 million, respectively.

10.
RESEARCH AND
DEVELOPMENT
EXPENSES

11.
ADVERTISING
COSTS

12.
RENT EXPENSES

p35-p66（英）3.3J 02.8.12 4:51 PM ページ 57

13.
FOREIGN
EXCHANGE GAINS
AND LOSSES

14.
RESTRUCTURING
CHARGES

For the years ended March 31, 2002 and 2001, the net foreign exchange losses are ¥6,682 million ($50,241 thou-
sand) and ¥7,776 million, respectively.

Restructuring charges consist of various reorganization costs totaling ¥111,280 million ($836,692 thousand) primarily
related to the “01 Action Plan,” a series of measures to reshape business operations and strengthen competitiveness
announced in August 2001 and additional termination benefits for voluntary early retirement of ¥97,674 million
($734,391 thousand).

The reorganization costs of ¥111,280 million ($836,692 thousand) comprised the following.

For the year ended March 31, 2002, the Company incurred sluggish demand and price erosion of semiconductors
especially commodity DRAMs and consequently the Company’s gross margin significantly decreased. Given these cir-
cumstances the Company evaluated certain machinery and equipment for memory production to be held and
used for impairment. The impairment of such machinery and equipment was based upon an analysis of projected undis-
counted cash flows, which were no longer deemed adequate to support their value. Consequently, the Company record-
ed an impairment loss of ¥55,247 million ($415,391 thousand) for assets to be held and used.

The Company decided to exit the commodity DRAM business. In December 2001, the Company announced that it
would sell Dominion Semiconductor, L.L.C. (“Dominion”) to Micron Technology, Inc. (“Micron”). The sale covers all
of the assets of Dominion, including its land, buildings and DRAM production equipment. In connection with the exit,
certain NAND flash manufacturing equipment will be transferred to a Company facility in Japan. Furthermore, the
Company determined to liquidate a wholly-owned subsidiary, which had been engaged mainly in the assembly of
DRAMs. In connection with such reorganization of the DRAM business, the Company has incurred losses on disposal
and impairment for building, machinery and equipment of ¥5,125 million ($38,534 thousand) and various other loss-
es including; losses on contract terminations, purchase commitment losses, dismantling costs for machinery and equip-
ment to be disposed of, totaling ¥31,083 million ($233,707 thousand). The Company anticipates that
substantially all of the restructuring liabilities will be paid during the year ending March 31, 2003.

Other reorganization costs of ¥19,825 million ($149,060 thousand) mainly related to impairment losses of building,
machinery and equipment for other businesses to be discontinued or already discontinued.

The Company anticipates that substantially all of such assets will be disposed during the year ending March 31, 2003.

The Company recorded a loss of ¥97,674 million ($734,391 thousand) with respect to the additional termination ben-
efits for the voluntary early retirement of approximately 8,200 employees under the “01 Action Plan”.
Substantially all of these additional termination benefits were paid as of March 31, 2002.

Approximately ¥79,993 million ($601,451 thousand) of the restructuring charges are non-cash charges.

15.
INCOME TAXES

The Company is subject to a number of different taxes based on income which, in the aggregate, result in a normal
statutory tax rate in Japan of approximately 42.1 percent for the years ended March 31, 2002 and 2001. A recon-
ciliation between the reported income tax expense (benefit) and the amount computed by multiplying the income (loss)
before income taxes, minority interest and equity in earnings of affiliates by the applicable statutory tax rate is as fol-
lows:

Year ended March 31

Computed expected income tax expense
(benefit)

Increase in taxes resulting from:

Millions of yen

2002

2001

Thousands of
U.S. dollars

2002

¥(158,585)

¥79,190

$(1,192,368)

Non-deductible expenses for tax purposes

Net changes in valuation allowance

Tax rate difference relating to reclassification

adjustments for gains on securities

Other

3,256

41,575

308

(469)

3,979

2,256

4,061

6,659

24,481

312,594

2,316

(3,527)

Income tax expense (benefit)

¥(113,915)

¥96,145

$ (856,504)

p35-p66（英）3.3J 02.8.12 4:51 PM ページ 58

The significant components of deferred tax assets and deferred tax liabilities recorded on the consolidated balance
sheets as of March 31, 2002 and 2001 are as follows:

March 31

Gross deferred tax assets:

Inventories

Accrued pension and severance costs

Tax loss carryforwards

Minimum pension liability adjustment

Accrued bonus

Other

Valuation allowance for deferred tax assets

Deferred tax assets

Gross deferred tax liabilities:

Retained earnings appropriated for tax
allowable reserves

Unrealized gains on securities

Gain on securities contributed to employee
retirement benefit trusts
Other

Deferred tax liabilities

Net deferred tax assets

Millions of yen

2002

2001

Thousands of
U.S. dollars

2002

¥ 24,805

¥ 23,823

$ 186,504

97,788

180,125

205,946

27,746

174,958

711,368

(77,644)

633,724

(15,661)

(18,356)

(17,763)
(17,450)

(69,230)

81,520

34,695

147,230

29,168

151,555

467,991

(42,197)

425,794

(17,064)

(21,157)

(17,763)
(13,473)

(69,457)

735,248

1,354,323

1,548,466

208,617

1,315,473

5,348,631

(583,789)

4,764,842

(117,752)

(138,015)

(133,556)
(131,203)

(520,526)

¥ 564,494

¥ 356,337

$ 4,244,316

Net current deferred tax assets at March 31, 2002 and 2001 are reflected in the consolidated balance sheets under
the caption of prepaid expenses and other current assets, ¥84,402 million ($634,602 thousand) and ¥122,946 mil-
lion, respectively.

The net changes in the total valuation allowance for the years ended March 31, 2002 and 2001 were an
increase of ¥35,447 million ($266,519 thousand) and a decrease of ¥4,562 million, respectively.

Available corporate tax loss carryforwards of the Company at March 31, 2002 amounted to approximately
¥430,476 million ($3,236,662 thousand), the majority of which will expire during the period from 2003 through 2007.
Realization is dependent on the Company generating sufficient taxable income prior to their expiration or the
Company exercising certain available tax strategies. Although realization is not assured, management believes it is
more likely than not that all of the deferred tax assets, less the valuation allowance, will be realized. The amount of
such net deferred tax assets considered realizable, however, could be reduced in the near term if estimates of future
taxable income during the carryforward period are reduced.

Deferred income tax liabilities have not been provided on undistributed earnings of foreign subsidiaries and affiliates
deemed indefinitely reinvested in foreign operations. As of March 31, 2002, the undistributed earnings of the foreign
subsidiaries not subject to deferred tax liabilities were ¥103,248 million ($776,301 thousand). It is not practicable
to estimate the amount of the deferred income tax liabilities on such earnings.

A foreign subsidiary issued 35 shares of ¥1,000 million par value redeemable preferred stock with a totaling ¥35,000
million ($263,158 thousand) to the third parties. This preferred stock is included in minority interest in the consolidated
subsidiaries. Holders of the preferred stock have no voting rights and are to receive preferred dividends quarterly, based
on LIBOR, which currently approximates 1.06 percent per annum.

On October 1, 2001, an amendment (“Amendment”) to the Japanese Commercial Code became effective. The
Amendment eliminates the stated par value of Toshiba Corporation’s outstanding shares which results in all out-
standing shares having no par value as of October 1, 2001. The Amendment also provides that share issuances after
September 30, 2001 will be of shares with no par value. Before the Amendment, Toshiba Corporation’s shares had
a par value of ¥50 per share.

16.
ISSUANCE OF
PREFERRED
STOCK BY A
SUBSIDIARY

17.
SHAREHOLDERS’
EQUITY

p35-p66（英）3.3J 02.8.12 4:51 PM ページ 59

Retained Earnings
Retained earnings at March 31, 2002 and 2001 include a legal reserve of ¥81,815 million ($615,150 thousand) and
¥80,933 million, respectively. The Japanese Commercial Code provides that an amount equal to at least 10 percent
of cash dividends and other distributions from retained earnings paid by Toshiba Corporation and its Japanese sub-
sidiaries be appropriated as a legal reserve. No further appropriations are required when the total amount of the addi-
tional paid-in capital and the legal reserve equals 25 percent of their respective stated capital.

The amount 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 Japanese Commercial Code.

Accumulated Other Comprehensive Income (Loss)
An analysis of the changes in accumulated other comprehensive income (loss), net of tax, for the years ended March
31, 2002 and 2001 is shown below:

March 31

Unrealized gains on securities:

Balance at beginning of year

Current-period change

Balance at end of year

Foreign currency translation adjustments:

Balance at beginning of year

Current-period change
Balance at end of year

Minimum pension liability adjustement:

Balance at beginning of year

Current-period change
Balance at end of year

Unrealized losses on derivative instruments:

Balance at beginning of year
Current-period change

Balance at end of year

Total accumulated other comprehensive loss:

Balance at beginning of year

Current-period change
Balance at end of year

Millions of yen

2002

2001

Thousands of
U.S. dollars

2002

¥ 28,728

¥ 70,687

$ 216,000

(3,542)

(41,959)

(26,632)

¥ 25,186

¥ 28,728

$ 189,368

¥ (55,938)

13,987
¥ (41,951)

¥(199,185)

(80,754)
¥(279,939)

—
¥ (2,088)

¥ (2,088)

¥(226,395)

(72,397)
¥(298,792)

¥(105,990)

50,052
¥ (55,938)

¥(108,496)

(90,689)
¥(199,185)

—

¥(143,799)

(82,596)
¥(226,395)

$ (420,586)

105,166
$ (315,420)

$(1,497,632)

(607,173)
$(2,104,805)

—
$ (15,699)

$ (15,699)

$(1,702,218)

(544,338)
$(2,246,556)

Tax effects allocated to each component of other comprehensive income (loss) for the years ended March 31, 2002
and 2001 are shown below:

For the year ended March 31, 2002:
Unrealized gains on securities:

Unrealized holding gains arising during
period
Less: reclassification adjustment for gains
included in net loss

Foreign currency translation adjustements
Minimum pension liability adjustement
Unrealized losses on derivative instruments

Pre-tax
amount

Millions of yen

Tax benefit
(expense)

Net-of-tax
amount

¥ 10,052

¥ (4,179)

¥ 5,873

(16,233)
13,976
(139,471)
(3,465)

6,818
11
58,717
1,377

Other comprehensive income (loss)

¥(135,141)

¥ 62,744

(9,415)
13,987
(80,754)
(2,088)

¥(72,397)

p35-p66（英）3.3J 02.8.12 4:51 PM ページ 60

For the year ended March 31, 2001:
Unrealized gains on securities:

Unrealized holding gains arising during
period
Less: reclassification adjustment for gains
included in net income

Foreign currency translation adjustements
Minimum pension liability adjustement

¥ (29,752)

¥ 12,530

¥(17,222)

(45,527)
50,438
(156,630)

20,790
(386)
65,941

(24,737)
50,052
(90,689)

¥(82,596)

Other comprehensive income (loss)

¥(181,471)

¥ 98,875

Thousands of U.S. dollars

Pre-tax
amount

Tax benefit
(expense)

Net-of-tax
amount

For the year ended March 31, 2002:
Unrealized gains on securities:

Unrealized holding gains arising during
period
Less: reclassification adjustment for gains
included in net loss

Foreign currency translation adjustements
Minimum pension liability adjustement
Unrealized losses on derivative instruments

$ 75,579

$ (31,421)

$ 44,158

(122,053)
105,083
(1,048,654)
(26,053)

51,263
83
441,481
10,354

(70,790)
105,166
(607,173)
(15,699)

Other comprehensive income (loss)

$(1,016,098)

$ 471,760

$(544,338)

A reconciliation of the numerators and denominators between basic and diluted net income per share (EPS) for the
years ended March 31, 2002 and 2001 is as follows:

Year ended March 31

Net income (loss) available to common
shareholders
Net income effect of dilutive convertible
debentures

Net income (loss) available to common
shareholders and assumed conversions

Millions of yen

2002

2001

Thousands of
U.S. dollars

2002

¥(254,017)

¥96,168

$(1,909,902)

—

186

—

¥(254,017)

¥96,354

$(1,909,902)

Year ended March 31

Number of shares for basic EPS computations:

Weighted—average number of shares of common stock
outstanding for the year

Incremental shares from assumed conversions of dilutive

convertible debentures

Number of shares for diluted EPS computations

Thousands of shares

2002

2001

3,218,951

3,218,982

—
3,218,951

24,499

3,243,481

Year ended March 31

2002

2001

Net income (loss) per share of common stock:

Yen

Basic

Diluted

¥(78.91)

¥29.88

¥29.71

U.S. dollars

2002

$(0.593)

(1) Derivative financial instruments
The Company operates internationally, giving rise to exposure to market risks from fluctuations in foreign currency
exchange and interest rates. In the normal course of its risk management efforts, the Company employs a variety of
derivative financial instruments, which are comprised principally of forward exchange contracts, interest rate

18.
NET INCOME
(LOSS) PER
SHARE

19.
FINANCIAL
INSTRUMENTS

p35-p66（英）3.3J 02.8.12 4:51 PM ページ 61

swap agreements and currency swap agreements, to reduce its exposures. The Company has policies and procedures
for risk management and the approval, reporting and monitoring of derivative financial instruments. The
Company’s policies prohibit holding or issuing derivative financial instruments for trading purposes.

The counterparties to the Company’s derivative transactions are financial institutions of high credit standing. The
Company does not anticipate any credit loss from nonperformance by the counterparties to forward exchange con-
tract, interest rate swap agreements and currency swap agreements.

The Company has entered into forward exchange contracts with banks as hedges against fluctuations in foreign cur-
rency exchange rates on monetary assets and liabilities denominated in foreign currencies. The forward exchange con-
tracts related to accounts receivable and payable, and commitments on future trade transactions denominated in
foreign currencies mature primarily within a few months subsequent to the balance sheet date.

Interest rate swap agreements and currency swap agreements are used to limit the Company’s exposure to losses
in relation to underlying debt instruments and a certain foreign currency denominated accounts receivable resulting
from adverse fluctuations in foreign currency exchange and interest rates. These agreements mature during the peri-
od 2002 to 2012.

Forward exchange contracts and certain interest rate swap agreements and currency swap agreements are designated
as either fair value hedges or cash flow hedges depending on the foreign currency denominated accounts receivable
or commitments on future trade transactions and the interest rate characteristics of the underlying debt as discussed
below.

Fair Value Hedge Strategy
The forward exchange contracts utilized by the Company effectively reduce fluctuation in fair value of accounts receiv-
able denominated in foreign currencies.

The interest rate swap agreements utilized by the Company effectively convert a portion of its fixed-rate debt to a float-
ing-rate basis.

Cash Flow Hedge Strategy
The forward exchange contracts utilized by the Company effectively reduce fluctuation in cash flow from commitments
on future trade transactions denominated in foreign currencies for the next six months, approximately.

The interest rate swap agreements utilized by the Company effectively convert a portion of its floating-rate debt to a
fixed-rate basis for the next 10 years.

The Company expects to reclassify ¥214 million ($1,609 thousand) of net losses on derivative financial instruments
from accumulated other comprehensive income (loss) to earnings during the next twelve months due to the collection
of accounts receivable denominated in foreign currency and the payment of variable interest associated with the float-
ing rate debts.

At March 31, 2002, there were no significant gains or losses on derivative financial instruments or portions
thereof that are either ineffective as hedges, excluded from assessment of hedge effectiveness, or where the under-
lying risk did not occur.

The Company’s forward exchange contract amounts, the aggregate notional principal amounts of interest rate swap
agreements and the principal amounts of currency swap agreements outstanding at March 31, 2002 and 2001 are
summarized below:

March 31

Forward exchange contracts:

To sell foreign currencies

To buy foreign currencies

Interest rate swap agreements

Currency swap agreements

Millions of yen

2002

2001

Thousands of
U.S. dollars

2002

¥ 98,878

¥157,532

$ 743,444

29,036

410,377

122,755

30,829

432,884

132,836

218,316

3,085,541

922,970

p35-p66（英）3.3J 02.8.12 4:51 PM ページ 62

(2) Fair value of financial instruments
The estimated fair values of the Company’s financial instruments at March 31, 2002 and 2001 are summarized as
follows:

March 31

2002

2001

2002

Millions of yen

Thousands of U.S. dollars

Carrying
amount

Estimated
fair value

Carrying
amount

Estimated
fair value

Carrying
amount

Estimated
fair value

Nonderivatives:
Assets—

Long-term finance
receivables, net

Liabilities—

Long-term debt,
including current
portion

Derivative financial instruments:
Forward exchange
contracts
Interest rate swap
agreements
Currency swap
agreements

¥ 129,489

¥ 132,267

¥ 143,292

¥ 145,043

$ 973,602

$ 994,489

(1,159,679)

(1,181,925)

(1,260,771)

(1,299,526)

(8,719,391)

(8,886,654)

384

(592)

(5,474)

2,887

(3,994)

—

(5,042)

(30,030)

(6,884)

(9,403)

(10,038)

(51,759)

The above table excludes the financial instruments for which fair values approximate their carrying values and those
related to leasing activities.

In assessing the fair value of these financial instruments, the Company has used a variety of methods and
assumptions, which were based on estimates of market conditions and risks existing at that time. For certain instru-
ments, including cash and cash equivalents, notes and accounts receivable, trade, finance receivables, net,
short-term borrowings, notes payable, trade, accounts payable, trade and accounts payable, other and accrued expens-
es, it was assumed that the carrying amount approximated fair value for the majority of these instruments
because of their short maturities. Quoted market prices were used for a part of marketable securities and other invest-
ments. Other techniques, such as estimated discounted value of future cash flows, and replacement cost, have been
used to determine fair value for the remaining financial instruments. These estimated fair values are not necessarily
indicative of the amounts that could be realized in a current market exchange.

Marketable securities and other investments include investment securities which represent holdings in a number of
non-public companies. The aggregate carrying amount of these investments in non-public companies was
¥94,427 million ($709,977 thousand) and ¥103,147 million at March 31, 2002 and 2001, respectively.
However, the corresponding fair value of these investments at those dates was not computed as such estimation was
not practicable.

20
COMMITMENTS
AND
CONTINGENT
LIABILITIES

Commitments outstanding at March 31, 2002 for the purchase of property, plant and equipment approximated
¥10,098 million ($75,925 thousand).

At March 31, 2002, contingent liabilities, principally for loans guaranteed, approximated ¥531,888 million
($3,999,158 thousand).

The Company is a defendant in several pending lawsuits with respect to patent infringement, breaches of contract
and warranties and others. The Company 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 positions
or the results of operations of the Company.

21
SUBSEQUENT
EVENTS

On May 29, 2002, Toshiba Corporation issued unsecured yen bonds of ¥60,000 million ($451,128 thousand) and
¥40,000 million ($300,752 thousand) with maturity dates of May 27, 2005 and May 29, 2008, respectively. The inter-
est rates for the bond offerings are 0.49 percent and 1.08 percent, respectively.

p35-p66（英）3.3J 02.8.12 4:51 PM ページ 63

Repor t of Independent Auditors

The Board of Directors and Shareholders

Toshiba Corporation

■Hibiya Kokusai Bldg.
2-2-3, Uchisaiwai-cho
Chiyoda-ku, Tokyo 100-0011
C.P.O. Box1196, Tokyo 100-8841

■Phone:
:
Fax

03-3503-1191
03-3503-1277

We have audited the accompanying consolidated balance sheet of Toshiba Corporation (the “Company”) as of March 31, 2002, and the relat-
ed consolidated statements of operations, shareholders’ equity and cash flows for the year then ended, all expressed in Japanese yen. These
financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial state-
ments based on our audit. The consolidated balance sheet of the Company as of March 31, 2001 and the related consolidated statements
of income, shareholders’ equity and cash flows for the year ended March 31, 2001, all expressed in Japanese yen, were audited by other audi-
tors whose report dated April 27, 2001 on those statements was qualified with respect to the omission of segment information.

We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards
require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material mis-
statement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the over-
all financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

The Company has not presented segment information required to be disclosed in accordance with Statement of Financial Accounting Standards
No. 131, “Disclosures about Segments of an Enterprise and Related Information” for the year ended March 31, 2002. In our opinion, pre-
sentation of segment information is required under accounting principles generally accepted in the United States of America for a complete
presentation of the Company’s consolidated financial statements.

As discussed in Note 2 to the consolidated financial statements, effective April 1, 2001, the Company changed its method of accounting for
derivative financial instruments and hedging activities.

In our opinion, except for the omission of segment information discussed in the preceding paragraph, the fiscal 2002 financial statements
referred to above present fairly, in all material respects, the consolidated financial position of the Company at March 31, 2002, and the con-
solidated results of its operations and its cash flows for the year then ended in conformity with accounting principles generally accepted in
the United States of America.

We have also reviewed the translation of the financial statements mentioned above into United States dollars on the basis described in Note
3. In our opinion, such statements have been translated on such basis.

April 25, 2002, except for Note 21,
as to which the date is May 29, 2002

p35-p66（英）3.3J 02.8.12 4:51 PM ページ 64

Global Network

OVERSEA OFFICES

EUROPE

Moscow

AFRICA

Johannesburg

MIDDLE EAST

Baghdad
Abu Dhabi

ASIA

Shanghai
Manila
Bangkok
New Delhi

OVERSEAS SUBSIDIARIES AND
AFFILIATES

NORTH AMERICA

Toshiba of Canada, Ltd.
Markham, Ontario, Canada

LATIN AMERICA

Toshiba de Mexico, S.A. de C.V.
Mexico City, Mexico

Toshiba Electromex, S.A. de C.V.
Ciudad Juárez, Mexico

GE Toshiba Turbine Components de

Toshiba GE Automation Systems Canada

Mexico S.R.L. de C.V.

Corporation

Peel, Ontario, Canada

Toshiba America, Inc.
New York, New York, U.S.A.

Toshiba America Capital Corporation
New York, New York, U.S.A.

Toshiba America Research, Inc.
Morristown, New Jersey, U.S.A.

Toshiba America Medical Systems, Inc.
Tustin, California, U.S.A.

Toshiba America MRI Inc.
South San Francisco, California, U.S.A.

Applied Super Conetics, Inc.
San Diego, California, U.S.A.

Toshiba America Information

Systems, Inc.

Irvine, California, U.S.A.

Toshiba America Consumer Products, Inc.
Wayne, New Jersey, U.S.A.

Toshiba International Corporation
Houston, Texas, U.S.A.

Toshiba America Electronic

Components, Inc.
Irvine, California, U.S.A.

Toshiba Display Devices, Inc.
Horseheads, New York, U.S.A.

Dominion Semiconductor, L.L.C.
Manassas, Virginia, U.S.A.

Semiconductor America, Inc.
Irvine, California, U.S.A.

Semiconductor North America, Inc.
Irvine, California, U.S.A.

Toshiba America Venture Capital, Inc.
New York, New York, U.S.A.

Toshiba GE Automation Systems

International, L.L.C.

Wilmington, Delaware, U.S.A.

Monterrey, Mexico

Toshiba de Venezuela C.A.
Caracas, Venezuela

Toshiba Medical do Brasil Ltda.
São Paulo, Brazil

Semp Toshiba Amazonas S.A.
Manaus, Brazil

T and S Serviços Industrias S/C Ltda.
São Paulo, Brazil

Toshiba do Brasil, S.A.
São Paulo, Brazil

EUROPE

Toshiba of Europe Ltd.
London, U.K.

Toshiba International Finance (UK) Plc.
London, U.K.

Toshiba Research Europe Ltd.
Cambridge, U.K.

Toshiba Medical Systems Ltd.
Crawley, U.K.

Toshiba Information Systems (UK) Ltd.
Weybridge, U.K.

Toshiba International (Europe) Ltd.
West Drayton, U.K.

Toshiba Electronics (UK) Ltd.
Camberley, U.K.

Toshiba Electronics Scandinavia A.B.
Bromma, Sweden

Toshiba International Finance

(Netherlands) B.V.
Haarlem, The Netherlands

Toshiba Medical Systems Europe B.V.
Zoetermeer, The Netherlands

Toshiba Medical Systems B.V.
Zoetermeer, The Netherlands

GE Toshiba Automation Systems, L.L.C.
Wilmington, Delaware, U.S.A.

Toshiba Medical Systems NV/SA
Antwerpen, Belgium

Flash Vision, L.L.C.
Manassas, Virginia, U.S.A.

Toshiba Hawaii, Inc.
Honolulu, Hawaii, U.S.A.

ArTile Microsystems, Inc.
San Jose, California, U.S.A.

Enceratec, Inc.
Columbus, Indiana, U.S.A.

Toshiba Medical Systems GmbH
Neuss, Germany

Toshiba Europe GmbH
Neuss, Germany

Toshiba Semiconductor G.m.b.H.
Braunschweig, Germany

Toshiba Electronics Europe GmbH
Düsseldorf, Germany

Toshiba Medical France S.A.
Puteaux, France

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Toshiba Systèmes (France) S.A.
Puteaux, France

Toshiba Electronics France S.A.R.L.
Rosny-Sous-Bois, France

Schneider Toshiba Inverter Europe S.A.S.
Pacy-sur-Eure, France

Toshiba Medical Systems Gesellschaft

m.b.H.

Wiener Neudorf, Austria

Toshiba Medical Systems AG
Oetwil am See, Switzerland

Toshiba Medical Systems S.R.L.
Rome, Italy

Toshiba Electronics Italiana S.R.L.
Milan, Italy

Toshiba Medical Systems S.A.
Madrid, Spain

Toshiba Electronics España, S.A.
Madrid, Spain

ZAO Toshiba Medical Systems
Moscow, CIS

MIDDLE EAST

Toshiba Gulf FZE
Dubai, U.A.E.

ASIA

Toshiba India Pte. Ltd.
New Delhi, India

Toshiba (China) Co., Ltd.
Beijing, The People’s Republic of China

Toshiba Technology Development

(Shanghai) Co., Ltd.

Shanghai, The People’s Republic of China

Toshiba Dalian Co., Ltd.
Dalian, The People’s Republic of China

Hangzhi Machinery & Electronics Co., Ltd.
Hangzhou, The People’s Republic of China

Dalian Toshiba Television Co., Ltd.
Dalian, The People’s Republic of China

Toshiba Computer Systems (Shanghai)

Co., Ltd.

Shanghai, The People’s Republic of China

Changzhou Toshiba Transformer Co., Ltd.
Changzhou, The People’s Republic of China

Wuxi Huazhi Semiconductor Co., Ltd.
Wuxi, The People’s Republic of China

Jiangxi Toshiba Electronic Materials

Co., Ltd.

Jiangxi, The People’s Republic of China

Ningbo Toshiba Huatong Switchgear

Co., Ltd.

Ningbo, The People’s Republic of China

Shengyang Neusoft Business Software

Co., Ltd.

Shengyang, The People’s Republic of China

Jiangsu Honshiba Network System

Toshiba Consumer Products (Thailand)

Equipment Co., Ltd.

Nanjing, The People’s Republic of China

Co., Ltd.

Bangkok, Thailand

Nanjing Postel Wong Zhi

Telecommunications Co., Ltd.

Nanjing, The People’s Republic of China

Henan Pinggao Toshiba High-Voltage

Switchgear Co., Ltd.

Henan, The People’s Republic of China

Toshiba Display Devices (Thailand)

Co., Ltd.

Bangkok, Thailand

Toshiba Semiconductor (Thailand) Co., Ltd.
Bangkok, Thailand

Toshiba Electronics Service (Thailand)

Zhuhai Xujizhi Power System Automation

Co., Ltd.

Zhuhai, The People’s Republic of China

Tsurong Xiamen Xiangyu Trading Co., Ltd.
Xiamen, The People’s Republic of China

Guangzhou Toshiba Baiyan Electrical

Equipment Co., Ltd.

Guangzhou, The People’s Republic of China

Toshiba Hong Kong Ltd.
Shatin, Hong Kong SAR

Toshiba Electronics Asia, Ltd.
Kowloon, Hong Kong SAR

Toshiba Electronics Korea Corporation
Seoul, The Republic of Korea

Korea Electronic Material Co., Ltd.
Inchon City, The Republic of Korea

Toshiba Digital Media Network Korea

Corporation

Seoul, The Republic of Korea

Toshiba Memory Semiconductor Taiwan

Corp.

Kaohsiung, Taiwan

Toshiba Electronics Taiwan Corporation
Taipei, Taiwan

Taiwan Toshiba International Procurement

Corp.

Taipei, Taiwan

Bangkok, Thailand

Toshiba Sales and Services Sdn. Bhd.
Selangor, Malaysia

Toshiba Electronics Malaysia Sdn. Bhd.
Selangor, Malaysia

Toshiba Electronics Trading (Malaysia)

Sdn. Bhd.

Kuala Lumpur, Malaysia

Toshiba Capital (Asia) Ltd.
Singapore

Toshiba Asia Pacific Pte., Ltd.
Singapore

Toshiba Medical Systems Asia Pte., Ltd.
Singapore

Toshiba Video Products Pte., Ltd.
Singapore

Toshiba Singapore Pte., Ltd.
Singapore

Toshiba Electronics Asia (Singapore)

Pte., Ltd.

Singapore

Toshiba Data Dynamics Pte., Ltd.
Singapore

AFPD PTE., LTD.
Singapore

Toshiba Information, Industrial and Power

Systems Taiwan Corp.

Taipei, Taiwan

Toshiba Memory Semiconductor Taiwan

P.T. Toshiba Consumer Products Indonesia
Bekasi, Indonesia

P.T. Toshiba Display Devices Indonesia
Jawa Barat, Indonesia

Corp.

Taipei, Taiwan

Toshiba Information Equipment

(Philippines), Inc.

Laguna, Philippines

Toshiba Electronics Philippines, Inc.
Manila, Philippines

Toshiba Vietnam Consumer Products

Co., Ltd.

Ho Chi Minh City, Vietnam

Toshiba Vietnam Home Appliances

Co., Ltd.

Binh Duong, Vietnam

Toshiba Thailand Co., Ltd.
Bangkok, Thailand

Thai Toshiba Electric Industries Co., Ltd.
Bangkok, Thailand

P.T. Tosjaya Abadi Ventura
Jawa Barat, Indonesia

P.T. Schneider Electric Manufacturing

Batam

Batam Island, Indonesia

P.T. Display and Devices Indonesia
Jawa Barat, Indnesia

OCEANIA

Toshiba (Australia) Pty., Ltd.
Sydney, Australia

Toshiba International Corporation Pty., Ltd.
Sydney, Australia

(As of March 31, 2002)

Af filiated Companies
Accounted by The Equity
Method

DOMESTIC

D.T. Circuit Technology Co., Ltd.
ep Corporation
GE Toshiba Silicones Co., Ltd.
Media Serve Corporation
Mobile Broadcasting Corporation
NEC Toshiba Space Systems, Ltd.
Nishishiba Electric Co., Ltd.
TMA Electric Corporation
Topcon Corporation
Toshiba Ceramics Co., Ltd.
Toshiba GE Turbine Service Co., Ltd.
Toshiba Machine Co., Ltd.
Toshiba Tungaloy Co., Ltd.
Toshiba-EMI Limited

Plus 7 Others

OVERSEAS

Flash Vision, L.L.C.
GE Toshiba Turbine Components de Mexico

S.R.L. de C.V.

Guangdong Meizhi Compressor Limited
Guangdong Meizhi Motor Limited
Kumdong Lighting Co., Ltd
Schneider Toshiba Inverter S.A.S
Semp Toshiba Amazonas S.A.
Thai Toshiba Electric Industries Co., Ltd.
Toshiba Carrier (Thailand) Co., Ltd.
Toshiba Carrier UK Ltd.

Plus 4 Others

(As of March 31,2002)

p35-p66（英）3.3J 02.8.12 4:51 PM ページ 66

Consolidated Subsidiaries

DOMESTIC

OVERSEAS

A&T Battery Corporation
Device Link, Inc.
FreshEye Corporation
Fukuoka Toshiba Electronics Corporation
Harison Toshiba Lighting Co., Ltd.
Iwate Toshiba Electronics Co., Ltd.
Joint Fuel Co., Ltd.
Kaga Toshiba Electronics Corporation
Kawasaki Estate Management Co., Ltd.
Kitashiba Electric Co., Ltd.
Shibaura Mechatronics Corporation
Term Corporation
TFPD Corporation
Toshiba Air Conditioning Co., Ltd.
Toshiba Battery Co., Ltd.
Toshiba Building & Lease Co., Ltd
Toshiba Capital Corporation
Toshiba Carrier Air conditioning Systems

Corporation

Toshiba Carrier Corporation
Toshiba Chemical Corporation
Toshiba Credit Corporation
Toshiba Device Corporation
Toshiba Digital Frontiers Inc.
Toshiba Electric Appliances Co., Ltd.
Toshiba Elevator and Building Systems

Corporation

Toshiba Elevator Products Corporation
Toshiba Engineering Corporation
Toshiba Finance Corporation
Toshiba GE Automation Systems Corporation
Toshiba GE Turbine Components Co., Ltd
Toshiba Hokuto Electronics Corporation
Toshiba Home Technology Corporation
Toshiba Industrial Products Manufacturing

Corporation

Toshiba Industrial Products Sales Corporation
Toshiba Information Equipments Co., Ltd.
Toshiba Information Systems (Japan) Corporation
Toshiba International Fuel Sells Inc.
Toshiba It-Solutions Corporation
Toshiba Lifestyle-Electronics Corporation
Toshiba Lighting & Technology Corporation
Toshiba Logistics Corporation
Toshiba Medical Finance Co., Ltd.
Toshiba Medical Systems Co., Ltd.
Toshiba Microelectronics Corporation
Toshiba Multi Media Devices Co., Ltd.
Toshiba Plant Kensetsu Co., Ltd.
Toshiba TEC Corporation
Toyo Carrier Engineering Co., Ltd.
Yokkaichi Toshiba Electronics Corporation

Plus 157 Others

AFPD Pte., Ltd
Changzhou Toshiba Transformer Co., Ltd
Dalian Toshiba Television Co., Ltd.
Dominion Semiconductor, L.L.C.
GE Toshiba Automation Systems, L.L.C.
Hangzhi Machinery & Electronics Co., Ltd.
P.T. Display Devices Indonesia
P.T. Toshiba Consumer Products Indonesia
P.T. Toshiba Display Devices Indonesia
Pacific Fuel Cell Capital (U.S.A.), Inc.
Semiconductor America , Inc.
Semiconductor North America, Inc.
Shanghai Toshiba Elevator Co., Ltd.
Shenyang Toshiba Elevator Co., Ltd.
TEC America, Inc.
TEC Singapore Electronics Pte. Ltd.
TGA Holdings L.L.C.
TIM Electronics Sdn. Bhd
Toshiba (Australia) Pty., Ltd.
Toshiba (China) Co., Ltd.
Toshiba America Business Solutions, Inc.
Toshiba America Capital Corporation
Toshiba America Consumer Products, Inc.
Toshiba America Electronic Components, Inc.
Toshiba America Information Systems, Inc.
Toshiba America Medical Systems, Inc.
Toshiba America MRI Inc.
Toshiba America Venture Capital, Inc.
Toshiba America, Inc.
Toshiba Asia Pacific Pte., Ltd.
Toshiba Capital (Asia) Ltd.
Toshiba Chemical Singapore Pte., Ltd.
Toshiba Compressor (Taiwan) Corporation
Toshiba Computer Systems (Shanghai) Co., Ltd.
Toshiba Consumer Products (Thailand) Co., Ltd.
Toshiba Copying Machine (Shenzhen) Co., Ltd.
Toshiba Dalian Co., Ltd.
Toshiba Display Devices (Thailand) Co., Ltd.
Toshiba Display Devices Inc.
Toshiba do Brazil, S.A.
Toshiba Electronics Europe GmbH
Toshiba Electronics Malaysia Sdn. Bhd.
Toshiba Europe GmbH
Toshiba Information Equipment (Philippines), Inc.
Toshiba Information Systems (UK) Ltd.
Toshiba International Corporation
Toshiba International Finance (Netherlands) B.V.
Toshiba International Finance (UK) Plc.
Toshiba Medical Systems Asia Pte., Ltd.
Toshiba Medical Systems Europe B.V.
Toshiba Satellite Broadband, Inc.
Toshiba Semiconductor (Thailand) Co., Ltd.
Toshiba Semiconductor G.m.b.H.
Toshiba Singapore Pte., Ltd.
Toshiba Systemes (France) S.A.
Toshiba TEC Europe Imaging Systems S.A.
Toshiba TEC France Imaging Systems S.A.
Toshiba TEC Germany Imaging Systems GmbH
Toshiba TEC U.K. Imaging Systems Ltd.
Toshiba Ventuer Capital, Inc.
Toshiba Video Products Pte., Ltd
Wuxi Huazhi Semiconductor Co., Ltd.
Wuxi Tochemi Electro-Chemical Co., Ltd.

Plus 60 Others