For Anyone
Anytime
Anywhere
Communication Comes Alive
ANNUAL REPORT 2003
Year ended March 31, 2003
Basic Commitment of the
TOSHIBA Group
We, the Toshiba Group of companies, based on
our total commitment to people and to the
future, are determined 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 responsible 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 services 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 community, including ways to
improve the global environment.
FORWARD-LOOKING STATEMENTS
This annual report contains forward-looking statements
concerning Toshiba’s future plans, strategies and performance.
These forward-looking statements are not historical facts, rather
they represent assumptions and beliefs based on economic,
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.
INVESTOR REFERENCE
TOSHIBA CORPORATION
61
Investor Reference
TOSHIBA CORPORATION
PRINCIPAL SHAREHOLDERS (%)
FOUNDED
July 1875
CAPITAL
¥274,926 million
EMPLOYEES
165,776
COMMON STOCK
Authorized:
10,000,000,000 shares
Issued:
3,219,027,165 shares
No. of shareholders:
486,702
Average holdings: 6,614 shares
Stock Code:
6502
Transfer Agent:
The Chuo Mitsui Trust and Banking
Company, Limited
HEADQUARTERS
1-1, Shibaura 1-chome,
Minato-ku, Tokyo 105-8001,
Japan
The Master Trust Bank of Japan, Ltd. (trust accounts)
The Dai-ichi Mutual Life Insurance Company
Japan Trustee Service Bank, Ltd. (trust accounts)
Nippon Life Insurance Company
Sumitomo Mitsui Banking Corporation
State Street Bank and Trust Company
Employees Stock Ownership Plan
The Chase Manhattan Bank NA London
NIPPONKOA Insurance Co., Ltd.
Shinsei Bank, Limited
5.32
3.63
3.61
3.24
2.36
1.80
1.65
1.60
1.55
1.52
As of March 31, 2003
Web site information
Toshiba is vigorously carrying out
Internet-based IR activities to ensure
timely and fair disclosure to all investors.
Our investor relations site features
information for investors, including press
releases, investors’ guides and business
results announcements, as well as
streaming video of business results
meetings and explanatory sessions. There
is also a section that allows site 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.
www.toshiba.co.jp/about/ir/index.htm
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
E-mail: ir@toshiba.co.jp
http://www.toshiba.co.jp/about/ir/index.htm
Product names may be trademarks of their respective companies.
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TABLE OF CONTENTS
3-6P
7-9P
10-11
P
12-13
P
14-17
P
18-19
P
20-21
P
TABLE OF CONTENTS
TOSHIBA CORPORATION
1
To Our Shareholders
A Confident Step toward
Earnings Recovery
Growth Policies that Make Toshiba a Winner
Becoming a Highly Profitable Group with
Growth Potential and Earnings Stability
Corporate Governance
At a Glance
Leveraging Optimal Business Models
to Accelerate Growth under
Competitive Conditions
A View to the Future
Toshiba’s Growth
Business Domains
Expansion in China, the Growth Market
Research and Development
Advancing R&D to
Create a New Future
22-23
P
Toward Sustainable Development and a Recycling-Based Society
Toward a Sustainable Recycling-Based Society
P24-25
P26-55
P56-57
P58-59
P60
P61
Directors & Officers
Financial Section
Organization Chart
Global Network
Consolidated Subsidiaries
Investor Reference
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TOSHIBA CORPORATION
FINANCIAL HIGHLIGHTS
FINANCIAL HIGHLIGHTS
Toshiba Corporation and its subsidiaries
Years ended March 31, 2003 and 2002
Net sales–Japan
–Overseas
Net sales
Operating income (loss)
Income (loss) before income taxes and minority interest
Net income (loss)
Total assets
Shareholders’ equity
Capital expenditures (property, plant and equipment)
Research and development expenditures
Return on equity (ROE) (%)
Return on total assets (ROA) (%)
Per share of common stock:
Net income (loss)
–basic
–diluted
Cash dividends
Number of employees
Millions of yen
Change (%)
Thousands of U.S. dollars
2003
2002
2003/2002
2003
¥3,343,551
2,312,227
¥3,340,491
2,053,542
5,655,778
115,542
53,123
18,503
5,238,936
571,064
230,512
331,494
2.9
0.3
5,394,033
(113,575)
(376,687)
(254,017)
5,407,782
705,314
348,235
326,170
(29.0)
(4.6)
0.1
12.6
4.9
—
—
—
(3.1)
(19.0)
(33.8)
1.6
—
—
$27,862,925
19,268,558
47,131,483
962,850
442,692
154,192
43,657,800
4,758,867
1,920,933
2,762,450
Yen
U.S. dollars
¥5.75
5.75
3.00
¥(78.91)
(78.91)
—
—
—
—
$0.048
0.048
0.025
165,776
176,398
(6.0)
Notes: 1. Unless indicated otherwise, all dollar figures herein refer to U.S. currency. Yen amounts have been translated into U.S. dollars, for convenience only, at the
rate of ¥120=U.S. $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 convertible debentures were converted into common stock.
NET SALES
(Billions of yen)
NET INCOME (LOSS)
(Billions of yen)
ROE
(%)
ROA
(%)
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TO OUR SHAREHOLDERS
TOSHIBA CORPORATION
3
TO OUR SHAREHOLDERS
over two years, a Group-wide reduction of human resources by
10%, and ¥800 billion asset cuts.
Drawing on Toshiba Value Created (TVC), a methodology
we created for evaluating business performance, we initiated a
series of restructuring measures in fiscal 2002. Among these
were a joint venture with Matsushita Electric Industrial Co.,
Ltd. in color cathode ray tubes, and the merger of our indus-
trial electric and automation systems businesses with that of
Mitsubishi Electric Corporation. Continued competitiveness
in the semiconductor industry was bolstered by the decision
to initiate a four-year, ¥350 billion investment program to
construct advanced fabrication facilities that will put 300
millimeter wafer lines at the center of Toshiba’s production of
memory devices and system LSIs. In a move made to en-
hance the brand value of our digital products businesses,
Toshiba acquired Amuse Pictures, Inc., one of Japan’s leading
independent film producers and distributors.
As we worked for our ambitious goal of cutting procurement
costs by 20% over two years, we also saw progress in Group-
wide integration of procurement and in bringing engineers
into procurement activities. These and other measures, in-
cluding a greater emphasis on e-procurement, are expected to
promote cost reductions in all aspects of our activities and
add to the competitiveness of Toshiba products.
Our efforts to reduce human resources were rewarded when
we met our headcount target in fiscal 2002, a year earlier
than planned. We were also successful in efforts to reduce as-
sets by ¥450 billion, in addition to the ¥350 billion originally
planned.
Achievements in Fiscal 2002
Consolidated Group sales in fiscal 2002 were ¥5,655.8 bil-
lion, a 5% increase compared to fiscal 2001. Operating
income amounted to ¥115.5 billion, an increase of ¥229.1
billion over fiscal 2001. Income before taxes totaled ¥53.1
billion, an increase of ¥429.8 billion against fiscal 2001.
These results took us a steady step forward toward recovery,
and allowed us to pay a three-yen full-term dividend.
Mid-term Business Plan
This year marks the launch of our latest mid-term business
plan, which builds on our achievements in fiscal 2002 and
represents our expectations for the years after fiscal 2003.
We are at the threshold of a new age, an age of ubiquitous
computing. In coming years, immense processing capabilities
and powerful broadband networks will support the creation
Tadashi
Okamura
Director,
President and
Chief Executive Officer
An Overview of Fiscal 2002
Industry Environment
Fiscal 2002, to March 31, 2003, opened on a positive note,
as the world’s markets saw encouraging signs of recovery in
the United States, and inventory adjustments contributed to
an upturn in production. However, hopes for a moderate
but sustainable global recovery proved short-lived. Overseas,
geopolitical instability provoked doubt and a change of
mood. In the U.S., the stock market declined as petroleum
prices edged up, and individual consumption stagnated as
concerns for property values undermined consumer confi-
dence. In Europe, markets once again became sluggish. The
only bright spots and expanding markets were to be found
in China and other Asian countries that have become the
workshops of the world. But the appearance of Severe Acute
Respiratory Syndrome (SARS) in those countries raises ques-
tions about the economic impact of the illness, and how
affected regions can maintain high growth. While Japan ex-
perienced substantial growth, due to the economic
conditions in other Asian countries and a focus on recovery
in export-led industries, domestic deflation combined with a
long-term slump in private-sector capital investment and
public spending to produce a negative nominal growth rate.
Japan continues to experience severe setbacks in its transi-
tion to recovery.
Progress of the 01 Action Plan
Even in the midst of these severe economic conditions, we de-
clared fiscal 2002 to be “The First Year of Toshiba’s
Regeneration” and took decisive steps to strengthen competi-
tiveness. Chief amongst these steps was accelerated execution
of our 01 Action Plan—a three-year initiative announced in
fiscal 2001—to bring forward the positive results we targeted.
The Plan has supported us in raising management efficiency
across the Group, promoting asset-light management and de-
veloping a clear focus on selected businesses. Achievements of
the 01 Action Plan include a 20% reduction in procurement
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TOSHIBA CORPORATION
TOSHIBA CORPORATION
TO OUR SHAREHOLDERS
of products and services that remake our work and living envi-
ronments. The changes to come will range wide and deep,
extending beyond the office, beyond the home, into areas such
as administration and medical services, into pleasure and enter-
tainment, and into the fabric of society. The developments we
will see will add to the quality of life while respecting the earth
and our natural environment.
Toshiba is ready to play a central, proactive role in the shift to ubiqui-
tous computing networks, both through its advanced technologies
and long years of experience in bringing to market high-value-added
products. Times of social transition are also those of opportunity, and
we will make use of all opportunities to assure that Toshiba Group
becomes a highly profitable business across its business domains.
Within Toshiba Group, we have defined three key business areas, to
which we will channel management resources. Digital products and
electronic devices are areas where we anticipate high growth and
high profitability, and see rapid progress to a top-three position in
world markets. In our social infrastructure domain, we anticipate
steady growth, sustained profits, and business expansion.
The digital products domain encompasses diverse strength in PCs,
mobile products, storage devices, visual imaging and wireless tech-
nology. Toshiba’s portable PCs lead the industry and constantly
redefine performance standards. Our mobile phones do the same
with advanced video imaging. We are a market leader in small-form-
factor hard disk drives and in optical storage, both areas where we
are defining new applications. Toshiba’s wireless know-how includes
leadership in creating the Bluetooth™ standard. And we lead the
way in DVD and digital TV. These capabilities will come into play with
growing demand for mobile products with wireless functionality.
The electronic devices domain covers semiconductors and liquid
crystal displays (LCDs). Our continuing world leadership in discrete
devices demonstrates Toshiba’s formidable strength in semiconduc-
tors, as do our sustained profits in analog devices and NAND flash
memories. Alongside these, we will continue to develop the system-
on-chip (SoC) business that is positioning Toshiba as a solutions
provider and that will help assure our place among the world’s top-
three semiconductor makers. In LCDs, we will combine innovation in
new generations of displays with support for new applications.
The social infrastructure domain includes power systems, social sys-
tems, communications, solutions and medical equipment. While
rooted in hardware, this is also a domain where the development of
new services holds the promise of steady profit. The same is true of
such emerging business areas as the environment, and new markets,
where we are bringing products and services developed for Japan to
Asian markets and beyond to the wider global stage.
Along with these growth domains, Toshiba considers home appli-
ances and network services and content as important business
areas where it will promote reorganization and expansion. Under
the umbrella of a new marketing company, our businesses related
to home appliances will adopt new marketing structures and move
more proactively into overseas markets. By combining our network
service capabilities, including the Web-based services we have
marketed to individuals, we will support the continued emergence
of the virtual economy through digital broadcasting systems and
services and content, including digital images and music.
In fiscal 2005, the final year of the current mid-term business plan,
Toshiba anticipates dynamic Group operations and a strong profit
structure. The Company targets consolidated sales of ¥6,600 bil-
lion, operating income of over ¥270 billion, and an enhanced
financial standing, with a debt-to-equity ratio of less than 160%.
Structural Reform
The earliest realization of goals laid out in the 01 Action Plan will be
supported by a series of structural reforms initiated in April 2003.
Building a Platfor m for
Consistently High Earnings
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TO OUR SHAREHOLDERS
TOSHIBA CORPORATION
TOSHIBA CORPORATION
5
5
Business Reorganization
As the business environment becomes ever more demanding and
less forgiving, Toshiba is determined to devise an operational frame-
work that provides management direction for the overall Group, while
supporting individual businesses facing different circumstances and
different requirements. A comprehensive review of our operations has
made it clear that the time constraints, business cycles and particular
demands that our in-house companies face are growing increasingly
diverse. In response, we have adopted a four-fold approach to reor-
ganization: the integration of in-house companies with Group
companies, complete autonomy where it will enhance efficiency, full
independence to pursue alliances and collaboration with other com-
panies, and freedom to adopt a particular management style or
organization to reinforce strength and operations.
As a result of this approach, the Display Devices & Components Com-
pany, e-Solutions Company, Medical Systems Company and Home
Appliances Company have all been spun off and integrated with Group
companies, and are now developing new operating structures.
Introducing Business Groups
As already noted, Toshiba needs an organization that provides a
clear direction. To that we must add the need for faster, more reso-
lute decision-making. In pursuit of this, our structural reforms
include the establishment of business groups that bring together
those operations with similar time constraints and growth rates.
Each group comprises several in-house companies and Group com-
panies, and will develop the management approach best suited to its
businesses.
As a result of the above measures, the pace of management deci-
sion-making will be significantly accelerated and the management
g a Platfor m for
tently High Earnings
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TOSHIBA CORPORATION
TO OUR SHAREHOLDERS
resources available to each business group will be directed to
the areas where they can have the biggest impact.
Becoming a Company with Committees
In recent years, we have rolled out significant reforms. In
1998, we introduced an executive officer system, and in
1999 we initiated an in-house company system. A year later,
we established the Nomination and Compensation Commit-
tees, and in June 2001 we increased the number of external
directors to three, while lowering the tenure period of each
director to one year. Through these measures, we anticipated
changes in the wider world and assured Toshiba’s place in the
vanguard of reform.
Another way in which Toshiba will progress toward growth is
through evolutionary improvements in its culture and busi-
ness practices. One area where this is particularly important
is our “TM1 Movement,” or “Time to Market No. 1.” This
program is dedicated to cutting lead times at every stage of
product development and manufacture, from the planning
process through to customers. To realize our goal of a mar-
ket-centric approach to management, we are doing all we
can to remove barriers between product development, pro-
curement, production, distribution and sales and marketing,
while raising efficiency in each of these activities. This will
assure our ability to cut lead times and launch differentiated
products in advance of other companies.
We remain there today through our decision to make Toshiba
a “Company with Committees.” Adoption of this new sys-
tem allows us to take reform even further, as it defines a clear
supervisory function for the Board of Directors and enhanc-
es management authority and flexibility. As we promote
these measures to improve transparency and corporate gover-
nance, we are also reinforcing our risk management and
compliance systems.
Developments for Fiscal 2003
Pursuing Further Growth
Forecasts for fiscal 2003 show no easing in the severity of the
business environment. If Toshiba Group is going to over-
come these conditions and achieve further growth, it must
continue to rebuild and to reinforce its operating structures.
We must also utilize our technological assets, production
strengths and business acumen to stimulate new demand,
and to assure that the positive results we recorded in fiscal
2002 are the foundations for sustained growth and higher
profit in fiscal 2003.
Toward that objective, we will make every effort to promote
business development, particularly through investments in our
high-growth domains, the foundation for creating new demand.
Management Forecast for Fiscal 2003
In fiscal 2003, to March 31, 2004, Toshiba forecasts a 1%
increase against fiscal 2002 in consolidated net sales, to
¥5,700 billion. Operating income is projected to rise ¥54.5
billion, to ¥170 billion. We anticipate an increase of ¥36.9
billion in net income before taxes, to ¥90 billion, and a gain
of ¥21.5 billion in net income, to ¥40 billion.
Closing Remarks
In 128 years of operations, Toshiba and Toshiba Group have
won a vast number of customers, built up an abundance of
technological know-how and assets, and developed a brand
name that has become a byword for high quality and trust-
worthy products. That is our heritage, and the base from
which we will work to create new value that meets the needs
and expectations of our customers around the world.
Through our efforts, we will open a new chapter in Toshiba’s
history, and assure a dynamic Toshiba Group that contrib-
utes to society.
We will continue to adhere to our slogan, “Innovation-driv-
en, Customer-focused Growth,” and to build a highly
profitable group of companies that is active in both high-
growth and stable-growth businesses. As we do so, we hope
we may rely on your continued understanding and support.
Taizo Nishimuro
Chairman of the Board
Tadashi Okamura
Director,
President and Chief Executive Officer
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TOSHIBA CORPORATION
TOSHIBA CORPORATION
7
7
Aiming to be a Highly Profitable Corporate Group
that Offers Stability and Growth Potential
Vision and Direction
Major Business Domains
Goals for Fiscal 2005
Policies toward Growth
TM1: Compressed Lead Times
For Anyone
Anytime
Anywhere
Communication Comes Alive
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TOSHIBA CORPORATION
TOSHIBA CORPORATION
GROWTH POLICIES THAT MAKE TOSHIBA A WINNER
GROWTH POLICIES THAT MAKE TOSHIBA A WINNER
Management innovation and maximization of management resources will support
Toshiba as it promotes forward-looking reforms. Through this approach, we will reach a
balance in our high-growth and stable-growth domains and take our place among other
high-profit companies.
Vision and Direction
Low growth around the world has gradual-
ly given way to the current state of global
stagnation. Seeking opportunity in adversi-
ty, Toshiba has used its 01 Action Plan to
promote concerted efforts to boost profit-
ability and to improve its financial
position. Launched in fiscal 2001, the Plan
has fostered vigorous reforms in Toshiba’s
business structure, achieved significant re-
ductions in procurement and fixed costs,
and supported an “asset-light” strategy that
has trimmed property and other assets.
Major Business Domains
Our recent mid-term business plan defines
three key business domains. The digital
October 2003 Business Reorganization
products and electronic devices domains
are both high-growth areas; the first as a
source of the products of tomorrow, the
second of the key technologies that help to
realize them. In the social infrastructure do-
main, we expect to see continued stable
growth. Toshiba will promote expansion in
all of these domains by channeling manage-
ment resources into them, particularly the
high-growth domains.
Goals for Fiscal 2005
Our goal in digital products and electronic
devices is clear: a top-three position in
terms of sales in the world market in key
product areas. We will achieve this through
growth rates that surpass those of the mar-
ket, with the expectation of achieving
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TOSHIBA CORPORATION
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average annual sales growth of 8% and of
realizing ¥180 billion in combined operat-
ing income from these two domains in
fiscal 2005.
In the social infrastructure domain, our
target is operating income of ¥70 billion in
fiscal 2005, which we expect to achieve
even if the average sales increase is as low as
2% a year.
In all three of these core domains, we
expect overseas sales to account for 50% of
net sales in fiscal 2005, up 10% from the
fiscal year under review.
Through the 01 Action Plan and our
new mid-term business plan, we expect
consolidated net sales to increase to ¥6,600
billion by fiscal 2005, and project operat-
ing income of at least ¥270 billion. We also
expect to reduce the debt-to-equity ratio to
less than 160%.
Policies toward Growth
The direction technology will take in com-
ing years is strongly in Toshiba’s favor.
Industry-leading know-how in the digital,
mobile and network areas will sustain us in
developing innovative technologies, as
growth engines for products that will drive
the creation of promising new markets.
Our strengths include rich capabilities in
wireless and mobile technologies, such as
Bluetooth™, wireless LAN, MPEG4 digi-
tal image compression, portable PCs,
lithium-ion secondary batteries and fuel
cells. Accelerated R&D will be directed at
integrating these and other advanced tech-
nologies in differentiated products that
come to market at least one step ahead of
products from other companies.
Toward that goal, we will continue to
promote a high level of investment in
R&D, following on from fiscal 2002’s
¥340 billion with a total investment of
¥1,100 billion in the three years to fiscal
2005. Reflecting Toshiba’s commitment to
boost profitability, about three-fourths of
research funding will be channeled to the
high-growth domains.
In the same period, we will also promote
significant capital expenditure, from ¥204
billion in fiscal 2002, to ¥840 billion. Here
too, the emphasis will be on our growth
domains, with about 75% of expenditure
earmarked for semiconductors and other
growth areas.
TM1: Compressed Lead Times
We have already mentioned our resolve to
get products to market ahead of our com-
petitors. That is more than just ambition.
Through MI 2001, the six-sigma-based
management initiative introduced in 1999,
we have promoted concerted efforts to
maximize efficiency and cut lead times at
every stage, from product planning to mar-
ket launch. We have also achieved some
notable successes.
In August 2002, we brought new PCs to
the marketplace by placing priority on time
and on cross-functional cooperation across
sales and marketing, product planning, de-
velopment, procurement and production.
As a result, we met the demand spike at the
start of European and U.S. school years—
the intense, back-to-school market that can
make a big difference to the bottom line—
with products that met sales goals and
made a positive contribution to our profit
and loss figures. We were also able to close
August 2002 as the number one portable
PC vendor in the U.S. retail market.
Among the provisions of our latest mid-
term business plan is the “TM1
Movement,” or “Time to Market No. 1.”
Building on our successes so far, we will
make the TM1 Movement an essential part
of new product launches. We will promote
successive reductions in lead times and use
them to achieve rapid gains in market share
and improved sales and profits.
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TOSHIBA CORPORATION
TOSHIBA CORPORATION
GROWTH POLICIES THAT MAKE TOSHIBA A WINNER
CORPORATE GOVERNANCE
Toshiba is determined to achieve the highest standards of corporate governance. Toward
this, we will bring greater transparency to management processes and business strategy,
reinforce disclosure and accountability, and continue to refine thoroughgoing risk
management procedures. Through enhancements to our system of corporate governance,
we will seek continued enhancement of the value of the company.
Building on Accomplishments
Since improving corporate governance re-
quires higher levels of operating openness
and timely decision-making, we consistent-
ly advocate management innovation and
reform. As a result, Toshiba moved ahead
of other Japanese companies in the intro-
duction of an executive officer system in
1998, and in the deployment of an in-
house company system in 1999. Fiscal
2003 will involve another round of reform,
as we take full advantage of revisions to the
Japanese Commercial Code to initiate a
Company with Committees system. This
new system will reinforce the supervisory
function of management, enhance manage-
ment transparency and further improve
corporate governance. Moreover, the new
system will promote greater management
agility and flexibility by clearly separating
responsibility for business supervision and
execution, and improve management speed
by delegating a wide range of authority and
freedom to Toshiba’s executive officers.
Increasing Management Agility by Separating
Business Supervision and Execution
Through the Company with Committees
system, the role of the Board of Directors is
focused on compliance. The Board essen-
tially acts on behalf of stakeholders,
including the shareholders, to ensure that
basic policy decisions and important man-
agement initiatives reflect stakeholder
interests. Three legally mandated commit-
tees—Nomination, Audit and
Compensation—all of which must contain
a majority of outside directors, further bol-
ster the supervisory function and
transparency of governance, while also rep-
resenting stakeholder concerns. The Audit
Committee serves to provide a potential
check on management, as a vehicle for
monitoring Toshiba’s activities for compli-
ance with legal and regulatory
requirements.
The Company with Committees system
is positioned to transfer a wide range of au-
thority from directors to executive officers,
which will accelerate the speed of manage-
ment decision-making. With the
implementation of a clearly defined system
for business supervision and execution,
along with the reconstruction of mecha-
nisms for internal corporate controls and
monitoring, executive officers will gain the
freedom to concentrate more clearly on
business performance.
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GROWTH POLICIES THAT MAKE TOSHIBA A WINNER
TOSHIBA CORPORATION
TOSHIBA CORPORATION
11
11
Thoroughgoing Risk Management
Openness and Accountability
In a turbulent, fast-changing business envi-
ronment, it is imperative that risk
management is at the forefront of manage-
ment’s concerns. The recent revisions to the
Japanese Commercial Code are clear in re-
quiring companies that make the transition
to the Company with Committees system
to set up an internal control system for
managing risk and compliance with laws
and other requirements. Toshiba has al-
ready established a strong system for risk
management throughout Group opera-
tions. Measures already implemented
include a corporate Risk Management
Committee and a comprehensive compli-
ance system, all of which will be evaluated
and improved on as necessary.
Toshiba regards proactive investor relations
activities as an essential component of full
management transparency, and constantly
strives to maximize information disclosure.
The quarterly reports we initiated in the
quarter ending in December 2001 play a key
part in this pursuit, allowing us to provide
stakeholders with timely updates on fore-
casts and business conditions. And since we
also consider the exchange of information to
be a mutual process, stakeholder views,
opinions and suggestions are routinely re-
ported to Toshiba’s management. In other
words, we place central importance on in-
creasing shareholder value through positive
investor relations activities.
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TOSHIBA CORPORATION
AT A GLANCE
AT A GLANCE
Digital Products
In-House Companies, Affiliated
Companies and Corporate Divisions that
Comprise Business Groups
Percentage of Net Sales
(FY 2002)
Mobile Communications Company
Digital Media Network Company
Toshiba TEC Corporation
NET SALES
(¥ Billion)
OPERATING INCOME (LOSS) (¥ Billion)
3,000
2,500
2,000
1,500
1,000
500
0
33%
FY 01
FY 02
FY 03
Forecast
55
45
35
25
15
5
0
-5
FY 01
FY 02
FY 03
Forecast
Electronic Devices & Components
NET SALES
(¥ Billion)
OPERATING INCOME (LOSS) (¥ Billion)
Semiconductor Company
Display Devices & Components
Control Center
Toshiba Matsushita Display
Technology Co., Ltd.
3,000
2,500
2,000
1,500
1,000
500
0
20%
20%
FY 01
FY 02
FY 03
Forecast
100
50
0
-50
-100
-150
-200
FY 01
FY 02
FY 03
Forecast
Social Infrastructure Systems
NET SALES
(¥ Billion)
OPERATING INCOME (LOSS) (¥ Billion)
Home Appliances
Others
Industrial and Power Systems &
Services Company
Social Network & Infrastructure
Systems Company
Toshiba Elevator and Building
Systems Corporation
e-Solutions New Company
Medical Systems New Company
29%
Marketing New Company
Home Appliances (White Goods)
New Company
Toshiba Lighting & Technology
Corporation
10%
Toshiba Carrier Corporation
Toshiba Battery Co., Ltd.
Network Services & Contents
Control Center
Other
8%
3,000
2,500
2,000
1,500
1,000
500
0
FY 01
FY 02
FY 03
Forecast
60
50
40
30
20
10
0
FY 01
FY 02
FY 03
Forecast
NET SALES
(¥ Billion)
OPERATING INCOME (LOSS) (¥ Billion)
900
750
600
450
300
150
0
FY 01
FY 02
FY 03
Forecast
12
10
8
6
4
2
0
FY 01
FY 02
FY 03
Forecast
NET SALES
(¥ Billion)
OPERATING INCOME (LOSS) (¥ Billion)
600
500
400
300
200
100
0
FY 01
FY 02
FY 03
Forecast
30
25
20
15
10
5
0
FY 01
FY 02
FY 03
Forecast
Business Strategies
(¥ billion)
Net Sales
Operating
Income (Loss)
We will secure our position among the global leaders through effective
mobile and wireless solutions strategies and by channeling resources
into products for ubiquitous networks.
AT A GLANCE
TOSHIBA CORPORATION
13
Mobile Communications Company: Continuous investments in so-
phisticated, high-value-added products will assure we maintain a
high market share and strengthen profitability. Development of ad-
vanced products will support business expansion in the two key
markets we have recently entered, Europe and China.
Digital Media Network Company: The ability to meet the emergence
of ubiquitous networks with competitive products based on techno-
logical innovations and the integration of wireless and broadband
technologies will drive strategies for market leadership and contin-
ued growth.
Semiconductor Company: Three product areas sustaining growth and
high profitability—discrete devices, analog ICs and NAND flash
memory—will support us in expanding solutions that build our
SoC business and assuring that we continue to number among the
world’s top-three companies in sales.
Toshiba Matsushita Display Technology Co., Ltd.: A strategic focus on
small- and medium-sized displays and further cost reductions in
manufacturing low temperature polysilicon LCDs will bring us a
significant improvement in profitability.
In products, our emphasis is on high-growth areas such as digital con-
sumer products and mobile equipment, and on markets in China and
Asia, where we anticipate substantial growth and important customers
in the global market. As a Toshiba Group core industry, we will work
for high growth and sustained profitability.
Structural reorganization will support efficient allocation of management
resources and promote an improved cost structure and strengthened
profitability. As we work to expand overseas business we will also devel-
op new businesses that will support a stable base of profits.
Industrial and Power Systems & Services Company: The focus of our
expansion strategy will be on growth in China and other Asian
markets. We will enter Japan’s power generation business and pro-
mote further development of environmentally friendly systems and
expansion into other new businesses.
Social Network & Infrastructure Systems Company: Broadcasting, com-
munications and image recognition hardware will be our springboard
for an overseas expansion of our systems solutions business that will
assure maintained stable profits.
Toshiba Elevator and Building Systems Corporation: We will reinforce
relations with Kone of Finland, our strategic business partner. We
will continue to introduce competitive products, such as machine
room-less elevators, and work towards global business logistics.
e-Solutions New Company: The unification of marketing, technology
and development allows us to make the most of our wide-ranging
expertise, sophisticated technologies, and high-level reliability, and
supports our ability to offer advanced solutions and to reinforce a
comprehensive package-solution business.
Medical Systems New Company: We will initiate a system that sus-
tains global consistency in all aspects of our business, from planning
to development, production, marketing and maintenance services. As
a Total Medical Solutions Company we will deliver exclusive services
and achieve early market introduction of excellent products.
With the intent of reorganizing and strengthening our overseas busi-
ness and overall marketing, our October 2003 reorganization of the
home appliance business establishes a Marketing New Company. This
unifies marketing at four businesses and affiliates: Home Appliances
(White Goods) New Company, Toshiba Lighting & Technology Corpora-
tion, Toshiba Carrier Corporation and Toshiba Battery Co., Ltd.
The Network Services & Contents Control Center unifies management
of the network service business, content business and media services
business.
FY 01
FY 02
FY 03
(forecast)
1,885.3
- 1.9
2,073.0
24.8
2,180.0
50.0
(¥ billion)
Net Sales
Operating
Income (Loss)
FY 01
FY 02
FY 03
(forecast)
1,044.4
- 175.2
1,274.4
31.9
1,330.0
55.0
(¥ billion)
Net Sales
Operating
Income (Loss)
FY 01
FY 02
FY 03
(forecast)
1,930.9
41.1
1,822.6
39.2
1,740.0
42.0
(¥ billion)
Net Sales
Operating
Income (Loss)
FY 01
FY 02
FY 03
(forecast)
655.7
10.2
633.6
650.0
4.1
8.0
(¥ billion)
Net Sales
Operating
Income (Loss)
FY 01
FY 02
FY 03
(forecast)
484.9
11.4
491.1
15.5
510.0
15.0
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TOSHIBA CORPORATION
A VIEW TO THE FUTURE
A VIEW TO THE FUTURE
Our mid-term business plan, announced in March 2003, identifies two high-growth domains,
digital products and electronic devices
In FY 2005, the last year of the plan, we anticipate consolidated sales of ¥6,600 billion and consolidated operating income of
¥270 billion. In achieving that, and an average annual growth rate of 8%, we expect our high-growth domains to secure a top-
three position in terms of global sales in all major business areas, and to generate consolidated sales of ¥4,320 billion and
consolidated operating income of ¥180 billion. Individual businesses will have the freedom to develop the business model best
suited to their competitive environment and to promoting accelerated growth.
Toshiba’s Growth Business Domains
Digital Products Businesses
Mobile Communications Company
The digital products domain has a crucial mis-
sion: to meet the emergence of ubiquitous
networks with innovative mobile and wireless
solutions that secure leading positions in glo-
bal markets.
Businesses in the domain will draw on the
core competencies of our in-house companies,
in such areas as video image compression,
speech recognition and nanotechnology, to
promote differentiated technologies that sup-
port winning business strategies.
With the January 2003 release of the “dynabook C7” into
the Japanese market, Toshiba took portable computing
to the next level by making user comfort the core design
concept. A Clear Super View LCD offers striking visual
reproduction that is complemented by high-end specs,
including an Intel Pentium III processor and a 40GB hard
disk drive.
Vision and Strategy
Mobile communications is an attention-getter
everywhere, not least in Japan, where services
include mobile Internet connectivity and
transmission of still and moving pictures from
camera-equipped mobile phones. Toshiba
brings broad capabilities to this business, not
least the fusion of movie recording and trans-
mission with the AVC5 technologies of audio,
visual, computer, communications, camera,
card and content. This ability supports our
continuous delivery of high value-added mul-
timedia mobile phones to key regional
markets. We are confident that the know-how
we have cultivated and the strategies we are
promoting will prove to be winners, allowing
us to raise market share, increase profitability
and establish Toshiba in the top three in the
world multimedia mobile phone market.
Markets, Products and Technology
In a domestic market driven by replacement
demand, Toshiba is carving out a steadily
growing market share. In 2002 we advanced to
fourth position in overall sales, with approxi-
mately 26% of the NCC (New Common
Carrier) market. Our goal for 2003 is to con-
tinue improving on core technologies that
support us in the early launch of flagship mod-
els that can define the direction of the industry
and secure our technological and market lead-
ership
Overseas, we will bring the technologies
that succeed in Japan to full-featured mobile
phones for the global market. We will seek to
optimize the effective allocation of our re-
sources and to boost our international
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TOSHIBA CORPORATION
15
The 57-inch Projection TV uses Liquid Crystal on
Silicon technology (LCOS) to achieve a resolution
of 1080 pixels.
business. With Audiovox Corporation, our
business partner in North America, we will
venture beyond the mid-range models that
have, until now, been the nucleus of our strat-
egy, to reveal our strengths in
high-value-added markets.
In Europe, we started to supply 2.5G GSM
mode GPRS Method i-mode terminals to
Holland’s KPN Group in November 2002.
From there, we now hope to work with the
world’s largest mobile service provider, allow-
ing us to enter Europe’s value-added service
market and further develop our business. We
also brought multimedia to the Chinese mar-
ket, when we introduced terminals supporting
movie mail in March 2003. China is expected
to see substantial growth in demand, and we
want to win in the market by continuously
supplying advanced high-end products.
Digital Media Network Company
Vision, Products and Technology
The immense broadband capacities of ubiqui-
tous networks will soon make wireless
transmission of high-quality streaming video
and other data-rich content a fact of daily life.
Wherever we are, even while traveling, we will
be able to access and enjoy a vast range of en-
tertainment content, downloading it to a PC,
PDA, or even a mobile phone. The same is
true of access to information, whether we are
at home or on the move—fast, easy access that
will expand the possibilities of telecommuting
from home or a mobile office. The future is
drawing near, and it offers dramatic changes
that will enhance work styles and lifestyles.
The Digital Media Network Company is
leading the way to the future of ubiquitous
networking with core technologies in three es-
sential areas: the home, the office and the pub-
lic environment. The breadth of our
capabilities covers computing, visual imaging,
data storage, wireless and security technolo-
gies, and finds form in market-defining
products, a long list that includes portable
PCs, computer network equipment, HDD
and ODD drives, TVs and other visual equip-
ment, and new generations of personal mobile
devices.
In bringing cutting-edge capabilities to ad-
vanced products, we are guided and informed
by VOC, the voices of our customers. Listen-
ing closely to the market and what people
want, right from the point of concept develop-
ment, allows us to create highly original,
practical products and services that meet real
needs to the fullest. Drawing on Toshiba’s rich
storehouse of technological know-how, and
making full use of our abundant experience in
PCs and software assets, we create imaginative,
differentiated products that assure the Digital
Media Network Company’s continued leader-
ship in the age of ubiquitous networks.
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TOSHIBA CORPORATION
A VIEW TO THE FUTURE
Toshiba’s world-first combination HDD/DVD video
recorder with network connectivity made a big
splash on its launch into the Japanese market in
December 2002. In addition to the largest hard
drive available—a full 120GB—it is capable of
recording up to 156 hours of video.
Electronic Devices Businesses
Toshiba’s electronic devices domain begins
with semiconductors and goes on to the liquid
crystal display business—now the responsibili-
ty of Toshiba Matsushita Display Technology
Co. Ltd., our joint venture with Matsushita
Electric Industrial, Co., Ltd. — secondary bat-
teries and parts and materials.
Semiconductors are a core growth industry.
As an integrated device manufacturer (IDM),
we are determined to retain our leadership in
the global market and our position among the
world’s top-three IC manufacturers.
Semiconductor Company
Strategy and Vision
The Semiconductor Company is intent on
NAND flash memory capacity reached a new high in June
2002, when we started mass production of a 2GB device. Use
of state-of-the-art 130nm process technology allowed us to
use the same package as 1GB products fabricated with our
160nm technology.
achieving a leading position in the global SoC
business. These efforts are supported by world-
class capabilities in three core product areas:
discrete devices, where Toshiba is number one
in the global market; analog products, which
enjoy wide demand in fields as diverse as au-
dio-visual products communications, and
automotive products; and NAND flash mem-
ory, the versatile non-volatile memory that
supports rapid advances in memory cards and
electronic equipment such as digital still cam-
eras and mobile telephones. By nurturing the
growth field of SoC, we look to acquire busi-
ness from the leading companies we target in
each business field.
Our business strategy is centered on the
ability to propose innovative solutions to our
customers. This allows us to create new mar-
kets and to cultivate next-generation sources of
growth that will secure continued global lead-
ership. We also attach great importance to
cooperation with strategic partners.
Markets, Products and Technology
Memories
Withdrawal from a commodity DRAM busi-
ness that was increasingly uncertain and
buffeted by shifts in the PC market freed re-
sources for investment in NAND flash
memory—an increasingly important product
area that will grow alongside demand for mul-
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TOSHIBA CORPORATION
TOSHIBA CORPORATION
17
17
nology. These capabilities will be further en-
hanced by fabrication of 300mm wafers at our
new LSI facility at Oita Operations, our LSI pro-
duction facility. Construction of this advanced
facility started in June 2003 and mass production
is scheduled for the first half of 2004. Once full
capacity is reached output will climb to 12,500
wafers a month. Investment is expected to total
around ¥200 billion, with the first ¥40 billion
directed to construction of the building and
clean room in this fiscal year. The main product
of the facility will be advanced broadband pro-
cessors, a product area where we anticipate high
demand in future. Production will draw on our
strengths in system LSI with embedded DRAM
process technology. While first-generation prod-
ucts will be manufactured with 65nm process
technology, we will make an early transition to
the 45nm design rule in the future.
Discretes
While Toshiba remains the clear No. 1 in the
world discrete devices market, that does not
mean any relaxation in our efforts or commit-
ment. On the contrary, we will continue
efforts to expand business and improve cost
competitiveness. Toward these goals, we are
pushing for a stronger presence in the Chinese
and Korean markets, today’s two main growth
markets, developing differentiated core prod-
ucts and transferring assembly to China.
timedia products and technologies. Mobile
phones with cameras, digital still cameras and
replacement HDDs are expected to continue
to be in high demand. Toshiba’s basic strategy
is to build on its technological strengths and to
lead the way in mass-producing high-value-
added products while promoting measures to
further raise cost competitiveness, especially
using multi-level cell process technology ahead
of competitors. One advantage that we will
fully leverage is the fact that Toshiba invented
NAND flash memory and owns essential IP
rights. This will provide us with positive sup-
port in many areas, including efforts to
enhance multi-chip packages (MCP) for mo-
bile phones that integrate NAND flash, NOR
flash, SRAM and PSRAM in a single package.
A further plus will come from the construction
of 300mm wafer lines at Yokkaichi, scheduled
to start in 2005 and to begin mass production
in 2006. Investment in the facility and its
equipment is expected to total around ¥150
billion.
System LSIs
Toshiba is determined to focus on two areas:
digital consumer and mobile. Advanced SoC
now accounts for a little over 25% of Toshiba’s
system LSI business. Our goal for 2005 is to
take that to beyond 30%. We are working to
fortify new product proposals and constantly
searching for new markets for SoC products.
Our commitment to integrating cutting-edge
technologies and realizing new levels of func-
tionality are exemplified by an image
processing LSI that support high-capacity,
high-speed processing. Our concentration on
such value-added products and differentiated
technologies also supports us in forging alli-
ances with leading companies in our target
areas. For instance, in the CMOS image sensor
business, we have maintained strategic collabo-
rations with major phone manufacturers and
increased market share as the market for mo-
bile phones with cameras has grown to become
the mainstream.
Another undoubted asset is our ability to pio-
neer new levels of process technology—the secret
to advances in miniaturization and device func-
tionality. We were first in the industry to deploy
90nm process technology and we have already
gone beyond that to realize 65nm process tech-
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TOSHIBA CORPORATION
A VIEW TO THE FUTURE
Expansion in China, the Growth Market
Semiconductor Operations Reinforced
Any company looking to the future must give
full weight to the significant growth that Chi-
na promises in coming years. Toshiba does.
The Company is already a well-established
presence in China: 37 locally incorporated
subsidiaries promote activities across the com-
plete range of Toshiba’s businesses and already
employ approximately 13,000 people. In the
last fiscal year, Toshiba’s sales in China totaled
a healthy ¥350 billion and they are expected to
rise to at least ¥600 billion by 2005.
Given these figures, it comes as no surprise
that Toshiba considers expansion in China as
one of the most important issues for manage-
ment, or that the Company is now promoting
a series of policies to promote market success
and profitability.
China’s rapid development in recent years
has transformed the economy. Once thought
of simply as a cost-efficient production base,
China is now much more an important market
in its own right and a promising development
base for products and services. Toshiba’s activi-
ties in recent years reflect this evolution. By
October 2001, Toshiba China Co. Ltd. was
ready to open its own R&D Center, allowing
local development of products geared to the
Chinese market.
In April 2002, the Company established a
new Customer Service Center to promote a
central strategy—the ability to hear the voices
of customers, and to reflect their needs and de-
sires in products that are brought to market as
quickly as possible. This was followed by a se-
ries of key moves related to manufacturing.
In July 2002, Toshiba revitalized its semicon-
ductor operation in China when it made Wuxi
Huazhi Semiconductor Co., Ltd. a wholly
owned subsidiary, buying out the interest of its
joint-venture partner, Huajing Electronics
Group Corp. This was only Toshiba’s first step
in a radical makeover. Renamed Toshiba Semi-
conductor (Wuxi) Co., Ltd., the company
received additional funds to raise its capital to
U.S. $15 million and moved to a new produc-
tion facility, where a two-year, ¥5 billion
investment program will raise production ten-
fold while extending it from bipolar and
Bi-CMOS ICs into discrete devices.
There were sound reasons for the move.
While China accounted for only 11% of the
world semiconductor market in 2002, that fig-
ure is expected to climb to as high as 20% by
2010. The new company gives Toshiba a cost-
efficient production base that will support
early delivery of products that meet the needs
of customers in China.
Manufacturing Portable PCs for the
Global Market
Toshiba Information Equipment (Hangzhou)
Co., Ltd. became the first company to start
operations at the new Hangzhou site. Toshiba
was developing to serve global markets, when
it began production of portable PCs in April
2003. In its first year of operation, the new fa-
cility will manufacture approximately 750,000
PCs with annual output expected to rise to
2,000,000 units in the near future. Over time,
the new company will cultivate development
and design capabilities, and also provide sup-
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TOSHIBA CORPORATION
19
The T618X brought movie mail to China in
March 2003. Its key feature is Toshiba-
developed MPEG4 technology that delivers
up to 15 seconds of quality moving pictures
at one time.
port services. PCs produced at the facility will
contribute to Toshiba global logistics and cost
competitiveness, and support the Company in
securing leadership in China’s fast growing PC
market.
Toshiba Mobile Phones Bring Movie
Mail to China
Over 200 million subscribers make China the
world’s number one in mobile telephone pene-
tration. Demand, already strong, is expected to
receive a further boost from the transition
from voice to value-added data transmissions
that deliver a wide range of entertainment and
other services. Toshiba is in the vanguard of
this shift. In March 2003, Nanjing Postel
Wong Zhi Telecommunications Co., Ltd., a
joint venture between Toshiba, Nanjing Postel
Telecommunications Co., Ltd, (a subsidiary of
China Putian Corporation) and Hong Kong’s
Wong’s Industrial (Holdings), launched the
“T618X,” China’s very first phone supporting
movie mail communication and other ad-
vanced broadband services. Already a hit, the
T618X draws on advanced technology devel-
oped for the Japanese market. Toshiba will
continue to use this advantage to deliver dif-
ferentiated products that can win in the
market place.
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TOSHIBA CORPORATION
RESEARCH AND DEVELOPMENT
RESEARCH AND DEVELOPMENT
Toshiba is concentrating efforts on technological development that will provide the platform
for the impending digital mobile networking era. Our Corporate R&D Center works to improve
development speed and efficiency by actively engaging in Management Innovation (MI).
From the fiscal year under review, we aim to shorten product development times through
Time to Market No.1 (TM1) activities.
Financial Simulation Technology
Applying know-how accumulated in nuclear
energy and other areas of power systems tech-
nology to other fields is allowing Toshiba to
propose new solutions and to maximize over-
all strengths and capabilities. One advance
that brings this home is development of the
Financial Boltzmann Model, a financial mod-
el derived from simulations of the behavior of
neutrons inside nuclear reactors.
The Boltzmann equation describes particle
transport phenomena and is an essential aspect
of nuclear reactor theory. Toshiba’s Financial
Boltzmann Model applies it to track stock
prices, altering the global standard financial
simulation model developed in the U.S. The
new model demonstrates the ability to accu-
rately track complicated structures that
accompany the price movements of stocks, and
by doing so it lowers financial risks for securi-
ties houses and investors alike. At present, the
model has been applied to reproducing the
characteristics of the Nikkei 225 option market
prices, and is expected to contribute to reduc-
tion of the large risks that are option-specific.
The Financial Boltzmann Model is the
world’s first simulation model to apply the
nuclear reactor theory to financial fields. Re-
sults so far indicate that its application will
not be limited to stocks.
Delivering High-Speed Web Site
Access
Improved speed is always a must-have re-
quirement of Internet users. Toshiba offers an
original solution to this demand by caching
Web page content and minimizing data trans-
fer volumes. Using standard hardware and
software, this method boosts response speeds
and cuts communication costs by reducing
transmitted data volumes by as much as 90%
and increasing transfer rates by up to 60%.
The heart of this new technology is a power-
ful cache function that works alongside a system
for monitoring and handling changes in the dy-
namic content of Web pages, such as those for
receiving orders or delivering estimates.
Previously, the cache function could save
and provide high-speed delivery only of those
parts of a Web site that were static. Toshiba’s
difference management function overcomes
the problem by fine-grained management of
difference information of Web sites. When a
particular site is accessed, only the updated
parts of the page are transmitted to the PC,
where they are combined with the content of
the cache. The result is rapid download and
display, including high-speed transmission and
a reduced delay in displaying dynamic content.
One example of where this new technology
can make a difference is at a company that has
made the switch to a Web-based business sys-
tem, but that tries to reduce communication
costs by using low-speed private-network con-
nections to link its head office with sales offices.
With Toshiba’s high-speed system, traffic is re-
duced, while system responsiveness and data
delivery are enhanced. This technology can end
the need to invest in high-speed networks, allow
for lower operating costs and improve the per-
formance of Web-based systems.
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RESEARCH AND DEVELOPMENT
TOSHIBA CORPORATION
21
ApriAlpha introduces the concept of a robot information
home appliance. Speech recognition and synthesis
capabilities and diverse communication capabilities
support ApriAlpha as an interface with home networks,
for controlling home appliances and in carrying out
many other tasks.
Realizing a Concept Home Robot with
Communication Capabilities
In the next few years, wired and wireless net-
works will bring exciting new services into
our lives and with them a lot of complexity.
Managing this will be possible only with a
simple, user-friendly interface ready to inter-
mediate between the diverse network
equipment and the people who use it. In an-
ticipation of this need Toshiba has developed
the ApriAlpha “Robotic Information Home
Appliance.” In addition to its abilities to
move and communicate, ApriAlpha is easily
programmable. It has been designed to grow
in capabilities to become a “life support part-
ner” that will ultimately provide assistance
with handling household chores and care for
the aged.
The first generation ApriAlpha communi-
cates through voice recognition and voice
synthesis that allow it to recognize spoken
commands and hold conversations. It can also
recognize individuals, with the capacity to
register up to 100 individual faces through its
image recognition technology.
Among the wide range of data transmission
capabilities integrated into ApriAlpha is an
IEEE802.11b wireless LAN, along with sup-
port for NTT DoCoMo’s i-mode mobile
phone standard that allows remote supervision
and operation of ApriAlpha. ApriAlpha can
also control certain networked home applianc-
es via a Bluetooth™ compliant home server.
Movement-related capabilities include the
ability to input data of a room layout and
programming ApriAlpha to follow a specific
route and carry out surveillance patrols.
As far as Toshiba is concerned, these di-
verse capabilities are just the beginning, and
future research will extend and refine ApriAl-
pha’s versatility.
An LCD that Displays and Captures
Images
With its new “input display,” Toshiba Mat-
sushita Display Technology Co., Ltd. (TMD)
has drawn on its leadership in Systems on
Glass technology to develop the world’s first
TFT LCD that is able to capture images as
well as display them.
The company’s prototype display is a 3.5
inch (8.9 cm) low-temperature polysilicon
(LTPS) TFT LCD with QVGA (320/240)
resolution. Alongside the standard display
function, the capabilities of the input display
allow it capture and redisplay monochrome
images with an input resolution of up to 960 X
240 pixels. The new technology utilizes photo
sensors embedded in each pixel of the display.
This represents the latest advance in the
TMD’s pioneering work in Systems on Glass,
namely the ability to form the components of
LTPS displays directly on their glass substrate.
Image capture is accomplished by placing the
image, a document or a photograph, for ex-
ample, face-down on the display.
The input display differs from a camera
in that its built-in image sensors record an
actual-size image of the original, opening up
a wide range of business and personal uses.
One application that Toshiba is considering,
along with further refinement of the tech-
nology, is a fingerprint recognition
technology that could be employed in iden-
tification systems for e-commerce and other
financial transactions.
The world’s first Input
Display not only displays
images, it can also capture
them directly from its
polysilicon TFT LCD.
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TOSHIBA CORPORATION
TOWARD SUSTAINABLE DEVELOPMENT AND A RECYCLING-BASED SOCIETY
TOWARD SUSTAINABLE DEVELOPMENT AND A RECYCLING-BASED SOCIETY
Toshiba Group is fully conscious of the holistic nature of the product life cycle, from
development and manufacturing, through purchase, use, disposal and recycling.
As a major manufacturer of a wide range of products, Toshiba positions reduction of environmental impacts as central to
production processes. The Company makes every effort to help protect the environment in all its business activities through
ongoing activities to lighten environmental loads by reducing energy consumption and reducing the use of water and chemicals.
A determination to make a significant contribution to the realization of sustainable development and the achievement of a
recycling-based society inspires Toshiba’s activities in five basic areas: efficient use of resources, prevention of global warming,
strengthened management of chemicals, development of environmentally friendly products, and recycling end-of-life products.
All Toshiba Group companies coordinate efforts in line with the objectives of the Third Voluntary Environmental Plan, launched in
fiscal 2001 to guide the Group toward stringent targets for fiscal 2005. The plan identifies eight areas in the achievement of the
overall goal of zero emission of waste.
Working for a better global environment as a responsible corporate citizen, Toshiba considers the needs of regional
communities while promoting activities that support the ultimate goal of contributing to the advancement of society.
Maximizing Efficiency in Resource and
Energy Utilization
Toshiba believes that environmental conserva-
tion in the 21st century revolves around the
concept of sustainable development. The
Company makes concerted efforts to develop
products that use energy efficiently, and at the
same time works to prevent global warming
by reducing CO2 emissions through efforts to
slash energy consumption at all of its facili-
ties. Toshiba aims to lower “CO2 releases to
net sales” by 25% by fiscal 2010, with fiscal
1990 as its benchmark, and the Company has
shown results bettering the 1% annual im-
provement target set by the Energy
Conservation Law in Japan. In the fiscal year
ended March 31, 2003, Toshiba cut CO2 re-
leases by 22% compared with fiscal 1990
levels and 13% compared with the previous
fiscal year by increasing the energy efficiency
of its clean rooms.
By segment, CO2 releases in Electronic De-
vices & Components, which includes
semiconductors and LCDs, increased 12%
compared with fiscal 1990, but CO2 releases to
net sales improved 13% against the bench-
mark. The Company achieved a 26-54%
reduction in Information & Communications
Systems, Power Systems and Home Appliances.
Achievement of Zero Emission of Waste
In the production phase of product life cycles,
Toshiba aims to minimize environmental im-
pacts and the use of resources and energy.
Efforts here include working to achieve
zero emissions by recycling all waste generated
by our facilities, which means that waste un-
dergoing final disposal in landfills must be
less than 1% of the total waste emitted. We
are making Group-wide efforts to achieve
these targets.
Three of the most important points in re-
ducing waste comprise thoroughly separating
and sorting waste, disposal in a way that is
sensitive to regional characteristics and
through tie-ups with other industries, and us-
ing appropriate third-party disposal adhering
to strict standards. We aim to reduce our
waste release through classification and appli-
cations development at the emission stage.
In the fiscal year under review, Toshiba
Group released a total of 106 thousand tons of
waste, achieving a reduction of 5,300 tons
against the previous fiscal year. Of this amount,
88.1% was recycled, and 890 tons were dis-
posed of in landfill, a year-on-year decrease of
770 tons. Accordingly, Toshiba has achieved
the objective of zero emission of waste (less
than 1% of total waste emitted is disposed of
in landfill) in the Third Voluntary Environ-
mental Plan one year ahead of schedule.
Creation and Promotion of Environmentally
Conscious Products
The ultimate goal of Toshiba Group is to de-
velop environmentally conscious products
(ECPs) as a contribution to a recycling-based
society. To achieve this objective, Toshiba has
established a set of guidelines and put in place
a system emphasizing the creation of environ-
mentally conscious products: that is, products
whose environmental impacts are minimized
at every stage of their entire life cycles—from
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TOWARD SUSTAINABLE DEVELOPMENT AND A RECYCLING-BASED SOCIETY
TOSHIBA CORPORATION
23
The dual-inverter system and new
coolant of the New Super Power
Eco achieve an air-conditioning
system that cuts power
consumption to 40% of earlier
models. Its performance won the
Director-General’s Prize from the
Agency for Natural Resources and
Energy in the 2002 Energy
Conservation Awards.
materials procurement, manufacturing and
distribution, through to consumption and
eventual disposal. These guidelines call for en-
vironmentally conscious design,
environmental assessment of all products, and
full disclosure of environmental impacts and
other information.
Toshiba promotes environmentally con-
scious design grounded in the principle of the
“5Rs”: design to achieve reduction, reuse, re-
cycling, reduction of energy consumption and
reduction of substances with an environmen-
tal impact. In establishing its
“Environmentally Conscious Product Design
Guidelines” and “Eco Material Selection
Guidelines,” Toshiba promotes the use of
lead-free solder, green procurement, and the
development of an environmentally conscious
design support system.
In the area of environmental assessment of
products, Toshiba has introduced “Product
Assessment Guidelines” for its complete prod-
uct range, to clarify the extent to which the
environmental impact of a contemplated
product is reduced compared with that of the
previous model. In particular, Toshiba has in-
corporated a lifecycle assessment (LCA)-based
quantitative evaluation in the product assess-
ment of mass-produced mainstay models. The
application of LCA is expected to increase
over a broader range of products in the future.
Toshiba applies stringent standards in the
disclosure of environmental performance. The
Company has adopted a leading position in
the industry, adopting 13 criteria, including
the “5Rs,” in its “voluntary environmental
standards.” Toshiba products that comply
with all of the Company’s voluntary standards
and that have gained eco-labels, Toshiba
Group’s environmental performance self-dec-
laration mark in compliance with ISO 14021,
are introduced on the Company’s Web site.
A prime example of Toshiba’s environmen-
tally conscious products is the “New Super
Power Eco,” an air conditioner used in large
stores. Equipped with Toshiba’s unique dual
inverter system for simultaneous control of
two inverter compressors, and using a new
high-efficiency refrigerant, R-410A, this new
product has achieved an air-conditioning sys-
tem that cuts power consumption to 40% of
earlier models and was awarded the Director-
General’s Prize from the Agency for Natural
Resources and Energy in the 2002 Energy
Conservation Awards.
Recycling Activities
Recycling is another essential aspect of Toshi-
ba’s activities. All Group companies focus on
the development of technologies that recycle
discarded products and the materials from
which they are made. Emphasis is also placed
on the reduction of waste and costs. In accor-
dance with Japan’s recycling law, which
requires manufacturers to take back TVs, re-
frigerators, washing machines and
air-conditioners at the end of their life, Toshi-
ba recycled 1,560,000 units during fiscal
2002. In preparation for the introduction of
recycling laws in Europe in 2005, Toshiba has
established a European Environmental Divi-
sion in Germany.
Activities for Society and Local
Communities
Toshiba Group companies actively contribute
to the communities in which they operate,
and for the betterment of society as a whole.
Opened in 1961, the Toshiba Science Mu-
seum welcomes more than 120,000 visitors
each year to view the Company’s latest tech-
nologies. The museum also serves to increase
interest in science as a place for people to in-
teract with science displays, and offers
personal computer courses for beginners.
In addition, Toshiba has three charitable
foundations around the world, including the
Toshiba International Foundation and Toshi-
ba America Foundation, which support
cultural and educational activities. Toshiba
also works closely with regional groups in Ja-
pan to hold events in tune with the needs of
local communities.
Toshiba believes it is essential to disclose
its activities and results in protecting the envi-
ronment based on environmental
management systems to as many people as
possible through open communication both
within and outside the Company. To this end,
the Company publishes an Environmental
Report and discloses related information on
its Web site.
For more information on Toshiba Group
environmental protection activities, please vis-
it our Web site at: http://www.toshiba.co.jp/
env/english/index.htm.
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24
TOSHIBA CORPORATION
BOARD OF DIRECTORS AND EXECUTIVE OFFICERS
Board of Directors and Executive Officers
Taizo Nishimuro
Director
Chairman of the Board
Tadashi Okamura
Director
Yasuo Morimoto
Director
Takeshi Iida
Director
Makoto Nakagawa
Director
Yuji Kiyokawa
Director
Atsutoshi Nishida
Director
Tadashi Matsumoto
Director
Representative Executive Officer,
President and
Chief Executive Officer
Tadashi Okamura
Representative Executive Officers,
Corporate Senior Executive Vice
Presidents
Yasuo Morimoto
Takeshi Iida
Makoto Nakagawa
Executive Officers,
Corporate Executive Vice Presidents
Executive Officers,
Corporate Senior Vice Presidents
Yuji Kiyokawa
Atsutoshi Nishida
Tadashi Matsumoto
Takeshi Nakagawa
Susumu Kohyama
Masaki Matsuhashi
Tsuyoshi Kimura
Toshitake Takagi
Sadazumi Ryu
Masao Niwano
Tsutomu Miyamoto
Makoto Azuma
Shigeo Koguchi
Yoshiaki Sato
Yoshihiro Nitta
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BOARD OF DIRECTORS AND EXECUTIVE OFFICERS
TOSHIBA CORPORATION
25
Takeshi Nakagawa
Director
Sadazumi Ryu
Director
Akinobu Kasami
Director
Susumu Terao
Director
Sakutaro Tanino
Director
Yasuhiko Torii
Director
Eiichi Kakei
Director
Shunsaku Hashimoto
Director
Executive Officers,
Corporate Vice Presidents
Shinsuke Kawamura
Ginzo Yamazaki
Yasusuke Sumitomo
Masamichi Katsurada
Katsuji Fujita
Shunsuke Kobayashi
Toru Uchiike
Hisatsugu Nonaka
Mutsuhiro Arinobu
Fumio Muraoka
Ichiro Tai
Nobuhiro Yoshida
Toshinori Moriyasu
Masao Namiki
Hisayoshi Fuwa
Yoshihide Fujii
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26
TOSHIBA CORPORATION
TOSHIBA CORPORATION
FINANCIAL SECTION
Financial Section
P27 Management’s Discussion and Analysis
P34
P36
P37
P38
P39
P55
Consolidated Balance Sheets
Consolidated Statements of Operations
Consolidated Statements of Shareholders’ Equity
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements
Report of Independent Auditors
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MANAGEMENT’S DISCUSSION AND ANALYSIS
TOSHIBA CORPORATION
27
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 (loss)
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
Millions of yen, except per share amounts
2003
2002
2001
2000
1999
¥5,655,778
4,146,460
1,393,776
115,542
¥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
53,123
48,532
18,503
(376,687)
(113,915)
(254,017)
188,099
96,145
96,168
(44,844)
(4,530)
(32,903)
11,218
20,901
(9,095)
¥5.75
5.75
3.00
¥(78.91)
(78.91)
—
¥29.88
29.71
10.00
¥(10.22)
(10.22)
3.00
¥(2.83)
(2.83)
6.00
¥5,238,936
571,064
¥5,407,782
705,314
Total assets
Shareholders’ equity
Capital expenditures
(Property, plant and equipment)
Depreciation
(Property, plant and equipment)
R&D expenditures
Number of employees
Notes: 1. Basic earnings per share is computed based on the weighted-average number of shares of common stock outstanding during the period.
2. Diluted earnings per share assumes the dilution that would occur if dilutive convertible debentures were converted into common stock.
3. The Company adopted SFAS No. 115 “Accounting for Certain Investments in Debt and Equity Securities” beginning with the fiscal year ended March 31, 2001,
308,294
327,915
188,042
329,630
334,398
190,870
311,208
326,170
176,398
237,888
331,494
165,776
¥5,724,564
1,047,925
¥5,780,006
1,060,099
298,512
348,235
269,545
230,512
¥6,101,929
1,128,753
375,464
309,836
316,703
198,000
and has restated its prior years’ consolidated financial statements.
SCOPE OF
CONSOLIDATION
Toshiba Group consists of Toshiba Corporation and 315 consolidated subsidiaries (201 domestic companies and 114 foreign com-
panies) as well as 52 companies reflected under the equity method (consisting of 28 domestic and 24 foreign companies). The net
number of consolidated subsidiaries for the period under review was 14 companies less than the previous year. The number of
newly consolidated subsidiaries, including our strategic joint venture with Matsushita Electric Industrial in the LCD and liquid crys-
tal business—Toshiba Matsushita Display Technology—increased by 31 companies during the year. However, as the result of
restructuring efforts, we also consolidated, rationalized and sold-off some 45 subsidiaries.
RESULTS OF
OPERATIONS
NET SALES
NET SALES BY
REGION
Consolidated net sales in fiscal 2002, ended March 31, 2003, increased by 5% to ¥5,655.8 billion (US$47,131 million).
Supported by growth in consumer-use digital products and overseas sales particularly in Asia, electronic device sales centering
on semiconductors and overseas PC sales recorded strong growth. On the other hand, sales of industrial-use equipment
declined due to weak public works investment as well as private capital expenditures in Japan, while weak domestic personal con-
sumption was behind the decline in sales volumes and falling unit prices for home appliances. In addition, an appreciating yen
against the major currencies depreciated reported sales. The average yen-dollar rate for sales was ¥122/US$, or ¥4 stronger than
the previous fiscal year, while the yen dropped by ¥10 against the euro from ¥120 to ¥110.
Years ended March 31
Japan
North America
Asia
Europe
Other
Net sales
Millions of yen
2003
2002
2001
¥3,343,551
860,306
837,845
509,620
104,456
¥5,655,778
¥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
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 31, which are determined based upon where the sales originated.
Japan—Domestic sales were relatively flat compared with the previous fiscal year, amounting to ¥3,343.6 billion (US$27,863 mil-
lion). Sluggish domestic capital investment in the private and public sectors contributed to a sales decline in systems for public
institutions and industrial equipment. In Home Appliances, sales were undermined by price erosion and weak consumer
demand. Otherwise, however, sales climbed for visual products and mobile phones for digital media, semiconductors for digital
consumer products, and NAND flash memories in the Electronic Devices & Components segment.
North America—Sales increased 4% year on year to ¥860.3 billion (US$7,169 million). Despite the decline in sales of
Electronic Devices & Components due to the exit of the DRAM business during the previous fiscal year, sales of portable PCs,
HDD/DVD recorders and other visual products increased significantly.
Asia—A rise in sales of thermal power stations in Taiwan, and in semiconductors for digital consumer products, contributed to
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28
TOSHIBA CORPORATION
MANAGEMENT’S DISCUSSION AND ANALYSIS
NET INCOME
(LOSS)
SEGMENT
INFORMATION
a sales increase of 27% year on year to ¥837.8 billion (US$6,982 million).
Europe—Overall sales growth of 12% to ¥509.6 billion (US$4,247 million) year on year was recorded, thanks to steady
demand for portable PCs and PC peripherals.
As net sales increased ¥261.7 billion year on year to ¥5,655.8 billion (US$47,132 million), the gross profit margin improved 2.2 per-
centage points to 26.7%. Selling, general and administrative expenses decreased ¥43.7 billion year on year to ¥1,393.8 billion
(US$11,615 million). The primary reason for the decrease in selling, general and administrative expenses was the restructuring effect
of an approximate ¥30.0 billion reduction in fixed costs.
Although the impact of an average sales-price reduction of 9.4% amounted to ¥587.0 billion, operating income increased ¥229.1
billion year on year to ¥115.5 billion (US$963 million). The primary reasons for this increase included a reduction of ¥441.0 billion
in procurement costs, ¥182.0 billion in personnel and restructuring costs, a ¥17.0 billion foreign exchange gain, and changes in
sales volume and product mix of ¥176.1 billion.
Non-operating loss decreased ¥200.7 billion year on year to ¥62.4 billion (US$520 million). The main reasons for this
decrease were a decline in restructuring charges and additional termination benefits for voluntary early retirement of employees.
Total restructuring charges and additional termination benefits in fiscal 2002 and 2001 were ¥10.9 billion (US$91 million) and ¥208.9
billion, respectively. During the fiscal year under review, the Company recorded a ¥4.3 billion improvement in its net financial expens-
es, primarily due to a decline in interest expenses and an increase in dividend income. The Company also recorded a ¥21.5 bil-
lion (US$179 million) loss on marketable securities.
Income before income taxes greatly improved from a loss of ¥376.7 billion in the previous fiscal year, to a gain of ¥53.1 bil-
lion (US$443 million) in the fiscal year under review. Accordingly, income taxes increased ¥162.4 billion, which included the effect
of a revaluation of deferred income taxes in connection with adoption of Business Scale Taxation.
Minority interest in losses increased ¥5.0 billion from the previous fiscal year. This reflected mainly the increased net loss of
consolidated subsidiaries where Toshiba's ownership is less than 100%. The Company recorded equity in earnings of affiliates
of ¥2.6 billion (US$22 million), and this mainly reflected gains posted by foreign affiliates, while the domestic affiliates posted loss-
es. As a result, net income greatly improved by ¥272.5 billion from the previous fiscal year to ¥18.5 billion (US$154 million).
Information & Communications Systems—Sales declined by 5% against the previous fiscal year to ¥908.7 billion (US$7,573
million), and the segment’s proportion of total sales slipped to 14% from 16% the previous year. Operating income for the seg-
ment, while negatively affected by the decline in sales, nevertheless recorded an 8% increase to ¥10.4 billion (US$87 million), owing
to effects from restructuring and other measures.
Sales of information systems continued to feel the adverse effects of falling stock prices, curtailed IT investment in the pri-
vate sector, and continued deterioration in the domestic financial services sector due to delays in disposal of non-performing loans.
Communications systems saw a sharp fall in sales and global demand as the telecommunications industry sought to overcome
a shortage of funds and past excess investment. On the positive side, orders booked for broadcasting systems were boosted by
investments in digital broadcasting facilities.
Social Infrastructure Systems—Sales for the segment slipped 3% from the previous year to ¥922.8 billion (US$7,690 million).
Operating income rose 52% for the year to ¥20.7 billion (US$173 million), boosted by structural reforms and efforts to reduce costs,
which also contributed to profit increases in social infrastructure and industrial systems and the medical systems business.
Intensified restraint in public spending and private sector capital expenditures led to lower sales of system business in both
the public and private sectors.
Transportation business sales received a boost despite this climate of restraint, mainly from increased sales of electrical equip-
ment and substation facilities for new lines and bullet trains for JR (Japan Railways) group companies. Sales to private railways
also contributed to the increase.
Conditions remain severe in the domestic medical systems market, as structural reforms to Japan’s health insurance sys-
tem are directed to reducing fees for medical service. Increasing cost consciousness among domestic medical institutions and
intensified competition from foreign suppliers also added to market severity. Overseas markets were more positive, and sales were
particularly robust in the U.S. and Europe. Although a worsened market environment undercut sales from MRI equipment, CT and
ultrasonic diagnostic equipment revenues were favorable. Overall sales remained steady, supported by a stronger euro to the yen.
Power Systems—Sales in Power Systems were ¥523.7 billion (US$4,364 million), a 10% decline for the year, accounting for 8%
of total sales compared to 9% the previous year. Operating income for the division, reflecting lower sales and exchange rate fluc-
tuations, declined 19% for the year to ¥21.6 billion (US$180 million).
In the domestic market, electric power companies met rolling deregulation by curtailing capital expenditures, and sales results
were also impacted by the transfer of the power distribution and transmission business to a joint venture with Mitsubishi
Electric Corporation. Overseas, exports of thermal power plants to Taiwan saw solid growth.
Digital Media—Sales for the segement grew by 13% to ¥1,658.1 billion (US$13,818 million), and increased as a proportion of total
sales to 26% from 24% the previous year. Operating income recovered from a ¥14.9 billion deficit in the previous year to ¥9.3 bil-
lion (US$78 million), and accounted for 8% of total operating income.
In the portable PC market, PC sales saw a notable downturn in market demand due to large U.S. and European corporations’
deteriorated capital spending. The severe slump in demand lasted in Japan as IT investment was cut back due to the sluggish econ-
omy. Models for consumers achieved steady sales in the U.S. and Europe, but sales in Japan declined reflecting raised prices due
to raised components prices from spring to summer, and reserved consumer spending.
Toshiba focused on retail sales, succeeded in increasing market shares in each region and achieved higher growth in unit sales.
In optical disk drives, the sales shift from single-functional CD-R/RW or DVD-ROM to multifunctional DVD-ROM/CDR-RW dri-
ves accelerated further. Toshiba was able to lead the market with the introduction of an ultra-thin recordable DVD (DVD-
R/RW).
Mobile phone sales in Japan grew favorably and Toshiba’s introduction of leading-edge models with moving picture functions
allowed it to win market share. Overseas sales were weaker, hampered by waning sales in North America. Meanwhile,
Toshiba successfully launched the CDMA 1X handsets in the China market, and the GPRS models that support i-mode features
in Europe.
In the network services and content business, the “Ekimae Tanken Club” portal site became an established revenue earner,
and mobile application service provider (ASP) services also contributed to segment sales growth.
Home Appliances—Sales for the year eased 3% to ¥660.7 billion (US$5,506 million), accounting for 10% of total gross sales
against 11% in the previous year. Operating income fell by 69% to ¥3.5 billion (US$29 million).
The prolonged economic malaise in Japan has shrunk consumer spending, and overall demand for home appliances
remained flat. Shipments of major products, such as refrigerators and washing machines, were higher by volume than in the pre-
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MANAGEMENT’S DISCUSSION AND ANALYSIS
TOSHIBA CORPORATION
29
vious year, but further declines in sales prices impacted total sales value. In order to drive growth, we enhanced design in prod-
ucts like the Trilobite robot cleaner (in the “Electrolux by Toshiba” series), and we continue to develop overseas markets, centering
on China and other Asian countries.
Electronic Devices & Components—Sales for the segment rebounded 21% for the year to ¥1,296.0 billion (US$10,800 million),
and accounted for 20% of total sales, up from 17% the previous year. Operating income rebounded sharply from a ¥176.3 bil-
lion deficit in the previous year to a profit of ¥30.5 billion (US$254 million), and contributed nearly 27% of total operating profits,
as the operating margin recovered to 2.0%.
Demand for semiconductors in yen terms increased approximately 9%, boosted by higher demand for consumer products
in Japan and southeastern Asian countries, stimulated by the June 2002 World Cup soccer tournament.
Sales of discrete devices were supported by high demand from China and Asia in the first half of the fiscal year, particular-
ly for consumer AV products, DVDs and game consoles. Completion of inventory adjustments also boosted demand for products
for mobile phone applications. In contrast, demand for amusement equipment did not meet expectations, and demand for power
devices for mobile phones, PCs, and AV equipment applications weakened.
In the first half of the fiscal year, system LSI sales were driven by logic devices for digital consumer products, LCD drivers for
mobile phones and PCs, and bipolar ICs for audio and other applications. In the second half, sales of custom LSIs for SD Cards,
DVCs, mobile phones and amusement applications remained firm, while demand for MCUs declined.
In memory devices, demand for NAND flash memories for digital still cameras was particularly strong, and NAND flash mem-
ories found increasing application in the mobile phone market in the second half of the fiscal year. There was also rapid
growth in sales of MCP products incorporating NAND and NOR flash memories, SRAMs and pseudo-SRAMs.
Sales for LCDs increased sharply, by 88% to ¥235 billion (US$1,958 million), due to the launch of Toshiba Matsushita Display
Technology Co., Ltd. (TMD), a joint venture with Matsushita Electric Industrial Co., Ltd. While sales prices for displays for
portable PCs and monitors declined, small-sized displays for mobile phones saw brisk demand, and growth in TMD’s market-lead-
ing QVGA LCDs was particularly robust.
Others—Sales increased 1% for the year to ¥431.4 billion (US$3,595 million), and produced operating income of ¥18.6 billion
(US$155 million), representing a 21% increase from the previous year.
The following segment information is based on Japanese accounting standards. Along with a review of internal management juris-
dictions made in April 2001, Toshiba has reclassified its former Information & Communications and Industrial Systems into
Information & Communication Systems and Social Infrastructure Systems as well as reviewed a portion of its business classifi-
cations in Digital Media and Others. Consolidated financial data for the fiscal year ended March 31, 2001 have been reclassified
to comform with the fiscal year ended March 31, 2002.
INDUSTRY SEGMENTS
Year ended March 31
Net sales:
Information & Communication 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
2003
2002
2001
Thousands of
U.S. dollars
2003
¥ 775,307
133,425
908,732
¥ 784,071
172,643
956,714
¥ 800,941
171,048
971,989
$ 6,460,892
1,111,875
7,572,767
875,239
47,515
922,754
513,681
10,054
523,735
1,603,698
54,409
1,658,107
633,438
27,276
660,714
1,091,673
204,278
1,295,951
890,718
64,632
955,350
565,973
13,587
579,560
1,405,328
63,271
1,468,599
656,905
23,777
680,682
905,178
169,674
1,074,852
925,351
49,787
975,138
568,244
14,423
582,667
1,398,161
88,242
1,486,403
676,820
31,497
708,317
1,332,711
218,640
1,551,351
7,293,659
395,958
7,689,617
4,280,675
83,783
4,364,458
13,364,150
453,408
13,817,558
5,278,650
227,300
5,505,950
9,097,275
1,702,317
10,799,592
162,742
268,692
431,434
(745,649)
¥ 5,655,778
185,860
240,511
426,371
(748,095)
¥ 5,394,033
249,129
219,143
468,272
(792,780)
¥ 5,951,357
1,356,183
2,239,100
3,595,283
(6,213,742)
$ 47,131,483
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30
TOSHIBA CORPORATION
MANAGEMENT’S DISCUSSION AND ANALYSIS
Year ended March 31
Operating income (loss):
Information & Communications Systems
Social Infrastructure Systems
Power Systems
Digital Media
Home Appliances
Electronic Devices & Components
Others
Eliminations
Millions of yen
2003
2002
2001
¥ 10,407
20,655
21,603
9,316
3,477
30,490
18,602
992
¥ 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
Thousands of
U.S. dollars
2003
$ 86,725
172,125
180,025
77,633
28,975
254,083
155,017
8,267
Consolidated
¥ 115,542
¥ (113,575)
¥ 232,133
$ 962,850
Identifiable assets:
Information & Communications Systems
Social Infrastructure Systems
Power Systems
Digital Media
Home Appliances
Electronic Devices & Components
Others
Corporate and Eliminations
¥ 634,859
848,591
564,556
614,608
380,628
1,294,040
942,449
(40,795)
¥ 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)
$ 5,290,492
7,071,592
4,704,633
5,121,733
3,171,900
10,783,667
7,853,742
(339,959)
Consolidated
¥ 5,238,936
¥ 5,407,782
¥ 5,724,564
$ 43,657,800
Depreciation and amortization:
Information & Communications Systems
Social Infrastructure Systems
Power Systems
Digital Media
Home Appliances
Electronic Devices & Components
Others
Corporate
¥ 26,626
18,907
11,649
21,054
18,950
126,649
37,000
—
¥ 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
—
$ 221,883
157,558
97,075
175,450
157,917
1,055,409
308,333
—
Consolidated
¥ 260,835
¥ 326,239
¥ 339,816
$ 2,173,625
Capital expenditures:
Information & Communications Systems
Social Infrastructure Systems
Power Systems
Digital Media
Home Appliances
Electronic Devices & Components
Others
Corporate
¥ 23,578
19,496
6,712
21,117
20,850
117,171
47,893
—
¥ 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
—
$ 196,483
162,467
55,933
175,975
173,750
976,425
399,108
—
Consolidated
¥ 256,817
¥ 378,832
¥ 302,749
$ 2,140,141
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MANAGEMENT’S DISCUSSION AND ANALYSIS
TOSHIBA CORPORATION
31
GEOGRAPHIC SEGMENTS
Year ended March 31
Net sales:
Japan
Millions of yen
2003
2002
2001
Thousands of
U.S. dollars
2003
Unaffiliated customers
¥ 3,773,309
¥ 3,716,437
¥ 4,168,795
$ 31,444,242
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
1,169,802
999,914
1,004,448
9,748,350
4,943,111
4,716,351
5,173,243
41,192,592
784,683
20,052
804,735
563,639
521,620
1,085,259
477,870
13,957
491,827
56,277
1,533
57,810
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
6,539,025
167,100
6,706,125
4,696,992
4,346,833
9,043,825
3,982,250
116,308
4,098,558
468,975
12,775
481,750
(1,726,964)
(1,534,398)
(1,398,754)
(14,391,367)
¥ 5,655,778
¥ 5,394,033
¥ 5,951,357
$ 47,131,483
¥ 89,780
¥ (166,231)
¥ 193,258
$ 748,167
11,722
24,540
(3,197)
(286)
(7,017)
19,189
22,844
(128)
14
10,737
6,642
31,246
5,493
655
(5,161)
97,683
204,500
(26,642)
(2,383)
(58,475)
¥ 115,542
¥ (113,575)
¥ 232,133
$ 962,850
¥ 4,403,984
¥ 4,430,716
¥ 4,783,739
$ 36,699,867
218,782
416,726
202,575
30,057
360,366
434,112
186,900
36,061
413,777
323,183
205,960
34,276
1,823,183
3,472,717
1,688,125
250,475
Corporate and Eliminations
(33,188)
(40,373)
(36,371)
(276,567)
Consolidated
¥ 5,238,936
¥ 5,407,782
¥ 5,724,564
$ 43,657,800
Note: Geographic segment information for the fiscal year ended March 31, 2001 has been reclassified to conform with the fiscal year ended March 31, 2002.
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32
TOSHIBA CORPORATION
MANAGEMENT’S DISCUSSION AND ANALYSIS
RESEARCH AND
DEVELOPMENT
CAPITAL
EXPENDITURES
FINANCIAL
CONDITION
CASH FLOWS
Consolidated R&D expenditures increased 2% from the previous fiscal year to ¥331.5 billion (US$2,762 million). This was
equivalent to 6% of consolidated net sales, virtually unchanged from the previous fiscal year. Principal R&D achievements and
expenditures by segment were as follows. In Information & Communication Systems, R&D expenditures were ¥43.6 billion (US$363
million), mainly for the development of Web acceleration technology and mobile financial transaction technology; in Social
Infrastructure Systems, R&D expenditures were ¥33.8 billion (US$282 million), primarily for the development of airport radar mon-
itoring equipment and DNA chips. In Power Systems, R&D expenditures were ¥18.3 billion (US$153 million), principally for nuclear
reactor inspection technology and electrical power plant distributed control systems. In Digital Media, R&D expenditures were ¥65.7
billion (US$548 million), chiefly for the development of wireless home media stations and small-form-factor direct-methanol fuel
cells (DMFCs) for portable PCs. In Home Appliances, R&D expenditures were ¥19.8 billion (US$165 million), mainly for the devel-
opment of non-fluorochloro hydrocarbon (fluorine) refrigerators and “FEMINITY” networked home appliances. In Electronic
Devices & Components, R&D expenditures were ¥146.3 billion (US$1,219 million), primarily for the development of the world’s first
large-size low-temperature polysilicon LCD that enables display on rounded surfaces, and RISC processors with common key data
encryption systems (DES). In the Others segment, R&D expenditures were ¥4.0 billion (US$33 million), consisting mainly of research
carried out at Shibaura Mechatronics Corporation.
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 ¥230.5 billion (US$1,921 million),
amounted to ¥256.8 billion (US$2,140 million), and were made primarily in Electronic Devices & Components and Digital
Media.
Capital expenditures in Electronics Devices & Components amounted to ¥117.2 billion (US$976 million), and were for the devel-
opment and increased production capacity of semiconductors and LCD displays. Principal facility completions during the fiscal
year included manufacturing facilities for AFPD Pte., Ltd., low-temperature polysilicon TFT LCDs, facilities for manufacturing
advanced system LSI at Oita Operations, and development facilities for advanced system ULSI at Yokohama Operations.
Capital expenditures in Information & Communication Systems totaled ¥23.6 billion (US$196 million), and were allocated main-
ly for the broadcast and network services business.
In Digital Media, capital expenditures amounted to ¥21.1 billion (US$176 million), and were for the development and manu-
facturing of new PC and mobile phone-related facilities. Principal facilities completed during the fiscal year included a PC man-
ufacturing facilities for Toshiba Information Equipment (Hangzhou) Co., Ltd.
Capital expenditures amounted to ¥20.9 billion (US$174 million) for the development and manufacturing of new types of appli-
ances in Home Appliances; ¥19.5 billion (US$162 million) in Social Infrastructure Systems for the system development and the ren-
ovation and upgrading of infrastructure; ¥6.7 billion (US$56 million) in Power Systems, including for the renovation and
upgrading of infrastructure; and ¥47.9 billion (US$399 million) in Others.
As of March 31, 2003, total assets amounted to ¥5,238.9 billion (US$43,658 million), a decrease of ¥168.8 billion from the previous
fiscal year-end. Current assets declined ¥53.3 billion year on year to ¥2,621.2 billion (US$21,843 million). The primary reason for
the decrease in current assets included the reduction of inventories, which decreased 9% year on year to ¥629.7 billion
(US$5,247 million) due to the promotion of an “asset-light” program and transfer of the business line. Property, plant and equip-
ment declined ¥155.0 billion year on year to ¥1,199.3 billion (US$9,994 million) primarily due to capital investment restraints and
lease-back transactions.
Deferred tax assets increased ¥113.7 billion year on year to ¥685.6 billion (US$5,713 million) primarily due to increase in accrued
pension and severance costs.
On the liabilities side, current and long-term liabilities decreased ¥20.9 billion year on year to ¥4,491.9 billion (US$37,433 mil-
lion). Total interest-bearing liability was reduced by ¥165.1 billion year on year to ¥1,653.4 billion (US$13,778 million) with the cash
flow generated from operations. Accrued pension and severance costs increased ¥241.8 billion year on year to ¥951.0 billion
(US$7,925 million) due to a declined rate of return on plan asset and an amended discount rate for the projected benefit obligation.
Shareholders’ equity decreased ¥134.3 billion year on year to ¥571.1 billion (US$4,759 million) primarily due to the
increase in accumulated other comprehensive loss. Accumulated other comprehensive loss increased ¥152.0 billion year on year
to ¥450.8 billion (US$3,756 million) mainly due to an increase in minimum pension liability adjustment. Retained earnings
increased ¥18.5 billion year on year to ¥462.1 billion (US$3,850 million) due to the net income for the year.
Net cash provided by operating activities amounted to ¥271.6 billion (US$2,263 million), a large increase of ¥122.4 billion from ¥149.2
billion recorded in the previous fiscal year. Despite increased cash outflows resulting from an increase in notes and accounts receiv-
able and inventories, net cash provided by operating activities increased because of a large improvement in net income.
Net cash used in investing activities amounted to ¥148.0 billion (US$1,233 million), a decrease of ¥177.6 billion from
¥325.6 billion recorded in the previous fiscal year. This was mainly due to decreased capital investments in property, plant and
equipment in line with the selective investments and increased cash inflows through the transfer of the DRAM business and sale
and leaseback transactions.
Net cash used in financing activities amounted to ¥159.8 billion (US$1,331 million) compared with ¥53.5 billion in net cash pro-
vided by financing activities in the previous fiscal year. This decrease was primarily due to a reduction of interest-bearing liabil-
ities through the reinforcement of cash flow management. Accordingly, the interest-bearing liabilities were reduced by ¥165.1 billion.
In addition, the effect of exchange rate changes was to decrease cash by ¥7.2 billion.
As a result, cash and cash equivalents at the fiscal year-end decreased ¥43.3 billion to ¥327.1 billion (US$2,726 million) com-
pared with ¥370.4 billion recorded in the previous fiscal year.
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MANAGEMENT’S DISCUSSION AND ANALYSIS
TOSHIBA CORPORATION
33
Affiliated Companies:
Japan
Flash Vision
MT Picture Display Co., Ltd.
TM T&D Corporation
Toshiba Ceramics Co., Ltd.
Toshiba Machine Co., Ltd.
Toshiba Tungaloy Co., Ltd.
Percentage held by Group
50
36
50
41
48
38
Principal Subsidiaries and Affiliated Companies
As of March 31, 2003
Consolidated Subsidiaries:
Japan
Harison Toshiba Lighting Corporation
Toshiba Battery Co., Ltd.
Toshiba Building Co., Ltd.
Toshiba Elevator and Building Systems Corporation
Toshiba Information Systems (Japan) Corporation
Toshiba Logistics Corporation
Toshiba Matsushita Display Technology Co., Ltd.
Toshiba Plant Kensetsu Co., Ltd.
Toshiba TEC Corporation
U.S.A.
Toshiba America Consumer Products, Inc.
Toshiba America Electronic Components, Inc.
Toshiba America Information Systems, Inc.
Toshiba America, Inc.
Brazil
Toshiba do Brasil, S.A.
Philippines
70
100
100
80
88
100
60
56
51
100
100
100
100
100
Toshiba Information Equipment (Philippines), Inc.
100
Malaysia
Toshiba Electronics Malaysia Sdn. Bhd.
Singapore
AFPD Pte., Ltd.
TEC Singapore Electronics Pte., Ltd.
Toshiba Electronics Asia (Singapore) Pte., Ltd.
100
100
100
100
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34
TOSHIBA CORPORATION
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS
Toshiba Corporation and its subsidiaries
As of March 31, 2003 and 2002
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)
Deferred tax assets (Note 15)
Prepaid expenses and other current assets (Note 5)
Millions of yen
2003
2002
Thousands of
U.S. dollars
(Note 3)
2003
¥ 327,098
¥ 370,432
$ 2,725,817
107,920
1,007,396
(25,776)
166,190
629,659
143,087
265,642
136,890
976,037
(26,780)
190,912
693,350
84,402
249,284
899,333
8,394,967
(214,800)
1,384,917
5,247,158
1,192,392
2,213,683
Total current assets
2,621,216
2,674,527
21,843,467
Long-term receivables and investments:
Long-term receivables (Note 5)
Long-term finance receivables, net (Note 5)
Investments in and advances to affiliates (Note 7)
Marketable securities and other investments (Note 4)
Property, plant and equipment (Note 9):
Land
Buildings
Machinery and equipment
Construction in progress
Less—Accumulated depreciation
27,153
260,361
186,685
209,374
683,573
174,701
1,116,868
2,670,750
37,642
3,999,961
(2,800,676)
14,523
313,058
132,974
230,300
690,855
175,682
1,168,861
2,712,073
92,594
4,149,210
(2,794,888)
226,275
2,169,675
1,555,708
1,744,784
5,696,442
1,455,842
9,307,233
22,256,250
313,683
33,333,008
(23,338,967)
1,199,285
1,354,322
9,994,041
Deferred tax assets (Note 15)
Other assets (Note 8)
542,507
192,355
487,524
200,554
4,520,892
1,602,958
The accompanying notes are an integral part of these statements.
¥5,238,936
¥5,407,782
$43,657,800
ｱﾆﾚﾎﾟp34-55(英)6.18 03.6.25 5:41 PM ページ 35
CONSOLIDATED BALANCE SHEETS
TOSHIBA CORPORATION
35
Liabilities and shareholders’ equity
Current liabilities:
Short-term borrowings (Note 9)
Current portion of long-term debt (Note 9)
Notes payable, trade
Accounts payable, trade
Accounts payable, other and accrued expenses
Accrued income and other taxes
Advance payments received
Other current liabilities (Note 22)
Total current liabilities
Long-term liabilities:
Long-term debt (Note 9)
Accrued pension and severance costs (Note 10)
Other liabilities
Millions of yen
2003
2002
Thousands of
U.S. dollars
(Note 3)
2003
¥ 427,969
¥ 658,854
$ 3,566,408
343,373
107,817
874,153
269,885
49,934
243,187
302,459
270,924
140,879
837,141
340,232
36,768
273,107
314,588
2,861,442
898,475
7,284,608
2,249,042
416,117
2,026,558
2,520,492
2,618,777
2,872,493
21,823,142
882,026
950,997
40,127
888,755
709,233
42,324
7,350,217
7,924,975
334,391
1,873,150
1,640,312
15,609,583
Minority interest in consolidated subsidiaries (Note 16)
175,945
189,663
1,466,208
Shareholders’ equity (Note 17)
Common stock, without par value:
Authorized—10,000,000,000 shares
Issued and outstanding:
2003 and 2002—3,219,027,165 shares
Additional paid-in capital
Retained earnings
Accumulated other comprehensive loss
Treasury stock, at cost:
2003—2,269,483 shares
2002—225,288 shares
Commitments and contingent liabilities (Notes 21 and 22)
274,926
285,736
462,058
(450,775)
(881)
—
274,926
285,736
443,555
2,291,050
2,381,133
3,850,484
(298,792)
(3,756,458)
—
(111)
(7,342)
—
571,064
705,314
4,758,867
¥5,238,936
¥5,407,782
$43,657,800
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36
TOSHIBA CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
CONSOLIDATED STATEMENTS OF OPERATIONS
Toshiba Corporation and its subsidiaries
For the years ended March 31, 2003 and 2002
Sales and other income:
Net sales
Interest and dividends
Other income (Notes 4, 5, and 23)
Costs and expenses:
Cost of sales (Notes 11 and 19)
Selling, general and administrative (Notes 8, 11, 12, and 19)
Restructuring charges (Note 14)
Interest
Other expense (Notes 4, 5, 13, and 23)
Income (loss) before income taxes, minority
interest and equity in earnings of affiliates
Income taxes (Note 15):
Current
Deferred
Millions of yen
2003
2002
Thousands of
U.S. dollars
(Note 3)
2003
¥5,655,778
¥5,394,033
$47,131,483
13,381
65,937
14,704
59,100
111,509
549,475
5,735,096
5,467,837
47,792,467
4,146,460
1,393,776
10,906
24,257
106,574
4,070,130
1,437,478
208,954
29,891
98,071
34,553,833
11,614,800
90,883
202,142
888,117
5,681,973
5,844,524
47,349,775
53,123
(376,687)
442,692
50,986
(2,454)
48,532
36,185
(150,100)
(113,915)
424,883
(20,450)
404,433
Income (loss) before minority interest and equity in
earnings of affiliates
4,591
(262,772)
38,259
Minority interest in income (loss) of consolidated subsidiaries
(11,330)
Income (loss) before equity in earnings of affiliates
Equity in earnings of affiliates (Note 7)
15,921
2,582
(6,315)
(256,457)
2,440
(94,417)
132,676
21,516
Net income (loss)
¥ 18,503
¥ (254,017)
$ 154,192
Basic and diluted net income (loss) per share
¥ 5.75
¥ (78.91)
$ 0.048
Weighted-average number of shares used in calculation
of earnings per share (thousands of shares)
3,217,979
3,218,951
Yen
U.S. dollars
(Note 3)
Cash dividends per share (Note 17)
¥ 3.00
—
$ 0.025
The accompanying notes are an integral part of these statements.
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CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY
TOSHIBA CORPORATION
37
CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY
Toshiba Corporation and its subsidiaries
For the years ended March 31, 2003 and 2002
Common
stock
Additional
paid-in
capital
Retained
earnings
Millions of yen
Accumulated
other
comprehensive
loss
Treasury
stock
Balance at March 31, 2001
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 10)
Unrealized losses on derivative
instruments
Comprehensive loss
Cash dividends
Purchase of treasury stock, at cost
Balance at March 31, 2002
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 10)
Unrealized losses on derivative
instruments
Comprehensive loss
Purchase of treasury stock, at cost
Balance at March 31, 2003
Balance at March 31, 2002
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 10)
Unrealized losses on derivative
instruments
Comprehensive loss
Purchase of treasury stock, at cost
Balance at March 31, 2003
The accompanying notes are an integral part of these statements.
Total
¥1,047,925
9
(254,017)
(3,542)
13,987
(80,754)
(2,088)
(326,414)
(16,095)
(111)
705,314
18,503
(9,550)
(17,638)
(125,130)
¥ 274,921 ¥ 285,732 ¥ 713,667
¥ (226,395)
5
4
(254,017)
(3,542)
13,987
(80,754)
(2,088)
274,926
285,736
443,555
(298,792)
¥(111)
(111)
(16,095)
18,503
(9,550)
(17,638)
(125,130)
335
¥ 274,926 ¥ 285,736 ¥ 462,058
¥ (450,775)
Thousands of U.S. dollars (Note 3)
335
(133,480)
(770)
¥ (881) ¥ 571,064
(770)
Common
stock
Additional
paid-in
capital
Retained
earnings
Accumulated
other
comprehensive
loss
Treasury
stock
Total
$2,291,050 $2,381,133 $3,696,292
$(2,489,933)
$ (925) $5,877,617
154,192
(79,583)
(146,983)
154,192
(79,583)
(146,983)
(1,042,751)
(1,042,751)
2,792
$2,291,050 $2,381,133 $3,850,484
$(3,756,458)
2,792
(1,112,333)
(6,417)
$(7,342) $4,758,867
(6,417)
ｱﾆﾚﾎﾟp34-55(英)6.18 03.6.25 5:41 PM ページ 38
38
TOSHIBA CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
CONSOLIDATED STATEMENTS OF CASH FLOWS
Toshiba Corporation and its subsidiaries
For the years ended March 31, 2003 and 2002
Cash flows from operating activities
Net income (loss)
Adjustments to reconcile net income (loss) to net cash provided
by operating activities—
Depreciation and amortization
Provisions for pension and severance costs, less payments
Deferred income tax benefit
Equity in income of affiliates
Loss from sales, disposal and impairment of property
and securities, net
Minority interest in loss of consolidated subsidiaries
(Increase) decrease in notes and accounts receivable, trade
Decrease in finance receivables, net
Decrease in inventories
(Increase) decrease in other current assets
(Increase) decrease in long-term receivables
Decrease in long-term finance receivables, net
Increase (decrease) in notes and accounts payable, trade
Increase (decrease) in accrued income and other taxes
Decrease in advance payments received
(Decrease) increase 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
(Increase) decrease in investments in affiliates
Increase 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
(Decrease) increase in short-term borrowings
Dividends paid
Proceeds from stock offering by subsidiaries
Repurchase of subsidiary common stock from minority shareholder
Purchase of treasury stock
Net cash (used in) provided by financing activities
Effect of exchange rate changes on cash and cash equivalents
Net decrease in cash and cash equivalents
Millions of yen
2003
2002
Thousands of
U.S. dollars
(Note 3)
2003
¥ 18,503
¥(254,017)
$ 154,192
260,835
20,296
(2,454)
(2,582)
30,337
(11,330)
(13,520)
2,538
17,856
(35,299)
(15,283)
52,697
6,392
13,183
(16,860)
(53,706)
271,603
151,319
13,897
(249,253)
(22,557)
(12,409)
(28,985)
(147,988)
363,086
(280,965)
(238,600)
(2,428)
525
(604)
(770)
(159,756)
(7,193)
(43,334)
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)
52,523
—
(111)
53,495
5,756
(117,163)
2,173,625
169,133
(20,450)
(21,516)
252,808
(94,417)
(112,667)
21,150
148,800
(294,158)
(127,358)
439,142
53,267
109,858
(140,500)
(447,551)
2,263,358
1,260,992
115,808
(2,077,108)
(187,975)
(103,408)
(241,542)
(1,233,233)
3,025,716
(2,341,375)
(1,988,333)
(20,233)
4,375
(5,033)
(6,417)
(1,331,300)
(59,941)
(361,116)
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year
370,432
¥327,098
487,595
¥ 370,432
3,086,933
$2,725,817
Supplemental disclosure of cash flow information (Note 23)
Cash paid during the year for—
Interest
Income taxes
The accompanying notes are an integral part of these statements.
¥ 31,932
¥ 43,094
¥ 39,347
¥ 55,340
$ 266,100
$ 359,117
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
TOSHIBA CORPORATION
39
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Toshiba Corporation and its subsidiaries
1.
DESCRIPTION OF
BUSINESS
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 sys-
tems, (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, 2003, sales of digital media products rep-
resented the most significant portion of the Company’s total sales or approximately 26 percent. Electronic
devices & components represented approximately 20 percent of the Company’s total sales, while sales of
information & communications systems and social infrastructure systems were approximately equal in amount, each
representing approximately 15 percent of the Company’s total sales. Sales of home appliances and power systems
represented approximately 10 percent of the Company’s total sales. The Company’s products are manufactured
and marketed throughout the world with 59 percent of sales in Japan and the remainder in North America,
Asia, Europe and other parts of the world.
2.
SUMMARY OF
SIGNIFICANT
ACCOUNTING
POLICIES
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 state-
ments 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 in which the ability to exercise significant influence exists are stated at cost plus equity in undis-
tributed 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 at the date of purchase 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
included 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.
Allowance for Uncollectible Receivables
An allowance for uncollectible trade receivables is recorded based on a combination of the write-off history, aging
analysis, and an evaluation of any specific known troubled accounts. When all collection options are exhausted
including legal recourse, the accounts or portions thereof are deemed to be uncollectible and charged against the
allowance. An allowance for uncollectible finance receivables is provided based on past loss experience and the
estimation of value of the underlying collateral.
Marketable Securities and Other Investments
The Company classifies all of its marketable securities as available-for-sale which are reported at fair value, with
unrealized gains and losses included in accumulated other comprehensive income (loss), net of taxes. Other invest-
ments 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
carrying 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 abil-
ity to retain marketable securities and investment securities for a period of time sufficient to allow for any antici-
pated recovery in market value. When such a decline exists, the Company recognizes an impairment loss to the
extent of such decline.
Inventories
Raw materials, finished products and work in process for stock sales items are stated at the lower of cost or market,
cost being determined principally by the average method. Finished products and work in process for contract items
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40
TOSHIBA CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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.
Depreciable Assets
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. Certain costs incurred in connection
with developing or obtaining internal use software are capitalized. These costs consist of payments made to third
parties and the salaries of employees working on such software development and are included under the caption
Other assets in the accompanying consolidated balance sheets.
Depreciation for property, plant and equipment is computed generally by the declining-balance method at
rates based on the following estimated useful lives of the assets: buildings, 3 to 50 years; machinery and
equipment, 2 to 20 years. Software is depreciated mainly using the straight-line method over the estimated use-
ful life of the asset, which is generally less than 5 years.
Impairment of Long-Lived Assets
Long-lived assets, other than goodwill and intangible assets with indefinite lives, 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 carry-
ing amount of the assets, an impairment loss is recorded based on the fair value of the asset. Fair value is deter-
mined primarily by using the anticipated cash flows discounted at a rate commensurate with the risk involved. For
assets held for sale, an impairment loss is further increased by costs to sell. Long-lived assets to be disposed of
other than by sale are considered held and used until disposed of.
Intangible Assets
Intangible assets, mainly consisting of technical license fees, are amortized over the contractual periods or the esti-
mated useful lives on a straight-line basis without residual values. Weighted average amortization period for these
intangible assets was 5.3 years as of March 31, 2003. The Company reviews the carrying amount of indefinite lived
intangible assets for impairment whenever events or circumstances indicates that the carrying amount may not be
recoverable.
Income Taxes
The provision (benefit) for income taxes is computed based on the pre-tax income (loss) included in the consoli-
dated 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
statements, and are measured by applying currently enacted tax laws. The effect on deferred tax assets and lia-
bilities of a change in tax rates is recognized in income in the period that the change is enacted. 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 applica-
tion of Statement of Financial Accounting Standards (“SFAS”) No. 87 and prior service costs resulting from amend-
ments to the plans are amortized over the average remaining 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
decreases; 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
connection with this transaction, the Company recognized a gain of ¥9,185 million and deferred taxes on this gain
of ¥3,867 million.
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. 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.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
TOSHIBA CORPORATION
41
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. To measure the extent
of progress toward completion, the Company generally compares the costs incurred to date to estimated total costs
to complete based upon the most recent available information.
Revenues from the sale of equipment under sales-type leases are recognized at the inception of the lease.
Interest on sales-type leases and direct financing leases is recognized to produce a constant periodic rate of return
on the net investment in the lease. Leases not qualifying as sales-type lease or direct financing lease are accounted
for as operating leases and related revenues are recognized over the lease term.
Shipping and Handling Costs
The Company includes shipping and handling costs which totaled ¥88,760 million ($739,667 thousand) and ¥88,332 mil-
lion for the years ended March 31, 2003 and 2002, 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, currency swap agreements, and currency options for the purpose of currency
exchange rate and interest rate risk management. Refer to Note 18 for descriptions of these financial instruments.
The Company recognizes all derivative financial instruments, such as forward exchange contracts, interest rate swap
agreements, currency swap agreements, and currency options 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 deriv-
ative financial instruments are either recognized periodically in income or in shareholders’ 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 value
of derivative financial instruments accounted for as fair value hedges are recorded in income along with the por-
tion of the change in the fair value of the hedged item that relates to the hedged risk. Changes in fair value of deriv-
ative 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 derivative financial
instruments not qualifying as a hedge are reported in income.
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
receivables is computed based on the allocated carrying amount of the receivables sold. Retained interests are
recorded at the allocated carrying value of the assets based on their relative fair values at the date of sale. The
Company estimates fair value based on the present value of future expected cash flows less credit losses.
Guarantees
Effective January 1, 2003, the Company adopted the Financial Accounting Statements Board (“FASB”) Interpreta-
tion No. 45 (“FIN 45”), Guarantor’s Accounting and Disclosure Requirements for Guarantees. FIN 45 requires a com-
pany to recognize, at the inception of a guarantee, a liability for the fair value of the obligation it has undertaken in
issuing the guarantee. The initial recognition and initial measurement provisions of FIN 45 are applicable on a
prospective basis to guarantees issued or modified after December 31, 2002. The adoption of FIN 45 did not have
a material impact on the Company’s financial position and results of operations.
Recent Pronouncements
In June 2001, the FASB issued SFAS No. 143, Accounting for Asset Retirement Obligations, which is effective for
fiscal years beginning after June 15, 2002. The Statement requires legal obligations associated with the retirement
of long-lived assets to be recognized at their fair value at the time that the obligations are incurred. Upon initial recog-
nition of a liability, that cost should be capitalized as part of the related long-lived asset and allocated to
expense over the useful life of the asset. The Company will adopt SFAS No.143 on April 1, 2003. The Company is
currently evaluating the impact of adoption of SFAS No. 143 on the Company’s financial position and the
results of operations.
In January 2003, the FASB issued Interpretation No. 46 (“FIN 46”), Consolidation of Variable Interest Entities, which
addresses consolidation by business enterprises of variable interest entities (“VIEs”) that either: (1) do not have a suf-
ficient equity investment at risk to permit the entity to finance its activities without additional subordinated financial
support, or (2) the equity investors lack an essential characteristic of a controlling financial interest. FIN 46
requires disclosure of VIEs in financial statements initially issued after January 31, 2003, if it is reasonably possible
that as of the transition date: (1) the company will be the primary beneficiary of an existing VIE that will require con-
solidation or, (2) the company will hold a significant variable interest in an existing VIE. Pursuant to the transitional
requirements of FIN 46, such disclosures are provided in Note 20. Any VIEs created after January 31, 2003 are imme-
diately subject to the consolidation guidance in FIN 46. The Company will adopt the consolidation guidance
applicable to existing VIEs in the interim reporting period ending September 30, 2003. In accordance with FIN 46,
the Company is currently reviewing the existing VIEs to determine if consolidation is required.
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.
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42
TOSHIBA CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
3.
U.S. DOLLAR
AMOUNTS
4.
MARKETABLE
SECURITIES AND
OTHER
INVESTMENTS
5.
FINANCE
RECEIVABLES AND
SECURITIZATIONS
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 rates. The amounts shown in
U.S. dollars are not intended to be computed in accordance with generally accepted accounting principles in the
United States for the translation of foreign currency amounts. The rate of ¥120 = U.S.$1, the approximate current
rate of exchange at March 31, 2003, 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, 2003 and 2002 are
as follows:
March 31, 2003:
Equity securities
Debt securities
March 31, 2002:
Equity securities
Debt securities
March 31, 2003:
Equity securities
Debt securities
Millions of yen
Gross
unrealized
holding gains
Gross
unrealized
holding losses
¥ 36,896
3
¥ 36,899
¥ 50,952
—
¥ 50,952
¥ 6,985
32
¥ 7,017
¥ 6,553
9
¥ 6,562
Thousands of U.S. dollars
Gross
unrealized
holding gains
Gross
unrealized
holding losses
Cost
¥75,830
1,994
¥77,824
¥84,601
2,365
¥86,966
Cost
$631,916
16,617
$648,533
$307,467
25
$307,492
$58,208
267
$58,475
Fair value
¥105,741
1,965
¥107,706
¥129,000
2,356
¥131,356
Fair value
$881,175
16,375
$897,550
At March 31, 2003, debt securities mainly consist of corporate debt securities.
Contractual maturities of debt securities classified as available-for-sale were as follows at March 31, 2003:
Due within one year
Due after one year
Millions of yen
Thousands of U.S. dollars
Cost
¥ 25
1,969
¥ 1,994
Fair value
¥ 28
1,937
¥ 1,965
Cost
$ 208
16,409
$16,617
Fair value
$ 233
16,142
$ 16,375
The proceeds from sales of available-for-sale securities for the years ended March 31, 2003 and 2002 were ¥13,897
million ($115,808 thousand) and ¥29,714 million, respectively. The gross realized gains on those sales for the years
ended March 31, 2003 and 2002 were ¥3,347 million ($27,892 thousand) and ¥9,474 million, respectively. The gross
realized losses on those sales for the years ended March 31, 2003 and 2002 were ¥934 million ($7,783 thousand)
and ¥644 million, respectively.
Included in other expense is a charge of ¥21,292 million ($177,433 thousand) and ¥27,572 million related to other-
than-temporary declines in the marketable and non-marketable equity securities for the years ended March 31, 2003
and 2002 respectively.
Investment in financing leases consists of sales-type and direct financing leases mainly for information systems,
medical 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:
Millions of yen
Thousands of
U.S. dollars
March 31
Investment in financing leases:
Total minimum lease payments receivable
Estimated executory costs
Unearned income
Estimated residual values
2003
2002
2003
¥231,871
(4,256)
(11,214)
—
216,401
¥286,019
(10,471)
(11,771)
2,417
266,194
$1,932,258
(35,467)
(93,450)
—
1,803,341
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
TOSHIBA CORPORATION
43
Less—allowance for doubtful accounts
Less—current portion
Other finance receivables
Less—allowance for doubtful accounts
Less—current portion
(925)
215,476
(64,320)
¥151,156
¥224,426
(13,351)
211,075
(101,870)
¥109,205
(1,161)
265,033
(81,464)
¥183,569
¥250,223
(11,286)
238,937
(109,448)
¥129,489
(7,708)
1,795,633
(536,000)
$1,259,633
$1,870,217
(111,258)
1,758,959
(848,917)
$ 910,042
At March 31, 2003, 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
2004
2005
2006
2007
2008
Thereafter
Investment in financing leases
Other finance receivables
Millions of yen
¥ 69,894
70,313
49,423
28,904
12,468
869
¥231,871
Thousands of
U.S. dollars
$ 582,450
585,942
411,858
240,867
103,900
7,241
$1,932,258
Millions of yen
¥106,646
47,126
25,632
15,604
9,496
19,922
¥224,426
Thousands of
U.S. dollars
$ 888,717
392,717
213,600
130,033
79,133
166,017
$1,870,217
The Company has transferred trade accounts receivable, trade notes receivable and finance receivables under sev-
eral securitization programs. These securitization transactions are accounted for as a sale in accordance with SFAS
No. 140, because the Company has relinquished control of the receivables. Accordingly, the receivables sold under
these facilities are excluded from receivables in the accompanying consolidated balance sheets.
Upon the sale of receivables, the Company holds subordinated retained interests for certain trade account
receivable, trade notes receivable and finance receivables. A portion of these receivables, where the Company holds
subordinated retained interests, are not taken off the balance sheet and are recorded at their fair value. Such car-
rying value is adjusted to reflect the portion that is not expected to be collectible. As of March 31, 2003 and 2002,
the fair value of retained interest is ¥28,579 million ($238,158 thousand) and ¥31,617 million, respectively. The
Company recognized losses of ¥1,210 million ($10,083 thousand) and gains of ¥669 million on the securitizations
of receivables for the years ended March 31, 2003 and 2002, respectively.
Subsequent to sale, the Company retains collection and administrative responsibilities for the receivables.
Servicing fees received by the Company approximated the prevailing market rate. Related servicing assets or lia-
bilities are immaterial to the Company’s financial position.
The table below summarizes certain cash flows received from and paid to the securitization SPEs on the above
transactions.
Year ended March 31
Proceeds from new securitizations
Servicing fees received
Cash flows received on retained interests
Purchases of delinquent and foreclosed
receivables
Millions of yen
2003
¥1,068,072
458
83,240
2002
¥876,660
447
133,953
Thousands of
U.S. dollars
2003
$8,900,600
3,817
693,667
16
487
133
At March 31, 2003, key economic assumptions used to compute the fair value of retained interests are as follows:
Weighted-average life (in years)
Residual cash flows discount rate
Accounts
Receivables
0.15
Other Finance
Receivables
0.13
1.40% 0.52%–0.63% 1.50%–2.70% 0.45%–0.85%
Lease
Receivables
1.95
Note
Receivables
0.18
Quantitative information about delinquencies, net credit losses, and components of securitized receivables as of
and for the years ended March 31, 2003 and 2002 are as follows:
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44
TOSHIBA CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Total principal amount of receivables
Amount 90 days or more past due
Net credit losses
March 31,
Year ended March 31,
Millions of yen
Accounts receivables
Note receivables
Lease receivables
Other finance receivables
Total managed portfolio
Securitized receivables
Total receivables
2003
2002
213,105
340,683
359,590
¥1,105,353 ¥1,106,036
199,176
352,523
350,558
¥2,018,731 ¥2,008,293
(376,873)
¥1,569,020 ¥1,631,420
(449,711)
2003
¥23,047
18
1,290
6,105
¥30,460
2002
¥23,090
16
1,104
5,574
¥29,784
2003
¥3,928
301
—
—
¥4,229
2002
¥3,874
382
—
—
¥4,256
Total principal amount of receivables
Amount 90 days or more past due
Net credit losses
Thousands of U.S. dollars
Accounts receivables
Note receivables
Lease receivables
Other finance receivables
Total managed portfolio
Securitized receivables
Total receivables
$ 9,211,275
1,775,875
2,839,025
2,996,584
$16,822,759
(3,747,592)
$13,075,167
March 31, 2003
$192,058
150
10,750
50,875
$253,833
Year ended March 31, 2003
$32,734
2,508
—
—
$35,242
6.
INVENTORIES
Inventories comprise the following:
March 31
Finished products
Work in process:
Long-term contracts
Other
Raw materials
Millions of yen
2003
¥256,299
90,387
175,431
107,542
¥629,659
2002
¥280,178
128,486
163,782
120,904
¥693,350
Thousands of
U.S. dollars
2003
$2,135,825
753,225
1,461,925
896,183
$5,247,158
7.
INVESTMENTS IN
AND ADVANCES
TO AFFILIATES
The Company’s significant investments in affiliated companies accounted for by the equity method together with the
percentage of the Company’s ownership of voting shares at March 31, 2003 are: TM T&D Corporation (“TM
T&D”) (50.0%); MT Picture Display Co., Ltd. (“MTPD”) (35.5%); Topcon Corporation (41.9%); Toshiba Ceramics Co.,
Ltd. (41.4%); Toshiba Machine Co., Ltd. (47.7%); and Toshiba Tungaloy Co., Ltd. (38.3%). Of the affiliates which are
accounted for by the equity method, the investment in common stock of the listed companies (five companies) is
carried at ¥59,974 million ($499,783 thousand) and ¥60,174 million at March 31, 2003 and 2002, respectively. The
Company’s investments in these companies had a market value of ¥49,022 million ($408,517 thousand) and
¥58,330 million at March 31, 2003 and 2002, respectively, based on quoted market prices at those dates.
Summarized financial information of the affiliates accounted for by the equity method is shown below:
Millions of yen
March 31
Current assets
Other assets including property, plant
and equipment
Total assets
Current liabilities
Long-term liabilities
Shareholders’ equity
Total liabilities and shareholders’ equity
2003
¥ 689,175
409,779
¥1,098,954
¥ 490,717
100,369
507,868
¥1,098,954
2002
¥450,226
262,323
¥712,549
¥323,950
66,072
322,527
¥712,549
Year ended March 31
Sales
Net income (loss)
Millions of yen
2003
¥770,347
¥ (3,580)
2002
¥614,580
¥ 11,002
Thousands of
U.S. dollars
2003
$5,743,125
3,414,825
$9,157,950
$4,089,309
836,408
4,232,233
$9,157,950
Thousands of
U.S. dollars
2003
$6,419,558
$ (29,833)
ｱﾆﾚﾎﾟp34-55(英)6.18 03.6.25 5:41 PM ページ 45
8.
INTANGIBLE
ASSETS
9.
SHORT-TERM
BORROWINGS
AND LONG-
TERM DEBT
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
TOSHIBA CORPORATION
45
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
Notes and accounts receivable, trade
Other receivables
Notes and accounts payable, trade
Other payables
Millions of yen
Millions of yen
2003
¥79,274
¥73,455
2003
¥25,544
¥ 6,383
¥28,633
¥ 7,900
2002
¥22,164
¥63,355
2002
¥15,033
¥ 3,349
¥44,618
¥ 5,475
Thousands of
U.S. dollars
2003
$660,617
$612,125
Thousands of
U.S. dollars
2003
$212,867
$ 53,192
$238,608
$ 65,833
Intangible assets comprise mainly technical license fees and are subject to amortization. At March 31, 2003, gross
carrying amounts and related accumulated amortization were ¥90,139 million ($751,158 thousand) and ¥53,110 mil-
lion ($442,583 thousand), respectively. At March 31, 2002, gross carrying amounts and related accumulated amor-
tization were ¥82,381 million and ¥41,223 million, respectively. For the years ended March 31, 2003 and 2002,
amortization expense was ¥15,179 million ($126,492 thousand) and ¥16,174 million, respectively. Estimated
amortization expense for each of the five years ending March 31 is: ¥12,651 million ($105,425 thousand) in
2004, ¥10,957 million ($91,308 thousand) in 2005, ¥6,974 million ($58,117 thousand) in 2006, ¥3,168 million ($26,400
thousand) in 2007, and ¥961 million ($8,008 thousand) in 2008.
Short-term borrowings at March 31, 2003 and 2002 comprise the following:
March 31
Loans, principally from banks, including bank
overdrafts, with weighted-average interest
rate of 0.77% at March 31, 2003 and 0.84%
at March 31, 2002:
Secured
Unsecured
Commercial paper with weighted-average
interest rate of 0.04% at March 31, 2003
and 0.15% at March 31, 2002
Euro yen or U.S. dollar medium-term notes
of a subsidiary, with weighted-average interest
rate of 0.16% at March 31, 2003 and 0.36%
at March 31, 2002 (swapped for floating
rate (LIBOR, etc.) or fixed rate U.S. dollar,
yen or Euro obligations)
Millions of yen
2003
2002
Thousands of
U.S. dollars
2003
¥ 2,645
352,048
¥ 3,516
456,510
$ 22,042
2,933,733
35,000
168,693
291,667
38,276
¥427,969
30,135
¥658,854
318,966
$3,566,408
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, 2003, the Company had unused committed lines of credit from short-term financing arrange-
ments aggregating ¥542,235 million ($4,518,625 thousand), of which ¥21,035 million ($175,292 thousand) was in
support of the Company’s commercial paper. The lines of credit expire on various dates from July 2003
through April 2004. Under the agreements, the Company is required to pay commitment fees raging from 0.1 per-
cent to 0.2 percent on the unused portion of the lines of credit.
ｱﾆﾚﾎﾟp34-55(英)6.18 03.6.25 5:41 PM ページ 46
46
TOSHIBA CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Long-term debt at March 31, 2003 and 2002 comprise the following:
March 31
Loans, principally from banks and insurance
companies, due 2003 to 2034 with weighted
average interest rate of 1.15% at March 31,
2003 and due 2002 to 2034 with weighted
average interest rate of 1.20% at March 31, 2002:
Millions of yen
2003
2002
Thousands of
U.S. dollars
2003
Secured
Unsecured
¥ 11,233
597,895
¥ 19,268
574,838
$ 93,608
4,982,459
Unsecured yen bonds, due 2003 to 2008 with
interest ranging from 0.49% to 3.025% at March
31, 2003 and due 2002 to 2008 with interest
ranging from 0.60% to 3.025% at March 31,
2002
Euro yen medium-term notes, due 2003 to 2008
with interest ranging from zero % to 2.34%
at March 31, 2003 and due 2002 to 2008 with
interest ranging from zero % to 2.34% at March
31, 2002 (swapped for floating rate (LIBOR, etc.)
or fixed rate yen obligations)
Unsecured yen bonds of subsidiaries, due
2004 with interest ranging from 1.69% to 3.00%
at March 31, 2003 and due 2002 to 2004 with
interest ranging from 0.95% to 3.00% at March
31, 2002
1.825% secured yen bonds of a subsidiary
due 2004
Euro yen or U.S. dollar medium-term notes of
subsidiaries, due 2003 to 2012 with interest
ranging from 0.09% to 3.70% at March 31, 2003
and due 2002 to 2012 with interest ranging from
zero % to 4.00% at March 31, 2002 (swapped
for floating rate (LIBOR, etc.) U.S. dollar, Yen or
Euro obligations)
Zero % unsecured yen convertible debentures
of a subsidiary due 2004 convertible currently
at ¥803 per share
Less—Portion due within one year
475,667
420,622
3,963,892
28,525
39,375
237,708
12,000
300
14,000
300
100,000
2,500
96,959
88,456
807,992
2,820
1,225,399
(343,373)
2,820
1,159,679
(270,924)
23,500
10,211,659
(2,861,442)
¥ 882,026
¥ 888,755
$ 7,350,217
Certain of the secured loan agreements contain provisions, which permit the lenders to require additional collat-
eral. 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, 2003 are property, plant
and equipment with a book value of ¥53,030 million ($441,917 thousand).
The aggregate annual maturities of long-term debt are as follows:
Year ending March 31
2004
2005
2006
2007
2008
Thereafter
Millions of yen
¥ 343,373
228,053
287,028
119,295
127,395
120,255
¥1,225,399
Thousands of
U.S. dollars
$ 2,861,442
1,900,442
2,391,900
994,125
1,061,625
1,002,125
$10,211,659
10.
ACCRUED
PENSION AND
SEVERANCE
COSTS
All employees whose services with the Company are terminated are usually entitled to lump-sum severance indem-
nities 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.
Toshiba Corporation and certain subsidiaries in Japan have Employees’ Pension Fund Plans (“EPFs”), which are
contributory defined benefit pension plans under the Japanese Welfare Pension Insurance Law (“JWPIL”).
These plans are composed of a substitutional portion which is the obligation related to the government-defined ben-
ｱﾆﾚﾎﾟp34-55(英)6.18 03.6.25 5:41 PM ページ 47
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
TOSHIBA CORPORATION
47
efit prescribed by JWPIL and a corporate portion based on a contributory defined benefit arrangement established
at the discretion of Toshiba Corporation.
Certain subsidiaries in Japan 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 con-
tribute amounts required to maintain sufficient plan assets to provide for accrued benefits, subject to the limitation
on deductibility imposed by Japanese income tax laws.
For the year ended March 31, 2002, the Company has amended the regulations of the social security benefits por-
tion under the contributory trusteed employee pension funds in accordance with the revisions of the JWPIL. This
amendment resulted in the reduction of the projected benefit obligations of the funds.
Net periodic pension and severance cost for the years ended March 31, 2003 and 2002 included the following com-
ponents:
Millions of yen
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
Net periodic pension and severance cost
2003
¥ 52,287
59,053
(35,546)
12,025
(5,972)
29,184
¥111,031
2002
¥ 62,687
61,439
(37,864)
12,025
(4,202)
18,693
¥112,778
Thousands of
U.S. dollars
2003
$435,725
492,108
(296,217)
100,209
(49,767)
243,200
$925,258
A weighted-average discount rate of 3.0 percent and 3.5 percent, an expected long-term rate of return on plan
assets of 4.0 percent and 4.0 percent, and an assumed rate of increase in salary levels of 1.9 percent and 2.1 per-
cent were used in measuring the pension obligations at March 31, 2003 and 2002, respectively.
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, 2003 and 2002 were as follows:
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
Divestitures
Foreign currency exchange impact
Benefit obligation at end of year
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
Divestitures
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
Net amount recognized
Amounts recognized in the consolidated
balance sheets consist of:
Accrued pension and severance costs
Accumulated other comprehensive loss,
pre-tax
Net amounts recognized
Millions of yen
2003
2002
¥1,816,656
52,287
59,053
5,308
25,046
95,969
(102,338)
(14,273)
(1,411)
¥1,936,297
¥ 988,112
(126,700)
41,627
5,308
(53,972)
(8,191)
(1,417)
¥ 844,767
¥1,091,530
(861,688)
(36,911)
46,950
¥ 239,881
¥1,823,810
62,687
61,439
8,745
(39,154)
67,633
(169,461)
—
957
¥1,816,656
¥1,044,142
(55,441)
40,371
8,745
(50,648)
—
943
¥ 988,112
¥ 828,544
(638,072)
(49,163)
78,740
¥ 220,049
Thousands of
U.S. dollars
2003
$15,138,800
435,725
492,108
44,233
208,717
799,742
(852,817)
(118,942)
(11,758)
$16,135,808
$ 8,234,267
(1,055,834)
346,892
44,233
(449,767)
(68,258)
(11,808)
$ 7,039,725
$ 9,096,083
(7,180,733)
(307,592)
391,250
$ 1,999,008
¥ 950,997
¥ 709,233
$ 7,924,975
(711,116)
¥ 239,881
(489,184)
¥ 220,049
(5,925,967)
$ 1,999,008
Accumulated benefit obligation at end of year
¥1,796,972
¥1,696,572
$14,974,767
ｱﾆﾚﾎﾟp34-55(英)6.18 03.6.25 5:41 PM ページ 48
48
TOSHIBA CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
In January 2003, the Emerging Issue Task Force reached a consensus on Issue No. 03-2, Accounting for the Transfer
to the Japanese Government of the Substitutional Portion of Employee Pension Fund Liabilities (“EITF 03-2”), which
addresses accounting for a transfer to the Japanese government of a substitutional portion of EPFs. In
September 2002, the Company received an approval from the Japanese government to transfer the future benefit
obligation related to the substitutional portion. In addition, the Company will submit another application to sepa-
rate the remaining substitutional portion related to past sevice by its employees. The Company expects to
receive final approval from the Japanese government for its second application during the year ending March 31,
2004. Upon receipt of the final approval, the Company will be relieved of all obligations pertaining to the substitutional
portion by transferring the benefit obligation and the related government-specified portion of the plan assets which
are computed by the Japanese government. The Company will account for the entire process upon completion of
the transfer to the Japanese government of the substitutional portion of the benefit obligation and the related plan
asset, as the culmination of a series of steps in a single settlement transaction under EITF 03-2. The effect of the
completion of the transaction has not yet been determined because the amount of the benefit obligation and the
related plan assets to be transferred may change significantly.
Research and development costs are expensed as incurred and amounted to ¥331,494 million ($2,762,450
thousand) and ¥326,170 million for the years ended March 31, 2003 and 2002, respectively.
Advertising costs are expensed as incurred. Advertising expenses amounted to ¥41,911 million ($349,258
thousand) and ¥59,390 million for the years ended March 31, 2003 and 2002, respectively.
For the years ended March 31, 2003 and 2002, the net foreign exchange losses are ¥15,614 million ($130,117 thou-
sand) and ¥6,682 million, respectively.
During the year ended March 31, 2003, the Company recorded restructuring charges of ¥10,906 million
($90,883 thousand) principally related to its Display Devices and Components division. Included in the restructuring
charges is impairment of manufacturing facilities of ¥7,815 million ($65,125 thousand) for the year ended March 31,
2003.
During the year ended March 31, 2002, the Company recorded restructuring charges, which consisted of various
reorganization costs totaling ¥111,280 million primarily related to the “01 Action Plan,” and additional termination
benefits for voluntary early retirement of ¥97,674 million.
The reorganization costs of ¥111,280 million comprised the following:
For the year ended March 31, 2002, the Company recorded an impairment loss of ¥55,247 million for assets to be
held and used related to machinery and equipment pertaining to memory products. In conjunction with a decision
to exit the commodity DRAM business, the Company announced in December 2001 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 sale, certain NAND
flash manufacturing equipment was 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 dis-
posal and impairment for building, machinery and equipment of ¥5,125 million and various other losses including;
losses on contract terminations, purchase commitment losses, dismantling costs for machinery and equipment to
be disposed of, totaling ¥31,083 million. The Company paid substantially all of the restructuring liabilities during
the year ended March 31, 2003. Other reorganization costs of ¥19,825 million mainly related to impairment
losses of building, machinery and equipment for other businesses to be discontinued or already discontinued.
The Company recorded a loss of ¥97,674 million with respect to the additional termination benefits 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 of the restructuring charges are non-cash charges. At March 31, 2003, approximately
¥2,365 million ($19,708 thousand) of restructuring charges remain accrued for by the Company.
The Company is subject to a number of different taxes based on income which, in the aggregate, result in a normal statu-
tory tax rate in Japan of approximately 42.1 percent for the years ended March 31, 2003 and 2002, respectively.
Commencing with the year ended March 31, 2003, the Japanese tax regulations is permit the filing of a consolidated
tax return. In connection with its introduction, a temporary surtax of 2.0 percent is assessed for consolidated tax returns
filed for the years ending March 2003 and 2004. Upon the initial filing of a consolidated tax return, net operating loss
carryforwards previously generated by a company’s subsidiaries will expire. A change in the corporate enterprise tax
rate was enacted in March 2003 and is effective for tax periods ending March 31, 2005.
In 2003, Toshiba Corporation applied for and obtained approval from the Japanese tax authorities to file a tax return
for the consolidated group starting from the year ending March 2004. As a result of the change in the corporate enter-
prise tax rate and commencement of the consolidated tax return filing, the Company’s normal statutory tax rate will
change from 42.1 percent to 43.9 percent for the year ending March 31, 2004 and to 40.9 percent for the years end-
ing on or after March 31, 2005. The effect on deferred tax assets and liabilities of the future change in the tax rates
recorded as deferred tax expense for the year ended March 31, 2003 was ¥4,373 million ($36,442 thousand).
11.
RESEARCH AND
DEVELOPMENT EXPENSES
12.
ADVERTISING COSTS
13.
FOREIGN EXCHANGE
GAINS AND LOSSES
14.
RESTRUCTURING
CHARGES
15.
INCOME TAXES
ｱﾆﾚﾎﾟp34-55(英)6.18 03.6.25 5:41 PM ページ 49
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
TOSHIBA CORPORATION
49
A reconciliation 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 statuto-
ry tax rate is as follows:
Millions of yen
Year ended March 31
Expected income tax expense (benefit)
Increase in taxes resulting from:
Non-deductible expenses for tax purposes
Net changes in valuation allowance
Effect of income tax rate change
Other
Income tax expense (benefit)
2003
¥22,365
5,076
15,571
4,373
1,147
¥48,532
2002
¥(158,585)
3,256
41,575
—
(161)
¥(113,915)
Thousands of
U.S. dollars
2003
$186,375
42,300
129,758
36,442
9,558
$404,433
The significant components of deferred tax assets and deferred tax liabilities as of March 31, 2003 and 2002 are
as follows:
March 31
Gross deferred tax assets:
Inventories
Accrued pension and severance costs
Tax loss carryforwards
Minimum pension liability adjustment
Accrued bonus
Depreciation and amortization
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
2003
2002
¥ 24,970
103,998
194,248
298,303
38,920
34,528
107,176
802,143
(65,880)
736,263
(12,888)
(12,341)
(17,257)
(16,299)
(58,785)
¥677,478
¥ 24,805
97,788
180,125
205,946
27,746
38,793
136,165
711,368
(77,644)
633,724
(15,661)
(18,356)
(17,763)
(17,450)
(69,230)
¥564,494
Thousands of
U.S. dollars
2003
$ 208,083
866,650
1,618,733
2,485,858
324,333
287,733
893,135
6,684,525
(549,000)
6,135,525
(107,400)
(102,842)
(143,808)
(135,825)
(489,875)
$5,645,650
The net changes in the total valuation allowance for the years ended March 31, 2003 and 2002 were a
decrease of ¥11,764 million ($98,033 thousand) and an increase of ¥35,447 million, respectively.
Tax loss carryforwards of the Company at March 31, 2003 amounted to approximately ¥487,788 million
($4,064,900 thousand), the majority of which will expire during the period from 2004 through 2008. The
Company utilized tax loss carryforwards of ¥31,272 million ($260,600 thousand) to recognize income tax benefits
for the current year.
Realization of tax loss carryforwards and other deferred tax assets is dependent on the Company generating suffi-
cient taxable income prior to their expiration or the Company exercising certain available tax strategies. Although real-
ization 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 affil-
iates deemed indefinitely reinvested in foreign operations. As of March 31, 2003, and 2002, the undistributed earn-
ings of the foreign subsidiaries not subject to deferred tax liabilities were ¥107,328 million ($894,400 thousand), and
¥103,248 million, respectively. It is not practicable to estimate the amount of the deferred income tax liabilities on
such earnings.
During the year ended March 31, 2002, a foreign subsidiary issued 35 shares of ¥1,000 million par value
redeemable preferred stock totaling ¥35,000 million 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
16.
ISSUANCE OF
PREFERRED STOCK
BY A SUBSIDIARY
17.
SHAREHOLDERS’
EQUITY
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50
TOSHIBA CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Corporation’s shares had a par value of ¥50 per share.
Retained Earnings
Retained earnings at March 31, 2003 and 2002 include a legal reserve of ¥12,869 million ($107,242 thousand) and
¥81,815 million, respectively. The Japanese Commercial Code provides that an amount equal to at least 10 per-
cent of cash dividends and other distributions from retained earnings paid by Toshiba Corporation and its
Japanese subsidiaries be appropriated as a legal reserve. No further appropriations are required when the total
amount of the additional paid-in capital and the legal reserve equals 25 percent of their respective stated capital.
The Japanese Commercial Code also provides that to the extent that the sum of the additional paid-in capital and
the legal reserve exceeds 25 percent of the stated capital, the amount of the excess (if any) is available for appro-
priations by the resolution of the shareholders.
The amount of retained earnings available for dividends is based on Toshiba Corporation’s retained earnings deter-
mined in accordance with generally accepted accounting principles in Japan and the Japanese Commercial Code.
Retained earnings at March 31, 2003 do not reflect year-end dividends of ¥9,656 million ($80,467 thousand) for the
year ended March 31, 2003, which are expected to be formally approved at the general shareholders’ meeting held
in June 2003, and will be payable subsequently.
Retained earnings at March 31, 2003 included the Company’s equity in undistributed earnings of affiliated
companies accounted for by the equity method in the amount of ¥45,131 million ($376,092 thousand).
Accumulated Other Comprehensive Loss
An analysis of the changes in accumulated other comprehensive loss, net of tax, for the years ended March 31, 2003
and 2002 is shown below:
March 31
Unrealized gains on securities:
Balance at beginning of year
Current year change
Balance at end of year
Foreign currency translation adjustments:
Balance at beginning of year
Current year change
Balance at end of year
Minimum pension liability adjustment:
Balance at beginning of year
Current year change
Balance at end of year
Unrealized losses on derivative instruments:
Balance at beginning of year
Current year change
Balance at end of year
Total accumulated other comprehensive loss:
Balance at beginning of year
Current year change
Balance at end of year
Millions of yen
2003
2002
¥ 25,186
(9,550)
¥ 15,636
¥ (41,951)
(17,638)
¥ (59,589)
¥(279,939)
(125,130)
¥(405,069)
¥ (2,088)
335
¥ (1,753)
¥(298,792)
(151,983)
¥(450,775)
¥ 28,728
(3,542)
¥ 25,186
¥ (55,938)
13,987
¥ (41,951)
¥(199,185)
(80,754)
¥(279,939)
—
¥ (2,088)
¥ (2,088)
¥(226,395)
(72,397)
¥(298,792)
Thousands of
U.S. dollars
2003
$ 209,883
(79,583)
$ 130,300
$ (349,592)
(146,983)
$ (496,575)
$(2,332,824)
(1,042,751)
$(3,375,575)
$ (17,400)
2,792
$ (14,608)
$(2,489,933)
(1,266,525)
$(3,756,458)
Tax effects allocated to each component of other comprehensive income (loss) for the years ended March 31, 2003
and 2002 are shown below:
For the year ended March 31, 2003:
Unrealized gains on securities:
Unrealized holding losses arising during year
Less: reclassification adjustment for losses
included in net income
Foreign currency translation adjustments:
Currency translation adjustments arising
during year
Less: reclassification adjustment for
losses included in net income
Minimum pension liability adjustment
Unrealized losses on derivative instruments:
Unrealized losses arising during year
Less: reclassification adjustment for
losses included in net income
Other comprehensive income (loss)
Pre-tax
amount
Millions of yen
Tax benefit
(expense)
Net-of-tax
amount
¥ (28,670)
¥11,717
¥ (16,953)
12,524
(5,121)
7,403
(20,363)
3,099
(217,487)
(11,210)
11,668
¥(250,439)
(374)
—
92,357
4,784
(4,907)
¥98,456
(20,737)
3,099
(125,130)
(6,426)
6,761
¥(151,983)
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
TOSHIBA CORPORATION
51
For the year ended March 31, 2002:
Unrealized gains on securities:
Unrealized holding gains arising during year
Less: reclassification adjustment for gains
included in net loss
Foreign currency translation adjustments:
Currency translation adjustments arising
during year
Less: reclassification adjustment for
gains included in net loss
Minimum pension liability adjustment
Unrealized losses on derivative instruments:
Unrealized losses arising during year
Less: reclassification adjustment for
losses included in net loss
Other comprehensive income (loss)
¥ 10,052
¥ (4,179)
(16,233)
6,818
14,030
(54)
(139,471)
(13,227)
9,762
¥(135,141)
11
—
58,717
5,481
(4,104)
¥62,744
¥ 5,873
(9,415)
14,041
(54)
(80,754)
(7,746)
5,658
¥(72,397)
Thousands of U.S. dollars
Pre-tax
amount
Tax benefit
(expense)
Net-of-tax
amount
For the year ended March 31, 2003:
Unrealized gains on securities:
Unrealized holding losses arising
during year
Less: reclassification adjustment for losses
included in net income
Foreign currency translation adjustments:
Currency translation adjustments arising
during year
Less: reclassification adjustment for
losses included in net income
Minimum pension liability adjustment
Unrealized losses on derivative instruments:
Unrealized losses arising during year
Less: reclassification adjustment for
losses included in net income
Other comprehensive income (loss)
$ (238,917)
$ 97,642
$ (141,275)
104,367
(42,675)
61,692
(169,692)
(3,116)
(172,808)
25,825
(1,812,392)
(93,417)
97,234
$(2,086,992)
—
769,641
39,867
(40,892)
$820,467
25,825
(1,042,751)
(53,550)
56,342
$(1,266,525)
(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 swap
agreements, currency swap agreements, and currency options to reduce its exposures. The Company has
policies and procedures for risk management and the approval, reporting and monitoring of derivative financial instru-
ments. 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-
tracts, interest rate swap agreements, currency swap agreements and currency options.
The Company has entered into forward exchange contracts with banks as hedges against fluctuations in foreign
currency exchange rates on monetary assets and liabilities denominated in foreign currencies. The forward
exchange contracts related to accounts receivable and payable, and commitments on future trade transactions
denominated in foreign currencies mature primarily within a few months of the balance sheet date.
Interest rate swap agreements, currency swap agreements, and currency options 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 period 2003 to 2012.
Forward exchange contracts and certain interest rate swap agreements and currency swap agreements are des-
ignated 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 under-
lying debt as discussed below.
Fair Value Hedge Strategy
The forward exchange contracts utilized by the Company effectively reduce fluctuation in fair value of accounts
receivable denominated in foreign currencies.
The interest rate swap agreements utilized by the Company effectively convert a portion of its fixed-rate debt to
a floating-rate basis.
Cash Flow Hedge Strategy
The forward exchange contracts utilized by the Company effectively reduce fluctuation in cash flow from com-
mitments on future trade transactions denominated in foreign currencies approximately for the next six months.
18.
FINANCIAL
INSTRUMENTS
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52
TOSHIBA CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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 ¥744 million ($6,200 thousand) of net losses on derivative financial instruments
from accumulated other comprehensive income (loss) to earnings during the next twelve months due to the col-
lection of accounts receivable denominated in foreign currency and the payment of variable interest associated with
the floating-rate debts.
At March 31, 2003, there were no significant gains or losses on derivative financial instruments or portions
thereof that were 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, currency swap agreements, and currency options outstanding at March 31, 2003 and 2002 are sum-
marized below:
March 31
Forward exchange contracts:
To sell foreign currencies
To buy foreign currencies
Interest rate swap agreements
Currency swap agreements
Currency options
Millions of yen
2003
2002
¥ 82,290
29,333
355,517
133,571
101,922
¥ 98,878
29,036
410,377
114,560
8,195
Thousands of
U.S. dollars
2003
$ 685,750
244,442
2,962,642
1,113,092
849,350
(2) Fair value of financial instruments
The estimated fair values of the Company’s financial instruments at March 31, 2003 and 2002 are summarized as
follows:
Millions of yen
March 31
Nonderivatives:
Assets:
2003
2002
Carrying
amount
Estimated
fair value
Carrying
amount
Estimated
fair value
Long-term finance receivables, net
¥ 109,394 ¥ 107,256 ¥ 129,489 ¥ 132,267
Liabilities:
Long-term debt, including current portion
(1,225,399)
(1,247,035)
(1,159,679)
(1,181,925)
Derivative financial instruments:
Forward exchange contracts
Interest rate swap agreements
Currency swap agreements
Currency options
238
(2,534)
(3,611)
(575)
238
(2,534)
(3,611)
(575)
384
(3,994)
(6,853)
(31)
384
(3,994)
(6,853)
(31)
March 31
Nonderivatives:
Assets:
Thousands of U.S. dollars
2003
Carrying
amount
Estimated
fair value
Long-term finance receivables, net
$ 911,617
$ 893,800
Liabilities:
Long-term debt, including current portion
(10,211,659)
(10,391,958)
Derivative financial instruments:
Forward exchange contracts
Interest rate swap agreements
Currency swap agreements
Currency options
1,983
(21,117)
(30,092)
(4,792)
1,983
(21,117)
(30,092)
(4,792)
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
expenses, 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
investments. 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
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
TOSHIBA CORPORATION
53
non-public companies. The aggregate carrying amount of these investments in non-public companies was
¥97,271 million ($810,592 thousand) and ¥94,427 million at March 31, 2003 and 2002, respectively. However, the cor-
responding fair value of these investments at those dates was not computed as such estimation was not practicable.
19.
LEASES
Lessee
The Company leases manufacturing equipment, office and warehouse space, and certain other assets under oper-
ating leases. Rent expenses under such leases for the years ended March 31, 2003 and 2002 were ¥76,180 mil-
lion ($634,833 thousand) and ¥84,781 million, respectively.
The Company sold certain machinery and equipment for approximately ¥82,732 million ($689,433 thousand) and
¥25,000 million during the years ended March 31, 2003 and 2002, respectively. These assets were leased back from
the purchaser over periods of less than 5 years under operating lease agreements. The gain or loss on these trans-
actions was not significant.
Minimum lease payments for the Company’s non-cancelable operating leases as of March 31, 2003 are as follows:
Year ending March 31
2004
2005
2006
2007
2008
Thereafter
Millions of yen
¥17,798
15,694
12,980
11,240
5,475
2,668
¥65,855
Thousands of
U.S. dollars
$148,317
130,783
108,167
93,667
45,625
22,233
$548,792
Lessor
The Company is also a lessor to industrial equipment and information systems under operating leases. Future min-
imum lease payments to be received as of March 31, 2003 are as follows:
Year ending March 31
2004
2005
2006
2007
2008
Thereafter
Millions of yen
¥ 5,088
4,841
3,480
2,876
2,041
3,832
¥22,158
Thousands of
U.S. dollars
$ 42,400
40,342
29,000
23,967
17,008
31,933
$184,650
20.
CONSOLIDATION
OF VIEs
The Company has entered into several sale and leaseback transactions with SPEs in which certain manufacturing
equipment was sold and leased back. The transactions were funded through SPEs. The fair value of the equipment
and the outstanding balance of debt of these SPEs in connection with such transactions at March 31, 2003 were
¥68,716 million ($572,633 thousand) and ¥64,370 million ($536,417 thousand), respectively. At the end of the lease
term, the Company can either purchase the equipment for the estimated fair market value determined at the incep-
tion of the lease, or can terminate the agreement by paying the residual value guarantee. In addition, for a certain
transaction, the Company provided a guarantee to the lender of the SPE for principal and interest payments of por-
tion of debt incurred by the SPE for the purchase of the equipment. The Company’s maximum exposure to loss
with respect to its involvement in these VIEs as of March 31, 2003 was ¥48,269 million ($402,242 thousand), which
is the sum of the outstanding balance of debt guaranteed by the Company in the amount of ¥29,142 million
($242,850 thousand) and the residual value guarantee by the Company in the amount of ¥19,127 million
($159,392 thousand).
21.
COMMITMENTS
AND
CONTINGENT
LIABILITIES
Commitments outstanding at March 31, 2003 for the purchase of property, plant and equipment approximated
¥9,065 million ($75,542 thousand).
At March 31, 2003, contingent liabilities, other than guarantees disclosed in Note 22, approximated ¥11,957 mil-
lion ($99,642 thousand) principally for recourse obligations related to notes receivable transferred.
The Company is a defendant in several pending lawsuits with respect to patent infringement, breaches of contract
and warranties and others. The Company’s 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 posi-
tion or the results of operations of the Company.
22.
GUARANTEES
Guarantees of financing arrangements
Certain financing subsidiaries of the Company provide guarantees for installment loans and credit financing
agreements entered into by its customers for product purchases from third parties. The aggregate amount
guaranteed by the Company is ¥349,088 million ($2,909,067 thousand) as of March 31, 2003. The terms of the guar-
antees range from less than 1 year to 8 years. The guarantee fee income, which is recognized over the guarantee
period, was ¥2,862 million ($23,850 thousand) for the year ended March 31, 2003. The products purchased are
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54
TOSHIBA CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
pledged as collateral for the Company’s guarantees.
Guarantees of unconsolidated affiliates and third party debt
The Company guarantees debt as well as certain financial obligations of unconsolidated affiliates and third parties
to support the sale of the Company’s products and services. Expiration dates vary from 2003 to 2014 or terminate
on payment and/or cancellation of the obligation. A payment by the Company would be triggered by the failure of
the guaranteed party to fulfill its obligation under the guarantee. The maximum potential payment under these guar-
antees, including the amount provided in Note 20, was ¥127,845 million ($1,065,375 thousand) as of March 31, 2003.
Guarantees of employees’ housing loans
The Company guarantees housing loans of its employees. The term of the guarantees is equal to the term of the
related loans which range from 5 years to 30 years. A payment would be triggered by failure of the guaranteed party
to fulfill its obligation covered by the guarantee. The maximum potential payments under these guarantees
were ¥40,289 million ($335,742 thousand) as of March 31, 2003. However, the Company expects that the
majority of such payments would be reimbursed through the Company’s insurance policy.
Guarantees of transferred corporate bonds
The Company entered into a sale and assumption agreement with an SPE during 2001. As a result, the Company was
released from being a primary obligor for ¥20,178 million of the Company’s corporate bonds, which mature on var-
ious dates through 2008, and became secondarily liable for these obligations. The maximum potential payment by
the Company as a secondary obligor was ¥14,529 million ($121,075 thousand) at March 31, 2003.
Residual value guarantees under sale and leaseback transactions
As discussed in Note 20, the Company may be required to make payments for residual value guarantees in con-
nection with certain sale and leaseback transactions. The operating leases will expire on various dates through
September 2007. The maximum potential payments by the Company for such residual value guarantees,
including the amount provided in Note 20, were ¥31,224 million ($260,200 thousand) at March 31, 2003.
Guarantees of defaulted notes receivable
The Company has transferred trade accounts receivable, trade notes receivable and finance receivables under sev-
eral securitization programs. Upon certain sales of trade notes receivable, the Company holds a repurchase oblig-
ation, which the Company is required to perform upon default of the trade notes receivable. The trade notes
receivable generally mature within three months. The maximum potential payment for such repurchase obligation
was ¥12,165 million ($101,375 thousand) as of March 31, 2003.
The carrying amounts of the liabilities for the Company’s obligations under the guarantees described above at March
31, 2003 were not significant.
Warranty
Estimated warranty costs are accrued for at the time the product is sold to a customer. Estimates for warranty costs
are made based primarily on historical warranty claim experience. The following is a reconciliation of the product
warranty accrual:
March 31
Balance at beginning of year
Warranties issued
Settlements made
Foreign currency translation
Balance at end of year
Millions of yen
2003
¥20,886
19,775
(20,542)
(628)
¥19,491
2002
¥20,945
19,120
(20,429)
1,250
¥20,886
Thousands of
U.S. dollars
2003
$174,050
164,792
(171,183)
(5,234)
$162,425
23.
SUPPLEMENTAL
CASH FLOW
INFORMATION
In April 2002, Toshiba Corporation formed Toshiba Matsushita Display Technology Co., Ltd. (“TMD”) with
Matsushita Electric Industrial Co., Ltd. (“Matsushita”). In connection with this transaction, Toshiba Corporation and
Matsushita contributed certain operating facilities, in return for 60 percent and 40 percent interests, respectively, in
TMD. The carrying value of the assets and liabilities acquired, net of cash received of ¥2,001 million ($16,675 thou-
sand), was ¥70,666 million ($588,883 thousand), and ¥59,953 million ($499,608 thousand), respectively.
During the year ended March 31, 2003, Toshiba Corporation contributed certain assets and liabilities aggregating
¥55,009 million ($458,408 thousand), and ¥30,568 million ($254,733 thousand), respectively, and formed TM T&D
with Mitsubishi Electric Corporation. As a result of this transaction, Toshiba Corporation obtained a 50 percent inter-
est in TM T&D.
On January 1, 2003, Toshiba Corporation and Matsushita formed MTPD. In connection therewith, Toshiba
Corporation contributed substantially all assets and liabilities of four of its subsidiaries, in exchange for 35.5 per-
cent interest in MTPD, and recognized a gain of approximately ¥6,269 million ($52,242 thousand). The aggregate
book carrying value of the assets and liabilities contributed by Toshiba Corporation amounted to ¥50,622 million
($421,850 thousand) and ¥31,462 million ($262,183 thousand), respectively. The gain of ¥6,269 million ($52,242 thou-
sand), representing the difference between the fair value of the investment obtained in MTPD, and the net book value
of the assets and liabilities contributed, adjusted for Toshiba Corporation’s interest in MTPD, is included in
other income in the accompanying consolidated statement of operations for the year ended March 31, 2003.
During the year ended March 2003, certain operating assets and liabilities were sold to unaffiliated parties in
exchange for marketable securities. In connection with such activity, Toshiba Corporation obtained marketable equity
securities of ¥12,911 million ($107,592 thousand), in return for net assets and liabilities aggregating ¥17,152 mil-
lion ($142,933 thousand), and recorded a loss on disposal of assets of ¥4,241 million ($35,342 thousand).
ｱﾆﾚﾎﾟp34-55(英)6.18 03.6.25 5:41 PM ページ 55
REPORT OF INDEPENDENT AUDITORS
TOSHIBA CORPORATION
55
REPORT OF INDEPENDENT AUDITORS
The Board of Directors and Shareholders
Toshiba Corporation
We have audited the accompanying consolidated balance sheets of Toshiba Corporation (the “Company”) as of March 31, 2003 and
2002, and the related consolidated statements of operations, shareholders’ equity and cash flows for the years 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 statements based on our audits.
We conducted our audits 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
misstatement. 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 overall financial statement presentation. We believe that our audits provide 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 years ended March 31,
2003 and 2002. In our opinion, presentation 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.
In our opinion, except for the omission of segment information discussed in the preceding paragraph, the financial statements
referred to above present fairly, in all material respects, the consolidated financial position of the Company at March 31, 2003 and 2002,
and the consolidated results of their operations and their cash flows for the years 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, 2003
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56
TOSHIBA CORPORATION
ORGANIZATION CHART
TOSHIBA CORPORATION MANAGEMENT
ORGANIZATION CHART
(April 1, 2003)
Board of
Directors
President &
Chief Executive
Officer
Corporate Project
(cid:127) Management Innovation Div.
(cid:127) Procurement Innovation Div.
(cid:127) Kawasaki Development Office
(cid:127) Automotive Systems Div.
Corporate Staff
(cid:127) Corporate Audit Div.
(cid:127) Corporate Strategic Planning Div.
(cid:127) Consolidated Management Div.
(cid:127) Corporate Communications Div.
(cid:127) Human Resources and
Administration Div.
(cid:127) Finance & Accounting Div.
(cid:127) Technology Planning Div.
(Digital Products Group)
(Electronic Devices & Components Group)
(Infrastructure
Systems Group)
Mobile Communications
Company
Digital Media Network
Company
Semiconductor
Company
(cid:127) Mobile Communications
· Development Center
(cid:127) Hino Operations
· Mobile Communications
(cid:127) Discrete Semiconductor Div.
Himeji Operations
- Semiconductor
(cid:127) System LSI Div.
Kitakyushu Operations
Oita Operations
Microelectronics Center
(cid:127) Memory Div.
Yokkaichi Operations
(cid:127) Electronic Devices Sales &
Marketing Div.
(cid:127) Personal Computer Div.
· Japanese Operations
(cid:127) Personal Computer Div.
· International Operations
(cid:127) Server & Network Div.
(cid:127) Storage Device Div.
(cid:127) CTV & Visual Media Equipment Div.
(cid:127) Digital Camera &
Imaging System Div.
(cid:127) Digital AV Div.
(cid:127) Core Technology Center
(cid:127) Digital Media Development
Center
(cid:127) Ome Complex
(cid:127) Ome Operations
· Digital Media Network
(cid:127) Fukaya Operations
· Digital Media Network
Display Devices &
Components
Control Center
(cid:127) Electron Tubes & Devices Div.
Nasu Operations
- Electron Tubes
(cid:127) Materials & Components Div.
Yokohama Operations
- Materials & Components
(cid:127) Battery & Energy Div.
(cid:127) Yokohama Complex
(cid:127) Fukaya Operations
(cid:127) Himeji Operations
Industrial and
Power Systems &
Services Company
(cid:127) Nuclear Energy Systems & Services Div.
Isogo Nuclear Engineering Center
(cid:127) Thermal Power &
Hydroelectric Power
· Systems & Services Div.
(cid:127) Infrastructure Systems Div.
(cid:127) Industrial Systems Div.
(cid:127) Control & Measurement Div.
(cid:127) Transportation Systems Div.
(cid:127) International Operations Div.
(cid:127) Power and Industrial Systems
Research and Development Center
(cid:127) Keihin Product Operations
(cid:127) Fuchu Complex
(cid:127) Fuchu Operations
· Social Infrastructure Systems
(cid:127) Digital Media Network
Mie Operations
Statutory
Auditors
Statutory
Auditors
Office
Corporate S
(cid:127) Employee Wellness Div.
(cid:127) Legal Affairs Div.
(cid:127) Intellectual Property Div.
(cid:127) Export Control Div.
(cid:127) Corporate Research &
Development Center
(cid:127) Corporate Manufacturing
Engineering Center
(cid:127) S
(cid:127) E
(cid:127) I
(cid:127) C
(cid:127)
(cid:127) E
(cid:127) P
(Consumer Electronic
Consumer Elec
Marketing Contr
Home Applia
Compan
(cid:127) Home Appliances
(cid:127) Manufacturing Cen
Osaka Operation
Aichi Operations
Social Network &
Infrastructure Systems
Company
(cid:127) Telecommunications Systems Div.
(cid:127) Broadcasting Systems Div.
(cid:127) System Components Div.
(cid:127) Defense & Electronic Systems Div.
(cid:127) Komukai Operations
(cid:127) Yanagicho Complex
(cid:127) Hino Operations
(cid:127) Fuchu Operations
· Social Network &
Infrastructure Systems
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ORGANIZATION CHART
TOSHIBA CORPORATION
57
Statutory
Auditors
Statutory
Auditors
Office
Corporate Support Services
(cid:127) Employee Wellness Div.
(cid:127) Legal Affairs Div.
(cid:127) Intellectual Property Div.
(cid:127) Export Control Div.
(cid:127) Corporate Research &
Development Center
(cid:127) Corporate Manufacturing
Engineering Center
(cid:127) Software Engineering Center
(cid:127) Environmental Protection Planning Div.
(cid:127) Information Systems Center
(cid:127) Corporate Marketing Planning Group
(cid:127) Design Center
(cid:127) Employee Affairs Service Center
(cid:127) Procurement Center
(Consumer Electronics Group)
Consumer Electronics
Marketing Control Center
Social Network &
Infrastructure Systems
Company
(cid:127) Telecommunications Systems Div.
(cid:127) Broadcasting Systems Div.
(cid:127) System Components Div.
(cid:127) Defense & Electronic Systems Div.
(cid:127) Komukai Operations
(cid:127) Yanagicho Complex
(cid:127) Hino Operations
(cid:127) Fuchu Operations
· Social Network &
Infrastructure Systems
Home Appliances
Company
e-Solutions
Company
Medical Systems
Company
(cid:127) Home Appliances R&D Center
(cid:127) Manufacturing Center
Osaka Operations
Aichi Operations
(cid:127) System Integration
Technology Center
(cid:127) Solutions Sales Div.
(cid:127) Solutions Div. 1
(cid:127) Solutions Div. 2
(cid:127) Solutions Div. 3
(cid:127) Platform Solutions Div.
(cid:127) System Integration
Technology Center
(cid:127) Medical Systems Research
& Development Center
(cid:127) Nasu Operations
Network Services &
Content
Control Center
(cid:127) iValue Creation Div.
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58
TOSHIBA CORPORATION
GLOBAL NETWORK
GLOBAL NETWORK
Overseas Offices
EUROPE
Moscow
AFRICA
Johannesburg
MIDDLE EAST
Baghdad
Abu Dhabi
ASIA
Shanghai
Overseas Subsidiaries and
Affiliates
NORTH AMERICA
Toshiba of Canada, Ltd.
Markham, Ontario, Canada
Toshiba GE Automation Systems Canada
Corp.
Peel, Ontario, Canada
Toshiba America, Inc.
New York, New York, U.S.A.
Toshiba America Capital Corp.
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 Business Solutions, Inc.
Irvine, California, U.S.A
Toshiba America Consumer Products, Inc.
Wayne, New Jersey, U.S.A.
Toshiba Hawaii, Inc.
Honolulu, Hawaii, U.S.A.
Toshiba International Corp.
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.
Audiovox Communications Corp.
Hauppauge, New York, U.S.A.
TGA Holdings L.L.C.
New Castle Country, Delaware, U.S.A
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
Toshiba Medical Systems NV/SA
Antwerpen, Belgium
GE Toshiba Automation Systems, L.L.C.
Wilmington, Delaware, U.S.A.
Toshiba Europe GmbH
Neuss, Germany
Enceratec, Inc.
Columbus, Indiana, U.S.A.
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
Mexico S.R.L. de C.V.
Monterrey, Mexico
Toshiba de Venezuela C.A.
Caracas, Venezuela
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
Toshiba Medical do Brasil Ltda.
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 Information Systems (UK) Ltd.
Weybridge, U.K.
TTI Card Technology Europe Ltd.
Northamptonshire, U.K.
Toshiba International (Europe) Ltd.
West Drayton, U.K.
Toshiba Electronics (UK) Ltd.
Camberley, U.K.
Toshiba Medical Systems Ltd.
Crawley, U.K.
Toshiba Semiconductor GmbH
Braunschweig, Germany
Toshiba Electronics Europe GmbH
Düsseldorf, Germany
Toshiba Medical Systems GmbH
Neuss, Germany
Toshiba Systèmes (France) S.A.
Puteaux, France
Toshiba Electronics France S.A.R.L.
Rosny-Sous-Bois, France
Schneider Toshiba Inverter S.A.S.
Pcy-sur-Eure, France
Schneider Toshiba Inverter Europe S.A.S.
Pcy-sur-Eure, France
Toshiba Medical France S.A.
Puteaux, France
Toshiba Medical Systems Gesellschaft
m.b.H.
Wiener Neudorf, Austria
Toshiba Medical Systems AG
Oetwil am See, Switzerland
Toshiba Electronics Italiana S.R.L.
Milan, Italy
Toshiba Medical Systems S.R.L.
Rome, Italy
Toshiba Electronics España, S.A.
Madrid, Spain
Toshiba Medical Systems S.A.
Madrid, Spain
ZAO Toshiba Medical Systems
Moscow, CIS
LLC Toshiba Digital Media Network CIS
Moscow, Russia
MIDDLE EAST
Toshiba Gulf FZE
Dubai, U.A.E.
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ASIA
Toshiba China Co., Ltd.
Beijing, The People’s Republic of China
Toshiba Dalian Co., Ltd.
Dalian, The People’s Republic of China
Toshiba Hangzhou Co., Ltd.
Hangzhou, The People’s Republic of China
Hangzhi Machinery & Electronics Co., Ltd.
Hangzhou, The People’s Republic of China
Ningbo Toshiba Huatong Switchgear
Co., Ltd.
Ningbo, The People’s Republic of China
Guangzhou Toshiba Baiyun Electrical
Equipment Co., Ltd.
Guangzhou, The People’s Republic of China
Dalian Toshiba Locomotive Electric
Equipment Co., Ltd.
Dalian, The People’s Republic of China
GLOBAL NETWORK
TOSHIBA CORPORATION
59
Toshiba Electronics (Shenzhen) Co., Ltd.
Shenzhen, The People’s Republic of China
Thai Toshiba Electric Industries Co., Ltd.
Bangkok, Thailand
Toshiba Semiconductor (Wuxi) Co., Ltd.
Wuxi, The People’s Republic of China
Tsurong Xiamen Xiangyu Trading Co., Ltd.
Xiamen, The People’s Republic of China
Jiangxi Toshiba Electronics Materials Co., Ltd.
Jiangxi, The People’s Republic of China
Toshiba Washing Machine (Wuxi) Co., Ltd.
Wuxi, The People’s Republic of China
Toshiba Electronics Korea Corp.
Seoul, The Republic of Korea
Toshiba Digital Media Network Korea Corp.
Seoul, The Republic of Korea
Korea Electronic Material Co., Ltd.
Inchon City, The Republic of Korea
Taiwan Toshiba International Procurement
Corp.
Toshiba Consumer Products (Thailand)
Co., Ltd.
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 Data Dynamics Pte., Ltd.
Singapore
Toshiba Video Products Pte., Ltd.
Singapore
Toshiba Singapore Pte., Ltd.
Singapore
Shengyang Neusoft Business Software
Taipei, Taiwan
Co., Ltd.
Shengyang, The People’s Republic of China
Toshiba Information, Industrial and Power
Systems Taiwan Corp.
Dalian Toshiba Broadcasting System Co.,
Taipei, Taiwan
Ltd.
Dalian, The People’s Republic of China
Beijing Tongfang-Tsingshiba Business
Machines Co., Ltd.
Beijing, The People’s Republic of China
Jiangsu Honshiba Network System
Equipment Co., Ltd.
Jiangsu, 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
Toshiba Information Equipment (Hangzou)
Co., Ltd.
Hangzhou, The People’s Republic of China
Toshiba Storage Device (Shanghai) Co.,
Ltd.
Toshiba Digital Media Network Taiwan
Toshiba Electronics Asia (Singapore)
Corp.
Taipei, Taiwan
Pte., Ltd.
Singapore
Toshiba Memory Semiconductor Taiwan
Corp.
Taipei, Taiwan
Toshiba Electronics Taiwan Corp.
Taipei, Taiwan
Toshiba Hong Kong Ltd.
Shatin, Hong Kong SAR
Toshiba Electronics Asia, Ltd.
Kowloon, Hong Kong SAR
Toshiba Information Equipment
(Philippines), Inc.
Laguna, Philippines
Toshiba Medical Systems Asia Pte., Ltd.
Singapore
P.T. Schneider Manufacturing Batam
Batam Island, Indonesia
P.T. Toshiba Consumer Products
(Indonesia)
Bekasi, Indonesia
P.T. Toshiba Visual Media Network
Indonesia
Jakarta, Indonesia
P.T. Toshiba Display Devices Indonesia
Bekasi, Indonesia
Toshiba Electronics Philippines, Inc.
Manila, Philippines
P.T. Display Devices Indonesia
Bekasi, Indonesia
Shanghai, The People’s Republic of China
Toshiba Vietnam Consumer Products
Nanjing Postel Wang Zhi
Telecommunications Co., Ltd.
Nanjing, The People’s Republic of China
Changzhou Toshiba Transformer Co., Ltd.
Changzhou, The People’s Republic of China
Henan Pinggao Toshiba High-Voltage
Switchgear Co., Ltd.
Henan, The People’s Republic of China
Zhuhai Xujizhi Power System Automation
Co., Ltd.
Zhuhai, The People’s Republic of China
Langfang Epri Toshiba Arrester Co., Ltd.
Langfang, The People’s Republic of China
Toshiba Electronics (Shanghai) Co., Ltd.
Shanghai, The People’s Republic of China
Co., Ltd.
Ho Chi Minh City, Vietnam
Toshiba Vietnam Home Appliances
Co., Ltd.
Binh Duong, Vietnam
Toshiba Thailand Co., Ltd.
Bangkok, Thailand
Toshiba Semiconductor (Thailand) Co., Ltd.
Bangkok, Thailand
Toshiba Electronics Service (Thailand)
Co., Ltd.
Bangkok, Thailand
Toshiba Display Devices (Thailand)
Co., Ltd.
Bangkok, Thailand
Toshiba India Private Ltd.
New Delhi, India
OCEANIA
Toshiba International Corporation Pty.,
Ltd.
Sydney, Australia
Toshiba (Australia) Pty., Ltd.
Sydney, Australia
(As of March 31, 2003)
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60
TOSHIBA CORPORATION
CONSOLIDATED SUBSIDIARIES / AFFILIATED COMPANIES ACCOUNTED BY THE EQUITY METHOD
CONSOLIDATED SUBSIDIARIES
DOMESTIC
A&T Battery Corporation
Device Link, Inc.
OVERSEAS
AFPD Pte., Ltd.
AFFILIATED COMPANIES ACCOUNTED
BY THE EQUITY METHOD
DOMESTIC
ep Broadcasting Corporation
Dalian Toshiba Television Co., Ltd.
ep Corporation
Harison Toshiba Lighting Corporation
GE Toshiba Automation Systems, L.L.C.
GE Toshiba Silicones Co., Ltd.
IT-Services Corporation
Taiwan Toshiba International Procurement
Media Serve Corporation
Iwate Toshiba Electronics Co., Ltd.
Joint Fuel Co., Ltd.
Kaga Toshiba Electronics Corporation
Kawasaki Estate Management Co., Ltd.
Shibaura Mechatronics Corporation
Toshiba Battery Co., Ltd.
Toshiba Building Co., Ltd.
Toshiba Capital Corporation
Toshiba Carrier Airconditioning Systems
Corporation
Toshiba Carrier Corporation
Toshiba Device Corporation
Toshiba Elevator and Building Systems
Corporation
Toshiba Finance Corporation
Toshiba Home Technology Corporation
Toshiba Industrial Products Sales
Corporation
Corp.
TGA Holdings L.L.C.
Toshiba (China) Co., Ltd.
Mobile Broadcasting Corporation
MT Picture Display Co., Ltd.
NEC Toshiba Space Systems, 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.
TM T&D Corporation
Topcon Corporation
Toshiba Ceramics Co., Ltd.
Toshiba Machine Co., Ltd.
Toshiba Tungaloy Co., Ltd.
Plus 16 Others
Toshiba America MRI, Inc.
Toshiba America, Inc.
Toshiba Asia Pacific Pte., Ltd.
Toshiba Capital (Asia) Ltd.
Co., Ltd.
Toshiba Dalian Co., Ltd.
Toshiba Electronics Asia, Ltd.
OVERSEAS
Audiovox Communications Corporation
Beijing Matsushita Cathode Ray Tube
Co., Ltd.
GE Toshiba Turbine Components de
Mexico S.R.L. de C.V.
Guangdong Meizhi Compressor Limited
Toshiba Elevator Products Corporation
Toshiba Compressor (Taiwan) Corporation
Toshiba Engineering Corporation
Toshiba Consumer Products (Thailand)
Toshiba Information Equipments Co., Ltd.
Toshiba Europe Gmbh
Toshiba IT-Solutions Corporation
Toshiba Information Equipment
Toshiba Lifestyle-Electronics Corporation
(Philippines), Inc.
(M) Sdn. Bhd.
Matsushita Display Device of America
P.T. Display Devices Indonesia
Toshiba Electronics Malaysia Sdn. Bhd.
Matsushita Display Device Corporation
Toshiba Information Systems (UK) Ltd.
P.T. Toshiba Display Devices Indonesia
Toshiba International Corporation
Semp Toshiba Amazonas S.A.
Toshiba Lighting & Technology
Corporation
Toshiba Logistics Corporation
Toshiba Matsushita Display Technology
Co., Ltd.
Toshiba International Finance
(Netherlands) B.V.
Toshiba International Finance (UK) Plc.
Toshiba Carrier (Thailand) Co., Ltd.
Toshiba Carrier UK Ltd.
Toshiba Display Devices (Thailand)
Co., Ltd.
Toshiba Display Devices Inc.
Toshiba Medical Finance Co., Ltd.
Toshiba Medical Systems Europe B.V.
Toshiba Medical Systems Co., Ltd.
Toshiba Systemes (France) S.A.
Toshiba Multi Media Devices Co., Ltd.
Toshiba Tec Europe Imaging Systems S.A.
Toshiba Plant Kensetsu Co., Ltd.
Toshiba Tec France Imaging Systems S.A.
Plus 11 Others
Toshiba Sogo Finance Corporation
Toshiba TEC Corporation
Plus 83 Others
Plus 168 Others
(As of March 31, 2003)
Basic Commitment of the
TOSHIBA Group
We, the Toshiba Group of companies, based on
our total commitment to people and to the
future, are determined 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 responsible 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 services 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 community, including ways to
improve the global environment.
FORWARD-LOOKING STATEMENTS
This annual report contains forward-looking statements
concerning Toshiba’s future plans, strategies and performance.
These forward-looking statements are not historical facts, rather
they represent assumptions and beliefs based on economic,
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.
INVESTOR REFERENCE
TOSHIBA CORPORATION
61
Investor Reference
TOSHIBA CORPORATION
PRINCIPAL SHAREHOLDERS (%)
FOUNDED
July 1875
CAPITAL
¥274,926 million
EMPLOYEES
165,776
COMMON STOCK
Authorized:
10,000,000,000 shares
Issued:
3,219,027,165 shares
No. of shareholders:
486,702
Average holdings: 6,614 shares
Stock Code:
6502
Transfer Agent:
The Chuo Mitsui Trust and Banking
Company, Limited
HEADQUARTERS
1-1, Shibaura 1-chome,
Minato-ku, Tokyo 105-8001,
Japan
The Master Trust Bank of Japan, Ltd. (trust accounts)
The Dai-ichi Mutual Life Insurance Company
Japan Trustee Service Bank, Ltd. (trust accounts)
Nippon Life Insurance Company
Sumitomo Mitsui Banking Corporation
State Street Bank and Trust Company
Employees Stock Ownership Plan
The Chase Manhattan Bank NA London
NIPPONKOA Insurance Co., Ltd.
Shinsei Bank, Limited
5.32
3.63
3.61
3.24
2.36
1.80
1.65
1.60
1.55
1.52
As of March 31, 2003
Web site information
Toshiba is vigorously carrying out
Internet-based IR activities to ensure
timely and fair disclosure to all investors.
Our investor relations site features
information for investors, including press
releases, investors’ guides and business
results announcements, as well as
streaming video of business results
meetings and explanatory sessions. There
is also a section that allows site 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.
www.toshiba.co.jp/about/ir/index.htm
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
E-mail: ir@toshiba.co.jp
http://www.toshiba.co.jp/about/ir/index.htm
Product names may be trademarks of their respective companies.
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ANNUAL REPORT 2003
Year ended March 31, 2003
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