Toshiba Corp. Annual Report 2004

FY2004 Annual Report · Toshiba Corp.

Loading PDF…

T
O
S
H
B
A
A
N
N
U
A
L
R
E
P
O
R
T
2
0
0
4

UNIQUE Competencies
GLOBAL Expansion
Profitable Growth

ANNUAL REPORT 2004
Year ended March 31, 2004

The Toshiba
Commitment

Basic Commitment of the TOSHIBA Group

We, the Toshiba Group 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.

Management Principles

Management Vision

Standards of Conduct

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 megacompetition 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.

CONTENTS

3-6

7-13

14-15

16-24

27-29

To Our Shareholders
Flexible management that
delivers growth

Special Features
Establishing a high-earning
corporate group that combines
stability and profitability

Toshiba’s Semiconductor Business Model

8-9
10-11 Chinese Strategy
12-13 Increasing Profitability in the Digital Products

Business and Developing Growth Engines

Business at a Glance
Fiscal 2003 results for each business

Business Review
Overview of business
strategies and measures

Research and Development
The relentless pursuit of
innovation

Intellectual Property Unified business, R&D and

intellectual property strategies

Helping to Build a

Sustainable Society CSR as the basis for

corporate management

Board of Directors and Executive Officers

30
31-67 Financial Section
68-69 Organization Chart
70-71 Global Network

Consolidated Subsidiaries/Affiliated

Companies Accounted for by the Equity

Method

Investor Reference

FINANCIAL HIGHLIGHTS

Toshiba Corporation and its subsidiaries
Toshiba Corporation and its subsidiaries
For the years ended March 31, 2004 and 2003
For the years ended March 31, 2004 and 2003

Net sales–Japan

–Overseas

Net sales
Operating income
Income before income taxes
and minority interest
Net income
Total assets
Shareholders’ equity
Capital expenditures (property,
plant and equipment)
Research and development expenditures
Return on equity (ROE) (%)
Return on total assets (ROA) (%)

Per share of common stock:
Net income

–basic
–diluted

Cash dividends

Number of employees

Millions of yen

Change (%)

Thousands of U.S. dollars

2004

2003

2004/2003

2004

¥3,399,903
2,179,603

¥3,343,551
2,312,227

1.7
(5.7)

$32,074,557
20,562,292

5,579,506
174,586

5,655,778
115,542

(1.3)
51.1

52,636,849
1,647,038

145,041
28,825
4,462,200
754,990

227,273
336,714
4.3
0.6

53,123
18,503
5,238,936
571,064

173.0
55.8
(14.8)
32.2

1,368,311
271,934
42,096,226
7,122,547

230,512
331,494
2.9
0.3

(13.6)
1.6

—
—

1,878,557
3,176,547

Yen

U.S. dollars

¥8.96
8.96
3.00

¥5.75
5.75
3.00

55.8
55.8
—

$0.085
0.085
0.028

161,000

166,000

(3.0)

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 ¥106=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 &
GROSS PROFIT MARGIN

SG&A EXPENSES

NET INCOME (LOSS)

(Billions of yen)

(%)

(Billions of yen)

5,951

5,749

5,656

5,580

5,394

1,500

1,394

1,396

1,437

1,394

1,379

2 4444444444444444444444444444444444444444444444444444444444444444444444444444444444427.4

2 0000000000000000000000000000000000000000000000000000000000000000000000000000026.0

2 5555555555555555555555555555555555555555555555555555555555555555555224.5

77777777777777777777777777777777777777777777777777777777777777777777772 7726.7

2 0000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000027.0

1,200

900

600

300

6,000

5,000

4,000

3,000

2,000

1,000

00/3 01/3

02/3

03/3 04/3

00/3 01/3

02/3

03/3 04/3

Net Sales
Gross Profit Margin

100

-100

-200

-300

96.2

-32.9

28.8

18.5

-254.0

00/3 01/3

02/3

03/3 04/3

ROE

(%)

9.1

4.3

2.9

-3.0

-29.0

00/3 01/3

02/3

03/3 04/3

-10

-20

-30

TO OUR SHAREHOLDERS

OVERVIEW OF FISCAL 2003

Fiscal 2003, ended March 31, 2004, opened in uncertainty, with contin-
ued deflation in the domestic economy and concerns about the international
impact of the war in Iraq. The second half of the fiscal year was more
settled, however, with the corporate sector showing renewed confidence as
exports turned favorable and capital expenditure began to increase slightly.
Digital consumer products emerged as clear favorites in the market,
boosting sales of digital still cameras, mobile phones and digital flat-panel
TVs in both Japan and overseas markets, including China and the United
States. However, the commoditization of portable PCs gathered steam and
made a strong impact on Toshiba Corporation’s performance.

Amid these conditions, Toshiba’s consolidated net sales for fiscal 2003

Tadashi Okamura,
Director, President and Chief Executive Officer

totaled ¥5,579.5 billion, a 1% decline compared with the previous fiscal year. Excluding the effect of business
transfers, however, sales rose approximately 2% year on year. More significant indictors of the Company’s im-
proved performance are the 51% surge in operating income, to ¥174.6 billion, and the 56% jump in net income,
to ¥28.8 billion.

Electronic devices made a robust contribution to this performance, led by the superior quality and global
strength of the Company’s semiconductors. Digital products fell short of targets as a result of slow sales of color
TVs, mobile phones in overseas markets, and especially portable PCs.

The substantial increase in profitability achieved in fiscal 2003 was the result of rising earnings in the
electronic devices business, along with positive effects of structural improvement measures carried out under the
01 Action Plan.

RESULTS OF THE 01 ACTION PLAN

Fiscal 2003 marked the culmination of our three-year 01 Action Plan, which supported us in developing pro-
grams for intensified competitiveness and streamlined management and in defining corporate initiatives to improve
operating efficiency.

Measures for improved competitiveness included our 2002 withdrawal from the general-purpose dynamic ran-
dom access memory (DRAM) business and a series of major joint ventures, with Matsushita Electric Industrial Co.,
Ltd. in liquid crystal displays (LCDs) and cathode ray tubes (CRTs), and with Mitsubishi Electric Corporation in the
power transmission and distribution businesses and the industrial electric and automation systems businesses.

During the course of the plan we also reduced the number of Group employees from 188,000 to 161,000,
and promoted an “asset-light” strategy that reduced assets by ¥1,200 billion, surpassing the original target of

Accomplishments of the 01 Action Plan

Goal/Target

Accomplishments

Restructure businesses

(cid:127) Withdrew from the general-purpose DRAM business
(cid:127) Restructured the LCD and CRT businesses in joint ventures with
Matsushita Electric Industrial Co., Ltd.
(cid:127) Restructured power transmission and distribution businesses
and industrial electric and automation systems businesses in
joint ventures with Mitsubishi Electric Corporation

Reduce procurement costs
by 20% over two years

20% reduction achieved

Reduce number of Group personnel
by 10% from 188,000 employees
(as of March 31,2001)

14% reduction achieved
161,000 employees (as of March 31, 2004)

Reduce assets (asset-light strategy)
by ¥800 billion

¥1,200 billion reduction achieved

Strategic Products

Strategic Products and Technologies that will Drive Future Growth

Digital Products

Electronic Devices

Social Infrastructure

[
[
[

SED TVs, 0.85-inch HDD, etc.

CELL, Fuel cells, etc.

Hydrogen production systems, etc.

]
]
]

¥800 billion. Among the most successful of our corporate initiatives was our drive to reduce procurement costs
by 20%, which we achieved a full year ahead of schedule.

We will continue to apply the lessons we learned during the course of the 01 Action Plan in our strategic

planning.

THE NEW MID-TERM BUSINESS PLAN

As fiscal 2003 progressed, we carefully considered the market and realized we had to revise our targets in light
of the rapid changes in our business environment. As a result, we forged a new mid-term business plan for fiscal
2004 through fiscal 2006, which is outlined in depth in the “Profitable Growth” section of this report. There are
four essential elements in the new plan.

1) In the digital products business, we will promote proactive collaboration with the electronic devices business,
with the goal of reinforcing the visual imaging business and establishing it as a major source of profits by
2006, alongside the portable PC business.

2) In the electronic devices business, we will continue to devote substantial management resources to further

sharpening competitiveness, and enhancing collaboration with the digital products business.

3) In the social infrastructure business, we will actively seek business opportunities in China, Southeast Asia
and in new business areas, while expanding the scale of our power plant rehabilitation businesses in Europe
and North America.

4) We have identified strategic products and technologies that will drive future profits, and defined a strategic

product map that will support the timely introductions of products.

Successful deployment of these strategies will allow us to advance further in our strong businesses and to press
forward with efforts to restore profitability to underperforming businesses. They will also assure that we have the
engines of growth we need for sustained profit. Based on our reading of the market and of the potential of these
strategies, we have set clear targets for fiscal 2006, the final year of the plan: consolidated net sales of ¥6,200
billion, operating income of ¥280 billion, and return on equity (ROE) of greater than 10%. We also will strive to
improve our financial position and to lower the debt-to-equity ratio to 100%.

TOSHIBA’S CORPORATE CULTURE

As we promote management reforms that enhance corporate governance and transparency, we are strongly aware
of the importance of an appropriate corporate culture. This culture must permeate every aspect of our business
and our operations around the globe, and assure that we are proactive toward the market, respect our social

Left: Taizo Nishimuro, Chairman of the Board
Right: Tadashi Okamura, Director, President and Chief Executive Officer

obligations, and understand and embrace common values. We have taken steps forward in all of these areas.
Since 1999, the Management Innovation (MI) initiative has guided Toshiba employees in seeking out the oppor-
tunities offered by change and a fiercely competitive business environment. MI encourages each business to
operate autonomously and confidently, to promote reform and to improve operations to win success. Most recent-
ly, under MI we have promoted the Time to Market No. 1 (TM1) initiative. Launched in 2002, TM1 aims for the
world’s shortest lead times from product development to sales promotion, across all of our business domains.
TM1 is a tool for providing customers with the products they want ahead of our competitors, and bolsters us in
enhancing customer relations and building product competitiveness.

ANTICIPATING TOSHIBA’S 130TH ANNIVERSARY

Toshiba will celebrate its 130th anniversary in 2005. This is a record of longevity that few companies can match,
and that can be explained by the sign that welcomed people to our very first manufacturing facility, which read:
“Improving life with things people need.” That determination to seek out the new, to add to the quality of life, has
always sustained and guided us, to the point that it has become ingrained into our corporate DNA. Today, innova-
tion is our passion and our goal.

Innovation grows from people and we must cultivate the creativity of everyone in Toshiba Group. That is the
goal of the management vision that we introduced in January 2004. As MI brings us closer to the market and our
customers, we are making progress in building a growth-oriented company. At the same time, we are striving to
make Toshiba Group a place where people can develop their skills, and direct their energies and talents into
developing and delivering products and services that reverberate and stir emotions throughout the world.

As we engage the market, it is essential that we abide by laws and regulations, respect corporate ethics, and
ensure honest and open management. We must also shoulder our obligations for a better global environment and
contribute to the wider community. In July 2003, we established the Corporate Social Responsibility (CSR)
Division to oversee our activities in statutory and regulatory compliance, human rights, the environment, custom-
er satisfaction and social contribution initiatives. The CSR Division led Toshiba in signing the United Nations’
Global Compact in January 2004, pledging support for universal principles in the areas of human rights, labor
and the environment, in order to achieve sustainable development at the global level.

Toshiba will continue to concentrate all its efforts on developing profitable businesses, strengthening its
financial position, and ensuring appropriate returns to shareholders. As we pursue the realization of our manage-
ment vision, we will also strive to achieve the sustainable development of society, increased satisfaction for
shareholders, customers, employees and society at large, and add to our corporate value. Thank you for your
continued support of Toshiba.

June 2004

Taizo Nishimuro
Chairman of the Board

Tadashi Okamura
Director, President and
Chief Executive Officer

7
7

Unique
Competencies
Global Expansion
Profitable Growth

Toshiba is seeking to establish a high-earning corporate group
that effectively combines stability and profitability.

The visual imaging business, built on core technologies in digital imaging and storage,
will be a new pillar of growth for the digital products business.
During the next three years through fiscal 2006, we will concentrate on pursuing
synergies between visual imaging and the electronic devices that underpin our strength,
establishing a strong foundation for future growth.

UNIQUE COMPETENCIES
Toshiba’s Semiconductor Business Model

Toshiba’s semiconductor business achieved consolidated sales of ¥898.8 billion and
operating income of ¥118.4 billion in fiscal 2003, securing a continued position
among the leaders in the world market.

The semiconductor business is a key growth field, and we will direct resources into capital investment and R&D that
assure our continued ability to create world No. 1 products and secure the profitable growth that will maintain our
position among the world leaders in this competitive industry.

Toshiba’s Semiconductor Business Model
Proposals with existing businesses/Integration of support businesses

General-
Purpose
Discrete

Peripheral
Analog

Analog

Custom
Discrete

Satellite SoC

SoC

Future

Custom
Memory

Peripheral
Logic

General-
Purpose
Memory

Platforms

System Solution Proposals

SoC Research and
Development Center

Discrete

Analog

System
LSI

Memory

Three Primary Cash Cows
Toshiba’s semiconductor business strategy positions NAND
flash memory, discrete devices and analog ICs as three pil-
lars to sustain high profitability and consistent growth. The
NAND flash memory business holds immense promise, as
strong demand for use in such products as digital still cam-
eras and mobile phones with cameras is now being reinforced
by the growing popularity of MP3 players, USB memory
and other new applications. Toshiba projects the NAND
market to be ¥880 billion in fiscal 2006 compared with
approximately ¥380 billion in fiscal 2003, a 32% com-
pound annual growth rate.

We are readying ourselves to meet this spurt in demand
by installing a 300mm wafer fab at our memory production
base, Yokkaichi Operations, in partnership with SanDisk
Corporation of the United States, a move that will allow us
to increase production capacity in line with market expan-
sion. The new fab will be constructed under a ¥270 billion
investment through fiscal 2006, and it will allow us to push
monthly production to a level as high as 37,500 wafers.

In flash memory production, Toshiba is now promoting
simultaneous development of three generations of process
technology, covering the 90nm, 70nm and 55nm design

rules, which will secure the Company’s continued lead in
submicron and multilevel technologies.

Toshiba is the consistent leader in the world market for
discrete devices—transistors, diodes and other devices that
provide the essential components of all electronic products.
The Company will continue to expand this profitable busi-
ness by bringing a strong product lineup and technological
capabilities to key growth markets, including China, Tai-
wan, Korea and the ASEAN countries.

In analog products, we will channel our robust product
competitiveness and strategic technological know-how to-
ward achieving enhanced market power in the two key fields
of high frequency and power devices.

In coming years, Toshiba will continue to place an unre-
lenting emphasis on these three key fields, to hone
competitiveness in product development and product cost.

System LSIs
In system large-scale integration (LSI) devices, our empha-
sis is clearly on the digital consumer product market and
the development of devices that bring essential capabilities
to products like digital TVs, DVD recorders and mobile
phones with cameras. In coming years, system-on-chip (SoC)

technology and the near-term realization of ubiquitous net-
working will drive the semiconductor industry. Toshiba is
readying for this by strengthening its ability to propose SoC
solutions and with new SoC platform designs.

In today’s highly demanding SoC market, acting alone
is often a decision in favor of ineffectiveness. Toshiba pro-
actively cultivates alliances with other industry leaders and
increases R&D efficiency through joint development projects.
In a key partnership with Sony Computer Entertainment
Inc. and IBM Corporation, Toshiba is currently working on
development of CELL, a general-purpose broadband pro-
cessor that the Company expects to bring to market in the
near future. CELL will deliver a scalable architecture appli-

Enabling the Future

cable to all aspects of ubiquitous broadband networks. In
the area of system LSI process technology, Toshiba and Sony
Corporation are together developing leading-edge 45nm
process technology, the finest production technology yet
developed.

Sustained leadership in the semiconductor business
demands the ability to act quickly and to direct sustained
R&D activities and investment to areas where future de-
mand growth can be anticipated. In system LSIs, key devices
for the achievement of ubiquitous networks, Toshiba will
continue to develop the most advanced products and as-
sure their early delivery to market.

INVESTING IN THE FUTURE OF
OITA OPERATIONS

DEVELOPMENT OF NINE-LAYER
MCP

ALLIANCE STRATEGY

Toshiba is the industry trailblazer in
technology for mass production of
multilayer multichip packages (MCPs).
By shaving substrates to achieve unri-
valed thinness and advancing bonding
technology, Toshiba has integrated nine
layers into a 1.4mm package—a pack-
age small enough to be loaded into
mobile phones and other personal mo-
bile products.

The nine-layer MCP allows cus-
tomers to meet different purposes by
freely combining five different types
of memories: SRAM, NOR flash mem-
ory, NAND flash memory, low-power
SDRAM and Pseudo SRAM. This ap-
proach makes it possible to integrate
the optimal memory chips required to
achieve high performance in mobile
devices, such as next-generation mo-
bile phones, offering improved
performance without any increase in
the component count. The result is
high-performance systems that retain
or advance miniaturization.

Much is expected of next-generation
system LSIs. In addition to new levels
of performance and capabilities that
realize high-speed processing of large
volume video sources, they have to of-
fer miniaturization and lower power
consumption as well as support other
advanced technologies, such as embed-
ded DRAM. Achieving the ultrafine
process technology necessary to real-
ize these requirements is itself an
increasingly difficult challenge.

Toshiba is working with Sony Cor-
poration on next-generation 45nm
process technology, targeting completion
of development by the end of fiscal 2005.
The Company is also promoting other
strategic alliances, including joint devel-
opment of CELL with Sony Computer
Entertainment and IBM; joint develop-
ment of cutting-edge technology for
NAND flash memory with SanDisk; and
a comprehensive alliance with M-
Systems Flash Disk Pioneers Ltd. in
flash-memory-based data storage.

In fiscal 2002, Toshiba committed to a
capital investment in a new 300mm
wafer facility at Oita Operations that
will help to assure the Company’s world
leadership in system LSI production.
From fiscal 2003 through fiscal 2007,
¥200 billion is being directed to the
new fab, with the first ¥40 billion of
that invested in the fiscal year under
review.

Mass production at Oita’s new fab
is scheduled to begin in autumn 2004.
Once the plant reaches full production
it will have all the capacity required to
produce approximately 12,500 wafers
a month. The flexibility built into the
plan will allow Oita to respond to mar-
ket growth and to increase output to as
much as 17,500 wafers a month.

The production efficiency achieved
by deployment of 300mm production
technology will by enhanced by Toshi-
ba’s full utilization of proprietary
technology for embedded DRAM, an
area in which the Company is an in-
dustry leader, and by the application of
state-of-the-art process technology to
circuits as fine as 65nm. This approach
will underpin Toshiba’s ability to bring
advanced products to market ahead of
its competitors.

GLOBAL EXPANSION
Chinese Strategy

In the review of its current mid-term business plan,
Toshiba set itself the target of raising overseas sales to 50% by the end of fiscal 2006.

Overseas operations are already a long-established and essential part of the Company’s business, accounting for
39% of overall sales in fiscal 2003. In recent years, consistently high growth rates have established China as a
particularly important market for Toshiba, a situation that shows every sign of continuing in coming years. China will
host the Beijing Olympics in 2008 and the Shanghai World’s Fair in 2010, major events that will spur further
growth—and Toshiba’s expectations.

SCALE OF TOSHIBA’S BUSINESS IN CHINA

GDP, CAGR (01-04), POPULATION BY COUNTRY/REGION

Fiscal 2001

AppApprox. ¥

300 billion
on

Fiscal 2002
AApprox. ¥370 billion

Fiscal 2003
Approx. ¥500 billion

Note: Includes export sales to China and sales by Group companies.

(Billions of US$)
14,000

12,000

10,000

GDP

8,000

380

NAFTA

420

People
(Millions)

GROWTH ENGINE

ASEAASEAEAN
EANAN

INDIAND

CH
CHINA

E.EUR
120

1,030

220

530
4

280

1,280

(%)

CAGR

6,000

4,000

2,000

JAPAN
130

MERCOSUR
MERCOSUR
220

CIS
M.EAST

Since establishing Toshiba Dalian Co., Ltd. in September
1991, Toshiba has cultivated a presence in China that spans
its business lines, from home appliances to social infra-
structure. Today, 49 Toshiba Group companies in China
develop, manufacture and sell products. The scale of this
commitment is testimony to China’s increasing strategic
importance, a position that received powerful reinforcement
from China’s accession to the WTO. That move swept away
numerous regulations, and allowed China to create an envi-
ronment allowing economic development beyond production
for the world market. As a result, Toshiba sees China not
just as a manufacturing base, but also as an emerging busi-
ness base offering numerous opportunities in everything from
R&D to sales and marketing.

Figures from China’s National Bureau of Statistics re-
veal that China’s GDP recorded year-on-year growth of 9.1%
in 2003, an astonishing rate of growth. Long aware of this
inherent potential, Toshiba Group has promoted positive
involvement in China since the government’s first steps to-
ward reform and market opening. As a result, Toshiba’s fiscal
2003 sales in China climbed to ¥500 billion, including
sales by local subsidiaries and exports targeting the Chi-
nese market, a healthy 35% increase compared with the
previous year.

In coming years, Toshiba will respond to the Chinese
government’s continued moves for market liberalization by

strengthening its sales networks in China. We will also pro-
mote further tie-ups with large-scale volume retailers and
build up business bases in China. In this age of megacom-
petition, cost competitiveness is also a crucial concern. China
will continue to provide a powerful production base that
supports Toshiba’s concerted efforts to reinforce cost com-
petitiveness. The accelerated transfer of production to
overseas bases, particularly those in China, will bring sharp
relief from fluctuations in the U.S. dollar exchange risk.

Another area where we look for progress in China is in
technology and product development. Toshiba took early steps
in this area with the establishment of the Toshiba China Re-
search and Development Center in October 2001. Through
R&D in such areas as Chinese voice-recognition and synthe-
sis technology, Chinese machine-translation technology and
next-generation IT platforms, at a location at the heart of the
local market, we will expand Toshiba’s IT business in China.
China’s portable PC market in 2003 amounted to 1.8
million units. The forecast for 2004 is 2.6 million units,
rising to 3.4 million in 2005. The projected CAGR (com-
pound average growth rate) for 2003 to 2006 is an
impressive 25.2%. Toshiba currently holds third place in
the portable PC market, with a 13% market share. We in-
tend to increase this. In October 2003, a new sales and
marketing headquarters was established in Shanghai to re-
inforce the marketing function. In April 2003, Toshiba

Information Equipment (Hangzhou) Co., Ltd. started oper-
ation as a production base for the global market. Production
at this state-of-the-art plant had already reached some
120,000 units a month by the end of March 2004, a figure
that will climb as the year progresses. The plan is to pro-
duce core, high-value-added products at this plant.

Testimony to China’s manufacturing strength can be
found in the increasing scale of its semiconductor busi-
ness. This is expected to reach ¥6 trillion by 2010, a number
far surpassing the U.S. total, making China the world’s larg-
est market. In fact, the combined scale of the Chinese,
Hong Kong and Taiwanese markets is expected to account
for nearly 40% of the global semiconductor market. Toshi-
ba established a new subsidiary in Shanghai in April 2004
that has the mission of unifying and overseeing the opera-
tions and business strategy of semiconductor-related
operations in China, Hong Kong and Taiwan. Concentrating
market research, technology development support, market-
ing support, and other functions at this new subsidiary is
expected to raise operating efficiency and competitive
strength throughout the region.

China clearly offers tremendous opportunities in the area
of social infrastructure, and is seen as one of the most prom-
ising markets. One reason for this is the investment in
infrastructure accompanying preparations for the 2008
Beijing Olympics. Infrastructure investment is also essen-
tial to maintain China’s appeal as a low-cost production
base. Toshiba is ready to meet demand, with production

Strategic Communications

and marketing operations for electric power equipment, elec-
tronic equipment for vehicles, elevators, broadcasting
facilities and medical equipment already in place.

In 2002, Asia, including China, was a ¥1 billion market
for white goods. Looking forward, annual growth of 4% to
5% a year is widely expected. Toshiba Products & Services
(Shanghai) Co., Ltd., established in Shanghai in September
2003, has the mission of reinforcing Toshiba’s presence in
the market though focused sales and marketing of refrigera-
tors, washing machines and other white goods. Market
penetration of these products, alongside Toshiba brand TVs,
portable PCs, mobile telephones and semiconductors, will
reinforce recognition and acceptance of the Toshiba brand
name. For the same reason, we also intend to provide cus-
tomers with a level of service and support that assures Toshiba
is regarded as No. 1 in the market for customer satisfaction.
As a white goods production base, Toshiba established
Toshiba Refrigerator (Xi’an) Co., Ltd. in July 2003 and Toshi-
ba Washing Machine (Wuxi) Co., Ltd. in February 2003,
and manufacturing of high-function refrigerators and wash-
ing machines began. Plans for the future call for these plants
to add lighting and batteries to their manufacturing portfo-
lio. Currently, overseas production accounts for 20% of all
production of home appliances. We plan to raise that figure
to 40% by fiscal 2005 by achieving optimum conditions
for manufacturing each product, and by doing so we intend
to enhance cost competitiveness.

SHANGHAI OUTDOOR
ADVERTISING

Toshiba does not hesitate to invest in
campaigns that promote enhanced rec-
ognition of the Company and its
products by the Chinese general pub-
lic. To coincide with our September
2003 full-fledged entry into the Chi-
nese white goods market, including
refrigerators and washing machines, we
placed advertisements in 22 Chinese
newspapers. We also decorated the pub-
lic open spaces of Shanghai’s Nanjing
Street and other principal areas with
mini-flags. These measures promoted
widespread recognition of our white
goods campaign slogan: “New Current,
New Arrival, New Toshiba”. In Decem-
ber 2003, we also launched a corporate
ad campaign in Beijing and Guangzhou
to reinforce brand awareness.

Are programs like this effective? In
September 2003, the China Science Re-
search Center survey of “Favored
Japanese Businesses” named Toshiba as
the third-best-known Japanese company

Toshiba Group Companies in China

7 7

4 3

2 2

92/3 93/3

94/3 95/3 96/3

97/3 98/3 99/3 00/3 01/3 02/3 03/3 04/3

New Companies

Total Companies

in China. That is the Company’s highest
ranking yet in the survey, and further
proof that the Toshiba brand is making
steady inroads into the Chinese market.

SUMMARY OF TOSHIBA’S
BUSINESS IN CHINA

In March 2004, 49 Toshiba Group sub-
sidiaries in China employed 15,000
people in production, marketing and
development activities. Export sales to
China totaled approximately US$2.0
billion in 2003, and sales from Chinese
subsidiaries totaled approximately
US$2.5 billion. Digital products ac-
counted for 57% of total sales, electronic
devices for 30%, social infrastructure
for 7%, and home appliances for 6%.
Toshiba plain-paper copiers and pro-
jection TVs held the top shares in the
Chinese market, while the Company’s
portable PCs and semiconductors both
maintain high shares. For Toshiba, China
not only provides an advantageous pro-
duction and development base, it is also
a lucrative market in its own right.

PROFITABLE GROWTH
Increasing Profitability in the Digital Products Business
and Developing Growth Engines

Toshiba is developing its business to build a rapidly expanding
group able to generate and sustain profitable operations.

Yet in less than a year, Toshiba’s key markets have undergone dramatic shifts, including faster than anticipated
growth in demand for digital consumer electronics and appliances. Recognizing this, Toshiba Group used the
opportunity of the new fiscal year to define a new business plan, one primarily concerned with reconstructing the
growth strategy. Achieving the targets of the new plan will raise the value of Toshiba by securing high profit and
sustainable growth.

Fiscal 2006 Targets (consolidated)

Net Sales

Operating
Income

ROE

Debt-to-Equity
Ratio

Capital
Investments

R&D
Expenditures

Overseas
Business
Ratio

¥6,200 billion

¥280 billion

Over10%

100%

¥1,000 billion

(cumulative total through FY06)

¥1,100 billion

(cumulative total through FY06)

50%

Focusing on digital
products and
electronic devices
businesses

To strengthen digital
products and semiconductor
partnerships

Restructuring the Portable PC Business
Tumbling product prices, particularly in the first half, cou-
pled with price increases in major components, resulted in
an operating loss of ¥22 billion for the portable PC and
peripherals business in fiscal 2003. We responded with
urgent, wide-ranging restructuring measures that will re-
build the portable PC business and contribute to increased
profits. Steps taken in the second half to strengthen com-
petitiveness include cuts in headcount both in the domestic
market and overseas that have allowed us to improve the
efficiency of the sales structure; a reduction in PC plat-
forms to improve development efficiency and promote a
review of product strategy; and increases in overseas pro-
duction and ODM (Original Design Manufacturing).
Another major move to accelerate reform was implemented
in January 2004, when the portable PC business became a

new in-house company, the Personal Computer & Network
Company. We are already starting to see positive results
from these efforts: losses in the PC and peripherals busi-
ness bottomed out in the second quarter of fiscal 2003 and
have since started to recover.

In the future we will end mass production at Ome
Operations, repositioning these facilities as a product de-
velopment and experimental production base. This move,
in tandem with an increase of ODM to over 50% by the end
of March 2005 will enhance production efficiency. Fixed
costs will be cut by transferring employees to growth sec-
tors, and development costs will be reduced by decreasing
the number of motherboards and increasing use of com-
mon parts. The cost structure of low-end models will also
be improved and made more competitive, a move that rec-
ognizes that they have become commodity products.

Increased ODM will allow us to allocate more resources
to the development of differentiated products. This strategy
will allow us to draw on the advanced capabilities of other
businesses, including displays and storage devices, and sup-
port development of unique products other companies
cannot easily match. Our guiding concept here will be “Thin
& Light,” and the first product will be the AV-PC, which
integrates advanced visual capabilities. The AV-PC will be
launched in summer 2004, and other products will soon
follow. In order to protect the intellectual property at the
heart of our most advanced products, we will adopt a “black
box” structure.

The measures we are now implementing, and our dif-
ferentiated product strategy, are expected to restore the
portable PC and peripherals business to an operating profit
in fiscal 2004.

Strengthening Synergies to Make the Visual Imaging Busi-
ness a Major Source of Profits
Guided by the maxim “Look, Record, Shoot,” Toshiba Group
will make concerted efforts to rebuild the visual imaging
business as a new pillar of profits. The potential of this
business is bolstered by Toshiba’s wide range of essential
technologies that can support and add to the value of dis-
plays, including high-definition DVD, storage devices
(including an 0.85-inch HDD certified as the world’s small-
est by Guinness World Records), system LSIs with powerful
embedded DRAM (able to handle large data volumes at a
high speed, including moving images), the CELL broadband
microprocessor (under development with Sony Computer
Entertainment Inc. and IBM Corporation), high-capacity

NAND flash memory, and CMOS image sensors (which al-
ready have a top share of the market for mobile phones with
cameras).

Synergies among these technologies will support the
continuous launch of competitive products. Among prod-
ucts heading for the market in the near future are a new
TV with a powerful new processor, HD DVD and mobile AV
products with small but capacious HDDS. In TVs, we are
completing development of the surface-conduction electron-
emitter display (SED) with Canon Inc. This new flat-panel
display is superior to current plasma and LCD TVs in all key
areas: contrast, video resolution, viewing angle and power
consumption. Plans call for our first SED TVs to come to
market in 2005, as a new flagship product heralding the
arrival of “Visual Specialist, Toshiba”.

Development and Strengthening of Growth Engines
Future growth and our target of being a high-profit company
rest on our ability to cultivate engines of growth. The means
to accomplish this are a focused investment strategy and
the creation of unique products through synergies among
our different businesses. Toshiba has great strength in depth,
and this has allowed the Company to draw up a list that
identifies products and technologies expected to drive fu-
ture growth. These include SED TVs, the 0.85-inch HDD,
CELL, and fuel cell technologies. We will deliver these to
market as core products that will blaze a trail for growth.

Building on our growth strategies, we expect to achieve
our targets for fiscal 2006: consolidated net sales of
¥6,200 billion, operating income of ¥280 billion, ROE of
over 10% and a 100% debt-to-equity ratio.

Competitive Edge

Net Sales / Operating Income

R&D Expenditures

Capital Investments

(¥ Billion)
300

(¥ Billion)
400

(%)
10

(¥ Billion)
350

280.0

6,200

5,800

190.0

5,580

174.6

(¥ Billion)
7,000

6,000

5,000

4,000

3,000

2,000

1,000

337

6.0

356

6.1

370

6.0

250

200

150

100

300

200

100

300

250

200

150

100

296

306

300

168

154

04/3

05/3
(forecast)

07/3
(forecast)

04/3

05/3
(forecast)

07/3
(forecast)

04/3

05/3
(forecast)

07/3
(forecast)

Net Sales

Operating Income

R&D Expenditures

R&D to Net Sales

Capital Investments

Semiconductors

(Based on orders)

BUSINESS AT A GLANCE

In-house companies,
divisions and affiliated companies

Percentage of sales

Sales
(Billions of yen)

Operating income (loss)
(Billions of yen)

3,000

2,500

2,000

1,500

1,000

500

3,000

2,500

2,000

1,500

1,000

500

3,000

2,500

2,000

1,500

1,000

500

1,000

750

500

250

DIGITAL PRODUCTS

Mobile Communications Company
Digital Media Network Company
Personal Computer &
Network Company
Toshiba TEC Corporation

ELECTRONIC DEVICES
Semiconductor Company
Display Devices &
Components Control Center
Toshiba Matsushita Display
Technology Co., Ltd.

33%

21%

SOCIAL INFRASTRUCTURE
Industrial and Power Systems & Services Company
Social Network & Infrastructure Systems Company
Toshiba Elevator and
Building Systems Corporation
Toshiba Solutions Corporation
Toshiba Medical Systems Corporation

28%

HOME APPLIANCES

Toshiba Consumer Marketing Corporation
Toshiba HA Products Co., Ltd.
Toshiba Lighting &
Technology Corporation
Toshiba Carrier Corporation
Toshiba Battery Co., Ltd.

10%

OTHERS

Network Services & Content Control Center
Mobile Broadcasting Corporation
Others

02/3

03/3

04/3

02/3

03/3

04/3

-10

-20

-30

200

100

-100

(Billions of yen)

Sales

Operating Income
(Loss)

02/3

1,885.3

- 1.9

03/3

2,073.0

24.8

04/3

2,009.4

-23.8

(Billions of yen)

Sales

Operating Income
(Loss)

02/3

1,044.4 - 175.2

03/3

1,274.4

31.9

04/3

1,283.6

117.0

02/3

03/3

04/3

-200

02/3

03/3

04/3

02/3

03/3

04/3

02/3

03/3

04/3

02/3

03/3

04/3

(Billions of yen)

Sales

Operating Income

02/3

1,930.9

41.1

03/3

1,822.6

39.2

04/3

1,714.1

58.6

(Billions of yen)

Sales

Operating Income

02/3

03/3

04/3

655.7

10.2

633.6

637.3

4.1

3.5

(Billions of yen)

Sales

Operating Income

02/3

03/3

04/3

484.9

11.4

491.1

15.5

472.7

18.8

02/3

03/3

04/3

02/3

03/3

04/3

600

500

400

300

200

100

02/3

03/3

04/3

Business results and strategies

>> Mobile Communications Company
The company won the top share of business provided to NCCs
(New Common Carriers), and domestic sales were strong overall,
but slow development of products hurt overseas operations,
resulting in lower sales. During fiscal 2004 the company will seek
substantial growth in mobile TV, moving image and on-demand
mobile handsets.

>> Digital Media Network Company
Strong sales of portable PCs and digital audio players boosted the
HDD business, but a slow response to market changes by the TV

>> Semiconductor Company
Strong sales of NAND flash memories, MCPs for mobile phones
and discrete devices resulted in increased sales and earnings.
During fiscal 2004 robust growth can be expected in digital
consumer products and mobile products, and the company will
work to secure greater growth and higher earnings.

>> Display Devices & Components Control Center
A significant loss was recorded as a result of poor performance in
the mainstay lithium-ion rechargeable battery and CRT businesses.

>> Industrial and Power Systems & Services Company
Stepped up inspections of nuclear power plants in Japan, and
growth in the overseas power plant services business bolstered
performance, but income fell overall due to a fall in the number of
thermal power projects in the United States, and other factors.
During fiscal 2004 the company will concentrate on three main
areas for expansion: the overseas business, the service business,
and new fields of business.

>> Social Network & Infrastructure Systems Company
Strong sales of electromagnetic wave systems such as terrestrial
digital broadcasting equipment and radar systems contributed to a
rise in income. During fiscal 2004 and beyond, the company will
use its accumulated expertise to deliver in a timely manner high
quality products and services utilizing the latest technologies,
contributing to the Group and the industry.

>> Toshiba Elevator and Building Systems Corporation
Performance was on par with the previous year. During fiscal 2004

>> Toshiba Consumer Marketing Corporation
In October 2003 Toshiba Consumer Marketing took over
management of Toshiba HA Products Co., Ltd., Toshiba Lighting &
Technology Corporation, Toshiba Carrier Corporation, Toshiba
Battery Co., Ltd., and Toshiba Service & Engineering Co., Ltd.,
creating a single worldwide structure for the home appliances
business. During fiscal 2004 the company will place priority on
producing the best products and reforming its cost structure as it
seeks to increase earnings.

>> Mobile Broadcasting Corporation
A broadcast satellite was successfully launched in March 2004.

business led to an operating loss. During fiscal 2004 the company
will seek to constrict its operating loss through restructuring and
greater synergies with other divisions.

>> Personal Computer & Network Company
The PC business posted a substantial loss during fiscal 2003, due
to falling retail prices and rising component costs worldwide.
During fiscal 2004 and beyond, the company will seek to recover
profitability by implementing an action plan incorporating an
extraordinary restructuring project.

>> Toshiba Matsushita Display Technology Co., Ltd.
Income and earnings rose as a result of greater yields from the
company's manufacturing plant in Singapore, and strong sales of
small- and medium-sized TFT LCDs. Looking ahead, the company
is pursing substantial growth through the timely commercialization
of differentiated technologies, and greater cultivation of overseas
business.

the company will focus on the growing Chinese market and the
renovation market in Japan.

>> Toshiba Solutions Corporation
A shrinking in the scale of projects following privatization of the
national postal services, and cutbacks in IT investment at private
companies resulted in a fall in revenue. During fiscal 2004
integration of sales, technology and development operations will
allow the company to ascertain and quickly respond to client needs
as it seeks to be a trusted solutions company that leads its field.

>> Toshiba Medical Systems Corporation
Robust sales of multislice CT units both in Japan and overseas
delivered strong performance. Looking ahead, the company will
respond to user needs with minimally invasive medical equipment
and hospital workflows that match comprehensive evaluation
systems, as well as introduce new products to increase manage-
ment efficiency at medical institutions.

BUSINESS REVIEW

Digital Products

Toshiba’s digital products business aims to position itself as a global leader through winning strategies
in mobile and wireless solutions, and by directing its know-how into the technologies and products
that will sustain and advance the development of a society of ubiquitous networks.

Mobile Communications Company

Innovative designs won the Mobile Communications Com-

pany the top market share in mobile phones for Japan’s NCCs

such as KDDI Corporation and Vodafone K.K. While domes-

tic sales rose, the overseas market saw a significant fall in

revenue compared with the previous year, as price erosion

combined with a delay in developing new products. In fiscal
2004 we will establish a firm revenue base, mainly in the

domestic market, and use that as a basis for further growth.

We continue to develop fun, easy-to-use multimedia mo-

bile phones that integrate our cutting-edge advanced

technology, including MPEG4 chips, BluetoothTM, SD memo-

ry cards, low-temperature polysilicon TFT LCDs, cameras with

CMOS image sensors, and Japanese kana to kanji character

conversion technology. These advanced technologies have

secured an unchallenged position in code division multiple

access (CDMA) and personal digital cellular (PDC) in the

Japanese market. We have also commercialized W-CDMA and

cdma2001 1X handsets.

We will strive for leadership in emerging markets based

on ubiquitous broadband networks. We look beyond the cur-

rent market of mobile phones with video cameras, seeing

that not as an end in itself but the nucleus of a trend to

greater integration of multimedia technologies. We will take

the initiative in this market to create a new growth engine

and to continue to produce distinctive advanced products.

Digital Media Network Company

The vitality of our HDD business continued unabated in fis-

cal 2003, with sales rising on growth in portable PCs and

expanded demand from digital consumer products. Sales of

televisions declined, as domestic demand for CRT-based TVs

was displaced by a rapid rise in the popularity of flat-panel

TVs. In fiscal 2004 the visual imaging business will strength-

en its profit-making structure through enhanced product

performance, a goal that will be realized through promotion

of operating synergies with the electronic devices business.

In optical disk drives (ODDs), we have partnered with Sam-

sung Electronics, another industry leader, in a new joint

venture, Toshiba Samsung Storage Technology Corporation

(TSST), in which Toshiba has a 51% stake. As the ODD

business emerges from a global realignment, TSST aims to

become No. 1 in the market.

Digital technology continues its rapid advance into the

home. DVD, in which Toshiba promoted industry standard-

ization, led the way, replacing videotape with sharper images

and better sound. More recently, Japan began terrestrial dig-

ital broadcasts last year.

The Digital Media Network Company applies digital imag-

ing technology and storage technology to the development of

products that bring out the full promise of digital content, the

rich textures of digital images and sound, including large-

sized, flat-panel TVs for terrestrial digital broadcasts, HDD/

DVD video recorders, digital audio players and other products.

In business applications, Toshiba’s visual products busi-

ness extends to network cameras and liquid crystal projectors.

In storage, Toshiba recently developed the world’s smallest

HDD (only 0.85 inch in diameter, but with a capacity of up

to four gigabytes), and leads the world in small form factor,

high-density HDD. On top of this, Toshiba is proactively in-

volved in the development and standardization of HD DVD,

the next generation DVD.

Personal Computer & Network Company

As sales prices tumbled around the world and key compo-

nents rose in price, the portable PC business reported a

significant loss in fiscal 2003. The current fiscal year will be

different. Comprehensive measures for restructuring and re-

building, including a significant increase in ODM ratio and a

reformed procurement structure, will support us in securing

an early return to profitability.

In the coming age of ubiquitous networks, individual

Mobile Telephones

The A5501T model developed and
marketed by Toshiba is the
world’s first CDMA handset
equipped with an output jack for
a television. This enables the
user to display movies and pho-
tos taken with the phone’s CCD
camera on a TV screen.

0.85-inch HDD

The 0.85-inch HDD developed by
Toshiba weighs less than 10 grams,
one-quarter the weight of our 1.8-inch
HDD, making it ideal for use in mobile IT
equipment. This HDD will be recognized
as the world’s smallest in the 2005 edi-
tion of the Guinness Book of World
Records.

1717

Digital Products
Major Products
Mobile phones
Portable PCs
Personal digital assistants (PDAs)
Servers
Hard disk drives (HDDs)
CD-RW/DVD-ROM drives
DVD-ROM drives
DVD-RAM drives
Color TVs
Digital Hi-Vision TVs
Projection TVs
HDD/DVD video recorders
DVD video players
DVD video recorders
Liquid crystal display (LCD) data projectors
Mobile audio players
Copiers
Point of sale (POS) terminals
Others

lifestyles and work styles will see dramatic transformations

ties in the three essential spheres of a society of ubiquitous

as the mobile office and work at home concepts reach a new

networks: the home, the office and mobile applications.

level of maturity and popularity. All thanks to total access to

In developing new products and services, the Personal

information via broadband and wireless networks.

Computer & Network Company listens very closely to VOC—

The Personal Computer & Network Company will offer a

the voices of customers. Analysis of this information supports

comprehensive lineup of network-ready devices, portable PCs,

the company in launching practical products and services that

PDAs and Internet appliance (IA) servers among them, all

combine a high degree of originality with network readiness.

equipped with cutting-edge, differentiated technologies from

Through this approach, Toshiba seeks to deliver inspirational

Toshiba Group. These products will support us in our activi-

products that create a comfortable computing environment.

Electronic Devices

As a Toshiba Group core business, the electronic devices business aims for consistent high growth
and profitability. While promoting a proactive presence in the global market, close attention is paid to
high-potential customers in China and other Asian countries, and to increased sales in the digital
consumer and mobile product areas, both seen as strong growth areas in coming years.

Semiconductor Company

The Semiconductor Company boosted year-on-year sales and

profit in fiscal 2003 on the strength of excellent sales of

NAND flash memories, growth in MCPs for mobile phones

and another year of steady performance in discrete devices.

Looking ahead, the company anticipates continued sales

growth in digital consumer products and mobile devices in

fiscal 2004, and a performance that points the way to fur-

ther growth and gains in profits.

ICs drive advances in the growth markets of digital con-

sumer products and mobile devices, and the Semiconductor

Company will draw on cutting-edge process technology and

sophisticated manufacturing techniques to deliver a wide

range of leading products to the global market.

The Semiconductor Company will continue to promote

balanced management in its three key business areas: dis-

crete devices, where the company is the world No. 1; system

LSIs; and memories. The System LSI Divisions look for ex-

panded demand in digital consumer products and mobile

devices, while the Memory Division will continue to increase

sales in products for cellular phones with cameras and mem-

ory cards.

In the coming year, the Semiconductor Company will

continue to focus on discrete devices, analog ICs and NAND

flash memories, highly profitable and stable business, and

4-Gigabit NAND

To meet growing demand for large-capacity memory cards, Toshiba has used
single-die, multi-level cell (MLC) technology to commercialize a 4Gb NAND

flash memory card, the larg-
est capacity in the industry.
NAND flash memory is ideally
suited for recording large
volumes of data. The new
product records data eight
times faster than our previ-
ous MLC product.

inject resources into development of competitive products and

strengthened cost competitiveness. Resources will be partic-

ularly directed to high-value-added products such as SoCs.

Here, Toshiba will reinforce its support for software and hard-

ware development to deliver competitive, high-quality products

that satisfy diverse customer needs and secure the Semicon-

ductor Company’s position as a total solutions provider.

Display Devices & Components Control Center

Falling prices for lithium-ion rechargeable batteries and CRTs

in fiscal 2003 resulted in an overall loss in this business

area. Toshiba is responding resolutely. We will terminate the

lithium-ion rechargeable battery business and dissolve A&T

Battery Corporation.

In a move to revitalize the CRT business, we moved it into

a joint venture with Matsushita Electric Industrial Co., Ltd.,

and established MT Picture Display Co., Ltd., in April 2003.

Following on from this, we spun off two other businesses

into independent companies. The material and components

businesses in high-precision processing components and

energy and industrial materials became Toshiba Materials

Co., Ltd., and the electron tubes businesses, covering medical

CT scanners and X-ray tubes, became Toshiba Electron Tubes &

Devices Co., Ltd. These measures will support the businesses

Input Display

Toshiba Matsushita Display Technology has developed the world’s first de-
vice that both inputs and displays color images.

19
19

Electronic Devices
Major Products
General-purpose CMOS Logic series
Small signal devices
Power devices
Opto semiconductor devices
System LSIs
Microcomputer and peripheral control system LSIs
Bipolar/BiCMOS ICs
Custom DRAMs
SRAMs
Flash memories
Amorphous silicon thin film transistor (TFT) LCDs
Polysilicon TFT LCDs

in streamlining management and accelerating decision

LCDs. TMD realized an operating surplus in the second half

making and operation, and stimulate measures for renewed

of fiscal 2003 and sees strong potential for profitability in

growth.

fiscal 2004.

We will also accelerate development and commercializa-

TMD made a strategic shift in its product mix from large,

tion of SED and fuel cells, both expected to grow into robust

commodity LCDs for PCs to smaller, high-value-added dis-

new businesses.

Toshiba Matsushita Display Technology Co., Ltd. (TMD)

plays for mobile phones, AV applications and mobile

applications, including PDA, and won the No. 1 position in

market share for mobile phones, car navigation and amuse-

TMD recorded significantly increased revenue and a large

ment. TMD aims to grow by cultivating overseas markets

decrease in its deficit in fiscal 2003. This was due to im-

and commercializing differentiated technologies, such as OCB

proved yields at its Singapore manufacturing plant, AFPD

(optical compensated bending), SOG (system on glass) and

Pte., Ltd., and buoyant sales in medium- to small-sized TFT

OLED (organic light emitting diode).

Social Infrastructure

Toshiba’s social infrastructure business is establishing a firm revenue base by making effective use of
managerial resources to improve its cost structure, enhancing income, developing overseas markets
and exploring new businesses.

Industrial and Power Systems & Services Company

1) Overseas Business Expansion

In fiscal 2003, the Industrial and Power Systems & Services

Company saw revenues fall on declining demand for thermal

power plants in North America and the transfer of business-

es, including the power transmission and distribution

businesses and the industrial electric and automation sys-

tems businesses to equity method affiliates.

Overseas markets, particularly in the Asia-Pacific region,

are seeing increased demand for new power generation fa-

cilities, but the domestic market continues to retract on

cutbacks in facilities investment by utility companies. Toshiba

is proud to hold a top share in nuclear and thermal power in

the domestic market, and to be in the top class in hydroelec-

tric power. In overseas markets we have a strong presence in

steam turbine generators in North America, Southeast Asia

and Oceania.

While the social infrastructure market in Japan has con-

tracted on restrained public investment, China’s commitment

to improved infrastructure makes it a highly promising mar-

ket. Toshiba holds top share in the domestic market for water

and sewerage systems as well as road and airport systems.

In fiscal 2004, the Industrial and Power Systems & Ser-

vices Company will promote the following three key strategies

dedicated to promoting business development.

Generating Electricity

A gas engine electricity generator
developed on the site of Toshiba’s
Keihin Product Operations, our
main facility for the production of
energy equipment, began operating
on March 1, 2004. Electricity gener-
ated will be sold wholesale to
certified electric companies.

The company will expand its presence in growing over-

seas markets by producing more competitive products,

and build a global business structure of manufacturing

and service bases.

2) Service Business Expansion

The company will expand its service business in areas

such as operation and maintenance (O&M) by leveraging

to the maximum its high share in markets where it al-

ready has a presence.
3) New Business Expansion

The company will bring high-tech know-how gained in

core businesses to meet emerging needs accompanying

power sector deregulation, address environmental and

safety concerns, and expand into new business areas in

the power generating business and energy solutions.

Social Network & Infrastructure Systems Company

The Social Network & Infrastructure Systems Company brings

cutting-edge IT and mechatronics technologies to broadcast-

ing systems that support this age of digital media, to

automated equipment systems such as automatic gate ma-

chines and automatic letter processing systems, to air traffic

control facilities radar systems, navigation aid systems and

weather monitoring systems, and to telecommunications sys-

tems such as wireless systems and Internet protocol (IP)

network systems.

Excellent sales in radio wave systems, especially digital

terrestrial broadcasting and radar devices, resulted in a year-

on-year increase in revenues in fiscal 2003. The company

also advanced business globalization in both manufacturing

and distribution by establishing OeT Bank Note Sorting So-

lutions GmbH as a base for sales expansion in the European

21
21

Social Infrastructure
Major Products and Services
Control systems for water purification plants
and sewage treatment plants
Road and airport systems
Building automation systems
Substation systems
New energy systems
Rolling stock electrical systems
Railway station service systems
Boiling water reactor (BWR) power plants
Hydroelectric power generating devices
Thermal power generating devices
Studio systems and transmitter systems
for broadcasting stations
Telecommunication network IP systems
Automatic letter processing systems
Expressway toll-collection systems
Radar systems
Air traffic control and navigation aid systems
Elevators and escalators system consulting services
General administration information systems
for local governments
Solution systems for financial institutions,
insurance companies
Solution systems for the distribution and
service industries
Solution systems for banks
Human resources management solution systems
Solutions and services for IT platforms
X-ray computed tomography systems
Magnetic resonance imaging (MRI) systems
Diagnostic x-ray systems
Diagnostic ultrasound systems

market. In fiscal 2004, the company will continue to con-

Toshiba Medical Systems Corporation

tribute to society and industry by drawing on its cumulative

know-how and capabilities to deliver products integrating

leading-edge technologies and timely, high-quality services.

Toshiba Elevator and Building Systems Corporation

Sales for Toshiba Elevator and Building Systems Corpora-

tion in fiscal 2003 were on par with the previous fiscal year.

New products that the company developed in fiscal 2003

met a positive response in the market. The SPACEL-EX stan-

dard-type elevator utilizes the company’s original system and

does not require a motor room. The Smokeproof door has a

self-explanatory name and a functionality that meets the de-

mands of revised building standards laws in Japan. The

Kindmover escalator, a new type with a universal design,

cuts installation time by as much as 30%. A further sign of

the distinctive market appeal of Toshiba’s technical capabil-

ities was the delivery of the world’s first elevator with adjust

functions between floors to the prestigious Roppongi Hills

Mori Tower which opened in Tokyo in April 2003.

The company will deliver the world’s fastest elevator

(60.6kph) in Taiwan, and will focus on the potential market

in China and the domestic replacement market.

Toshiba Solutions Corporation

Revenues eased slightly in fiscal 2003 as privatization of

the national postal services resulted in smaller scale projects

and the private sector continued to restrain investment in IT.

Toshiba Solutions was spun off from Toshiba Corporation

in October 2003 and integrated into Toshiba IT-Solutions Cor-

poration, which is positioned as the Toshiba Group IT solutions

provider. Toshiba Solutions has the mission of establishing

itself as Japan’s premier IT solutions company, directing closely

coordinated operations in technology, solutions development

and sales to providing customers with comprehensive and flex-

ible services and highly reliable products.

Home Appliances

Toshiba took positive steps toward a stronger presence in

medical systems in October 2003, when the in-house Med-

ical Systems Company was integrated with Toshiba Medical

Systems Co., Ltd., a domestic sales and service company, to

establish an independent company, Toshiba Medical Sys-

tems Corporation. The success of this move was reflected in

an improved performance in fiscal 2003 on increased sales

of multislice CT scanners in both the domestic and overseas

markets. The new company brought a faster version of the

popular 16-slice CT scanner to the market in 2003, able to

complete a scan in 0.4 second. The company also devel-

oped a 32-slice CT scanner, which was introduced to the
public at the December 2003 conference of the Radiologi-

cal Society of North America. Other products brought to

market were a high-end ultrasound system designed for di-

agnosis of the circulatory system, a cost-effective ultrasound

system, the biplane series of X-ray interventional angiogra-

phy systems and an MRI system equipped with the world’s

shortest bore magnet. Toshiba Medical Systems Corporation

will continue to develop patient-friendly medical equipment,

support improved workflows in hospitals while providing com-

prehensive diagnostics, and bring to market new products

and services that increase operational efficiency in medical

institutions.

Multislice CT

The AquilionTM system
is an advanced sys-
tem that supports
rapid diagnosis and
treatment of emer-
gency patients.
Incorporating a de-
tector with an axial

direction of 32mm, the largest in the world, the AquilionTM produces
high-resolution images in 0.5mm slices, the world’s smallest. Superior
resolution makes it possible to clearly visualize fine blood vessel
structures like those in the brain or heart, which is difficult to
achieve with current CT systems.

The home appliances business is preparing for a comprehensive reorganization of operations, including
those of its affiliates, to establish a consolidated/integrated business system that will strengthen over-
seas operations and sales. It will also expand network service and content by developing a structure to
consolidate the management of network services, content and media service.

Toshiba Consumer Marketing’s vision for 2006 centers on “the

creating No. 1 products that embody the “Simple & Comfort-

establishment of a business group with ‘Stability’ and ‘Growth

able” development concept and reform of the cost structure.

Potential’.” Toward achieving this, the company will acceler-

ate cost structure reforms in its current businesses, continue

Restructuring of Home Appliances Business

to strengthen overseas operations, and cultivate new busi-

Toshiba Consumer Marketing Corporation was launched on

nesses. In the first half of fiscal 2004, the emphasis is on

October 1, 2003, the culmination of an extensive reorgani-

2323

Home Appliances
Major Products
Washing machines
Vacuum cleaners
Refrigerators
Microwave ovens
Fluorescent lights
Air conditioners
Primary batteries

Others
Major Products and Services
Web service
Intelligent traffic systems
Automotive equipment
Real estate
Distribution services

zation designed to strengthen production, sales and over-

Trading (Shanghai) Co., Ltd., which imports and markets a

seas operations in the home appliances business. Toshiba

wide range of Toshiba consumer products, and the launch of

Consumer Marketing undertakes domestic sales and man-

Toshiba Lighting & Display Systems (Shanghai) Co., Ltd.,

agement and oversees the consolidated global business. In

which designs, manufactures and sells large display systems

addition to this, the company coordinates the operations of

such as the DLPTM Rear Projection Unit. Toshiba Consumer

a series of key related companies operating in the home ap-

Marketing will continue to expand its presence in China as

pliances segment: Toshiba HA Products Co., Ltd.; Toshiba

the market develops.

Lighting & Technology Corporation, which handles the light-

ing-equipment business; Toshiba Carrier Corporation, active

Strengthening Global Production

in air-conditioning; primary battery manufacturer Toshiba Bat-

A series of initiatives is strengthening our manufacturing

tery Co., Ltd.; and Toshiba Service & Engineering Co., Ltd.,

operations and our ability to meet demand on a global basis.

which is responsible for after-sales service.

Full-Scale Penetration of the Chinese Market

Harison Toshiba Lighting Corporation responded to burgeoning

overseas demand for cold cathode fluorescent lamps by es-

tablishing Harison Toshiba Lighting (Taiwan) Co., Ltd., and

China is clearly an important emerging market, and rising

also expanded production capacity at its head office factory

consumer demand promises considerable potential for growth.

in Imabari, Japan. Automobile light source businesses were

As in other businesses, Toshiba Consumer Marketing is as-

bolstered by the establishment of Toshiba Consumer & Lighting

suring that it will have a strong presence in the Chinese

Products Trading (Shanghai) Co., Ltd. and by the establish-

consumer products market. The value of this approach has

ment of Harison Toshiba Lighting (Kunshan) Co., Ltd., a new

been demonstrated by the rise in sales that followed the

facility that has improved and expanded manufacturing and

establishment of two manufacturing subsidiaries, Toshiba

sales in China. Toshiba Home Technology Corporation established

Washing Machine (Wuxi) Co., Ltd. and Toshiba Refrigerator

Hangzhou Toshiba Home Technology Electronics Co., Ltd.,

(Xi’an) Co., Ltd., and a sales subsidiary, Toshiba Products &

as part of a strategy to expand its share of the world market

Services (Shanghai) Co., Ltd. Other recent moves include

for cooling fans for portable PCs from 25% to 40% in 2004.

the establishment of Toshiba Consumer & Lighting Products

Toshiba Home Technology has recently obtained a patent for

Dishwasher

The new tabletop dishwasher/dryer DWS-60X6 features better washing
power and water conservation. The unique new washing system
“High Temperature
Steam Power” removes
even dried, sticky rice
grains, while the pro-
prietary DSI (digital
signal inverter) con-
trols the water supply.

Others

Mobile Broadcasting

Mobile Broadcasting Corporation (MBCO) is developing and

promoting an exciting new concept: multichannel digital

broadcasts via satellite that can be enjoyed on the move in a

vehicle or outdoors. The service will offer audio channels of

different genres of music, video channels featuring music,

news and sports, and data services. Satellite broadcasting

service enables customers to enjoy the service throughout

Japan with high-quality sound and images. The company

was established in May 1998, with Toshiba taking the initia-

tive as the majority shareholder, and has attracted investments

from some 80 companies by the end of March 2004. MBCO

its microprocessor unit (MPU) cooling fan in Japan and the U.S.

IH Electric Cooktop

The new induction heating (IH) electric cooktop features a heating
coil 20cm in diameter, the largest in the industry and bigger than
the 18cm in previous products. The use of a double coil widens the
heating area and reduces unevenness when using large pots or fry-
ing pans. This new product will help Toshiba increase its share of
the growing IH cooking heater market.

successfully launched its own broadcast satellite on March

13, 2004, and deployed its most important component, a

12-meter antenna, on March 29.

Mobile Broadcast Satellite

Toshiba took delivery of a mobile broad-
cast satellite on April 27, 2004.

RESEARCH AND DEVELOPMENT

Toshiba considers providing the market with an excep-
tional product and service lineup built on innovative
technologies to be an important source of growth, and
continually strives to generate numerous products that
alter current paradigms. Recognizing that the creation
of innovative technologies relies on world-class, No. 1
technologies that lie beneath the surface, Toshiba seeks
to strengthen the type of product development that
integrates technologies and cuts across business and
research fields, employing a product and technology
roadmap to ensure a shared strategy and purpose, and
enhancing the efficiency and effectiveness of its R&D
program.

In recent years, progress in IT has supported tre-
mendous advances in digitization, mobile technologies
and networks, bringing us closer to the realization of
the ubiquitous networking society. To name just a handful
of examples, broadband Internet circuits, digital broad-
casting and highly efficient, multifunctional mobile
phones have all emerged in recent years. The technolo-
gies driven by the ubiquitous networking society include
wireless networks, know-how in the human interface,
visual images, security, system LSIs and storage—all

areas that fall within the core expertise of Toshiba Group.
By further developing and integrating these technolo-
gies, Toshiba’s digital products and electronic devices
businesses will generate outstanding new products and
markets.

At the same time, we will continue to develop tech-
nologies that meet the growing demand for low energy
consumption and environmentally friendly products. In
connection with this, Toshiba Group continues to pro-
mote enhanced plant and process efficiency, conserva-
tion technologies and other systems-related technolo-
gies. Group companies are also working to achieve en-
vironmentally friendly and low-energy-consumption tech-
nologies that advance the transition to a future society
based on hydrogen energy.

Toshiba Group’s R&D activities have also been rec-
ognized by numerous institutions. Toshiba and its re-
searchers received numerous awards during fiscal 2003,
including the Medal with Purple Ribbon, the Honda
Prize, the Ministry of Education, Culture, Sports, Sci-
ence and Technology Award (Science and Technology
Merit Commendation) and the Ministry of Economy,
Trade and Industry Award.

A 32 parallax 3-D image viewed
from three different angles

▼

Left perspective

▼ Front perspective

▼

Right perspective

Compact Fuel Cell for Mobile Devices
The arrival of the ubiquitous networking society has brought the need for compact charging
devices that allow mobile devices such as portable PCs, mobile phones and PDAs to oper-
ate for extended periods. In response to this need Toshiba has developed the direct
methanol fuel cell (DMFC) system, capable of generating 1W of power. At a weight of 30
grams, and with a 140cc capacity that allows for continuous operation for 20 hours, it is the
world’s smallest and has the longest operating time in its class. Toshiba is currently working
on a smaller device that will deliver 2W of power.

Next-Generation 3-D Imaging System Without Glasses
Toshiba has developed an imaging system using integral imaging technology, allowing view-
ers to experience 3-D images without the need for special glasses. The system uses lenses
and slits in multiple rows of pixels to generate groups of light beams in several directions,
producing a natural 3-D effect that does not require special viewing lenses. Innovative de-
signs in the RGB pixel rows allow the device to retain a horizontal pixel count of 300, while
achieving a parallax number of 32, the world’s highest standard for 3-D imaging. Moreover,
the use of lenses has made possible a high-luminance display (160cd/m2). Toshiba is also
concurrently developing 3-D content environments, such as 3DCG (computer graphics) ani-
mation and interactive CG content, which can be used in advertising or gaming
applications.

On-Board Image Recognition System Using ViscontiTM LSI
In an effort to improve automotive safety, Toshiba is developing technology that can recog-
nize images from cameras located inside and outside a car, detect obstacles, and monitor
the condition of the driver. In order to realize such an imaging system in automobiles, Toshi-
ba first developed a highly sophisticated, low-priced and energy-conserving dedicated LSI
based on the Company’s MeP (media embedded processor) architecture. Using this LSI
and additional memory, it is possible to create an imaging system with sufficient features
and reliability. The prototype was tested using three cameras, one in front and one on either
side of the vehicle, to detect obstacles and monitor the surrounding area. With simple alter-
ations to the program, trials were also conducted with a system that monitors the face of the
driver. We plan to fit this system into ordinary vehicles in the future.

INTELLECTUAL PROPERTY

Intellectual Property Strategy

IP Strategy
Contributing to Revenue

Business Strategy
• Business differentiation through
patented products/services
• Increase license income
• Joint ventures and alliances
• Expand overseas business

Strategy for Effective Use of Patents
• Business monopoly and
license limitation
• Aggressive licensing
• Cross-licensing

ggggggggggggggggggggggggggg

• IP indexes

• IP asset valuation

IP Management

Maximizing the Value of IP Assets

• Unified IP management
for Group companies

• Management of technical
information/Prevention

Toshiba’s intellectual property (IP)
strategy promotes revenue growth,
supported by the three pillars of
proactive patenting, effective use of
IP asset and IP management, and
reinforces growth by integration
with business and R&D strategies.
Proactive patenting enables
Toshiba to consistently pursue pat-
ents for inventions resulting from its R&D strategy. Toshiba enhances the value of its IP assets by establishing
patent portfolios focusing on its core technologies and concentrating in areas where it has a strategic emphasis.
Toshiba uses IP to promote business strategy and has further leveraged its global position by filing a greater number
of foreign patent applications. Toshiba’s patent strategy has achieved a clear and profitable synergy with its business
strategy by increasing licensing and related revenue streams and providing product differentiation in the market.

• Establish patent portfolios
• Concentrate applications on
strategic technology fields
• Increase foreign patent applications
(U.S., China)

• Technology/Product Roadmaps
• Standardization Strategy
• Industry-Government-
Academia Cooperation

of technical information
leaks

Strategy for Patenting

R&D Strategy

In addition, IP management provides a unified approach throughout Toshiba Group companies. This embraces
proactive promotion of IP indexes and IP asset valuation, and solid management systems for technical information
to prevent leaks of know-how.

A Strategic Patent Portfolio
Toshiba’s strategic patent portfolio includes the following:

Technology Fields

Patents

DVD

Optical disks in conformity with standards and
recorder/player

MPEG2, MPEG4

Motion picture coding in conformity with standards

Semiconductor Memory

Flash memory and DRAM circuit,
structure and manufacturing

Portable PC

IC Card

HDD

Medical Imaging System

BIOS, mounting technology, and power saving for
personal computers

Control of access to memory data

Giant magnetoresistive (GMR) head

Computed tomography system and
diagnostic ultrasound system

In the area of DVD technology, Toshiba is a
member of the steering committee of the
DVD Forum, the international industry
association that standardizes DVD and
promotes broad acceptance of DVD products.
As a leader in DVD technology, Toshiba has
obtained many patents essential to standards,
and by licensing these patents to various
manufacturers, the Company contributes to
the broad acceptance of DVD standards and
products on a global basis.

Invention Prizes
In fiscal 2003, the Japan Institute of Invention and Innovation acknowledged Toshiba’s achievements in advancing
science and technology and in industrial development with two distinguished prizes.

• The Prize of the Minister of Education, Culture, Sports, Science and Technology for Patent No. 1891917
“Ultrasound blood flow imaging systems using interleaved scanning”
• The Innovation Prize for Patent No. 2644348 “Power saving for a personal computer”

Number of Patents Held and Areas of Application
Toshiba owned 21,790 Japanese patents (including utility model) and
28,652 foreign patents as of December 31, 2003.

Toshiba directs resources to key business areas. By international
patent classification (IPC) in 2003, Toshiba’s patent portfolio percentage
weightings in strategic areas were: computers 12.8%; semiconductors
11.5%; image transmission 6.0%; magnetic/optical disks 5.5%.
Internationally, Toshiba stresses patent applications in the U.S. and
China, especially for inventions related to business growth areas.

Areas of Application
(Japanese public patents in 2003)

Computers (G06F)

Semiconductors (H01L)

Image Transmission (H04N)

6.0

Magnetic/Optical Disks (G11B)

5.5

12.8

11.5

15
(%)

HELPING TO BUILD A SUSTAINABLE SOCIETY

Toshiba Group, to enrich the lives of people everywhere, has provided products and services throughout its 129-year
history that have aided the progress of society, earning it widespread trust and support. We consider this to be our
social raison d’etre. In the course of our business operations and development it is therefore essential that we abide
by laws and regulations, promote corporate ethics, and ensure honest and open management, while working to
protect the global environment, and contributing to the worldwide community.

“Committed to People, Committed to the Future. TOSHIBA” This is the slogan adopted by Toshiba Group as
representing the shared values of all its employees. In January 2004 we revised the Toshiba Group Standards of
Conduct, significantly enhanced our compliance efforts, and implemented a CSR program in which all employees
participate. To fulfill its responsibilities as a global corporation, moreover, Toshiba has joined the United Nations’
Global Compact, and will support and promote its initiatives on the environment, human rights and labor. Toshiba
Group, while ensuring honest and open corporate management, will pursue technical innovations focused on ubiq-
uitous networking and the environment in its efforts to bridge the digital divide and resolve global environmental
issues, thereby contributing to the realization of a sustainable society.

Stakeholders

A sustainable society
for people, the earth
and the future

unication

m
m
o
C

Products and services that
fulfill dreams and change society,
that customers trust and
that make them smile
Customer
Satisfaction

l
i

An honorable
company that
contributes to society

Employee
Satisfaction

Social
Contribution

Contributing to
a better
global environment

Environment

Honest and open corporate activity

Corporate Ethics
Abiding by Laws

Human
Rights

Corporate Principles Corporate Vision
Standards of Conduct Global Compact

Toshiba Group

>> Corporate Governance
Toshiba Group’s fundamental principles and goals for corporate governance are management efficiency, increased
transparency, and maximization of corporate value from the standpoint of shareholders.

As part of the management reform undertaken in 1998, Toshiba adopted the executive officer system in order to
clearly separate the decision-making and operational functions. Further management evolution saw the adoption of
the company-with-committees structure in June 2003, a move that strengthened management oversight and in-
creased its transparency, improved management flexibility, and further bolstered the risk compliance structure.

Implementation of corporate governance measures
As of March 31, 2004, the Company had 16 directors, of which seven (four outside directors, the Chairman of the
Board and two internal auditors) do not serve as executive officers.

Shareholders

Appoint/Dismiss

Board of Directors

Appoint/Dismiss

Oversee

CEO (President)
(also serving as director)

Executive Officers
(also serving as directors)

Executive Officers
(not serving as directors)

Nominating
Committee

Audit

Audit Committee

Compensation
Committee

Audit

Collaborate

Corporate
Audit Division

Divisions

Internal Audit

>> Compliance and Risk Management
By integrating crisis management with a legal compliance structure, corporate regulations and ethical standards,
Toshiba Group is reinforcing its equitable and open management system. The Commercial Code of Japan clearly
states that under the company-with-committees structure, a company must put in place an internal control system
for risk and compliance. Toshiba anticipated these requirements by appointing a CRO (Chief Risk-Compliance
Management Officer) and establishing a Risk-Compliance Committee, strengthening its compliance and risk
management structure. In-house companies also appoint a person to be responsible for risk-compliance, and risk-
compliance committees at each company make and implement decisions for their companies.

Toshiba also initiated a system in January 2000 in which risk-compliance information is disseminated to all
employees. Since that time systems for consultations and anonymous reporting on risk-compliance have been
added, currently operated as a “risk consultation hotline.”

>> Strengthening Disclosure
Toshiba operates globally, working with a wide variety of stakeholders, each with differing needs and values. We
consider it important to provide all stakeholders with adequate disclosure of business strategies, financial data and
other corporate information, and value communication that accurately reflects the concerns of shareholders and all
stakeholders in Toshiba’s corporate management.

>> Establishment of the CSR Division and Revision of the Toshiba Group Standards of Conduct
In July 2003 Toshiba Group established a CSR Division to aid in making CSR an integral part of corporate manage-
ment. The new division coordinates and systematizes various CSR-related activities, such as statutory and regula-
tory compliance, human rights, environment, social contribution and customer satisfaction initiatives, and pro-
motes CSR throughout the Group.

The Toshiba standards for corporate conduct, which form the basis of these activities, have been revised from
the standpoint of CSR, and to clarify relationships with stakeholders. To ensure that these standards are dissemi-
nated throughout the Group, a new Toshiba Group Standards of Conduct document has been published.

>> Participation in the Global Compact
Toshiba Group has joined the United Nations’ Global Compact, pledging to support through its business activities
nine universal principles in the areas of human rights, labor and the environment. Toshiba believes that abiding by
internationally recognized standards regarding human rights, labor and the environment, and fulfilling social re-
sponsibilities, will lead to sustainable growth throughout the world.

>> Increasing Customer Satisfaction
Toshiba Group’s fundamental policy regarding customer service is to consider the perspective of the customer as
the basis for all ideas, and offer the products, systems and services that ensure their satisfaction. The Group
constantly strives to incorporate this principle in its various activities, and to make continual improvements.

In 2003 Toshiba formulated its Customer Service Promotion Principles, establishing a system for providing the
highest level of quality based on the dual tenets of “products and services that satisfy customers,” and “communi-
cation.”

>> Environmental Management
Amid a closer focus on corporations’ environmental management by stakeholders, Toshiba Group believes it is
necessary to establish long-term harmony between corporate management and the global environment.

Toshiba Group seeks to minimize environmental loads at all stages in the lifecycle of a product, including the
resources devoted to its production, and the waste generated by it. Through its efforts in efficient use of resources,
prevention of global warming, better management of chemical agents, environmentally friendly product develop-
ment and recycling of used products, Toshiba is playing a leading role in the building of a recycling-based society.
Environmental management is one of the supporting pillars of Toshiba Group’s corporate management, where
each employee is not just a member of the Group, but a responsible citizen working to address environment issues.
In the emerging ubiquitous networking society, Toshiba considers its efforts to resolve global environmental prob-
lems as a means of realizing sustainable development to be one of its highest management priorities.

Independent recognition
• Toshiba was selected as one of 300 companies from around the world for inclusion in the Dow Jones Sustainability

Indexes (DJSI), an influential social responsibility investment (SRI) index.

• Toshiba placed second among 16 global electronics manufacturers in the social responsibility rating issued by

the German rating agency Oekom Research AG.

• Toshiba was selected as one of 150 companies for the Morningstar Socially Responsible Investment Index

(MS-SRI), a Japanese SRI index.

BOARD OF DIRECTORS AND EXECUTIVE OFFICERS

Taizo Nishimuro
Director/Chairman of the Board

Tadashi Okamura
Director

Yasuo Morimoto
Director

Takeshi Nakagawa
Director

Yuji Kiyokawa
Director

Atsutoshi Nishida
Director

Toshitake Takagi
Director

Sadazumi Ryu
Director

Takeshi Iida
Director

Masaki Matsuhashi
Director

Sakutaro Tanino
Director

Yasuhiko Torii
Director

Shunsaku Hashimoto
Director

Atsushi Shimizu
Director

Representative Executive Officer/President and Chief Executive Officer

Tadashi Okamura

Representative Executive Officers/Corporate Senior Executive Vice Presidents

Yasuo Morimoto Takeshi Nakagawa

Executive Officers/Corporate Executive Vice Presidents

Yuji Kiyokawa Atsutoshi Nishida Tsuyoshi Kimura Toshitake Takagi Sadazumi Ryu Shigeo Koguchi Yoshiaki Sato

(Representative Executive Officer)

Executive Officers/Corporate Senior Vice Presidents

Masao Niwano Tsutomu Miyamoto Makoto Azuma Yoshihiro Nitta Yoshihide Fujii

Executive Officers/Corporate Vice Presidents

Katsuji Fujita Shunsuke Kobayashi Toru Uchiike Hisatsugu Nonaka Mutsuhiro Arinobu Fumio Muraoka
Ichiro Tai Nobuhiro Yoshida Toshinori Moriyasu Masao Namiki Hisayoshi Fuwa Toshiharu Kobayashi
Chikahiro Yokota Kazuo Tanigawa Masashi Muromachi

(As of June 25, 2004)

FINANCIAL SECTION

Financial
Section

32 Management’s Discussion and Analysis
42 Consolidated Balance Sheets
44 Consolidated Statements of Income
45 Consolidated Statements of Shareholders’ Equity
46 Consolidated Statements of Cash Flows
47 Notes to Consolidated Financial Statements
67 Report of Independent Auditors

32 MANAGEMENT’S DISCUSSION AND ANALYSIS

ELEVEN-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)

Millions of yen, except per share amounts

2004

2003

2002

2001

¥5,579,506
4,075,336
1,378,529
174,586

¥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

145,041
102,237
28,825

53,123
48,532
18,503

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

188,099
96,145
96,168

Per share of common stock:

Net income (loss)

—Basic
—Diluted
Cash dividends

Total assets
Shareholders’ equity
Capital expenditures
(Property, plant and equipment)
Depreciation
(Property, plant and equipment)
R&D expenditures
Number of employees

¥8.96
8.96
3.00

¥5.75
5.75
3.00

¥(78.91)
(78.91)
—

¥29.88
29.71
10.00

¥4,462,200
754,990

¥5,238,936
571,064

¥5,407,782
705,314

¥5,724,564
1,047,925

227,273

230,512

348,235

269,545

223,946
336,714
161,000

237,888
331,494
166,000

311,208
326,170
176,000

308,294
327,915
188,000

Notes: 1. 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.
2. Beginning with the fiscal year ended March 31, 2001, Toshiba has adopted Statement of Financial Accounting Standards (SFAS) No.
115, “Accounting for Certain Investments in Debt and Equity Securities.” Prior-period data for the fiscal years ended from March 31,
1995 through 2000 has been restated to conform with SFAS No. 115 (data for the fiscal year ended March 31, 1994 has not been
restated).

3. Beginning with the fiscal year ended March 31, 1998, revenues and expenses from financial services, real estate leasing and sales, and
other operations are reported as operating activities whereas they were reported as non-operating activities in prior periods. Prior-period
data for the fiscal years ended from March 31, 1994 through 1997 has been reclassified to conform with the current classification.
4. In the fiscal year ended March 31, 2004, ¥48,945 million of subsidy received on return of substitutional portion of Employees’ Pension

Fund Plan, net of settlement loss of ¥188,106 million is included in Toshiba’s operating income.

2000

1999

1998

1997

1996

1995

1994

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

¥5,300,902
3,890,622
1,379,797
30,483

¥5,458,498
3,960,158
1,416,046
82,294

¥5,521,887
3,932,585
1,391,471
197,831

¥5,192,244
3,647,624
1,282,053
262,567

¥4,864,015
3,435,146
1,260,053
168,816

¥4,702,334
3,371,517
1,224,081
106,736

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

11,218
20,901
(9,095)

18,748
17,313
14,723

125,456
71,593
67,077

177,749
102,965
90,388

120,674
67,607
44,693

90,190
75,506
12,140

¥(10.22)
(10.22)
3.00

¥(2.83)
(2.83)
6.00

¥4.57
4.57
10.00

¥20.84
20.06
10.00

¥28.08
26.85
10.00

¥13.89
13.54
10.00

¥3.78
3.78
10.00

¥5,780,006
1,060,099

¥6,101,929
1,128,753

¥6,166,323
1,305,946

¥5,933,205
1,388,827

¥5,743,009
1,384,582

¥5,598,565
1,255,083

¥5,350,690
1,117,725

298,512

375,464

339,584

341,020

308,653

293,823

344,600

329,630
334,398
191,000

309,836
316,703
198,000

291,418
322,928
186,000

252,732
332,555
186,000

261,985
314,774
186,000

283,575
302,171
190,000

255,553
311,435
175,000

SCOPE OF
CONSOLIDATION

Toshiba Group comprises Toshiba Corporation, 319 consolidated subsidiaries (203 in Japan,
116 overseas) and 64 equity method affiliates (32 in Japan, 32 overseas). The results for fiscal
2003, ended March 31, 2004, consolidate four more subsidiaries than the previous fiscal year.
This follows a strategic restructuring and change in consolidation policy that added 35
companies to the consolidation while excluding 31 companies, both in Japan and overseas,
some of which were integrated into other Group companies, while others were sold or liquidated.

RESULTS OF
OPERATIONS

> NET SALES
Consolidated net sales for fiscal 2003 were ¥5,579.5 billion (US$52,637 million), down by 1%
year on year. This slight decline primarily resulted from business transfers, among them joint
ventures with Matsushita Electric Industrial Co., Ltd. in CRTs and with Mitsubishi Electric
Corporation in the industrial systems business. The electronic devices segment, centered on
semiconductors and LCDs, reported strong sales results, while PCs and peripherals as well as
color TVs recorded sales declines.

The average exchange rate for the Japanese yen to the U.S. dollar appreciated by ¥9, from
¥122 to ¥113, which had a negative influence on sales for the fiscal year under review. The
exchange rate with the euro was ¥133, a ¥13 depreciation from ¥120 in fiscal 2002. These
shifts had an overall negative impact on net sales of ¥63.0 billion.

> NET SALES BY REGION

Years ended March 31

2004

2003

Japan
Asia
North America
Europe
Others

Net Sales

¥3,399,903
829,914
710,108
517,235
122,346

¥5,579,506

¥3,343,551
837,845
860,306
509,620
104,456

¥5,655,778

Millions of yen

2002

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

¥5,394,033

Note: These figures are based on geographic location of the market in which sales were
recorded, and therefore differ from the segment sales reported on p. 39, which are based on the
location of the distribution source.

> JAPAN—Sales of ¥3,399.9 billion (US$32,075 million) were higher than in the previous
fiscal year, despite business transfers, including the joint venture with Matsushita Electric
Industrial Co., Ltd. in CRTs and the joint venture with Mitsubishi Electric Corporation in
industrial systems. Electronic devices, including semiconductors and LCDs, recorded positive
results.

> ASIA—Sales of ¥829.9 billion (US$7,829 million) were 1% lower year on year, due to the
transfer of the CRT business.

> NORTH AMERICA—Sales of ¥710.1 billion (US$6,699 million) were 17% lower than in the
previous fiscal year, the result of declines in thermal power plant projects, portable PCs and
color TVs, as well as the impact of the transfer of the CRT business.

> EUROPE—Sales of ¥517.2 billion (US$4,880 million) were slightly higher than in the
previous fiscal year, due to healthy sales of electronic devices, including semiconductors.

> NET INCOME (LOSS)
Net sales totaled ¥5,579.5 billion (US$52,637 million), down ¥76.3 billion compared with the
previous fiscal year. The gross profit margin improved 0.3 point to 27.0%, largely as a result of
cost reduction programs, reviews of procurement sources and increased overseas procurement.
The cost of sales and overhead costs were ¥15.3 billion lower than in the previous fiscal year
due to business transfers and the transfer to the government of the employees’ pension fund, a
move that generated income of ¥48.9 billion (US$462 million). Operating income was ¥174.6
billion (US$1,647 million), ¥59.0 billion more than in the previous fiscal year.

Non-operating loss totaled ¥29.6 billion (US$279 million), a ¥32.8 billion improvement
from the previous fiscal year. This was primarily due to sales of securities totaling ¥32.5 billion
and a ¥13.4 billion gain on foreign currency transactions. Negative factors included a ¥15.2
billion increase in restructuring costs. Net financial expenses were ¥10.4 billion (US$98
million), a ¥0.5 billion improvement from the previous fiscal year primarily due to reduced
interest expenses.

Income before income taxes, minority interest and equity in earnings of affiliates was
¥145.0 billion (US$1,368 million), a significant improvement of ¥91.9 billion from the
previous fiscal year. Income taxes increased by ¥53.7 billion from the previous fiscal year, in
line with the increase in income.

Minority interest in income (loss) of consolidated subsidiaries was a positive ¥4.7 billion
(US$44 million), a turnaround of ¥16.0 billion from the previous fiscal year. This was due in
large part to much-improved profit and loss at less-than-100%-owned consolidated subsidiaries,
especially in the LCD business, which increased income deductions. Equity in (loss) earnings of
affiliates, meanwhile, declined in both Japan and overseas to a negative total of ¥9.3 billion
(US$87 million).

Net income for fiscal 2003 of ¥28.8 billion (US$272 million) represented a ¥10.3 billion

improvement over the previous fiscal year.

> RESULTS BY INDUSTRY SEGMENT

> DIGITAL PRODUCTS—Total sales in this segment were ¥2,009.4 billion (US$18,957
million), a 3% decline from the previous year, accounting for 33% of total sales. The operating
loss was ¥23.8 billion (US$225 million), compared with the previous year’s operating income of
¥24.8 billion, due to sales declines in portable PCs and color TVs, and in mobile phones for the
overseas market.

In the domestic market, the mobile phone business recorded positive sales and the top
share in the NCC market, on the strength of growing replacement demand for mobile phones
with cameras. However, overall sales were undermined by delays in developing products for the
North American market and the European i-mode market and a drastic market shift in China.

In the portable PC business, unit sales increased 14% year on year mainly due to strong
demand from consumers and small- and medium-sized enterprises. However, the business
suffered a heavy operating deficit due to severe price erosion, even as key components saw price
increases. The rate of loss was reined in after peaking in the second quarter of fiscal 2003, as
measures implemented in the second half gradually began to take effect. Measures taken
include headcount reductions in Japan and overseas, improved sales productivity and reductions
in the number of PC platforms that will enhance development and operating efficiency.

Price pressure in the HDD business was minimized as a result of the accelerating shift from
desktop to portable PCs, particularly in the European and American markets, and strong
demand for our strategic 2.5-inch HDD product. Our niche-creating 1.8-inch HDD sold well
thanks to an expanding market for portable audio equipment.

Toshiba Group maintains its top position in ODDs by directing resources to the development
of drives with DVD recording capability, typified by the multiformat DVD drives integrated into
our DVD video recorders.

In color TVs, price declines for projection TVs in North America, an abrupt shift in the
domestic market away from CRT-based TVs, and a related delay in launching flat-panel TVs,
produced decreased sales and income.

DVD players in the North American market, the single largest market, saw transition to sales
of dual-deck players featuring both a DVD player and VCR deck. Dedicated DVD players
recorded low sales on dramatic price erosion and a declining market scale. Despite the
intensified competition in the domestic market for DVD recorders, Toshiba Group maintained its
position among the market leaders as DVD recorders with integrated HDDs entered the
mainstream market.

> ELECTRONIC DEVICES—Although sales of semiconductors and LCDs both rose, total sales
in this segment rose only 1% to ¥1,283.6 billion (US$12,109 million), due to the transfer of
the CRT business to MT Picture Display Co., Ltd. This key business segment, which accounted
for 21% of total sales in fiscal 2003, recorded large operating profits on burgeoning demand
for semiconductors and improvement in the LCD business profit structure. Operating income of
¥117.0 billion (US$1,104 million) represented an ¥85.1 billion improvement over the
previous year.

The semiconductor market saw yen-based growth of over 13% in the first half of fiscal
2003, due to macroeconomic recovery in the wake of the SARS scare. Among products that
contributed to growth were digital consumer electronic appliances, chief among them digital
still cameras, flat-panel TVs, mobile phones and PCs.

Although the discrete devices business experienced stagnant demand for audio systems and
other consumer products in Asia during the first half of fiscal 2003, vitality returned in the
second half as increased demand for mobile phones and portable PCs stimulated sales.

In system LSIs, demand was low in Asia for devices for consumer products, such as TV sets
and audio devices, but sales of custom LSIs were buoyant, especially for digital still cameras and
digital video cameras. CMOS image sensors for mobile phones also recorded increased sales.

Healthy demand for NAND flash memory spurred sales in the memory business, including a
broadening market for USB memory and application in digital TV and video. The continued
popularity of digital still cameras spurred demand for SD Memory Cards, and the MCP market
grew as demand for feature-rich mobile phones pushed demand for a single package integrating
NAND, NOR, SRAM and Pseudo SRAM.

A sales strategy focusing on the small- to medium-size range proved successful, as sales of
LCDs soared by 22% year on year. Success in cutting the deficit and moving toward operating
profit was also bolstered by improved yields at AFPD Pte., Ltd., the LCD manufacturing facility
in Singapore. During the second half, LCD operations achieved a surplus and there are strong
prospects for profit in fiscal 2004.

> SOCIAL INFRASTRUCTURE—Sales of ¥1,714.1 billion (US$16,171 million) represented a
6% fall from the previous year, and 28% of total sales. The main cause for the decline was a
marked decrease in the number of thermal power projects, particularly in North America, and
lower sales as a result of restructuring. Operating profit was ¥58.6 billion (US$553 million), a
¥19.5 billion increase over the previous fiscal year.

The Industrial and Power Systems & Services Company saw revenues decline on cutbacks in
thermal power projects in North America and the transfers of the power transmission and
distribution businesses and industrial electronics and automation systems businesses to equity
method affiliates, despite increased sales of electrical equipment for rolling stock for overseas
rail projects. The business recorded an operating loss due to an expected loss on overseas
thermal power plants.

The Social Network & Infrastructure Systems Company increased profits due to a growing

market for radio wave systems such as digital terrestrial broadcasting and radar devices.

Toshiba Solutions Corporation experienced slightly lower sales, as the scale of business
decreased on privatization of the Japanese postal services and restrained private-sector
investments in IT.

In a tough business environment characterized by investment restraint both in Japan and
overseas, Toshiba Medical Systems Corporation increased both sales and profits, most notably in
multislice CT scanners. Toshiba Elevator and Building Systems Corporation also saw good
results, in line with the previous fiscal year.

> HOME APPLIANCES—While sales in this segment rose 1% year on year to ¥637.3 billion
(US$6,012 million), operating profit fell ¥0.7 billion to ¥3.5 billion (US$33 million), the result
of a cool summer that punctured demand for air conditioners.

As the domestic market continued to experience the severe combination of sluggish demand
and price deflation, an unseasonably cool summer in 2003 slowed sales of core products,
including freon-free refrigerators and air conditioners. On the positive side, market share
improved in kitchen products, such as rice cookers that prevent rice from drying up, coffee
machines and microwave ovens.

> OTHERS—Sales in this segment totaled ¥472.7 billion (US$4,460 million), a 4% year-on-
year decrease, and accounted for 8% of total sales. Operating profit of ¥18.8 billion (US$178
million) represented a ¥3.3 billion increase from the previous fiscal year.

Segment information below is based on Japanese accounting standards. On April 1, 2003,
Toshiba adopted a system of reporting five business segments: Digital Products, Electronic
Devices, Social Infrastructure, Home Appliances and Others. This segmentation replaces the
previous system of seven segments: Information & Communication Systems, Social
Infrastructure Systems, Power Systems, Digital Media, Home Appliances, Electronic Devices &
Components and Others. Consolidated results for fiscal 2001 and 2002 have been reclassified
to reflect this new segmentation.

> INDUSTRY SEGMENTS

Years ended March 31

2004

Sales:

Digital Products

Millions of yen

2003

2002

Thousands of
U.S. dollars
(Note 3)

2004

Unaffiliated customers
Intersegment

¥1,939,717
69,678

¥2,032,736
40,235

¥1,832,671 $18,299,217
657,340

52,675

Total

2,009,395

2,072,971

1,885,346

18,956,557

Electronic Devices

Unaffiliated customers
Intersegment

1,174,934
108,654

1,070,165
204,278

874,733
169,674

11,084,283
1,025,038

Total

1,283,588

1,274,443

1,044,407

12,109,321

Social Infrastructure

Unaffiliated customers
Intersegment

1,654,959
59,177

1,722,603
99,994

1,812,005
118,904

15,612,821
558,273

Total

1,714,136

1,822,597

1,930,909

16,171,094

Home Appliances

Unaffiliated customers
Intersegment

Total

Others

Unaffiliated customers
Intersegment

Total

Eliminations

Consolidated

616,807
20,475

637,282

193,089
279,655

472,744

611,286
22,314

633,600

218,988
272,123

491,111

635,537
20,118

5,818,934
193,160

655,655

6,012,094

239,087
245,791

1,821,594
2,638,255

484,878

4,459,849

(537,639)

(638,944)

(607,162)

(5,072,066)

¥5,579,506

¥5,655,778

¥5,394,033 $52,636,849

Years ended March 31

2004

Millions of yen

2003

2002

Thousands of
U.S. dollars
(Note 3)

2004

Operating income (loss):

Digital Products
Electronic Devices
Social Infrastructure
Home Appliances
Others
Eliminations

¥ (23,810) ¥ 24,828
31,853
39,178
4,134
15,532
17

117,002
58,637
3,474
18,845
438

¥ (1,851) $ (224,623)
1,103,793
553,179
32,774
177,783
4,132

(175,164)
41,100
10,165
11,363
812

Consolidated

¥ 174,586

¥ 115,542

¥ (113,575) $ 1,647,038

Identifiable assets:
Digital Products
Electronic Devices
Social Infrastructure
Home Appliances
Others
Corporate and Eliminations

¥ 872,559
1,241,464
1,529,197
371,850
479,399
(32,269)

¥ 904,989
1,232,392
1,671,432
385,094
1,080,738
(35,709)

¥ 885,545 $ 8,231,689
11,711,924
14,426,387
3,508,019
4,522,632
(304,425)

1,302,670
1,852,806
406,016
978,894
(18,149)

Consolidated

¥4,462,200

¥5,238,936

¥5,407,782 $42,096,226

Depreciation and amortization:

Digital Products
Electronic Devices
Social Infrastructure
Home Appliances
Others
Corporate

¥ 35,499
112,466
37,657
18,786
44,423
—

¥ 34,287
125,755
42,759
18,732
39,302
—

¥ 41,161 $ 334,896
1,061,000
355,255
177,226
419,085
—

162,033
63,229
18,422
41,394
—

Consolidated

¥ 248,831

¥ 260,835

¥ 326,239 $ 2,347,462

Impairment of long-lived assets:

Digital Products
Electronic Devices
Social Infrastructure
Home Appliances
Others
Corporate

Consolidated

Capital expenditures:
Digital Products
Electronic Devices
Social Infrastructure
Home Appliances
Others
Corporate

¥ — ¥
10,018
—
—
—
—

— ¥ 1,140 $

7,815
—
—
—
—

58,550
—
—
—
—

—
94,509
—
—
—
—

¥ 10,018

¥ 7,815

¥ 59,690 $ 94,509

¥ 48,556
136,162
27,629
19,330
23,009
—

¥ 35,090
115,664
34,585
21,259
50,219
—

¥ 55,106 $ 458,075
1,284,547
260,651
182,359
217,066
—

209,095
44,771
22,044
47,816
—

Consolidated

¥ 254,686

¥ 256,817

¥ 378,832 $ 2,402,698

> GEOGRAPHIC SEGMENTS

Years ended March 31

2004

Millions of yen

2003

2002

Thousands of
U.S. dollars
(Note 3)

2004

Sales:

Japan

Unaffiliated customers
Intersegment

Total

Asia

¥ 3,747,371 ¥ 3,773,309 ¥ 3,716,437 $ 35,352,556
11,212,340

1,188,508

1,169,802

999,914

4,935,879

4,943,111

4,716,351 46,564,896

Unaffiliated customers
Intersegment

617,973
568,220

563,639
521,620

470,518
429,904

5,829,934
5,360,566

Total

North America

Unaffiliated customers
Intersegment

Total

Europe

Unaffiliated customers
Intersegment

Total

Others

Unaffiliated customers
Intersegment

Total

Eliminations

Consolidated

Operating income (loss):

Japan
Asia
North America
Europe
Others

Eliminations

Consolidated

Identifiable assets:

Japan
Asia
North America
Europe
Others

1,186,193

1,085,259

900,422

11,190,500

667,663
19,220

686,883

488,785
15,619

504,404

57,714
2,035

59,749

784,683
20,052

804,735

477,870
13,957

491,827

56,277
1,533

57,810

728,595
86,334

6,298,708
181,321

814,929

6,480,029

426,089
13,026

4,611,179
147,349

439,115

4,758,528

52,394
5,220

57,614

544,472
19,198

563,670

(1,793,602)

(1,726,964)

(1,534,398)

(16,920,774)

¥ 5,579,506 ¥ 5,655,778 ¥ 5,394,033 $ 52,636,849

¥ 148,729 ¥ 89,780 ¥ (166,231) $ 1,403,104
126,113
62,255
36,556
7,132

24,540
11,722
(3,197)
(286)

22,844
19,189
(128)
14

13,368
6,599
3,875
756

1,259

(7,017)

10,737

11,878

¥ 174,586 ¥ 115,542 ¥ (113,575) $ 1,647,038

¥ 3,589,596 ¥ 4,403,984 ¥ 4,430,716 $ 33,864,113
4,848,415
1,698,925
1,989,953
265,198

513,932
180,086
210,935
28,111

416,726
218,782
202,575
30,057

434,112
360,366
186,900
36,061

Corporate and Eliminations

(60,460)

(33,188)

(40,373)

(570,378)

Consolidated

¥ 4,462,200 ¥ 5,238,936 ¥ 5,407,782 $ 42,096,226

RESEARCH AND
DEVELOPMENT

CAPITAL
EXPENDITURES

Consolidated R&D expenditures totaled ¥336.7 billion (US$3,177 million), a 2% increase
compared with the previous fiscal year. This was equivalent to 6% of consolidated sales,
virtually unchanged from fiscal 2002. Principal R&D expenditures and achievements by
segment were as follows.

R&D expenditures in the digital products segment totaled ¥94.7 billion (US$893 million)
and included the development of the 0.85-inch HDD; an HD DVD system utilizing a blue-violet
semiconductor laser; a palm-sized fuel cell compatible with mobile devices; a multi-drive HDD
& DVD compatible with the RAM and RW standards; a 3-D display system supporting natural
moving images; a physical distribution system based on the RFID tag (a non-contact IC tag);
and the beautiful “face™” lineup of large flat-panel TVs with the magic square algorithms.

In the electronic devices segment, R&D expenditures totaled ¥156.9 billion (US$1,480
million) and were directed to commercialization of an MPEG4 video image processing LSI
supporting high-grade graphics; development of the world’s fastest 512MB XDR™ DRAM, which
supports a 3.2GHz data transfer rate; low power consumption 65nm generation CMOS
transistors with high dielectric constant materials; multilayer technologies for a nine-layer MCP;
0.7nm single crystal thin-film transistors, the finest yet achieved; and an LCD panel with an
integrated scanner function.

In social infrastructure, R&D expenditures totaled ¥62.2 billion (US$587 million) and were
directed to the development of laser-based preventive maintenance and repair technologies for
nuclear power plant control rod drive mechanisms; FacePass™, a new facial recognition security
system; electricity transaction solutions; a vehicle mounted image recognition system with an
electronic image recognition LSI (Visconti™); quantum cipher communication over 100km of
fiber-optic cable; the Aquilion™ CT scanner, able to scan 16 shots in 1 pass; and motor drive
systems for hybrid automobiles.

R&D expenditures in the home appliances segment totaled ¥18.4 billion (US$174 million)
and included the commercialization of the comfortable NDR series of home air conditioners that
set the industry benchmark for energy-saving performance; a top-loading washing machine with
digital signal processor (DSP) inverter control; development of a home air conditioner
compatible with Bluetooth™ and ECHONET standards; and improvements of the CFC-free
refrigerator lineup.

In the others segment, R&D expenditures totaled ¥4.5 billion (US$43 million) and included

programs currently underway at Toshiba Electric Appliances Co., Ltd.

Toshiba Group follows a basic strategy of focusing management resources on growth areas.
Capital expenditures, including investments in intangible fixed assets, amounted to ¥254.7
billion (US$2,403 million) and were primarily directed to the electronic devices segment.

Capital expenditures in the electronic devices segment totaled ¥136.2 billion (US$1,285
million), and included facilities for the development and production of semiconductors and to
raise production of LCDs. Principal facilities completed in the course of fiscal 2003 were
facilities for the manufacture of advanced system LSIs at Oita Operations, NAND flash memory
production facilities at Yokkaichi Operations, and cutting-edge LSI development facilities at
Yokohama Operations. Facilities still under construction include system LSI manufacturing
facilities at Oita Operations, NAND flash memory facilities at Yokkaichi Operations, and low-
temperature polysilicon LCD production facilities at Toshiba Matsushita Display Technology Co.,
Ltd.

In digital products, capital expenditures totaled ¥48.6 billion (US$458 million) and were
channeled into the development and manufacturing of new products, such as PCs and mobile
phones.

In social infrastructure, capital expenditures totaled ¥27.6 billion (US$261 million) and

were directed to system development and infrastructure improvement.

Capital expenditures in the home appliances segment totaled ¥19.3 billion (US$182

million) and included the development and production of new products.

Capital expenditures in the others segment totaled ¥23.0 billion (US$217 million).

FINANCIAL
CONDITION

As of March 31, 2004, total assets amounted to ¥4,462.2 billion (US$42,096 million), a
decrease of ¥776.7 billion from the previous fiscal year-end, reflecting the transfer of Toshiba
Finance Corporation and Shibaura Mechatronics Corporation into equity method affiliates.
Current assets declined ¥268.8 billion year on year, to ¥2,352.4 billion (US$22,193 million).

CASH FLOWS

The transfer of Toshiba Finance into an equity method affiliate reduced finance receivables, net
to ¥17.3 billion (US$163 million), a ¥148.9 billion decrease, and long-term finance
receivables, net to ¥29.9 billion (US$282 million), a ¥230.5 billion decrease. Deferred tax
assets were ¥489.7 billion (US$4,620 million), ¥195.9 billion less than at the end of the
previous fiscal year, due to the transfer of the employees’ pension fund to the government,
improvements in pension asset management yield, a decrease in additional minimum pension
liabilities, and elimination of a loss carried forward by improvements in operating performance.

Current and long-term liabilities decreased by ¥920.5 billion from the end of previous fiscal
year, to ¥3,571.4 billion (US$33,693 million). The balance of interest-bearing liabilities was
¥1,199.5 billion (US$11,316 million), a ¥453.9 billion decrease due to business transfers.
Accrued pension and severance costs were ¥601.6 billion (US$5,675 million), ¥349.4 billion
less than at the previous fiscal year-end, as a result of the transfer of the employees’ pension
fund to the government and a decrease in additional minimum pension liabilities on a pension
assets increase through improvements in pension asset management yield.

Shareholders’ equity increased by ¥183.9 billion to ¥755.0 billion (US$7,123 million), on
a ¥164.9 billion improvement in accumulated other comprehensive loss, to ¥285.9 billion
(US$2,697 million), as a result of a reduction in the minimum pension liability adjustment.
Improved net income raised retained earnings by ¥19.2 billion to ¥481.2 billion (US$4,540
million).

Net cash provided by operating activities amounted to ¥322.7 billion (US$3,044 million), an
increase of ¥51.1 billion from ¥271.6 billion in the previous fiscal year. In addition to the
improvement in net income, restructuring charges decreased.

Net cash used in investing activities amounted to ¥189.5 billion (US$1,787 million), an
increase of ¥41.5 billion from ¥148.0 billion in the previous fiscal year. This was due to large
cash inflows from the transfer of the DRAM business and sale and leaseback transactions in the
previous fiscal year.

Net cash used in financing activities amounted to ¥132.7 billion (US$1,252 million), a
decrease of ¥27.0 billion from ¥159.8 billion in the previous fiscal year. Besides increased
proceeds from stock offering by subsidiaries, there was a reduction in the scale of contracted
interest-bearing liabilities.

The effect of exchange rate changes was to decrease cash by ¥8.3 billion (US$78 million).
As a result, cash and cash equivalents at the fiscal year-end decreased by ¥7.8 billion to
¥319.3 billion (US$3,012 million) compared with ¥327.1 billion at the end of the previous
fiscal year.

> PRINCIPAL SUBSIDIARIES AND AFFILIATED COMPANIES

Percentage held by Group

Affiliated Companies:
Japan

MT Picture Display Co., Ltd.
Toshiba Ceramics Co., Ltd.
Toshiba Machine Co., Ltd.

36
41
33

As of March 31, 2004

Consolidated Subsidiaries:
Japan

A&T Battery Corporation
Toshiba Building Co., Ltd.
Toshiba Elevator and Building

Systems Corporation

Toshiba Plant Systems & Services

Corporation

Toshiba TEC Corporation

U.S.A.

Toshiba America Electronic

Components, Inc.
Toshiba America, Inc.

100
100

69
52

100
100

CONSOLIDATED BALANCE SHEETS

Toshiba Corporation and its subsidiaries
As of March 31, 2004 and 2003

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

Millions of yen

2004

2003

Thousands of
U.S. dollars
(Note 3)

2004

¥ 319,277

¥ 327,098

$ 3,012,047

101,624
962,216
(27,682)
17,271
629,044
114,425
236,244

107,920
1,007,396
(25,776)
166,190
629,659
143,087
265,642

958,717
9,077,509
(261,150)
162,934
5,934,377
1,079,481
2,228,717

Total current assets

2,352,419

2,621,216

22,192,632

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 (Notes 9, 19 and 20):

Land
Buildings
Machinery and equipment
Construction in progress

Less—Accumulated depreciation

21,808
29,887
191,391
197,901

440,987

27,153
260,361
186,685
209,374

683,573

205,736
281,953
1,805,575
1,866,991

4,160,255

165,255
1,070,607
2,311,773
51,897

174,701
1,116,868
2,670,750
37,642

1,559,010
10,100,066
21,809,179
489,594

3,599,532
(2,481,287)

3,999,961
(2,800,676)

33,957,849
(23,408,368)

1,118,245

1,199,285

10,549,481

Deferred tax assets (Note 15)
Other assets (Note 8)

375,244
175,305

542,507
192,355

3,540,037
1,653,821

The accompanying notes are an integral part of these statements.

¥ 4,462,200

¥ 5,238,936

$ 42,096,226

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)

Millions of yen

2004

2003

¥ 306,711
190,821
81,827
795,594
320,640
37,029
179,912
287,094

¥ 427,969
343,373
107,817
874,153
269,885
49,934
243,187
302,459

Thousands of
U.S. dollars
(Note 3)

2004

$ 2,893,500
1,800,198
771,953
7,505,604
3,024,906
349,330
1,697,283
2,708,434

Total current liabilities

2,199,628

2,618,777

20,751,208

Long-term liabilities:

Long-term debt (Note 9)
Accrued pension and severance costs (Note 10)
Other liabilities

701,924
601,566
68,293

882,026
950,997
40,127

6,621,925
5,675,151
644,273

1,371,783

1,873,150

12,941,349

Minority interest in consolidated subsidiaries

135,799

175,945

1,281,122

Shareholders’ equity (Note 17)

Common stock, without par value:

Authorized—10,000,000,000 shares
Issued and outstanding:

2004 and 2003—3,219,027,165 shares

Additional paid-in capital
Retained earnings
Accumulated other comprehensive loss
Treasury stock, at cost:

2004—2,224,121 shares
2003—2,269,483 shares

Commitments and contingent liabilities (Notes 21 and 22)

274,926
285,736
481,227
(285,894)

(1,005)
—

274,926
285,736
462,058
(450,775)

2,593,641
2,695,623
4,539,877
(2,697,113)

—
(881)

(9,481)
—

754,990

571,064

7,122,547

¥4,462,200

¥5,238,936

$42,096,226

CONSOLIDATED STATEMENTS OF INCOME

Toshiba Corporation and its subsidiaries
For the years ended March 31, 2004 and 2003

Sales and other income:

Net sales
Subsidy received on return of substitutional portion of
Employees’ Pension Fund Plan, net of settlement loss of
¥188,106 million ($1,774,585 thousand) (Note 10)
Interest and dividends
Other income (Notes 4, 5, 16, and 23)

Costs and expenses:

Cost of sales (Notes 11 and 19)
Selling, general and administrative
(Notes 8, 11, 12, and 19)
Interest
Other expense (Notes 4, 5, 7, 13, 14 and 23)

Income before income taxes, minority interest
and equity in (loss) earnings of affiliates

Income taxes (Note 15):

Current
Deferred

Income before minority interest and equity
in (loss) earnings of affiliates

Minority interest in income (loss)
of consolidated subsidiaries

Income before equity in (loss) earnings of affiliates
Equity in (loss) earnings of affiliates (Note 7)

Net income

Basic and diluted net income per share
Weighted-average number of shares used in calculation
of earnings per share (thousands of shares)

Millions of yen

2004

2003

Thousands of
U.S. dollars
(Note 3)

2004

¥5,579,506

¥5,655,778

$52,636,849

48,945
10,470
88,394

—
13,381
65,937

461,745
98,774
833,905

5,727,315

5,735,096

54,031,273

4,075,336

4,146,460

38,446,566

1,378,529
20,832
107,577

5,582,274

1,393,776
24,257
117,480

5,681,973

13,004,991
196,528
1,014,877

52,662,962

145,041

53,123

1,368,311

50,092
52,145

102,237

50,986
(2,454)

48,532

472,566
491,934

964,500

42,804

4,591

403,811

4,708

38,096
(9,271)

(11,330)

15,921
2,582

44,415

359,396
(87,462)

¥ 28,825

¥ 18,503

$ 271,934

Yen

U.S. dollars
(Note 3)

¥ 8.96

¥ 5.75

$ 0.085

3,216,774

3,217,979

Cash dividends per share (Note 17)

¥ 3.00

$ 0.028

The accompanying notes are an integral part of these statements.

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

Toshiba Corporation and its subsidiaries
For the years ended March 31, 2004 and 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
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 gains on
derivative instruments

Comprehensive income

Cash dividends
Purchase of treasury stock,
net, at cost
Balance at March 31, 2004

Balance at March 31, 2003
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 gains on
derivative instruments

Comprehensive income

Cash dividends
Purchase of treasury stock,
net, at cost
Balance at March 31, 2004

Millions of yen

Common
stock

Additional
paid-in
capital

Retained
earnings

Accumulated
other
comprehensive
loss

Treasury
stock

Total

¥274,926

¥285,736

¥443,555

¥(298,792)

¥ (111)

¥705,314

18,503

(9,550)

(17,638)

(125,130)

335

274,926

285,736

462,058

(450,775)

(770)
(881)

28,825

(9,656)

11,189

(19,701)

170,786

2,607

(9,550)

(17,638)

(125,130)

335
(133,480)
(770)
571,064

28,825

11,189

(19,701)

170,786

2,607
193,706
(9,656)

¥274,926

¥285,736

¥481,227

¥(285,894)

Thousands of U.S. dollars (Note 3)

Common
stock

Additional
paid-in
capital

Retained
earnings

Accumulated
other
comprehensive
loss

(124)
¥(1,005)

(124)
¥754,990

Treasury
stock

Total

$2,593,641 $2,695,623 $4,359,037 $(4,252,594)

$(8,311)

$5,387,396

271,934

105,556

(185,858)

1,611,189

24,594

(91,094)

105,556

(185,858)

1,611,189

24,594
1,827,415
(91,094)

$2,593,641 $2,695,623 $4,539,877 $(2,697,113)

(1,170)
$(9,481)

(1,170)
$7,122,547

The accompanying notes are an integral part of these statements.

CONSOLIDATED STATEMENTS OF CASH FLOWS

Toshiba Corporation and its subsidiaries
For the years ended March 31, 2004 and 2003

Cash flows from operating activities

Net income
Adjustments to reconcile net income to net cash
provided by operating activities-
Depreciation and amortization
Provisions for pension and severance costs,
less payments
Deferred income tax provision (benefit)
Equity in loss (earnings) of affiliates
Loss from sales, disposal and impairment
of property, plant and equipment, net
(Gain) loss from sales and impairment of securities
and other investments, net
Minority interest in income (loss) of consolidated
subsidiaries
Increase in notes and accounts receivable, trade
Decrease in finance receivables, net
(Increase) decrease in inventories
Decrease (increase) in other current assets
Decrease (increase) in long-term receivables
Decrease in long-term finance receivables, net
(Decrease) increase in notes and accounts payable, trade
(Decrease) increase in accrued income and other taxes
Decrease in advance payments received
Increase (decrease) in accounts payable
and other liabilities

Net cash provided by operating activities

Cash flows from investing activities

Proceeds from sale of property, plant and equipment
Proceeds from sale of securities
Acquisition of property, plant and equipment
Purchase of securities
Decrease (increase) 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 in short-term borrowings
Dividends paid
Proceeds from stock offering by subsidiaries
Repurchase of subsidiary common stock
Redemption of subsidiary preferred stock
Purchase of treasury stock, net
Other

Net cash used in financing activities

Effect of exchange rate changes on cash and cash equivalents
Net decrease in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year
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.

Millions of yen

2004

2003

Thousands of
U.S. dollars
(Note 3)

2004

¥ 28,825

¥ 18,503

$ 271,934

248,831

260,835

2,347,462

(8,001)
52,145
9,271

20,296
(2,454)
(2,582)

(75,481)
491,934
87,462

22,557

13,278

212,802

(25,028)

17,059

(236,113)

4,708
(14,617)
1,949
(35,852)
9,371
3,776
64,615
(21,239)
(12,493)
(47,050)

(11,330)
(13,520)
2,538
17,856
(35,299)
(15,283)
52,697
6,392
13,183
(16,860)

44,415
(137,896)
18,387
(338,226)
88,406
35,622
609,575
(200,368)
(117,858)
(443,868)

40,894
322,662

(53,706)
271,603

385,792
3,043,981

39,908
53,469
(199,127)
(53,170)
20,570
(51,116)
(189,466)

338,222
(371,554)
(63,389)
(11,720)
14,366
(1,182)
(35,000)
(195)
(2,281)
(132,733)
(8,284)
(7,821)
327,098
¥ 319,277

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)
370,432
¥ 327,098

376,491
504,424
(1,878,557)
(501,604)
194,057
(482,226)
(1,787,415)

3,190,774
(3,505,226)
(598,009)
(110,566)
135,528
(11,151)
(330,189)
(1,840)
(21,519)
(1,252,198)
(78,151)
(73,783)
3,085,830
$ 3,012,047

¥ 27,852
¥ 58,496

¥ 31,932
¥ 43,094

$ 262,755
$ 551,849

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Toshiba Corporation and its subsidiaries
March 31, 2004

1. DESCRIPTION OF BUSINESS

Toshiba Corporation and its subsidiaries (collectively, the “Company”) is engaged in research and development,
manufacturing and sales of high-technology electronic and energy products, which span (1) digital products, (2)
electronic devices, (3) social infrastructure, (4) home appliances, and (5) others. For the year ended March 31, 2004,
sales of digital products represented the most significant portion of the Company’s total sales or approximately 33%.
Social infrastructure represented approximately 28%, electronic devices approximately 21%, and home appliances
approximately 10% of the Company’s total sales. The Company’s products are manufactured and marketed throughout
the world with 61% of its sales in Japan and the remainder in Asia, North America, 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
statements to conform with accounting principles generally accepted in the United States of America. These
adjustments were not recorded in the statutory books of account.

> BASIS OF CONSOLIDATION AND INVESTMENTS IN AFFILIATES The consolidated financial statements as of
March 31, 2003 and for the year then ended include the accounts of Toshiba Corporation and its majority-owned
subsidiaries. As a result of adopting Financial Accounting Standards Board (“FASB”) Interpretation No. 46 as revised
in December 2003, Consolidation of Variable Interest Entities, an Interpretation of ARB No. 51 (“FIN 46R”), the
consolidated financial statements of the Company as of March 31, 2004, include the accounts of Toshiba Corporation
and its majority-owned subsidiaries that are not considered variable interest entities (“VIEs”) and all VIEs for which the
Company is the primary beneficiary. All significant intercompany transactions and accounts are eliminated in
consolidation.

FIN 46R requires a VIE to be consolidated if a party with an ownership, contractual or other financial interest in
the VIE is obligated to absorb a majority of the risk of loss from the VIE’s activities, is entitled to receive a majority of
the VIE’s residual returns, or both. A variable interest holder that consolidates the VIE is called the primary beneficiary.
Upon consolidation, the primary beneficiary must initially record all of the VIE’s assets, liabilities and noncontrolling
interests at fair value and subsequently account for the VIE as if it were consolidated based on majority voting interest.
Investments in affiliates in which the ability to exercise significant influence exists are stated at cost plus equity in
undistributed earnings (losses). Net consolidated income (loss) includes the Company’s equity in the current net
earnings (losses) of such companies, after elimination of unrealized intercompany profits.

> USE OF ESTIMATES The preparation of the consolidated financial statements in conformity with accounting
principles generally accepted in the United 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 consolidated 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
income.

> 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 has
been 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 investments without quoted market prices are stated at cost. Realized
gains or losses on the sale of securities are based on the average cost of a particular security held at the time of sale.

Marketable securities and other investment securities are regularly reviewed for other-than-temporary declines in
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 ability to retain
marketable securities and investment securities for a period of time sufficient to allow for any anticipated recovery in
market value. When such a decline exists, the Company recognizes an impairment loss to the extent of such decline.

> 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 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 useful 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 carrying amount of the assets, an impairment loss is recorded based on the fair value of the
asset. Fair value is determined 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 estimated useful lives on a straight-line basis. The weighted average amortization period for
these intangible assets was 6 years as of March 31, 2004. The Company reviews the carrying amount of indefinite-
lived intangible assets for impairment whenever events or circumstances indicate 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 consolidated statements of income. 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
liabilities 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 application of Statement of Financial Accounting Standards (“SFAS”)
No. 87 and prior service costs resulting from amendments 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 accounts for such adjustments as gains or losses in income for the year in which the change
in ownership interest occurs rather than as a capital transaction with a charge or credit to additional paid-in capital.

> 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.
Revenue from the development of custom software products is recognized when the software product has been

delivered 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. A provision for contract losses is recorded in its entirety
when the loss first becomes evident.

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 ¥83,329
million ($786,123 thousand) and ¥88,760 million for the years ended March 31, 2004 and 2003, 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
derivative 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 portion of the
change in the fair value of the hedged item that relates to the hedged risk. Changes in fair value of derivative financial
instruments accounted for as cash flow hedges, to the extent they are effective as a hedge, are recorded in other
comprehensive income (loss), net of tax. Changes in the fair value of 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 FASB Interpretation No. 45 (“FIN 45”),
Guarantor’s Accounting and Disclosure Requirements for Guarantees. FIN 45 requires a company 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
adoption of FIN 45 did not have a material impact on the Company’s financial position and results of operations.

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

3. U.S. DOLLAR AMOUNTS

U.S. dollar amounts are included solely for convenience. These translations should not be construed as a
representation 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 ¥106 = U.S.$1, the approximate current rate
of exchange at March 31, 2004, has been used throughout for the purpose of presentation of the U.S. dollar amounts
in the accompanying consolidated financial statements.

4. MARKETABLE SECURITIES AND OTHER INVESTMENTS

The aggregate cost, gross unrealized holding gains and losses, and aggregate fair value for marketable equity securities
and debt securities classified as available-for-sale securities by security type at March 31, 2004 and 2003 are as
follows:

Millions of yen

March 31, 2004:

Equity securities
Debt securities

March 31, 2003:

Equity securities
Debt securities

March 31, 2004:

Equity securities
Debt securities

Cost

¥49,838
1,420

¥51,258

¥75,830
1,994

¥77,824

Cost

Gross
unrealized
holding gains

Gross
unrealized
holding losses

¥43,892
2

¥43,894

¥36,896
3

¥36,899

¥ 258
—

¥ 258

¥6,985
32

¥7,017

Thousands of U.S. dollars

Gross
unrealized
holding gains

Gross
unrealized
holding losses

Fair value

¥ 93,472
1,422

¥ 94,894

¥105,741
1,965

¥107,706

Fair value

$470,170
13,396

$414,075
19

$483,566

$414,094

$2,434
—

$2,434

$881,811
13,415

$895,226

At March 31, 2004, debt securities mainly consist of corporate debt securities.

Contractual maturities of debt securities classified as available-for-sale were as follows at March 31, 2004:

Due within one year
Due after one year

Millions of yen

Thousands of U.S. dollars

Cost

¥1,000
420

¥1,420

Fair value

Cost

Fair value

¥1,002
420

¥1,422

$ 9,434
3,962

$13,396

$ 9,453
3,962

$13,415

The proceeds from sales of available-for-sale securities for the years ended March 31, 2004 and 2003 were ¥53,469
million ($504,424 thousand) and ¥13,897 million, respectively. The gross realized gains on those sales for the years
ended March 31, 2004 and 2003 were ¥28,483 million ($268,708 thousand) and ¥3,347 million, respectively. The
gross realized losses on those sales for the years ended March 31, 2004 and 2003 were ¥717 million ($6,764
thousand) and ¥934 million, respectively.

Included in other expense is a charge of ¥5,640 million ($53,208 thousand) and ¥21,292 million related to
other-than-temporary declines in the marketable and non-marketable equity securities for the years ended March 31,
2004 and 2003, respectively.

5. FINANCE RECEIVABLES AND SECURITIZATIONS

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:

March 31

Investment in financing leases:

Total minimum lease payments receivable
Executory costs
Unearned income

Less—allowance for doubtful accounts

Less—current portion

Other finance receivables
Less—allowance for doubtful accounts

Less—current portion

Millions of yen

2004

2003

¥ 36,788
(807)
(691)

35,290
(216)

35,074
(10,817)

¥ 231,871
(4,256)
(11,214)

216,401
(925)

215,476
(64,320)

¥ 24,257

¥ 151,156

¥ 12,142
(58)

12,084
(6,454)

¥ 224,426
(13,351)

211,075
(101,870)

Thousands of
U.S. dollars

2004

$ 347,057
(7,613)
(6,519)

332,925
(2,038)

330,887
(102,047)

$ 228,840

$ 114,547
(547)

114,000
(60,887)

¥ 5,630

¥ 109,205

$ 53,113

At March 31, 2004, the contractual maturities of minimum lease payments of the investment in financing leases and
the other finance receivables are as follows:

Years ending March 31

2005
2006
2007
2008
2009
Thereafter

Investment in financing leases

Other finance receivables

Millions of yen

¥11,296
9,291
7,268
4,958
2,524
1,451

¥36,788

Thousands of
U.S. dollars

$106,566
87,651
68,566
46,774
23,811
13,689

$347,057

Millions of yen

¥ 6,466
2,009
1,600
1,078
638
351

¥12,142

Thousands of
U.S. dollars

$ 61,000
18,953
15,094
10,170
6,019
3,311

$114,547

The Company has transferred trade accounts receivable, trade notes receivable and finance receivables under several
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 accounts
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 carrying
value is adjusted to reflect the portion that is not expected to be collectible. As of March 31, 2004 and 2003, the fair
value of retained interest is ¥21,976 million ($207,321 thousand) and ¥28,579 million, respectively. The Company
recognized losses of ¥1,138 million ($10,736 thousand) and ¥1,210 million on the securitizations of receivables for
the years ended March 31, 2004 and 2003, 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 liabilities
are immaterial to the Company’s financial position.

The table below summarizes certain cash flows received from and paid to the securitization special purpose entities

(“SPEs”) on the above transactions.

Years 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

2004

2003

¥1,180,141
521
44,212
172

¥1,068,072
458
83,240
16

Thousands of
U.S. dollars

2004

$11,133,406
4,915
417,094
1,623

At March 31, 2004, the assumed weighted-average life and residual cash flow discount rate used to compute the fair
value of retained interests were 0.15 years and 1.30%, respectively.

Quantitative information about delinquencies, net credit losses, and components of securitized receivables as of and
for the years ended March 31, 2004 and 2003 are as follows:

Total principal amount of receivables

Amount 90 days or more past due

Net credit losses

March 31,

Years ended March 31,

Millions of yen

Accounts receivable
Notes receivable
Lease receivables
Other finance receivables

2004

2003

¥1,126,809 ¥1,105,353
213,105
340,683
359,590

186,067
35,074
12,084

2004
¥23,162
61
—
—

2003
¥23,047
18
1,290
6,105

Total managed portfolio

1,360,034

2,018,731

¥23,223

¥30,460

2004
¥5,196
271
—
—

¥5,467

2003
¥3,928
301
—
—

¥4,229

Securitized receivables

(227,228)

(449,711)

Total receivables

¥1,132,806 ¥1,569,020

Total principal amount of receivables

Amount 90 days or more past due

Net credit losses

March 31, 2004

Year ended March 31, 2004

Thousands of U.S. dollars

Accounts receivable
Notes receivable
Lease receivables
Other finance receivables
Total managed portfolio

Securitized receivables

Total receivables

$10,630,274
1,755,349
330,887
113,999
12,830,509

(2,143,660)

$10,686,849

$218,509
576
—
—
$219,085

$49,019
2,556
—
—
$51,575

6. INVENTORIES

Inventories comprise the following:

March 31

Finished products
Work in process:

Long-term contracts
Other
Raw materials

Millions of yen

2004

2003

Thousands of
U.S. dollars

2004

¥270,569

¥256,299

$2,552,538

85,857
164,933
107,685

90,387
175,431
107,542

809,972
1,555,971
1,015,896

¥629,044

¥629,659

$5,934,377

7. INVESTMENTS IN AND ADVANCES TO AFFILIATES

On March 26, 2004, the Company sold 25,481,000 shares of Toshiba Finance Corporation (“TFC”), a consolidated
subsidiary of the Company, to certain unrelated financial institutions for ¥10,906 million ($102,887 thousand).
Subsequent to the effective date of the transaction, the Company has used the equity method to account for its 35%
interest held in TFC.

Summarized financial information of TFC as of the effective date of the transaction is as follows:

Current assets
Other assets including property, plant and equipment

Total assets

Current liabilities
Long-term liabilities
Shareholders’ equity

Total liabilities and shareholders’ equity

Millions of yen

¥216,177
246,703

¥462,880

¥183,850
256,091
22,939

¥462,880

Thousands of
U.S. dollars

$2,039,405
2,327,387

$4,366,792

$1,734,434
2,415,953
216,405

$4,366,792

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, 2004 are: TM T&D Corporation (“TM T&D”)
(50.0%); MT Picture Display Co., Ltd. (“MTPD”) (35.5%); Topcon Corporation (43.1%); Toshiba Ceramics Co., Ltd.
(41.4%); Toshiba Machine Co., Ltd. (33.5%); TFC (35.0%); and Toshiba Mitsubishi-Electric Industrial Systems
Corporation (“TMEIC”) (50.0%).

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 ¥56,451 million ($532,557 thousand) and ¥59,974 million at March 31,
2004 and 2003, respectively. The Company’s investments in these companies had a market value of ¥97,162 million
($916,623 thousand) and ¥49,022 million at March 31, 2004 and 2003, respectively, based on quoted market
prices at those dates.

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

March 31

Current assets
Other assets including property, plant and equipment

Total assets

Current liabilities
Long-term liabilities
Shareholders’ equity

Millions of yen

2004

2003

Thousands of
U.S. dollars

2004

¥1,022,935
793,102

¥ 689,175
409,779

$ 9,650,330
7,482,095

¥1,816,037

¥1,098,954

$17,132,425

¥ 769,150
436,020
610,867

¥ 490,717
100,369
507,868

$ 7,256,132
4,113,396
5,762,897

Total liabilities and shareholders’ equity

¥1,816,037

¥1,098,954

$17,132,425

Years ended March 31

Sales
Net loss

Millions of yen

2004

2003

Thousands of
U.S. dollars

2004

¥1,281,165
¥ (18,525)

¥ 770,347
¥ (3,580)

$12,086,462
$ (174,764)

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

Years ended March 31

Sales
Purchases
Sales of machinery and equipment

Millions of yen

2004

2003

Thousands of
U.S. dollars

2004

¥ 105,124
¥ 96,770
¥ 7,239

¥ 79,274
¥ 73,455
¥ 3,744

$ 991,736
$ 912,925
$ 68,292

March 31

Notes and accounts receivable, trade
Other receivables
Advance payment
Notes and accounts payable, trade
Capital lease obligations
Other payables

8. INTANGIBLE ASSETS

Millions of yen

2004

¥24,024
¥ 8,507
¥ 5,598
¥79,272
¥45,706
¥ 5,976

2003

¥25,544
¥ 6,383
¥ 2,848
¥28,633
—
¥ 7,900

Thousands of
U.S. dollars

2004

$226,642
$ 80,255
$ 52,811
$747,849
$431,189
$ 56,377

Intangible assets comprise mainly technical license fees and are subject to amortization. At March 31, 2004, gross
carrying amounts and related accumulated amortization were ¥87,574 million ($826,170 thousand) and ¥65,307
million ($616,104 thousand), respectively. At March 31, 2003, gross carrying amounts and related accumulated
amortization were ¥90,139 million and ¥53,110 million, respectively. For the years ended March 31, 2004 and
2003, amortization expense was ¥12,454 million ($117,491 thousand) and ¥15,179 million, respectively. Estimated
amortization expense for each of the five years ending March 31 is: ¥10,879 million ($102,632 thousand) in 2005,
¥6,935 million ($65,425 thousand) in 2006, ¥2,923 million ($27,575 thousand) in 2007, ¥1,062 million ($10,019
thousand) in 2008, and ¥288 million ($2,717 thousand) in 2009.

9. SHORT-TERM BORROWINGS AND LONG-TERM DEBT

Short-term borrowings at March 31, 2004 and 2003 comprise the following:

March 31

Loans, principally from banks, including bank overdrafts,
with weighted-average interest rate of 0.74% at March 31,
2004 and 0.77% at March 31, 2003:

Secured
Unsecured

Commercial paper with weighted-average interest rate of
0.01% at March 31, 2004 and 0.04% at March 31, 2003
Euro yen medium-term notes of a subsidiary, with weighted-
average interest rate of 0.12% at March 31, 2004 and
0.16% at March 31, 2003 (swapped for floating rate (LIBOR,
etc.) or fixed rate U.S. dollar, Yen or Euro obligations)

Millions of yen

2004

2003

Thousands of
U.S. dollars

2004

¥ 1,084
257,241

¥ 2,645
352,048

$ 10,226
2,426,802

20,000

35,000

188,679

28,386

38,276

267,793

¥306,711

¥427,969

$2,893,500

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, 2004, the Company had unused committed lines of credit from short-term financing arrangements
aggregating ¥329,110 million ($3,104,811 thousand), of which ¥16,910 million ($159,528 thousand) was in
support of the Company’s commercial paper. The lines of credit expire on various dates from July 2004 through March
2005. Under the agreements, the Company is required to pay commitment fees raging from 0.1 percent to 0.15
percent on the unused portion of the lines of credit.

Long-term debt at March 31, 2004 and 2003 comprise the following:

March 31

Loans, principally from banks and insurance companies, due
2004 to 2032 with weighted average interest rate of 0.89%
at March 31, 2004 and due 2003 to 2034 with weighted
average interest rate of 1.15% at March 31, 2003:

Secured
Unsecured

Unsecured yen bonds, due 2004 to 2008 with interest ranging
from 0.40% to 3.025% at March 31, 2004 and due 2003
to 2008 with interest ranging from 0.49% to 3.025% at
March 31, 2003
Euro yen medium-term notes, due 2004 to 2008 with interest
ranging from zero % to 2.34% at March 31, 2004 and due
2003 to 2008 with interest ranging from zero % to 2.34%
at March 31, 2003 (swapped for floating rate (LIBOR, etc.)
or fixed rate yen obligations)
Unsecured yen bonds of subsidiaries, due 2004 with interest
rate of 1.69% at March 31, 2004 and due 2004 with interest
ranging from 1.69% to 3.00% at March 31, 2003
1.825% secured yen bonds of a subsidiary due 2004
Euro yen medium-term notes of subsidiaries, due 2004 to
2013 with interest ranging from 0.08% to 2.60% at March
31, 2004 and due 2003 to 2012 with interest ranging
from 0.09% to 3.70% at March 31, 2003 (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
Capital lease obligations

Less—Portion due within one year

Millions of yen

2004

2003

Thousands of
U.S. dollars

2004

¥ 8,994
324,869

¥ 11,233
597,895

$ 84,849
3,064,802

415,425

475,667

3,919,104

16,000

28,525

150,943

7,000
300

12,000
300

66,038
2,830

74,451

96,959

702,368

—
45,706

2,820
—

892,745
(190,821)

1,225,399
(343,373)

—
431,189

8,422,123
(1,800,198)

¥ 701,924

¥ 882,026

$ 6,621,925

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

Assets pledged as collateral for short-term borrowings and long-term debt at March 31, 2004 are property, plant

and equipment with a book value of ¥41,213 million ($388,802 thousand).

The aggregate annual maturities of long-term debt, excluding those of capital lease obligations are as follows:

Year ending March 31

2005
2006
2007
2008
2009
Thereafter

Millions of yen

¥169,744
223,143
148,094
89,674
101,865
114,519

¥ 847,039

Thousands of
U.S. dollars

$1,601,358
2,105,123
1,397,113
845,981
960,991
1,080,368

$7,990,934

10. ACCRUED PENSION AND SEVERANCE COSTS

All employees who retire or are terminated are usually entitled to lump-sum severance indemnities or pension benefit
determined by reference to their current basic rate of pay, length of service and conditions under which their employment
terminates. The obligation for the severance indemnity benefit is provided for through accruals, funding of tax-qualified
non-contributory pension plans, contributory trusteed employee pension funds, and the corporate pension plan.

Toshiba Corporation and certain subsidiaries in Japan have Employees’ Pension Fund (“EPF”) Plans, 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 benefit prescribed
by JWPIL, and a corporate portion based on a contributory defined benefit arrangement established at the discretion of
Toshiba Corporation and these subsidiaries. Among several EPF Plans that the Company participated in, the Toshiba
EPF Plan was reorganized and became a corporate pension plan under the Japanese Defined Benefit Corporate Pension
Law during the year ended March 31, 2004.

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 contribute
amounts required to maintain sufficient plan assets to provide for accrued benefits, subject to the limitation on
deductibility imposed by Japanese income tax laws.

The Company uses a March 31 measurement date for the majority of its plans.
The changes in the benefit obligations and plan assets and reconciliations of net amount recognized to funded

status and accrued pension and severance costs for the years ended March 31, 2004 and 2003 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
Return of substitutional portion to the government
Foreign currency exchange impact

Millions of yen

2004

2003

¥1,936,297
45,689
55,075
2,869
(18,403)
32,130
(91,901)
(15,604)
(654,057)
(1,591)

¥1,816,656
52,287
59,053
5,308
25,046
95,969
(102,338)
(14,273)
—
(1,411)

Thousands of
U.S. dollars

2004

$18,266,953
431,028
519,575
27,066
(173,613)
303,113
(866,991)
(147,207)
(6,170,349)
(15,009)

Benefit obligation at end of year

¥1,290,504

¥1,936,297

$12,174,566

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
Return of substitutional portion to the government
Foreign currency exchange impact

¥ 844,767
122,120
68,343
2,869
(47,338)
(4,449)
(366,927)
(1,553)

¥ 988,112
(126,700)
41,627
5,308
(53,972)
(8,191)
—
(1,417)

$ 7,969,500
1,152,076
644,745
27,066
(446,585)
(41,971)
(3,461,576)
(14,651)

Fair value of plan assets at end of year

¥ 617,832

¥ 844,767

$ 5,828,604

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

¥ 672,672
(515,851)
(24,520)
59,875

¥1,091,530
(861,688)
(36,911)
46,950

$ 6,345,962
(4,866,519)
(231,321)
564,859

¥ 192,176

¥ 239,881

$ 1,812,981

¥ 601,566
(409,390)

¥ 950,997
(711,116)

$ 5,675,151
(3,862,170)

¥ 192,176

¥ 239,881

$ 1,812,981

Accumulated benefit obligation at end of year

¥1,221,653

¥1,796,972

$11,525,028

The components of the net periodic pension and severance cost for the years ended March 31, 2004 and 2003 are as
follows:

Years 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
Settlement loss

Millions of yen

2004

2003

¥ 45,689
55,075
(31,052)
12,025
(5,170)
42,857
188,106

¥ 52,287
59,053
(35,546)
12,025
(5,972)
29,184
—

Thousands of
U.S. dollars

2004

$ 431,028
519,576
(292,943)
113,443
(48,774)
404,311
1,774,585

Net periodic pension and severance cost

¥307,530

¥111,031

$2,901,226

For the year ended March 31, 2004, the Company contributed certain marketable equity securities, not including
those of the Company and affiliates, to employee retirement benefit trusts, with no cash proceeds thereon. The fair
value of these securities at the time of contribution was ¥34,426 million ($324,774 thousand). The Company expects
to contribute ¥45,137 million ($425,821 thousand) to its domestic pension and severance plans in the year ending
March 31, 2005.

In January 2003, the Emerging Issue Task Force reached a consensus on Issue No. 03-2 (“EITF 03-2”),
Accounting for the Transfer to the Japanese Government of the Substitutional Portion of Employee Pension Fund
Liabilities, which addresses accounting for a transfer to the Japanese government of a substitutional portion of EPF
Plans. In September 2002, the Company received an approval from the Japanese government to transfer the future
benefit obligation related to the substitutional portion. In December 2003, the Company received an approval to
separate the remaining substitutional portion related to past service by its employees. In March 2004, the Company
completed the transfer of the substitutional portion of the benefit obligation and the related government-specified
portion of the plan assets which were computed by the Japanese government, and was relieved of all related
obligations. The Company has accounted for the entire process at completion of the transfer to the Japanese
government of the substitutional portion of the benefit obligation and the related plan asset, as a single settlement
transaction in accordance with EITF 03-2.

As a result, the Company recorded a gain of ¥48,945 million ($461,745 thousand) for the year ended March 31,
2004. The subsidy of ¥237,051 million ($2,236,330 thousand) from the government is calculated as the difference
between the obligation settled and the assets transferred determined pursuant to the government formula, less
derecognized amounts of previously accrued salary progression at the time of settlement of ¥50,079 million
($472,443 thousand).

Weighted-average assumptions used to determine benefit obligations as of March 31, 2004 and 2003 and net

periodic pension and severance cost for the years then ended were as follows:

March 31

Discount rate
Rate of compensation increase

Years ended March 31

Discount rate
Expected long-term return on plan assets
Rate of compensation increase

2004

2.7%
3.0%

2004

3.0%
4.0%
1.9%

2003

3.0%
1.9%

2003

3.5%
4.0%
2.1%

Following is information about domestic pension and severance plans:

The Company determines the expected long-term rate of return in consideration of the target allocation of the plan
assets, the current expectation of long-term returns on the assets and actual returns on plan assets.

The Company’s pension and severance plan asset allocations at March 31, 2004 and 2003, by asset category are as
follows:

March 31

Asset category

Equity securities
Debt securities
Life insurance company general accounts
Other

Total

2004

2003

62%
28%
4%
6%

100%

27%
45%
25%
3%

100%

The Company’s investment policies and strategies are to assure adequate plan assets to provide for future payments of
pension and severance benefits to participants, with reasonable risks. The Company designs the basic target allocation
of the plan assets to mirror the best portfolio based on estimation of mid-term and long-term return on the investments.
The Company periodically reviews the actual return on the investments and adjusts the portfolio to achieve the
assumed long-term rate of return on the investments. The Company targets its investments in equity securities at 40
percent or more of total investments, and investments in equity and debt securities at 75 percent or more of total
investments.

The accumulated benefit obligations for all domestic defined benefit plans were ¥1,199,933 million

($11,320,123 thousand) and ¥1,783,972 million at March 31, 2004 and 2003, respectively.

11. RESEARCH AND DEVELOPMENT EXPENSES

Research and development costs are expensed as incurred and amounted to ¥336,714 million ($3,176,547 thousand)
and ¥331,494 million for the years ended March 31, 2004 and 2003, respectively.

12. ADVERTISING COSTS

Advertising costs are expensed as incurred. Advertising expenses amounted to ¥40,156 million ($378,830 thousand)
and ¥41,911 million for the years ended March 31, 2004 and 2003, respectively.

13. FOREIGN EXCHANGE GAINS AND LOSSES

For the years ended March 31, 2004 and 2003, the net foreign exchange losses are ¥2,183 million ($20,594
thousand) and ¥15,614 million, respectively.

14. IMPAIRMENT OF LONG-LIVED ASSETS

Due to general price erosion and severe market competition, the Company recorded impairment charges of ¥10,018
million ($94,509 thousand) related to the manufacturing facilities of the lithium-ion rechargeable battery business,
and ¥7,815 million related to the manufacturing facilities of the Display Devices and Components division for the
years ended March 31, 2004 and 2003, respectively. These impairment charges are included under the caption Other
expense in the accompanying consolidated statements of income.

15. INCOME TAXES

For the year ended March 31, 2004, the Company was permitted to file consolidated tax returns in Japan. In
connection therewith, a temporary surtax of 2.0% was assessed for the years ended March 2004. As a result of the
surtax, and certain changes in the corporate tax rate, the Company’s normal statutory tax rate changed from 42.1% to
43.9% for the year ended March 31, 2004 and to 40.7% for the years ending on or after March 31, 2005.

A reconciliation between the reported income tax expense and the amount computed by multiplying the income
before income taxes, minority interest and equity in (loss) earnings of affiliates by the applicable statutory tax rate is as
follows:

Years ended March 31

Expected income tax expense
Increase (decrease) in taxes resulting from:

Dividends
Non-deductible expenses for tax purposes
Net changes in valuation allowance
Tax rate difference relating to foreign subsidiaries
Effect of income tax rate change
Other

Millions of yen

2004

2003

Thousands of
U.S. dollars

2004

¥ 63,673

¥ 22,365

$ 600,689

11,245
6,134
17,114
(4,187)
3,142
5,116

10,799
5,076
15,571
(7,155)
4,373
(2,497)

106,085
57,868
161,453
(39,500)
29,642
48,263

Income tax expense

¥102,237

¥ 48,532

$ 964,500

The significant components of deferred tax assets and deferred tax liabilities as of March 31, 2004 and 2003 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

Millions of yen

2004

2003

¥ 22,583
107,187
127,045
167,189
45,214
38,873
116,780

624,871
(81,297)

¥ 24,970
103,998
194,248
298,303
38,920
34,528
107,176

802,143
(65,880)

Thousands of
U.S. dollars

2004

$ 213,047
1,011,198
1,198,538
1,577,255
426,547
366,726
1,101,698

5,895,009
(766,953)

Deferred tax assets

¥543,574

¥736,263

$5,128,056

March 31

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

2004

2003

Thousands of
U.S. dollars

2004

¥ (15,525)
(17,312)

¥ (12,888)
(12,341)

$ (146,462)
(163,321)

(17,381)
(13,774)

(63,992)

(17,257)
(16,299)

(58,785)

(163,972)
(129,943)

(603,698)

¥479,582

¥677,478

$4,524,358

The net changes in the total valuation allowance for the years ended March 31, 2004 and 2003 were an increase of
¥15,417 million ($145,443 thousand) and a decrease of ¥11,764 million, respectively.

The Company’s tax loss carryforwards for each of the corporate and local taxes at March 31, 2004 amounted to
¥283,909 million ($2,678,387 thousand) and ¥353,950 million ($3,339,151 thousand), respectively, the majority of
which will expire during the period from 2005 through 2011. The Company utilized tax loss carryforwards of
¥176,481 million ($1,664,915 thousand) and ¥140,953 million ($1,329,745 thousand) to reduce current corporate
and local taxes, respectively, during the year ended March 31, 2004.

Realization of tax loss carryforwards and other deferred tax assets is dependent on the Company generating
sufficient taxable income prior to their expiration or the Company exercising certain available tax strategies. Although
realization is not assured, management believes it is more likely than not that all of the deferred tax assets, less the
valuation allowance, will be realized. The amount of such net deferred tax assets considered realizable, however, could
be reduced in the near term if estimates of future taxable income during the carryforward period are reduced.

Deferred income tax liabilities have not been provided on undistributed earnings of foreign subsidiaries and
affiliates deemed indefinitely reinvested in foreign operations. As of March 31, 2004, and 2003, the undistributed

earnings of the foreign subsidiaries not subject to deferred tax liabilities were ¥95,908 million ($904,792 thousand),
and ¥107,328 million, respectively. It is not practicable to estimate the amount of the deferred income tax liabilities
on such earnings.

16. ISSUANCE OF STOCK BY A SUBSIDIARY

In March 2004, Toshiba Samsung Storage Technology Corporation (“TSST”), issued 294 shares of its common stock to
Samsung Electronics Co., Ltd. for ¥13,713 million ($129,368 thousand). TSST is engaged in the business of product
development, manufacturing outsourcing and sales of optical disk drives and was established in December 2003 as a
wholly owned subsidiary of the Company. As a result of this transaction, the Company recognized a gain of ¥6,391
million ($60,292 thousand), representing the excess of issuance price per share of ¥47 million ($443 thousand) over
its average carrying amount of the net equity held in TSST. The gain from stock issuance by TSST is included under
the caption Other income in the accompanying statement of income for the year ended March 31, 2004. The
transaction decreased the Company’s interest in TSST to 51%.

17. SHAREHOLDERS’ EQUITY

> RETAINED EARNINGS Retained earnings at March 31, 2004 and 2003 include a legal reserve of ¥13,122 million
($123,792 thousand) and ¥12,869 million, respectively. The Japanese Commercial Code provides that an amount
equal to at least 10 percent of cash dividends and other distributions from retained earnings paid by Toshiba
Corporation and its Japanese 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
appropriations by the resolution of the shareholders.

The amount of retained earnings available for dividends is based on Toshiba Corporation’s retained earnings
determined in accordance with generally accepted accounting principles in Japan and the Japanese Commercial Code.
Retained earnings at March 31, 2004 do not reflect current year-end dividends of ¥9,650 million ($91,038 thousand)
which will be payable in June 2004.

Retained earnings at March 31, 2004 included the Company’s equity in undistributed earnings of affiliated

companies accounted for by the equity method in the amount of ¥20,498 million ($193,377 thousand).

> ACCUMULATED OTHER COMPREHENSIVE LOSS An analysis of the changes in accumulated other comprehensive
loss, net of tax, for the years ended March 31, 2004 and 2003 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 gains (losses) on derivative instruments:

Balance at beginning of year
Current year change

Balance at end of year

Millions of yen

2004

2003

Thousands of
U.S. dollars

2004

¥ 15,636
11,189

¥ 25,186
(9,550)

$ 147,510
105,556

¥ 26,825

¥ 15,636

$ 253,066

¥ (59,589)
(19,701)

¥ (41,951)
(17,638)

$ (562,161)
(185,858)

¥ (79,290)

¥ (59,589)

$ (748,019)

¥(405,069)
170,786

¥(279,939)
(125,130)

$(3,821,406)
1,611,189

¥(234,283)

¥(405,069)

$(2,210,217)

¥ (1,753)
2,607

¥ (2,088)
335

$ (16,537)
24,594

¥ 854

¥ (1,753)

$ 8,057

Total accumulated other comprehensive loss:

Balance at beginning of year
Current year change

Balance at end of year

¥(450,775)
164,881

¥(298,792)
(151,983)

$(4,252,594)
1,555,481

¥(285,894)

¥(450,775)

$(2,697,113)

Tax effects allocated to each component of other comprehensive income (loss) for the years ended March 31, 2004
and 2003 are shown below:

For the year ended March 31, 2004:
Unrealized gains on securities:

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

Foreign currency translation adjustments:

Currency translation adjustments arising during year
Less: reclassification adjustment for gains included
in net income

Minimum pension liability adjustment
Unrealized gains on derivative instruments:
Unrealized gains arising during year
Less: reclassification adjustment for losses included
in net income

Other comprehensive income (loss)

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

Pre-tax
amount

Millions of yen

Tax benefit
(expense)

Net-of-tax
amount

¥ 43,367

¥ (17,517)

¥ 25,850

(27,393)

12,732

(14,661)

(20,040)

740

(19,300)

(401)
301,726

—
(130,940)

(401)
170,786

2,571

1,909

(1,098)

(775)

1,473

1,134

¥301,739

¥(136,858)

¥ 164,881

¥ (28,670)

¥ 11,717

¥ (16,953)

12,524

(5,121)

7,403

(20,363)

(374)

(20,737)

3,099
(217,487)

—
92,357

3,099
(125,130)

(11,210)

4,784

(6,426)

11,668

(4,907)

6,761

Other comprehensive income (loss)

¥(250,439)

¥ 98,456

¥(151,983)

For the year ended March 31, 2004:
Unrealized gains on securities:

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

Foreign currency translation adjustments:

Currency translation adjustments arising during year
Less: reclassification adjustment for gains included
in net income

Minimum pension liability adjustment
Unrealized gains on derivative instruments:
Unrealized gains arising during year
Less: reclassification adjustment for losses included
in net income

Thousands of U.S. dollars

Pre-tax
amount

Tax benefit
(expense)

Net-of-tax
amount

$ 409,122

$ (165,255)

$ 243,867

(258,424)

120,113

(138,311)

(189,056)

6,981

(182,075)

(3,783)
2,846,472

—
(1,235,283)

(3,783)
1,611,189

24,255

(10,358)

13,897

18,008

(7,311)

10,697

Other comprehensive income (loss)

$2,846,594

$(1,291,113)

$1,555,481

18. FINANCIAL INSTRUMENTS

> (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 instruments. The Company’s policies prohibit holding or issuing
derivative financial instruments for trading purposes.

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

The Company has entered into forward exchange contracts with financial institutions 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 2004 to 2013.

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

Fair Value Hedge Strategy
The forward exchange contracts utilized by the Company effectively reduce fluctuation in fair value of accounts
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 commitments
on future trade transactions denominated in foreign currencies approximately for the next six months.

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 ¥1,465 million ($13,821 thousand) of net gains on derivative financial
instruments from accumulated other comprehensive income (loss) to earnings during the next twelve months due to the

collection of accounts receivable denominated in foreign currency and the payment of variable interest associated with
the floating-rate debts.

At March 31, 2004, 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 underlying 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, 2004 and 2003 are
summarized 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

2004

2003

¥106,413
22,931
170,326
116,475
51,552

¥ 82,290
29,333
355,517
133,571
101,922

Thousands of
U.S. dollars

2004

$1,003,896
216,330
1,606,849
1,098,821
486,340

> (2) FAIR VALUE OF FINANCIAL INSTRUMENTS The estimated fair values of the Company’s financial instruments
at March 31, 2004 and 2003 are summarized as follows:

March 31

Nonderivatives:

Assets:

Millions of yen

2004

2003

Carrying
amount

Estimated
fair value

Carrying
amount

Estimated
fair value

Long-term finance receivables, net

¥ 5,630

¥ 6,050 ¥ 109,394 ¥ 107,256

Liabilities:

Long-term debt, including current portion

(847,039)

(862,081)

(1,225,399)

(1,247,035)

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

March 31

Nonderivatives:

Assets:

1,537
(163)
3,672
459

238
(2,534)
(3,611)
(575)

Thousands of U.S.dollars

2004

Carrying
amount

Estimated
fair value

Long-term finance receivables, net

$ 53,113 $ 57,075

Liabilities:

Long-term debt, including current portion

(7,990,934)

(8,132,840)

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

14,500
(1,538)
34,642
4,330

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
instruments, 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 non-public companies. The aggregate carrying amount of these investments in non-public companies was ¥101,456
million ($957,132 thousand) and ¥97,271 million at March 31, 2004 and 2003, respectively. However, the
corresponding 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
operating leases. Rent expenses under such leases for the years ended March 31, 2004 and 2003 were ¥83,889
million ($791,406 thousand) and ¥76,180 million, respectively.

The Company also leases certain machinery and equipment which are accounted for as capital leases from TFC, an
affiliate of the Company. The costs and accumulated amortization of the machinery and equipment under capital
leases as of March 31, 2004 were approximately ¥87,000 million ($820,755 thousand) and ¥41,300 million
($389,623 thousand), respectively.

During the year ended March 31, 2003, the Company sold certain machinery and equipment for approximately
¥82,732 million. 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 transactions was not significant.

Minimum lease payments for the Company’s capital and non-cancelable operating leases as of March 31, 2004 are

as follows:

Millions of yen

Thousands of U.S. dollars

Year ending March 31

Capital leases

Operating leases

Capital leases

Operating leases

2005
2006
2007
2008
2009
Thereafter

Total minimum lease payments

Executory costs
Amounts representing interest

Present value of net minimum lease payments
Less—current portion

¥21,334
15,131
6,889
3,569
1,367
753

49,043

(1,553)
(1,784)

45,706
(21,077)

¥24,629

¥15,795
12,929
11,721
5,800
3,243
2,827

¥52,315

$149,009
121,972
110,575
54,717
30,594
26,671

$493,538

$201,264
142,745
64,991
33,670
12,896
7,104

462,670

(14,651)
(16,830)

431,189
(198,840)

$232,349

> LESSOR The Company is also a lessor to office buildings and other assets under operating leases. Future minimum
lease payments to be received under the Company’s non-cancelable operating leases as of March 31, 2004 are as
follows:

Year ending March 31

2005
2006
2007
2008
2009
Thereafter

Millions of yen

¥ 856
848
848
841
718
6,648

¥10,759

Thousands of U.S. dollars

$ 8,075
8,000
8,000
7,934
6,774
62,717

$101,500

20. CONSOLIDATION OF VIEs

During the year ended March 31, 2003, the Company entered into a sale and leaseback transaction with a VIE in
which certain manufacturing equipment was sold and leased back. Upon adoption of FIN 46R, the Company was
required to consolidate the VIE. As a result, the Company’s machinery and equipment, and other liabilities increased
by ¥37,988 million ($358,377 thousand), respectively, in the accompanying consolidated balance sheet as of March
31, 2004. The creditors of the VIE do not have recourse to the general credit of the Company.

21. COMMITMENTS AND CONTINGENT LIABILITIES

Commitments outstanding at March 31, 2004 for the purchase of property, plant and equipment approximated
¥21,250 million ($200,472 thousand).

At March 31, 2004, contingent liabilities, other than guarantees disclosed in Note 22, approximated ¥9,634

million ($90,887 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 position or the
results of operations of the Company.

22. 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 2004 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 guarantees was ¥95,894 million ($904,660
thousand) as of March 31, 2004.

> 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 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 ¥31,715 million ($299,198 thousand) as of March 31, 2004. 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 various dates through 2008, and became secondarily
liable for these obligations. The maximum potential payment by the Company as a secondary obligor was ¥10,375
million ($97,877 thousand) at March 31, 2004.

> RESIDUAL VALUE GUARANTEES UNDER SALE AND LEASEBACK TRANSACTIONS The Company has entered into
several sale and leaseback transactions in which certain manufacturing equipment was sold and leased back. The
Company may be required to make payments for residual value guarantees in connection with these transactions. The
operating leases will expire on various dates through July 2006. The maximum potential payments by the Company for
such residual value guarantees were ¥21,167 million ($199,689 thousand) at March 31, 2004.

> GUARANTEES OF DEFAULTED NOTES AND ACCOUNTS RECEIVABLE The Company has transferred trade notes
receivable, trade accounts receivable and finance receivables under several securitization programs. Upon certain sales
of trade notes and accounts receivable, the Company holds a repurchase obligation, which the Company is required to
perform upon default of the trade notes and accounts receivable. The trade notes and accounts receivable generally
mature within three months. The maximum potential payment for such repurchase obligation was ¥12,610 million
($118,962 thousand) as of March 31, 2004.

The carrying amounts of the liabilities for the Company’s obligations under the guarantees described above at

March 31, 2004 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

2004

2003

¥ 19,491
23,590
(21,948)
(1,195)

¥ 19,938

¥ 20,886
19,775
(20,542)
(628)

¥ 19,491

Thousands of
U.S. dollars

2004

$ 183,877
222,547
(207,057)
(11,273)

$ 188,094

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% and 40% interests, respectively, in TMD. The carrying value
of the assets and liabilities acquired, net of cash received of ¥2,001 million, was ¥70,666 million and ¥59,953
million, respectively.

During the year ended March 31, 2003, Toshiba Corporation contributed certain assets and liabilities aggregating
¥55,009 million, and ¥30,568 million, respectively, and formed TM T&D with Mitsubishi Electric Corporation
(“Mitsubishi Electric”). As a result of this transaction, Toshiba Corporation obtained a 50% interest 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% interest
in MTPD, and recognized a gain of approximately ¥6,269 million. The aggregate book carrying value of the assets and
liabilities contributed by Toshiba Corporation amounted to ¥50,622 million and ¥31,462 million, respectively. The
gain of ¥6,269 million, 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 income for the year ended March 31, 2003.
During the year ended March 31, 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, in return for net assets and liabilities aggregating ¥17,152 million, and recorded a loss
on disposal of assets of ¥4,241 million.

During the year ended March 31, 2004, Toshiba Corporation and Mitsubishi Electric established TMEIC. In
connection with this transaction, the Company contributed certain assets totaling ¥48,549 million ($458,009
thousand), which included cash of ¥2,719 million ($25,651 thousand), and liabilities of ¥32,801 million ($309,443
thousand), and obtained a 50.0% interest in TMEIC.

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, 2004 and 2003, and the related consolidated statements of income, 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, 2004 and 2003. 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, 2004 and 2003, 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 27, 2004

68 ORGANIZATION CHART

Board of Directors

Nominating
Committee

Compensation
Committee

Audit Committee

Audit Committee
Office

President &
Chief Executive Officer

Corporate Audit Div.

Strategic Planning &
Communications Group

Legal Affairs &
Export Control Group

Human Resources Group

Finance &
Accounting Group

Corporate Social
Responsibility Div.

Management
Innovation Div.

Information
Systems Center

(In-house Companies)
Digital Products Group

Legal Affairs Div.
Export Control Div.

Corporate Strategic
Planning Div.
Corporate Business
Development Div.
Corporate Communications
Office
External Relations Div.
Overseas Business Promotion Div.

(Overseas Offices)

Moscow

Johannesburg

Baghdad
Abu Dhabi

Human Resources and
Administration Div.
Employee Wellness Div.
Toshiba General Hospital

Finance & Accounting Div.
Consolidated Management
Div.

Electronic Devices Group

Mobile Communications
Company

Digital Media Network
Company

Personal Computer &
Network Company

Semiconductor Company

Mobile Communications
(cid:127)Development Center
Hino Operations

Storage Device Div.
CTV &
Visual Media Equipment Div.
Digital Camera &
Imaging System Div.
Digital AV Div.
Core Technology Center
Ome Operations
(cid:127)Digital Media Network
Fukaya Operations
(cid:127)Digital Media Network

Personal Computer Div.
(cid:127)Japan & Asia Operations
Personal Computer Div.
(cid:127)America, EMEA &
Oceania Operations
Server & Network Div.
PC Development Center
Ome Complex
Global Production &
Logistics Management Center
Ome Operations
(cid:127)Personal Computer &
Network

Discrete Semiconductor Div.
Himeji Operations
(cid:127) Semiconductor
System LSI Div. I
Oita Operations
Microelectronics Center
System LSI Div. II
Kitakyushu Operations
Memory Div.
Yokkaichi Operations
Electronic Devices Sales &
Marketing Div.

Productivity &
Environment Group

Procurement Group

Technology &
Intellectual Property Group

Marketing Planning Group

Corporate Productivity
Planning Div.
Corporate Environment
Management Div.
Corporate Manufacturing
Engineering Center
Yokohama Complex

Corporate Procurement Div.

Technology Planning Div.
Intellectual Property Div.
Corporate Research &
Development Center
Software Engineering Center

Marketing Planning Div.
Corporate Market Creation Div.
Automotive Systems Div.
Corporate Branding Office
Design Center

Social Infrastructure Group

Display Devices &
Components Control Center

Industrial and
Power Systems & Services
Company

Social Network &
Infrastructure Systems
Company

Battery & Energy Div.
Fukaya Operations
Himeji Operations

Broadcasting Systems Div.
System Components Div.
Defense & Electronic
Systems Div.
Komukai Operations
Yanagicho Complex
Fuchu Operations
(cid:127)Social Network &
Infrastructure Systems

International Business
Promotion Div.
Nuclear Energy Systems &
Services Div.
Isogo Nuclear Engineering
Center
Thermal Power & Hydroelectric
Power Systems & Services Div.
Infrastructure Systems Div.
Control & Measurement Div.
Transportation Systems Div.
Power and Industrial Systems
Research and Development
Center
Keihin Product Operations
Fuchu Complex
Fuchu Operations
(cid:127)Social Infrastructure Systems
Mie Operations

Network Services &
Content Control Center

iValue Creation Div.

(As of April 1, 2004)

70 GLOBAL NETWORK

Overseas Offices

LATIN AMERICA

EUROPE

Moscow

AFRICA

Johannesburg

MIDDLE EAST

Baghdad
Abu Dhabi

Overseas Subsidiaries and
Affiliates

NORTH AMERICA

Toshiba of Canada, Ltd.
Markham, Ontario, Canada

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

Toshiba America Capital

Corporation

New York, New York, U.S.A.

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

Toshiba America Medical Systems,

Inc.

Tustin, California, U.S.A.

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

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

Toshiba America Information

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

Toshiba America Business

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

Toshiba America Consumer

Products, Inc.

Wayne, New Jersey, U.S.A.

Toshiba International

Corporation

Houston, Texas, U.S.A.

Toshiba America Electronic

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

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

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 Medical Systems Ltd.
Crawley, U.K.

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

Toshiba Europe GmbH
Neuss, Germany

Toshiba Semiconductor GmbH
Braunschweig, Germany

Toshiba Electronics Europe GmbH
Düsseldorf, Germany

Toshiba Medical Systems GmbH
Neuss, Germany

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

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

Schneider Toshiba Inverter Europe

S.A.S.

Pacy-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 Medical Systems S.R.L.
Rome, Italy

Toshiba Medical Systems S.A.
Madrid, Spain

ZAO Toshiba Medical Systems
Moscow, Russia

LLC Toshiba Digital Media Network

CIS

Moscow, Russia

MIDDLE EAST

Toshiba Gulf FZE
Dubai, U.A.E.

Toshiba El Araby Home Appliances

Marketi
Cairo, Egypt

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

Shengyang Neusoft Business

Software Co., Ltd.

Shengyang, The People’s Republic of

China

Dalian Toshiba Broadcasting System

Toshiba Industrial Products Sales

Toshiba Electronics Service

Co., Ltd.

Dalian Corporation

(Thailand) Co., Ltd.

Dalian, The People’s Republic of China

Bangkok, Thailand

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

(Hangzhou) Co., Ltd.

Hangzhou, The People’s Republic of

China

Toshiba Storage Device (Shanghai)

Co., Ltd.

Shanghai, The People’s Republic of China

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

Toshiba Electronics (Shenzhen) Co.,

Ltd.

Shenzhen, The People’s Republic of China

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 Refrigerator (Xi’an) Co., Ltd.
Xi’an, The People’s Republic of China

Toshiba Electronics Management

Thai Toshiba Electric Industries Co.,

(China) Co., Ltd.

Ltd.

Shanghai, The People’s Republic of China

Bangkok, Thailand

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

Toshiba Products & Services

(Shanghai) Co., Ltd.

Toshiba Consumer Products

(Thailand) Co., Ltd.

Bangkok, Thailand

Toshiba Sales and Services Sdn.

Shanghai, The People’s Republic of China

Bhd.

Toshiba Elevator (Shenyang) Co., Ltd.
Shenyang, 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

Toshiba Electronics Software

Solutions Korea Corp.
Seoul, The Republic of Korea

Taiwan Toshiba International

Procurement Corp.

Taipei, Taiwan

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 Singapore Pte., Ltd.
Singapore

Toshiba Information, Industrial and

Toshiba Electronics Asia (Singapore)

Power Systems Taiwan Corp.

Taipei, Taiwan

Pte., Ltd.

Singapore

Toshiba Digital Media Network

Toshiba Medical Systems Asia Pte.,

Taiwan Corp.

Taipei, Taiwan

Toshiba Memory Semiconductor

Taiwan Corp.

Taipei, Taiwan

Ltd.
Singapore

AFPD Pte., Ltd.
Singapore

P.T. Toshiba Consumer Products

Toshiba Electronics Taiwan Corp.
Taipei, Taiwan

(Indonesia)
Bekasi, Indonesia

Toshiba Hong Kong Ltd.
Shatin, Hong Kong SAR

Toshiba Electronics Asia, Ltd.
Kowloon, Hong Kong SAR

Toshiba Information Equipment

(Philippines), Inc.

Laguna, Philippines

P.T. Toshiba Visual Media Network

Indonesia
Jakarta, Indonesia

P.T. Display Devices Indonesia
Bekasi, Indonesia

Toshiba India Private Ltd.
New Delhi, India

Toshiba Electronics Philippines, Inc.
Manila, Philippines

OCEANIA

Toshiba Vietnam Consumer

Products Co., Ltd.
Ho Chi Minh City, Vietnam

Toshiba Vietnam Home Appliances

Co., Ltd.

Binh Duong, Vietnam

Toshiba Thailand Co., Ltd.
Bangkok, Thailand

Toshiba Semiconductor (Thailand)

Co., Ltd.

Bangkok, Thailand

Toshiba International Corporation

Pty., Ltd.
Sydney, Australia

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

(As of March 31, 2004)

CONSOLIDATED SUBSIDIARIES / AFFILIATED COMPANIES ACCOUNTED FOR BY THE EQUITY METHOD

CONSOLIDATED SUBSIDIARIES

Domestic
A&T Battery Corporation
Device Link, Inc.
Harison Toshiba Lighting Corporation
IT-Services Corporation
Iwate Toshiba Electronics Co., Ltd.
Joint Fuel Co., Ltd.
Kaga Toshiba Electronics Corporation
Toshiba Battery Co., Ltd.
Toshiba Building Co., Ltd.
Toshiba Capital Corporation
Toshiba Carrier Airconditioning
Systems Corporation
Toshiba Carrier Corporation
Toshiba Consumer Marketing

Corporation

Toshiba Device Corporation
Toshiba Elevator and Building

Systems Corporation

Toshiba Elevator Products Corporation
Toshiba HA Products Co., Ltd.
Toshiba Home Technology Corporation
Toshiba Industrial Products Sales

Corporation

Toshiba Information Equipments

Co., Ltd.

Toshiba Lighting & Technology

Corporation

Toshiba Logistics Corporation
Toshiba LSI Package Solutions

Corporation

Toshiba Matsushita Display
Technology Co., Ltd.

Toshiba Medical Finance Co., Ltd.
Toshiba Medical Systems Corporation
Toshiba Multi Media Devices Co., Ltd.
Toshiba Plant Systems & Services

Corporation

Toshiba Samsung Storage Technology

Corporation

Toshiba Solutions Corporation
Toshiba TEC Corporation

Plus 172 Others

AFFILIATED COMPANIES ACCOUNTED
FOR BY THE EQUITY METHOD

Domestic
ep Broadcasting Corporation
ep Corporation
GE Toshiba Silicones Co., Ltd.
Media Serve Corporation
Mobile Broadcasting Corporation
MT Picture Display Co., Ltd.
NEC Toshiba Space Systems, Ltd.
Nishishiba Electric Co., Ltd.
Shibaura Mechatronics Corporation
TM T&D Corporation
Topcon Corporation
Toshiba Ceramics Co., Ltd.
Toshiba-EMI Limited
Toshiba Finance Corporation
Toshiba Machine Co., Ltd.
Toshiba Mitsubishi-Electric Industrial

Systems Corporation

Toshiba Sogo Finance Corporation

Plus 14 Others

Overseas
Audiovox Communications Corporation
Beijing Matsushita Color CRT Co., Ltd.
Guangdong Meizhi Compressor

Limited

MT Picture Display (M) Sdn. Bhd.
MT Picture Display (Thailand) Co.,

Ltd.

MT Picture Display Corporation of

America (Ohio)

MT Picture Display Corporation of

America (New York)

MT Picture Display Indonesia
P.T. Display Devices Indonesia
Semp Toshiba Amazonas S.A.
TM GE Automation Systems L.L.C.
Toshiba Carrier (Thailand) Co., Ltd.
Toshiba Carrier UK Ltd.

Plus 19 Others

(As of March 31, 2004)

Overseas
AFPD Pte., Ltd.
Dalian Toshiba Television Co., Ltd.
Pacific Fuel Cell Capital (U.S.A.), Inc.
Toshiba (China) Co., Ltd.
Toshiba America Business Solutions,

Inc.

Toshiba America Capital Corporation
Toshiba America Consumer Products,

Inc.

Toshiba America Electronic

Components, Inc.

Toshiba America Information

Systems, Inc.

Toshiba America Medical Systems,

Inc.

Toshiba America MRI, Inc.
Toshiba America, Inc.
Toshiba Asia Pacific Pte., Ltd.
Toshiba Capital (Asia) Ltd.
Toshiba Compressor (Taiwan)

Corporation

Toshiba Consumer Products
(Thailand) Co., Ltd.

Toshiba Dalian Co., Ltd.
Toshiba Digital Media Network

Taiwan Corp.

Toshiba Electronics Asia, Ltd.
Toshiba Electronics Malaysia Sdn.

Bhd.

Toshiba Europe GmbH
Toshiba Information

Equipment (Hangzhou) Co., Ltd.

Toshiba Information

Equipment (Philippines), Inc.
Toshiba Information Systems (UK)

Ltd.

Toshiba Information, Industrial and
Power Systems Taiwan Corp.
Toshiba International Corporation
Toshiba International Finance

(Netherlands) B.V.

Toshiba International Finance (UK)

Plc.

Toshiba Medical Systems Europe B.V.
Toshiba Systemes (France) S.A.
Toshiba TEC Europe Imaging Systems

S.A.

Toshiba TEC France Imaging Systems

S.A.

Toshiba TEC U.K. Imaging Systems

Ltd.

Plus 83 Others

INVESTOR REFERENCE

CAPITAL
¥274,926 million

EMPLOYEES
161,000

COMMON STOCK

Authorized
10,000,000,000 shares

Issued
3,219,027,165 shares

No. of shareholders
483,591

Average holdings
6,657 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

As of March 31, 2004

PRINCIPAL SHAREHOLDERS (%)

The Master Trust Bank of Japan, Ltd. (trust accounts)

Japan Trustee Services Bank, Ltd. (trust accounts)

The Dai-ichi Mutual Life Insurance Company

Nippon Life Insurance Company

Sumitomo Mitsui Banking Corporation

Employees Stock Ownership Plan

NIPPONKOA Insurance Co., Ltd.

Shinsei Bank, Limited

State Street Bank and Trust Company

The Chase Manhattan Bank, NA London

5.94

4.64

3.38

3.25

2.17

1.73

1.55

1.52

1.36

1.34

As of March 31, 2004

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.

T
O
S
H
B
A
A
N
N
U
A
L
R
E
P
O
R
T
2
0
0
4

This report was printed entirely on recycled paper with soy-based ink.

Printed in Japan