Toshiba Corp. Annual Report 2008

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FY2008 Annual Report · Toshiba Corp.

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Toshiba Corporation
Annual Report 2008 • Operational Review

Contents

The Toshiba Brand Statement . . . . . . . . . . . . . . . . . 1

Special Feature: Leading Innovation . . . . . . . . . . . 2

Basic Management Policy and
Mid-term Business Plan . . . . . . . . . . . . . . . . . . . . . . 10

To Our Shareholders . . . . . . . . . . . . . . . . . . . . . . . . . 12

An Interview with the President . . . . . . . . . . . . . . . 14

Business at a Glance . . . . . . . . . . . . . . . . . . . . . . . . . 18

Business Review . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20

CSR Management . . . . . . . . . . . . . . . . . . . . . . . . . . . 34

Research & Development
and Intellectual Property. . . . . . . . . . . . . . . . . . . . . 38

Corporate Governance . . . . . . . . . . . . . . . . . . . . . . 41

Directors and Executive Officers . . . . . . . . . . . . . 44

Basic Commitment of the Toshiba Group . . . . 46

Data Section . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47

Corporate Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63

The cover background
picture is “Toshiba Forest”
in Gotemba City, Shizuoka.
This is part of Toshiba’s
1.5 million Tree-Planting
Project, which contributes
to global environment
protection.

Financial Highlights • Toshiba Corporation and Subsidiaries
For the years ended March 31, 2008 and 2007

Net sales—Japan

—Overseas

Net sales (Total)

Operating income (Note 2)

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 (Note 3)

—basic

—diluted

Cash dividends

Number of employees (Thousands)

Millions of yen

2008

2007

Change (%)
2008/2007

¥ 3,705,218

¥ 3,599,385

3,962,858

7,668,076

238,099

255,558

127,413

5,935,637

1,022,265

465,044

393,293

12.0

2.1

3,516,965

7,116,350

258,364

298,460

137,429

5,931,962

1,108,321
375,335

393,987

13.0

2.6

Yen

39.46

36.59

12.00

198

42.76

39.45

11.00

191

2.9

12.7

7.8

(7.8)

(14.4)

(7.3)

0.1

(7.8)
23.9

(0.2)

(7.7)

(7.2)

9.1

3.7

Thousands of
U.S. dollars (Note1)

2008

$ 37,052,180

39,628,580

76,680,760

2,380,990

2,555,580

1,274,130

59,356,370

10,222,650

4,650,440

3,932,930

U.S. dollars

0.39

0.37

0.12

Notes: 1) Unless indicated otherwise, all dollar figures refer to U.S. currency. Yen amounts have been translated into U.S. dollars, for convenience only, at the rate of ¥100 =

U.S.$1.00 (as of March 31, 2008)

2) Operating income has been determined under financial reporting practices generally accepted in Japan and is defined as net sales less cost of sales and selling,

general and administrative expenses.

3) 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 stock acquisition rights were exercised to issue common stock, unless their inclusion would have an antidilutive effect.

Net sales

Net income

78.2

46.0

28.8

(Billions of yen)

7,668.1

7,116.4

6,343.5

5,836.1

5,579.5

(Billions of yen)

127.4

137.4

Operating income / Operating income ratio (Billions of yen)

3.1%

238.1

3.6%

258.4

3.8%

240.6

2.7%

154.8

3.1%

174.6

Return on equity (ROE)

8.6%

5.9%

4.3%

12.0%

13.0%

FY2007 Topics

Jul ’07

Nov ’07

Westinghouse Group signed contracts for con-
struction of four nuclear power plants in China

Announcement of “Toshiba Group Environ-
mental Vision 2050”

Contracts to construct four
next-generation AP1000TM
PWR (pressurized water
reactors) in China represent
Westinghouse’s first orders
for new nuclear power plants
since joining Toshiba Group.

AP1000TM PWR type light water reactor

Sep ’07

Completion of construction of Fab 4
NAND Flash Memory manufacturing facility
at Yokkaichi Operations

Construction of the
fourth fabrication
facility at Yokkaichi
rein-
Operations
forced our capability
to meet increased
demand for NAND
Flash memory for
digital products.

Yokkaichi Fab 4

Sep ’07

Sale of Ginza Toshiba Building confirmed

Sale of the building supported Toshiba in maximiz-
ing corporate value and concentrating resources in
core business, and also allows for maximized utiliza-
tion of the Ginza site.

Oct ’07

Agreement with Sony Group on joint venture
for high-performance semiconductors

In strengthening its system LSI business, Toshiba
signed a memorandum of understanding with Sony
Group toward establishing a joint venture company for
the manufacture of high-performance semiconductors.

“Environmental Vision 2050”
will support efforts to raise
Toshiba Group’s eco-effi-
ciency in both products and
business processes, and pro-
mote environmental man-
agement toward ensuring
that “People lead rich lifestyles
in harmony with the Earth.”

Dec ’07

Environmental Vision
2050

Cooperation with Sharp Corp. on panels for
LCD TVs and system LSIs

An agreement with Sharp Corp.
will promote close cooperation
in the partners’ respective spe-
cialties: Toshiba’s system LSIs
and Sharp’s LCD panels.

The companies together
announced the cooperation.

Feb ’08

Withdrawal from the HD DVD business confirmed

Dramatic changes in the business environment, and
a determination that continuation would have a
major impact on the company’s overall operations,
guided Toshiba’s decision to withdraw from the HD
DVD business.

Feb ’08

Confirmation of construction of new memory
manufacturing facilities

With all projections showing growth in demand for
NAND Flash memory, Toshiba took steps to ensure it
was ready by deciding to build two new manufactur-
ing facilities simultaneously, with construction sched-
uled to start in 2009.

Financial Highlights • Toshiba Corporation and Subsidiaries
For the years ended March 31, 2008 and 2007

Net sales—Japan

—Overseas

Net sales (Total)

Operating income (Note 2)

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 (Note 3)

—basic

—diluted

Cash dividends

Number of employees (Thousands)

Millions of yen

2008

2007

Change (%)
2008/2007

¥ 3,705,218

¥ 3,599,385

3,962,858

7,668,076

238,099

255,558

127,413

5,935,637

1,022,265

465,044

393,293

12.0

2.1

3,516,965

7,116,350

258,364

298,460

137,429

5,931,962

1,108,321
375,335

393,987

13.0

2.6

Yen

39.46

36.59

12.00

198

42.76

39.45

11.00

191

2.9

12.7

7.8

(7.8)

(14.4)

(7.3)

0.1

(7.8)
23.9

(0.2)

(7.7)

(7.2)

9.1

3.7

Thousands of
U.S. dollars (Note1)

2008

$ 37,052,180

39,628,580

76,680,760

2,380,990

2,555,580

1,274,130

59,356,370

10,222,650

4,650,440

3,932,930

U.S. dollars

0.39

0.37

0.12

Notes: 1) Unless indicated otherwise, all dollar figures refer to U.S. currency. Yen amounts have been translated into U.S. dollars, for convenience only, at the rate of ¥100 =

U.S.$1.00 (as of March 31, 2008)

2) Operating income has been determined under financial reporting practices generally accepted in Japan and is defined as net sales less cost of sales and selling,

general and administrative expenses.

Net sales

Net income

78.2

46.0

28.8

(Billions of yen)

7,668.1

7,116.4

6,343.5

5,836.1

5,579.5

(Billions of yen)

127.4

137.4

Operating income / Operating income ratio (Billions of yen)

3.1%

238.1

3.6%

258.4

3.8%

240.6

2.7%

154.8

3.1%

174.6

Return on equity (ROE)

8.6%

5.9%

4.3%

12.0%

13.0%

FY2007 Topics

Jul ’07

Nov ’07

Westinghouse Group signed contracts for con-
struction of four nuclear power plants in China

Announcement of “Toshiba Group Environ-
mental Vision 2050”

Contracts to construct four
next-generation AP1000TM
PWR (pressurized water
reactors) in China represent
Westinghouse’s first orders
for new nuclear power plants
since joining Toshiba Group.

AP1000TM PWR type light water reactor

Sep ’07

Completion of construction of Fab 4
NAND Flash Memory manufacturing facility
at Yokkaichi Operations

Construction of the
fourth fabrication
facility at Yokkaichi
rein-
Operations
forced our capability
to meet increased
demand for NAND
Flash memory for
digital products.

Yokkaichi Fab 4

Sep ’07

Sale of Ginza Toshiba Building confirmed

Sale of the building supported Toshiba in maximiz-
ing corporate value and concentrating resources in
core business, and also allows for maximized utiliza-
tion of the Ginza site.

Oct ’07

Agreement with Sony Group on joint venture
for high-performance semiconductors

Dec ’07

Environmental Vision
2050

Cooperation with Sharp Corp. on panels for
LCD TVs and system LSIs

An agreement with Sharp Corp.
will promote close cooperation
in the partners’ respective spe-
cialties: Toshiba’s system LSIs
and Sharp’s LCD panels.

The companies together
announced the cooperation.

Feb ’08

Withdrawal from the HD DVD business confirmed

Feb ’08

Confirmation of construction of new memory
manufacturing facilities

The Toshiba Brand Statement

Special Feature: Leading Innovation

Toshiba delivers technology and products remarkable

for their innovation and artistry—contributing to a safer,

more comfortable, more productive life.

We bring together the spirit of innovation with our

passion and conviction to shape the future and help

protect the global environment—our shared heritage.

We foster close relationships, rooted in trust and respect,

with our customers, business partners and communities

around the world.

Accelerating Sustained Growth
with High Profit through Innovation
Toshiba captures the spirit of its corporate brand tagline, “Toshiba Lead-
ing Innovation,” to deliver waves of innovation in all aspects of business
operations.

If a company is to secure sustained profit, its management policies
must be grounded in promoting growth. We can never be complacent,
satisfied with business activities to date. Instead, we must constantly
seek to strengthen innovation activities and practices, in order to gener-
ate continuous innovation.

Achieving this demands thoroughgoing change in the way we do
things: process innovation that enhances our competitive strengths; and
value innovation that allows us to create and provide our customers with
new value. As we realize this, we will ensure that Toshiba Group enjoys
accelerated “Sustained Growth with High Profit.”

Strengthen Innovation Activities to
Achieve High Growth Goals

High Growth Goals

Value Innovation

Process Innovation

Current Pace of Growth

Strengthening
Innovation Activities
Multiplier Effect of Innovation (i cube)

Current Management
Innovation (MI) Activities

The Toshiba Brand Statement

Special Feature: Leading Innovation

Toshiba delivers technology and products remarkable

for their innovation and artistry—contributing to a safer,

more comfortable, more productive life.

We bring together the spirit of innovation with our

passion and conviction to shape the future and help

protect the global environment—our shared heritage.

We foster close relationships, rooted in trust and respect,

with our customers, business partners and communities

around the world.

Strengthen Innovation Activities to
Achieve High Growth Goals

High Growth Goals

Value Innovation

Process Innovation

Current Pace of Growth

Strengthening
Innovation Activities
Multiplier Effect of Innovation (i cube)

Current Management
Innovation (MI) Activities

Commodity
Products

Decommoditized
Products

Generate profit
through dramatic changes
in methodologies

Grow by
offering completely
new value

Process
Innovation

Value
Innovation

Toshiba Innovation is:

Process Innovation
Strengthen competitiveness by reevaluating cur-
rent methods, reducing costs and improving
product performance, and by enhancing quality,
supply capabilities and speed.

Value Innovation
Aim for growth by providing customers with
products and services that create completely new
value.

Multiplier Effect of Innovation (i cube)
Through its i cube innovation program, Toshiba Group
is simultaneously bringing innovation to the develop-
ment, manufacturing and sales processes, using the
multiplier effect to win sustained growth.

Research & Development
Process Innovation
Achieving enhanced speed and efficiency in pro-
viding timely new products and services, at levels
of quality and performance that give full consid-
eration to the needs of customers, society and
the environment.

Production & Procurement
Process Innovation
Refining manufacturing strengths (“monozukuri”)
and operating power by enhancing supply chain
management systems, and raising environmental
efficiency.

Sales & Marketing
Process Innovation
Seeing the market from the customer’s perspec-
tive in order to achieve new levels of customer
satisfaction in the sales and marketing process,
and to strengthen brand power.

Sustained Growth
with High Profit

Special Feature: Leading Innovation

Cumulative Worldwide Shipments
of Notebook PCs

Outlook

60 million
units

40 million
units

20 million
units

1985

Cumulative
shipments of 60
million

Launch of the “Qosmio”
brand worldwide

Launch of the world’s first
multi-drive notebook PC

Launch of the ultra-small “libretto” PC

Launch of the world’s first
256 color TFT notebook PC

Launch of the “dynabook”
brand in Japan

Commercialization of
the “T1100,” the world’s
first laptop PC

Toshiba: History of the Notebook PC

Notebook PCs
Toshiba wrote a new chapter in the history of the PC in 1985, with the commercial-

ization of the world’s first laptop. The Company created a new market, and led the

industry in combining portability, quality and usability, and in realizing enjoyable

and rewarding “wherever, whenever” computing. More advances followed: 1989’s

Japanese launch of the “dynabook” series, the world’s first notebook PC; 1996’s

groundbreaking “libretto,” a palm-sized computer; and 2004’s “Qosmio,” an AV note-

book PC rivaling LCD TVs in high-definition imaging. And those are just a few of the

many Toshiba PCs that have introduced innovative technologies to the world.

Worldwide shipments of Toshiba notebook PCs

exceeded 10 million units during FY2007, and cumula-

tive shipments now surpass 60 million units.

Going forward, the notebook PC market will con-

tinue to expand, and so will Toshiba, winning high

growth with competitive products offering cutting-

edge technologies and scale merit.

INNOVATION THAT REALIZES GROWTH AND CREATES

VALUE FOR CUSTOMERS AND THE ENVIRONMENT

Toshiba’s global notebook PC business rests on the

two pillars of differentiated and commodity products.

“AV Notebook PC” and “Thin & Light” are the guiding

concepts behind differentiated products. “AV Notebook

PC” integrate Toshiba’s latest cutting-edge features,

including support for high-definition images, incorpora-

tion of double tuners for digital terrestrial broadcasting,

and “REGZA” Link. With “Thin & Light,” we make the most

of our advanced technology and expertise to engineer

AV notebook PC with
advanced image processing
functions
“Qosmio” is the very first AV
notebook PC to integrate the
highly advanced “SpursEn-
gine™” image processor for
processing and recognizing
images. It offers users new
levels of pleasure and innova-
tion in using video content.

pioneering advances in miniaturization, integration, shock-resistance and spill-resistance.

The fruits can be seen in the release of thinner, lighter, tougher products.

The June 2007 launch in Japan of the environmentally conscious “dynabook

SS RX” realized the concept of “true mobility” with the world’s highest levels of thin-

ness, lightness and battery life, plus the world’s first solid state drive (SSD). Toshiba also

continues to lead the industry in commodity products with the release of high quality

notebook PCs.

Going forward, advances in high-performance processors supporting real-time

image processing, in power-efficient fuel cells, and in differentiated products

equipped with cutting-edge technology, will ensure that Toshiba continues to

deliver unsurpassed notebook PCs that create new value.

Special Feature: Leading Innovation

NAND Flash Memory
The semiconductor industry took a giant step forward in 1987, when Toshiba

invented NAND Flash memory—the world’s first rewritable non-volatile memory, a

memory that retains data when the power is switched off. Today, NAND Flash mem-

ory is by far the memory-of-choice for data storage in digital cameras, mobile

phones and portable media players.

Looking to the future, all expectations are that

increasing use in memory storage, particularly in per-

sonal computers, will drive further expansion of the

NAND Flash market.

INNOVATION THAT BRINGS GROWTH AND

CREATES VALUE FOR CUSTOMERS AND THE

GLOBAL ENVIRONMENT

Expectations are high for NAND Flash memory as a

storage device that is very light, with excellent shock

resistance and high-speed data throughput.

In promoting use of NAND Flash memory in all

kinds of digital products, Toshiba is advancing scalabil-

ity, increasing capacity with multi-level cell technology

that allows two or more bits of data to be saved to a

memory cell, and reducing chip sizes. These technolo-

gies assure Toshiba’s abilty to respond to customer

needs, including lower power consumption.

March 2008 saw Toshiba start to apply 43-nanome-

ter* process technology to production of NAND Flash

memory. The Company also developed its first Solid

State Drive (SSD), a product that is expected to see fast

demand growth thanks to superior shock resistance

and low power consumption.

Toshiba has consistently met expanding demand for NAND Flash memory with

investments in plant and equipment. The most recent facility, which was completed

in September 2007, is Fab 4 at Yokkaichi Operations. This highly advanced wafer fab

not only boosts production efficiency but also builds efforts to protect the global

environment into the manufacturing process: CO2 emissions by floor area are more

than 50% lower than for a typical memory facility (e.g. Fab 2 at Yokkaichi).

* A nanometer is one billionth of a meter

Demand for SSD in personal
computers expected to
grow.
Toshiba’s SSD, based on
multi-level cell NAND Flash
memory, is widely expected
to find a major role as a stor-
age device in personal com-
puters.

NAND Flash Memory: Advances in Density
(change in density by single chip)

10Gb

1Gb

100Mb

〜

1987

Development of the
Solid State Drive (SSD)

Launch for use with
USB memory

Launch of the world’s first multi-level cell
NAND (2 bits per cell)
Launch for use with mobile phones

Launch for use in portable music players
Development of the SD memory card

Launch of the world’s first Multi Chip Package (MCP)

Launch for use with digital cameras
Development of SmartMedia

Development of NAND Flash memory

Toshiba: History of the NAND Flash Memory

Mb: Megabit; Gb: Gigabit (1Gb is 1,024Mb)

Special Feature: Leading Innovation

Cumulative Output of Shipped Steam
Turbines for Power Generation

Outlook

2007
Toshiba steam
turbines achieved
a cumulative total
output of 150GW

1997 Toshiba steam
turbines achieved a
cumulative total output
of 100GW

150GW

100GW

50GW

1930

1949 Toshiba’s

first export
unit

1929 Toshiba’s first unit,

with the largest capacity to date of any
unit manufactured in Japan (7,500kW)

1989 World’s first ultra supercritical
steam turbine (700MW)

1976 First domestically produced nuclear

power generation steam turbine (784MW)

1975 World’s largest capacity steam turbine to

date (1,000MW super critical steam turbine)

1965 Largest capacity to date of any unit

manufactured in Japan (375MW)

Toshiba: History of the Steam Turbine for Power Generation

Steam Turbines for Power Generation
Since delivering its first unit in 1929, Toshiba has gone on to supply steam turbines

for thermal and nuclear power plants installed throughout Japan and in many other

countries around the world. As power consumption has grown, so too has demand

for steam turbines—demand that Toshiba continues to meet. In 2007 the Company

reached the milestone of cumulative total shipments with a power generating

capacity of 150 gigawatts.

Moving ahead, Toshiba will respond to demand for thermal and nuclear power

generation facilities in fast-growing overseas economies, and promote refurbish-

ment and replacement of aging equip-

ment in Japan and other countries.

INNOVATION THAT REALIZES GROWTH

AND CREATES VALUE FOR CUSTOMERS

AND THE ENVIRONMENT

Steam turbines for power plants, long a

Toshiba mainstay product, are the core

components of large scale thermal and

nuclear power generation systems.

In meeting customer needs for high

generating capacities and lower operat-

ing costs, including improved fuel effi-

ciency, it is necessary to put in place an

integrated system for developing

highly efficient turbines based on mate-

rials and structures that can support

higher steam temperatures. Toshiba

has constantly promoted cooperative

State-of-the-art steam tur-
bines delivering advances in
power generating efficiency.
Toshiba has produced many
highly efficient, high capacity
steam turbines for power
plants by meeting require-
ments for high-temperature,
high-pressure operation.

development in these areas by its research, design, procurement and manufactur-

ing divisions. The resulting flow of innovation has not only produced many record-

breaking “Japan First” and “World First” products in terms of output and efficiency

etc., but also made positive contributions to supporting the global environment,

through advances in efficiency that reduce CO2 emissions from coal and other fossil

fuels.

Currently, a new generation of advanced ultra-supercritical steam turbines is

under development. These turbines apply innovative technologies that take effi-

ciency to new heights and support efforts to further limit CO2 emissions, while

meeting growing worldwide demand for power generation systems.

Basic Management Policy and Mid-term Business Plan

Toshiba Group has the goal of being a responsible “corporate citizen of planet Earth”

that creates new value and contributes to the lives and cultures of people around the

world. To fulfill this goal, our basic management policy aims to achieve sustained

growth along with strong competitive power and to earn the trust of the global com-

munity.

Basic Management Policy

Our basic management policy is based on four concepts:

Attain sustained growth with high profit

We place strong management emphasis on achieving higher growth and making
strategically effective allocation of resources.

Maximize multiplier effect of innovations

We enhance global competitiveness through Process Innovations and Value Innova-
tions.

Carry out management with Corporate Social Responsibility

We put the utmost priority on respect for human life and safety as well as full compli-
ance with the law and regulations in all our business activities. We endeavor to earn the
trust of the global community as a responsible “corporate citizen of planet Earth.”

Develop people with a global perspective

We accelerate the development of our global business capabilities through developing
people with a global perspective and leadership potential, who can continuously lead
innovation and understand and empathize with diverse cultures.

Mid-term Business Plan

Goals for
FY2010

Net sales
Operating income
Operating income ratio
Return on equity (ROE)
Shareholders’ equity ratio

¥10 trillion
¥500 billion
5 %
over 15 %
over 20 %

Vision of FY2010

FY2006

Digital Products
G R O W T H B U S I N E S S

Electronic Devices
G R O W T H B U S I N E S S

Social Infrastructure
S TA B L E B U S I N E S S

FY2008

Reinforce
competitiveness

Continue high growth,
expand high profitability

Develop as
growth businesses

Create products that deliver
more “Surprise and Sensation”
(NAND, Cell, AV products)

Enhance provision of eco-products/systems
(nuclear power, new lighting,
innovative rechargeable batteries)

FY2010

Achieve High Growth and Profit in all Business Domains

Performance Goals by Segment

Net sales
(Billions of yen)

Operating income
ratio (%)

CAGR* (%)

Digital Products
Electronic Devices
Social Infrastructure
Home Appliances

FY2007 (Result)
2,951.2
1,738.5
2,419.0
774.3

FY2010 (Plan)
4,100.0
2,430.0
2,810.0
940.0

FY2007 (Result)
0.5
4.3
5.4
0.5

FY2010 (Plan) FYs2007–2010

2.4
8.2
6.0
2.1

12
12
5
7

*Compound Average Growth Rate

Shareholders’ equity,
Interest-bearing
debt and D/E ratio
(Billions of yen)

At the end of FY2010
D/E ratio: less than 100%

0
1
6
2
1

123%

3
2
2
0
1

Capital
expenditures
(Billions of yen)

R&D expenditures
(Billions of yen)

Cash flows
(Billions of yen)

0
0
0
2
2

n
o

i
l
l
i

b
0
0
5
¥
d
n
u
o
r
a

f
o
e
s
a
e
r
c
n

%
7
6

%
4
1

5
2
8
6
1

%
1
7

%
2
1

7
9
5
1
1

%
4
4

%
0
3

%
1
2

Accumulated free cash
flow for FY2008 to 2010
¥300 billion surplus

7
2
2
13
7
4
2

0
0
0
4
1

n
o

i
l
l
i

b
0
4
2
¥
d
n
u
o
r
a

f
o
e
s
a
e
r
c
n

%
4
4

%
6
2

%
5
2

FYs 05–07
(Result)

FYs08–10

FYs 05–07
(Result)

FYs08–10

Electronic Devices
Digital Products
Social Infrastructure
Others

-75.6

FY 07
(Result)

Cash flows from
operating activities
Cash flows from investing
activities

Free cash flow

Interest-bearing debt

Shareholders’ equity

D/E ratio
(Interest- bearing debt to
Shareholders’ equity)

To Our Shareholders:

Toshiba adopted “TOSHIBA Leading Innovation” as its corporate brand tagline to clearly demon-

strate the value that we promise to our customers and society and to emphasize that through

continuous innovation in all areas of its business activities Toshiba is determined to attain sus-

tained growth with high profit. With Digital Products, Electronic Devices and Social Infrastructure

positioned as our core domains, we are striving to achieve sustained growth and high profit in

each of our business segments.

In fiscal year 2007, consolidated net sales were ¥7,668 billion (an increase of ¥552 billion over

the previous fiscal year), consolidated operating income was ¥238 billion (a decrease of ¥20 billion

from the previous fiscal year), and consolidated net income was ¥127 billion (a decrease of ¥10 bil-

lion from the previous fiscal year). Consolidated net sales set a new record and grew at the rate of

7.8% over that of the previous year. Among our consolidated net sales, the share of sales outside of

Japan exceeded 50% for the first time ever, reaching 52%. However, consolidated operating

income and consolidated net income for the current term both came in below the figures

achieved in the previous fiscal year. Looking ahead, we will implement management policies

driven by a strong determination to overcome any challenges we might face, while remaining

firmly committed to the goal of achieving sustained growth with high profit.

Toshiba announced its mid-term business plan to FY2010 in May 2008. Goals for the final year

of the plan include achieving consolidated net sales of ¥10 trillion with consolidated operating

income of ¥500 billion. Toward achieving these targets, we are placing strong management

emphasis on achieving higher growth and making strategically effective allocation of resources.

We continue to consider the fulfillment of Corporate Social Responsibility as one of the main

concepts of our basic management policy. In November 2007, we released “Toshiba Group’s Envi-

ronmental Vision 2050,” and expressed our commitment toward the goal of helping people lead

culturally rich lifestyles in harmonious coexistence with the Earth by the year 2050. In all our busi-

ness activities, we not only are thoroughly committed to respect for human life and safety as well

as full legal compliance, but we also are taking a leading role in the realization of a sustainable

society by seriously addressing environmental problems as a “corporate citizen of planet Earth.”

We would like to ask all our shareholders to continue to provide us with their continued strong

support and understanding.

Tadashi Okamura
Chairman of the Board of Directors

Atsutoshi Nishida
Director, President and CEO

Tadashi Okamura

Atsutoshi Nishida

An Interview with the President

“Going forward, I want to see a Toshiba Group that has
a strong determination to overcome any challenges
and to increase profit as we achieve sustained growth.”

What is your evaluation of Toshiba Group’s

major factors, in the end we did see a profit decrease,

FY2007 business performance?

and I am not satisfied with that performance. Going

We succeeded in breaking our past record for consoli-

forward, I want to see a Toshiba Group that has a

dated sales. Since I was appointed President and CEO,

strong determination to overcome any challenges and

I have been implementing a basic management policy

to increase profit as we achieve sustained growth.

that calls on all Toshiba employees to work to achieve

“sustained growth with high profit.” Over the course of

If we look at your business performance in recent

FY2007, our consolidated sales grew 7.8%, reflecting

years, consolidated operating income has been

steady sales growth, particularly in global markets. I

largely derived from the Electronic Devices and

believe we are staying on track for sustained growth.

Social Infrastructure segments. What are your

Consolidated operating income and net income

thoughts on the ideal makeup of Toshiba Group’s

for the current term were lower than in the previous

income structure in the future?

fiscal year. Price declines in NAND Flash memory that

In the past, Toshiba has been heavily reliant on the

exceeded our expectations, combined with the costs

performance and profits of the Electronic Devices seg-

incurred in withdrawing from the HD DVD business,

ment. By comparison, we can see that recent improve-

can be pointed to as causes of this decline. Another

ments in business performance by the Social Infra-

contributory factor was costs resulting from the

structure segment have now given us two sturdy

change in accounting for estimation of salvage value.

pillars for profit. What we must do now in our Digital

On the positive side, both the PC business and the

Products segment is to put the PC business and TV

Social Infrastructure segment recorded profit

and AV businesses in the forefront of our efforts to

increases. As a result, I believe that on the whole the

raise a third pillar for profit, which will allow us to

negative impacts on Toshiba’s business performance

obtain a more well-balanced profit structure.

of the headwinds we faced were kept to a minimum.

However, even though we can point to these

Atsutoshi Nishida
Director, President and CEO

It looks as though you implemented a lot of forward

looking measures in FY2007, among them aggres-

sive investments in the semiconductor business and

plans to broadly strengthen the nuclear energy busi-

ness. What are the goals of these especially impor-

tant strategic investments?

There has been no fundamental change in Toshiba’s

stance or in our commitment to positioning the Digi-

tal Products and Electronic Devices segments as

FY2007 was a year in which Toshiba Group

growth businesses. Beyond these segments, we now

engaged in a comprehensive review of its cur-

expect the Social Infrastructure segment to make the

rent businesses. What were the results of this

transition to growth businesses, and we look for an

business review?

increase in profit in this heretofore stable-profit busi-

In any business, it is essential to periodically take a long

ness segment.

hard look at what you are doing, and to reconfirm the

Following this approach, one of the most impor-

direction you want to go in. When we do that, we look

tant of the policies that we implemented in FY2007

at each business from the perspective of what is good

was making consecutive aggressive investments in

for Toshiba Group as a whole, and we ask ourselves if it

the semiconductor business. There can be no doubt

is a core business that should be retained, if it is a busi-

that the market for NAND Flash memory will continue

ness that will grow and generate profit, or if it is a busi-

to see strong growth. In readiness for that, in addition

ness that creates synergies with our other businesses.

to Yokkaichi Operations Fab 4, which we completed in

During FY2007, all 45 businesses in Toshiba Group

FY2007, we have decided to further strengthen our

were reviewed from the perspectives of “business

production capabilities by constructing two more

scale,” “growth potential,” “profitability” and “efficiency,”

fabs. We also took steps to reinforce our position in

while keeping in mind the special characteristics of

the system LSI field through a joint venture with Sony

each business. The results of the review clarified areas

Group that will seek operating synergies with

that we need to strengthen to ensure that each busi-

Toshiba’s Oita Operations.

ness can survive and win in global markets, and these

In addition to that tie-up, we also entered into an

conclusions were reflected in the mid-term business

alliance with Sharp Corp. in semiconductors and LCDs.

plan announced in May 2008.

As is well known, the production of key components

An Interview with the President

of digital products such as LCD televisions requires

Your decisive decision in February 2008 to with-

enormous investment. In fact, it has become increas-

draw from the HD DVD business left a strong

ingly difficult for any one company to cover all the

impression. From the perspective of corporate

related development costs. Our alliance with Sharp

governance, what led you to make this decision?

speaks to the strengths of both companies, allows us

The business environment in the next-generation DVD

to use them for mutual benefit, and will support us in

market underwent far-reaching changes at the begin-

facing and overcoming intense global competition.

ning of 2008. HD DVD was a new business that our

We will continue to consider this type of alliance and

Digital Products segment was strongly promoting,

tie-up in the future, as it may become necessary.

and we had many in-house discussions about the

At the same time, we are accelerating our efforts

business. However, after assessing the factors involved

to expand our nuclear energy business, an area where

with the continuation of the business—particularly,

global growth is increasingly anticipated. Following

the potential for market confusion among consumers

the FY2006 acquisition of the Westinghouse Group, in

and others and the great impact on Toshiba’s future

FY2007, we took steps to reinforce our position in the

operations—I made the management decision in

nuclear fuel business by forming an alliance with

favor of early withdrawal. While the costs incurred in

Kazatomprom of Kazakhstan. We also endeavored to

withdrawing from the HD DVD business had an

bolster our engineering capabilities in the nuclear field

impact on our FY2007 performance, I believe that the

by deciding to expand the facilities at our Isogo Engi-

impact was contained, and any future impact has

neering Center.

been kept to the minimum.

How do you view the financial structure of Toshiba

Group?

The ratio of interest-bearing debt to shareholders’

equity—the D/E ratio—stood at 123% at the end of

FY2007, which was worse than that of the previous fis-

cal year. Our mid-term business plan addresses this

issue. We plan to bring the D/E ratio down to below

100% by the end of FY2010, and will take steps to

shorten the cash conversion cycle from FY2008

throughout the Group. It is especially important to

increase inventory turnover and accelerate early col-

lection of accounts receivable, as means to improve

cash flow and strengthen our financial structure.

a global corporation, it is an important part of our

mission to proactively contribute to society on a

worldwide scale. Toward this end, we are committed

to developing people who have a global perspective

and leadership potential.

What are your thoughts about a corporation’s

responsibility to transparently provide appropriate

information to stakeholders and to ensure share-

In what ways is Toshiba Group striving to be a

holders of a reasonable return?

responsible “corporate citizen of planet Earth”?

Toshiba Group has many stakeholders, including our

For Toshiba to continue to record sustained growth, I

shareholders, customers, employees, suppliers, and

am convinced that it is essential for us to raise public

the different societies in which we operate. Without

trust through making a firm commitment to the ful-

their support, we could not carry out our business

fillment of corporate social responsibility (CSR). The

activities. In this context, I believe that management

concept of a “corporate citizen of planet Earth” con-

must make proper disclosure of information to stake-

veys our corporate stance, and it consists of two fun-

holders and listen closely to their voices. I recognize

damental aspects.

that one of the most important responsibilities of

The first is that we give careful consideration to

management is to provide a fair return for sharehold-

all matters concerning the environment in all our

ers. While giving full consideration to such factors as

operations. “Toshiba Group Environmental Vision

the strategic investments necessary to secure

2050,” which we announced in November 2007, was

medium- to long-term growth, we try to maintain a

developed from this perspective, and it states our

dividend payout ratio of around 30% on a consoli-

goal of raising the eco-efficiency of our products and

dated basis, and in FY2007 the full-year dividend

business processes 10 times by 2050, with 2000 as

totaled ¥12 per share, a record amount. From now on,

the benchmark year.

we will continue to implement management strate-

The second fundamental idea is to operate our

gies that enhance the value of Toshiba Group and

businesses with a deep understanding of the history,

bring benefits to our shareholders and all of our stake-

culture, and customs of the countries in the world. As

holders.

Percentage of sales

Electronic
Devices
Segment

Percentage of sales

21%

Business at a Glance FY2007 ended march 2008

Digital
Products
Segment

Sales

Operating income /
Operating income ratio

0.5%

0.6%

0.8%

15.0

15.8

20.9

36%
36%

(Billions of yen)

2,951.2

2,805.5

2,536.5

(Billions of yen)

MOBILE COMMUNICATIONS COMPANY
Technological strengths in such areas as high resolution
imaging, wireless and advanced devices enable the
Mobile Communications Company to support rich com-
munication in this broadband age, and the drive towards
ubiquitous networks that will allow everybody to partici-
pate in social networks. The company fuses leading-
edge technologies in the multimedia mobile phone ter-
minals that it develops and brings to market.

DIGITAL MEDIA NETWORK COMPANY
In the fields of imaging and audio equipment, the
Digital Media Network Company offers LCD TVs and
HDD & DVD recorders compatible with terrestrial digital
broadcasting, digital audio players and LCD projectors.
In mass storage the company provides the world market
with small form factor HDD. The company has a wide
product line-up, ranging from BtoB to BtoC, and will
push hard to enhance Toshiba’s name in the digital AV
business. In addition, the company will work on devel-
oping and releasing leading-edge products with unique
technologies that make them distinctively different from
competing products.

PERSONAL COMPUTER & NETWORK COMPANY
As ubiquitous connectivity starts to make its way into
the three domains of the home, the office and the
mobile, we are bringing Toshiba Group’s cutting-edge
core technologies to notebook PCs, servers, business
telephone systems and other equipment, all toward
continuing to shape a comfortable computing and net-
work environment.

Sales

(Billions of yen)

1,738.5

1,657.3

1,388.1

Operating income /
Operating income ratio

(Billions of yen)

4.3%

74.1

7.2%

8.9%

119.7

123.3

SEMICONDUCTOR COMPANY
The Semiconductor Company promotes balanced busi-
ness in three segments: memories, system LSIs and dis-
crete devices. With NAND Flash memory and system LSIs
and discrete devices for digital consumer products, we
expect to see dynamic growth that we will sustain and
advance through proactive application of management
resources.

DISPLAY DEVICES &
COMPONENTS CONTROL CENTER
The Center provides dedicated management across the
electron tube business, including power tubes for accel-
erators and X-ray tubes, the materials business, including
precision manufactured parts and materials for the parts
and components business, and the solid-state device
business, including thermal print heads; all businesses
that contribute to development and progress in diverse
product areas. The Center also manages progress in key
emerging technologies, including direct methanol fuel
cells (DMFC) for mobile devices, DNA chips and photo-
catalysts.

TOSHIBA MATSUSHITA DISPLAY
TECHNOLOGY CO., LTD.
As it continues to lead the world in development of low
temperature polysilicon TFT technology, Toshiba Mat-
sushita Display Technology is also promoting develop-
ment of high value added displays for a wide range of
applications, including mobile phones, car navigation
systems and mobile PCs.

Social
Infrastructure
Segment

Percentage of sales

Home
Appliances
Segment

Percentage of sales

29%

Sales

(Billions of yen)

2,419.0

2,067.7

1,882.3

Operating income /
Operating income ratio

(Billions of yen)

5.4%

131.3

4.7%

96.8

4.1%

76.5

Sales

(Billions of yen)

774.3

748.9

687.5

Operating income /
Operating income ratio

3.9

0.5%

9.7

1.3%

2.7

0.4%

(Billions of yen)

POWER SYSTEMS COMPANY
Expertise in nuclear, thermal and hydroelectric power
generation ensures comprehensive and reliable electric
power supply solutions.

TRANSMISSION DISTRIBUTION &
INDUSTRIAL SYSTEMS COMPANY
Our transmission and distribution systems, electrical
equipment and systems for transportation, production,
control and measuring, all contribute to industrial devel-
opment in world markets.

SOCIAL INFRASTRUCTURE SYSTEMS COMPANY
We serve the public with essential social infrastructure
systems, water and environmental systems, broadcast-
ing and network systems, and security and automation
systems.

TOSHIBA ELEVATOR AND
BUILDING SYSTEMS CORPORATION
We develop, deliver and maintain highly efficient, safe,
state-of-the-art elevators and escalators, offer upgrades
and provide integrated building management services.

TOSHIBA SOLUTIONS CORPORATION
From consulting to outsourcing, for industry and busi-
ness, our full range of optimized solutions support our
clients’ continued growth and development.

TOSHIBA MEDICAL SYSTEMS CORPORATION
Through advanced diagnostic imaging modalities,
including CT system, MRI and ultrasound, and healthcare
IT systems, we contribute to global healthcare.

TOSHIBA CONSUMER ELECTRONICS HOLDINGS
CORPORATION
With the same innovative spirit that developed the lead-
ing-edge technology for Japan’s first refrigerators, wash-
ing machines, vacuum cleaners and rice cookers, we are
taking our products to the global level, to contribute to
richer, more comfortable lifestyles for people every-
where.

Others

Percentage of sales

Sales

(Billions of yen)

384.6

391.6

379.8

Operating income /
Operating income ratio

(Billions of yen)

3.8%

14.7

4.8%

4.7%

18.7

18.0

Business Review

Digital Products Segment

Consolidated sales of Digital Products rose by 145.7 billion yen to 2,951.2 billion yen.

The PC business saw sales growth on increased sales worldwide, and the Digital

Media business also saw higher sales thanks to increased sales of TVs. Sales in the

Mobile Phone business were flat, while the Retail Information Systems and Office

Equipment business saw lower sales.

Segment consolidated operating income decreased by 0.8 billion yen, resulting

in profit of 15.0 billion yen. The PC business significantly increased operating

income on higher sales, and the Retail Information Systems and Office Equipment

business raised operating income by focusing on high-value added products. The

overall Digital Media business, however, recorded a significantly lower performance,

on costs incurred in the withdrawal from the HD DVD business.

When dramatic change hit the HD DVD market environment at the beginning of

2008, management recognized the need for early clarification of company policy.

After giving full consideration to future strategy, the decision was made to immedi-

ately withdraw from the business. After-sales service and support continue, assuring

customers who purchased products of continued use, free from concern.

Finally, we sold our holding in IPS Alpha Technology, Ltd. a manufacturer of

large-sized LCDs, to Matsushita Electric Industrial Co., Ltd.

Toshiba’s position in the market
Share of the global portable PCs market for 2007

1
2
3
4
5

■ Hewlett-Packard
■ Acer
■ Dell
■ Toshiba
■ Lenovo
■ Others
Total

Volume of shipments
(Thousands of units)
23,326
15,402
15,295
10,902
8,515
34,598
108,038

Share (%)
21.6
14.3
14.2
10.1
7.9
31.9
100.0

Share of the domestic mobile phones market for FY2007

1
2
3
4
5

■ Sharp
■ Panasonic Mobile Communications
■ Fujitsu
■ Toshiba
■ NEC
■ Others
Total

Volume of shipments
(Ten thousands of units)
1,276
738
592
511
463
1,496
5,076

Share (%)
25.1
14.5
11.7
10.1
9.1
29.5
100.0

10.1%

Sources: IDC (March 2008)

10.1%

Source: MM Research Institute (April 2008)

Digital High Definition LCD Televisions
“REGZA ZH500” series
Through the latest advances in visual
imaging, it is possible to enjoy all sorts
of high definition content that are dis-
tributed via digital terrestrial broadcast-
ing, internet and optical cables, and to
easily record that content onto the inte-
grated 300-gigabyte hard-disk drive.

Mobile Phones and PHS
We offer a wide line-up, including mod-
els that use “REGZA” LCD TV technol-
ogy, organic light emitting diode
(OLED) displays, phones for children
and seniors, a waterproof model, and
an easy-to-use PHS terminal.

Business Review: DIGITAL PRODUCTS (CONT.)

MOBILE COMMUNICATIONS COMPANY

While the Japanese market recorded a new high in total units shipped in FY2007, this is

expected to change in the future, as the market undergoes steady change from matu-

ration and carriers implement changes in the billing system (standard two-year con-

tracts). Overseas, as the smart phone market continues to grow, leading venders are

locked into fierce price competition. In these circumstances, we promoted sales of 21

models, including smartphones, in the Japanese and overseas markets. Although profit

declined, we maintained sales revenue and unit sales at approximately the same level

as in the previous fiscal year.

In FY2007, our concerted efforts to enhance product variation could be seen in the

release of the high-spec “W56T” with integrated “KCP+” platform and OLED display for

au; the “921T” REGZA phone developed for Softbank; and in models that we delivered

to Willcom and EMOBILE. We will continue to draw on our strengths in high-resolution

imaging and other in-house technologies from the Digital Products segment to

advance development of high value-added and fusion products.

DIGITAL MEDIA NETWORK COMPANY

In FY2007, sales rose on increased sales of large-sized LCD televisions, but operating

income saw a decline, triggered by the withdrawal from the HD DVD business and price

declines in the Hard Disk Drive (HDD) business.

The television business saw a notable increase in sales, as “REGZA,” our unified

global brand, achieved greater market penetration and we strengthened sales promot-

ing of our line-up of LCD TVs with screen sizes of 26 inches and more. In Japan, we

secured the number two position in that segment in March 2008, with a market share of

approximately 25%. The July 2007 start of operations at our new LCD TV production

base for Europe, Toshiba Television Central Europe Sp. z o. o. in Poland, will allow us to

build share in the expanding European market. While market conditions remain tough,

with projections indicating continued declines in sales prices, and further cost reduc-

tions a matter of necessity, we will continue to launch a range of advanced, value-

added products offering excellent image quality, integrated HDD, and network func-

tions, and continue to develop and promote the “REGZA” brand as the key to

expanding the business.

The Storage business, where we focus on high-volume, high value-added 1.8- and

2.5-inch HDDs, saw decreased sales and operating income due to price declines.

The abrupt change in the business environment that hit the HD DVD business at

the beginning of the year led us to withdraw from the business at the end of March

2008, and to end production of HD DVD players and recorders. Going forward, we will

promote maximized application of our accumulated expertise in advanced technolo-

gies such as video processing and compression, and combine them with Flash memory

and HDD storage technologies to create new strategic products for our age of digital

convergence. In our current DVD business, while prices continue to ease, Toshiba num-

bers among the market leaders in Japan, thanks to sales promotions focused on prod-

ucts that can record terrestrial digital broadcasts, and we will continue to operate the

DVD player and recorder business.

While Toshiba faces price pressure and a tough competitive environment, our

superior technological capabilities will allow us to stimulate the market through the

proactive launch of cutting-edge products suited to the market’s needs.

PERSONAL COMPUTER & NETWORK COMPANY

The worldwide notebook PC market continues to see high annual growth. Given this,

our main emphasis is on expanding overseas sales, and in FY2007 we achieved ship-

ments of over 10 million units for the first time. As sales grew, we also promoted intensi-

fied cost reduction measures, and succeeded in generating greater sales and operating

income than in previous fiscal years.

In FY2007, we made the most of our capabilities in notebook PCs and Toshiba’s

position as an imaging equipment manufacturer to launch products with cutting-edge

functions. The “Qosmio” series of AV notebook PCs was strengthened as we led the

industry in commercializing “Qosmio G40/97D”, in Japan, which integrates two digital

terrestrial broadcasting tuners and offers enhanced compatibility with AV equipment. In
our “Thin & Light” series of “PORTE´GE´,” we started sales of the world’s lightest notebook
PC; under 900g, even with a built-in optical drive and a 12.1-inch wide LCD. We also

announced the world’s first notebook PC with a 128-gigabyte Solid State Drive (SSD).

At Toshiba, we will continue to direct our attention to the notebook PC field, and to

work for and look forward to consistent business expansion. In this age of ubiquitous

connectivity, we will also continue to release products incorporating the latest

advances in core technologies for the home, office and mobile spaces. Our goal is to

realize highly functional computing and network environments that are a pleasure to

use.

Business Review

Electronic Devices Segment

The Semiconductor business saw sales increase, mainly in NAND Flash memory.

Sales in the Devices and Components business remained flat. The LCD business saw

sales decline on sluggish sales of LCDs for mobile applications and a decline in sales

prices. Overall consolidated segment sales increased by 81.2 billion yen from the

previous year to 1,738.5 billion yen.

Consolidated operating income for the segment was 74.1 billion yen, a decrease of

45.6 billion yen from the previous year. Both the Semiconductor business and the LCD

business saw significantly lower operating income, the result of declining sales prices.

We have agreed with Sony Corp. and Sony Computer Entertainment Inc. to

establish a joint venture to manufacture high-performance semiconductors, and we

acquired manufacturing equipment from Sony Group. On the strength of a pro-

jected increase in demand for NAND Flash memory as it finds even wider applica-

tion, and in order to put in place a system that gives us the flexibility and speed

required to respond to demand for next-generation memory, we have decided to

construct two semiconductor manufacturing facilities at the same time, in Yokkaichi

and Kitakami. One of these new facilities will be operated with US-based SanDisk

—we will equip the facility together, and operate it as a joint venture.

Toshiba’s position in the market

Share of the global semiconductors market for 2007

1
2
3
4
5

■ Intel
■ Samsung Electronics
■ Toshiba
■ Texas Instruments
■ Infinion Technology
■ Others
Total

Sales (Million of US$)
33,800
20,464
11,820
11,768
10,194
185,865
273,911

Share (%)
12.3
7.5
4.3
4.3
3.7
67.9
100.0

Share of the global small- and mid-sized TFT-LCD market for 2007

(Amount base)
1
2
3
4
5

■ Sharp
■ Toshiba Matsushita Display Technology
■ Samsung Electronics
■ Epson Imaging Device
■ Hitachi Displays
■ Others
Total

Share (%)
20.3
10.9
8.6
8.2
7.0
45.0
100.0

4.3%4.3%

Source: Gartner Dataquest (April 2008)

10.9%

Source: DisplaySearch (January 2008)

Direct Methanol Fuel Cell (DMFC) for mobile phones
We continue development work toward establishing
DMFC as a new business. In February 2008, we unveiled a
Toshiba mobile phone integrating a working prototype of
thin DMFC that supported extended operation.

High-Performance Processor “SpursEngineTM”
Meeting demands for real-time, high-level image process-
ing in digital equipment requires a powerful coprocessor
to support the host processor. The SpursEngineTM is based
on the high-performance multi-core technology of the
Cell Broadband EngineTM (the high-end processor devel-
oped by IBM, Sony Group and Toshiba) and adds Toshiba’s
advanced image processing technology.

Automotive-use circular LCD display
A 75mm outer diameter LCD display
developed by Toshiba Matsushita Dis-
play Technology Co., Ltd. applies
advanced low-temperature polysilicon
technology to achieve a circular form.
The display can be installed in vehicle
instrument panels.

Business Review: ELECTRONIC DEVICES (CONT.)

SEMICONDUCTOR COMPANY

In FY2007, sales grew on increased volume demand for NAND Flash memory and dis-

crete semiconductors, but the severe price declines that hit NAND Flash memory com-

bined with changes in the accounting for estimation of salvage value to produce a sig-

nificant decrease in operating income.

While price declines in NAND Flash Memory exceeded our expectations, the market

continues its sustained expansion, and we are responding by expanding capacity. Most

recently, we completed construction of Fab 4, a new facility at Yokkaichi Operations, in

September 2007, and commenced production in December. In readiness for future

demand growth, we have firmed up plans to add new NAND Flash facilities, one in

Yokkaichi, Mie Prefecture, the other in Kitakami, Iwate Prefecture. Construction of the

two facilities is scheduled to begin in spring 2009, with completion in 2010. Looking to

the future, we are migrating to 43-nanometer process technology, and we are under-

taking R&D of next generation memory technologies that will increase density.

In system LSI, the System-on-Chip (SoC) business environment remained severe, but

we continued to make progress in CMOS sensors. Among moves to strengthen the

business, we brought production of CMOS camera modules for mobile phones in-

house, at Iwate Toshiba Electronics Co. We are also promoting cooperative agreements

with other companies. We formed an alliance with Sharp Corp. in system LSIs for LCD

TVs, and also entered into a contract with Sony Group for a joint venture to produce

high-performance processors and graphics engine.

The discrete semiconductor business anticipates strong growth in power devices. In

readiness for this, Kaga Toshiba Electronics Corp. started operation of a new manufac-

turing facility in October of 2007.

In coming years, Toshiba plans to retain and reinforce operating superiority as a ver-

tically integrated device manufacturer through swift transitions to advanced genera-

tions of process technology, expanding the memory business, particularly in NAND

Flash memory, and strengthening the system LSI and discrete businesses with strategic

allocations of resources to growth fields.

DISPLAYS DEVICES & COMPONENTS CONTROL CENTER

In FY2007, the electron tubes, materials, and solid state device businesses made steady

progress and recorded stable sales.

We continue to make advances in the development of direct methanol fuel cells

(DMFC) for mobile devices, and in February 2008 we showed a working prototype of

an integrated thin DMFC that brought extended operating time to a Toshiba mobile

phone at the “Mobile World Congress 2008.”

We also continue to promote development of DNA chips for medical diagnostics.

In June 2007, we announced a submission for marketing approval of a DNA chip as an

in-vitro diagnostic product for classifying strains of the human papillomavirus, a known

cause of cervical cancer, that we developed with SEKISUI MEDICAL Co., Ltd. (formerly

Daiichi Pure Chemical Co., Ltd.) and Toshiba Hokuto Electronics Corp. If this application

is granted, we will be the first to bring a medical-use DNA chip to the Japanese market.

The technology also has non-medical applications. Working with the National Research

Institute of Police Science and Obihiro University of Agriculture and Veterinary Medi-

cine, we have applied it to the development of a DNA chip to detect biological agents,

achieving a means for testing samples suspected of containing pathogens that is quick

and simple, and that supports simultaneous inspection of several targets at once.

In the materials field, Toshiba Materials Co., Ltd. announced development of a

groundbreaking visible light responsive photocatalyst that functions in low level lumi-

nance, including indoors, and that has 30 times the gas-decomposition efficiency and

50 times the antibacterial effectiveness of typical titania-based photocatalysts.

We are now implementing plans to boost competitiveness in current businesses

and to enlarge the scale of operations with new business, with a particular emphasis

on the early launch of DMFC.

TOSHIBA MATSUSHITA DISPLAY TECHNOLOGY CO., LTD.

FY2007 saw steady progress in LCD panels for mobile PCs and automotive applications,

but sudden demand fluctuations, most notably for mobile phones in overseas markets,

together with dramatic falls in prices, resulted in sales falling below the level of the pre-

vious fiscal year. Efforts to support profit that included continuous productivity

improvements, moves to reduce the purchase prices of parts materials and to control

fixed costs, eventually could not compensate for price declines and lower sales, result-

ing in a substantial decrease in operating income.

To meet the growing market for panels for mobile equipment, Ishikawa Works

installed a new line for low-temperature polysilicon LCD displays and commenced pro-

duction in October 2007.

Technology advances are at the heart of the display business, and as we continued

to promote the transition to thinner, lighter models across our products, we also

expanded development of a line-up of 12.1-inch panels that offer improved visibility in

direct sunlight for use in outdoor vending and ticket machines, of 3.5- and 5.7-inch pan-

els for portable terminals, and of circular LCDs for vehicle instrument panels. Develop-

ment of small OLED panels also continues, with the goal of commercialization in FY2008.

In FY2008, we will advance the shift to high value-added products and products for

new markets, and implement cost-cutting measures at an early stage to support

improved profitability.

Business Review

Social Infrastructure Segment
Consolidated segment sales increased by 351.3 billion yen to 2,419.0 billion yen. The

Power Generation Systems business saw solid sales of thermal power plant and

equipment, mainly overseas, and the consolidation of the Westinghouse Group also

boosted sales. The Transmission Distribution & Industrial Systems business recorded

higher sales on good performances in transmission and distribution systems, and

transportation systems. Sales in the Medical Systems business rose on improved

overseas sales. The IT Solutions business and the Elevator business also saw

increased sales. The Social Infrastructure Systems business booked lower sales, as

broadcasters completed initial capital investments in digital broadcasting.

Consolidated operating income rose by 34.5 billion yen to 131.3 billion yen.

While results slipped in the Social Infrastructure Systems business, both the Power

Generation Systems business and the Transmission Distribution & Industrial Systems

business posted solid results. The Medical Systems business and IT Solutions busi-

ness saw the same high profitability as in the previous period, and the Elevator busi-

ness also recorded a good performance.

Transmission Distribution & Industrial Systems Company was established on

April 1, 2008, following partial reorganization of Power Systems Company, Industrial

Systems Company and Social Infrastructure Systems Company.

Toshiba’s position in the market

Share of the U.S. steam turbine and generator market for 2007

1
2
3
4
5

■ Toshiba
■ Siemens
■ Fuji Electric Systems
■ General Electric
■ Dresser-Rand
■ Others
Total

MWe
4,323.0
1,633.0
286.0
285.0
101.3
112.3
6,740.6

Share (%)
64.1
24.2
4.2
4.2
1.5
1.8
100.0
Source: McCoy Power Report “Steam Turbine Report 2007”

64.1%

POWER SYSTEMS COMPANY

The FY2007 full year consolidation of the Westinghouse Group for the first time (the

group was consolidated during the second half of the previous year), along with a

notably strong performance in the thermal power business, supported us in achieving

significantly increased sales and operating income.

Our basic strategy is to build up overseas business while reinforcing our presence in

the service business, including corrective power plant maintenance, in the Japanese

market. In the nuclear energy business, Westinghouse received orders for four PWR

Advanced Site Assembly (ASA)
500kV power transformer
Toshiba overcame the logistical chal-
lenge of delivering high capacity, large-
sized transformers to locations that
impose strict road conditions, including
road-use limitations, by dismantling at
the factory, transporting in compo-
nents, and reassembling at the site with
strict quality control. In 2007, Toshiba
realized a compact next-generation
ASA transformer by optimizing insula-
tion design.

Dynamic Volume CT System
(Aquilion ONETM)
One rotation, 320 slices, 0.35 seconds—and a
complete 3D image of the heart or brain.
Toshiba’s Area Detector CT System is the first
in the world, capable of capturing complete
images in such a short time, in only one rota-
tion. The system delivers highly detailed,
dynamic 3D images of organs, reduces the
patient’s exposure to radiation, and supports
improved diagnostics and health care, thus
contributing to a healthier, better society.

(pressurized water reactors) plants in China, while Toshiba was selected as the prime

contractor in a project to construct two BWR (boiling water reactors) plants in the U.S.

Westinghouse’s measures to reinforce its overseas business bases included acquisitions

of nuclear power engineering companies in South Africa and France, while Toshiba

established a company to support promotion of its nuclear energy business in the U.S.

The Group’s determination to enhance its capabilities in the nuclear fuel supply area

underpinned a partnership with Kazatomprom, Kazakhstan’s state-owned nuclear

energy business company. In the thermal power business, the company continued to

win significant orders and to maintain leadership in the U.S. market for steam turbines

and generators, and established Toshiba Xingyi Control System (Xian) Co., Ltd. to manu-

facture and sell information control systems for plants in China.

In order to assure its ability to meet demand for services in Japan and for power

generation equipment overseas, we will continue to promote development of power

generation systems and to develop strategies that enhance competitiveness, including

strategic alliances, while giving full consideration to environmental issues.

Business Review: SOCIAL INFRASTRUCTURE (CONT.)

TRANSMISSION DISTRIBUTION & INDUSTRIAL SYSTEMS COMPANY

In FY2007, the company increased both sales and profits as the transmission and distri-

bution business, industrial system business, and the transportations system business

were carried forward on strong demand, both in Japan and overseas.

The company is determined to reinforce its business in transmission and distribution

(T&D). By driving forward a global expansion of its manufacturing and procurement bases,

along with its sales function, the company proposes to expand business in the Middle

East and Asia, including China; in South America, including Brazil; and in the large-scale

markets of North America and Europe. The company will enhance competitiveness by

establishing an integrated system that covers electricity transmission through to final dis-

tribution, with the aim of becoming one of the world’s top players in T&D. The company

also intends to accelerate globalization of industrial component products and electric

products for rolling stock by cooperating with the T&D business, and to promote expan-
sion of its new business in the “SCiBTM (Super Charge ion Battery),” an innovative recharge-

able battery.

SOCIAL INFRASTRUCTURE SYSTEMS COMPANY

In FY2007, despite a good performance in the radio application systems business, the

company reported lower sales and profits as the broadcasting systems business com-

pleted the first round of equipment sales for terrestrial digital broadcasters, carriers

installed fewer base stations for mobile phone services, and the security and automa-

tion system business completed a program for IC-based updating of station service

equipment for rail cars in Kanto, the area around Tokyo.

The infrastructure systems business provides total solutions for managing buildings,

road transportation, and facilities for rivers, etc. The water purification and environmen-

tal systems business has started commercial operations of Japan’s first processing facil-

ity for soil contaminated with PCBs. The broadcasting and network systems business has

entered into a capital alliance with Ikegami Tsushinki Co., Ltd. to promote a tapeless

video production and editing system. The radio application system business is extend-

ing operations into next-generation products, while advancing the overseas develop-

ment of radio application systems, etc. The security and automation systems business is

promoting expansion, including overseas marketing of such new products as mailing

equipment.

The company will contribute to the creation of a safe, secure, comfortable society,

by providing customers with high quality infrastructure and diverse solutions.

TOSHIBA ELEVATOR AND BUILDING SYSTEMS CORPORAITON

New orders received remained stable in Japan in FY2007 on the strength of large-scale

developments in the capital region. The renewal and maintenance business saw

healthy demand for replacement, and the number of maintenance contracts passed

the 100,000 units milestone. Overseas, sales and operating income grew on increased

business in China.

In Japan, the company started sales of new products and services offering anti-

earthquake measures in May 2007, and in November our “elevator renewal” program

took the industry’s first Minister’s Prize, the Ministry of Economy, Trade and Industry, at

the fourth Eco-Products Awards (Eco-Service Category). Overseas business grew on the

commercialization of environmentally-conscious elevators in China, where demand

continues to emerge.

Going forward, alongside the new construction and maintenance business in Japan,

and responding to upgrade demand, the company will expand overseas business,

mainly in China, the Middle East and Asia.

TOSHIBA SOLUTIONS CORPORATION

In FY2007, a healthy performance in business solutions and embedded software for finan-

cial and manufacturing companies in Japan boosted both sales and operating income.

The Japanese IT market is expected to expand at an annualized rate of 3% as require-

ments grow for larger, more complicated solutions systems and higher added value,

especially by large corporations. Toshiba established a high-quality system development
platform, “CommonStyleTM,” in spring 2007 to realize shorter development times and

achieve better quality. We have since used it to develop various solutions systems.

We continually seek to operate as our clients’ No.1 IT solutions partner, to enhance

customer satisfaction and to earn the highest evaluation and trust of our customers.

TOSHIBA MEDICAL SYSTEMS CORPORATION

In FY2007, the Japanese and U.S. markets for diagnostic imaging systems shrank by

approximately 15% against the same period a year ago, as administrative initiatives to

control medical costs cooled markets in advanced countries. On the positive side, mar-

kets in emerging economies such as Asia, the Middle East and Latin America expanded

on increased investment in the medical fields. In this business environment, Toshiba

promoted sales by concentrating on leading-edge medical systems, including 64 multi-

slice CT, ultrasound and MRI systems. As a result, the ratio of overseas sales to the total

exceeded 50% and both sales and operating income recorded a steady increase.

We commercialized a new generation Dynamic Volume CT system, “Aquilion
ONETM,” which makes it possible to image the whole heart or brain in a minimum of

one 0.35-second rotation.

Looking ahead, we will provide medical institutions and the global market with

high-quality, reliable products and appropriate services, and continue to strengthen our

competitiveness by developing new technologies.

Home Appliances Segment
Consolidated sales of Home Appliances increased by 25.4 billion yen from the previ-

ous year to 774.3 billion yen, on higher sales of air conditioners, refrigerators and

washing machines, mainly in overseas markets.

Consolidated segment operating income declined by 5.8 billion yen to 3.9 billion

yen, largely as the result of amendment of the Building Standards Law, declines in

prices for home appliances and industrial lighting, and increased costs involved in

restructuring domestic manufacturing bases.

We also streamlined group companies in the home appliance segment in April

2008, in order to improve management efficiency and accelerate decision-making.

In a major initiative, we introduced “eco style” as a new marketing concept cov-

ering all of our products in Japan in October 2007. We are leading the way in indus-

try efforts to reduce greenhouse gas emissions from homes, and aim to further

develop the home appliance business by manufacturing environmentally friendly

products.

Toshiba’s position in the market

Washing machine market share by unit sales

Over the four years 2004 to 2007, we maintained the No.1 share in the

Japanese washing machine market in unit sales.

Source: GfK Japan nationwide survey of leading electronic goods retailers

TOSHIBA CONSUMER ELECTRONICS HOLDINGS CORPORATION

Home Appliances business

In FY2007, our product line-up covered a wide variety of home appliances: “Quie”

cyclone vacuum cleaners, recognized for the quietest operation; rice cookers with a

built-in vacuum pump; simple heat control IH cooking heaters; refrigerators with mois-

turizing functions; and drum-type washer-dryers with heat pumps. All of these products

saw good sales.

In order to boost competitive power in the refrigerator business, we transferred pro-

duction from Osaka Operations to a production facility in China at the end of Septem-

ber 2007. We also transferred refrigerator development and design to Aichi Operations,

which is positioned as our global product and manufacturing technology development

center for home appliances, at the end of March 2008.

Business Review

E-CORE Highly Efficient LED
Downlight
E-CORE40 downlights were
installed as top lights around pillars
in the main lobby of the Imperial
Hotel in Osaka. The custom-made
downlights striking the surface of
pillars create an elegant atmos-
phere.

Drum-type washer-driers TW-3000VE
Improved energy heat pump efficiency
and increased air flow volume during
the drying cycle successfully shortened
the overall length of washing and drying
time to approximately two hours.

“Daiseikai” room air-conditioners BDR Series
Features include the “eco de clean system,” the industry’s most
powerful dust gathering plus the industry’s most efficient energy
saving ability. The remote controller displays electricity consump-
tion, so users can see just how much energy has been saved.

Air-conditioning business

We started sales of the innovative “Daiseikai BDR” series room air-conditioners in Decem-

ber 2007. These feature the “eco de clean system,” the industry’s most powerful dust

gathering system, which realizes energy savings of up to 30%. In overseas markets, the

air-conditioner business saw good sales, mainly in Europe and Asia, supporting sales

growth.

Lighting business

We released E-CORE, a highly efficient LED downlight with built-in power unit (40W) in

July 2007. E-CORE saves energy and reduces CO2 emissions, characteristics that won the

“Chairperson’s Award, Eco-Products Awards Steering Committee,” given to eco-friendly

products and services. In November 2007, we released the 60W E-CORE in order to fur-

ther promote LED lighting by expanding the product lineup. Industrial lighting prod-

ucts, including cold cathode fluorescent lamps for LCD backlights, also saw good sales.

CSR Management

CSR Management
Toshiba Group positions CSR (Corporate Social Responsibility) as a key management

policy, accords the highest priority to human life, safety and legal compliance, and seeks

to contribute to the achievement of a sustainable society. Based on this approach to

business, we recognize the importance of communication with stakeholders, and

address issues related to the environment, customer satisfaction, human rights, corpo-

rate citizenship, and CSR-based procurement. The basic policies and objectives of our

corporate governance are to improve management efficiency and transparency, and to

maximize corporate value from the perspective of our shareholders.

IMPLEMENT CSR MANAGEMENT AS “A CORPORATE CITIZEN OF PLANET EARTH”

In promoting CSR-based management, Toshiba Group attaches two meanings to the

concept of “a corporate citizen of planet Earth.” First is our determination to play a lead-

ing role in realizing a better global environment. Second is to contribute to society by

developing business activities that respect the history, culture and traditions of each

country and region of the world where we are active.

Toshiba Group’s CSR Management has earned very positive evaluations from inde-

pendent socially responsible investment (SRI) research agencies, and has been selected

for the Dow Jones Sustainability Index (DJSI) for eight consecutive years.

MAJOR EVALUATIONS OF TOSHIBA GROUP CSR IN 2007

Nihon Keizai Shimbun:

Environmental Management Ranking

Second Place

Center for Public Resources
Development (Japan):

Survey on Corporate Sociality

Integrex (Japan):

Corporate integrity and transparency

SAM (Switzerland):

CSR Corporate Evaluation

Gold Class

Innovest (USA):

Society/Environment Rating Agency

AAA

WITH ENVIRONMENTAL VISION 2050, CONTRIBUTE TO THE REALIZATION

OF A BETTER GLOBAL ENVIRONMENT

With the aim of realizing the essence of being “a corporate citizen of plant Earth,” we

announced “Toshiba Group Environmental Vision 2050” in November 2007. This state-

ment represents the Group’s commitment to contribute to the realization of a rich life

led in harmony with the Earth by 2050, by striving to reduce the environmental burdens

resulting from population growth and economic development.

More than a simple statement of intent, the Vision defines specific targets to

enhance the overall eco-efficiency of products and business processes by 10 times (Fac-

tor 10) in 2050, against benchmarks based on FY2000.

Toshiba Group “Environmental Vision 2050”

The ideal situation in 2050

Goals toward ensuring that
“People lead rich lifestyles
in harmony with the Earth”

* Reduce the environmental impacts

of population growth

* Ease the environmental impacts of

economic development

* Create rich value

Environmental Vision 2050

CO 2 REDUCTION EFFORTS INVOLVING ENERGY AND ECO-PRODUCTS

In working toward achieving “Environmental Vision 2050,” we have adopted various

measures to reduce CO2 emissions.

Energy: As a manufacturer of energy generation equipment, we seek to promote

new levels of safety in nuclear power generation and streamline the efficiency of ther-

mal power generation. Beyond this, we aim to promote methods for capturing and fix-

ing CO2, reducing energy losses from power transmission, and the practical application

of renewable energy and of dispersed power sources, including fuel cells. Our aim is to

contribute to a reduction in CO2 emissions of 82 million tons by 2025.

Eco-products: We seek to promote development of lifestyle-changing technologies and

pursue heightened efficiency and power saving. We also aim to promote the development

of high-end electronic devices that bring new levels of low power consumption to LED

lighting, air-conditioners and other home appliances. Through innovations in new, non-tra-

ditional products, we aim to reduce CO2 emissions by 35.7 million tons by 2025.

The overall impact is a total of about 120 million tons of CO2, around twice the

annual CO2 emissions of a mega-city like Tokyo or London.

Eco-process: In manufacturing processes, we strive to reduce energy consumption

in our semiconductor and LCD clean rooms, manufacturing facilities and buildings, and

proactively deploy new energy and renewable energy sources.

CSR Management

WE HAVE EXTENDED OUR FOURTH VOLUNTARY ENVIRONMENTAL PLAN

TO 2012, IN ORDER TO ALIGN IT WITH THE KYOTO PROTOCOL.

Toshiba Group‘s Fourth Voluntary Environmental Plan originally defined concrete tar-

gets and measures for products and business processes up to 2010. The March 2008

extension carries the plan forward to 2012, in alignment with the first commitment

period of the Kyoto Protocol, and defines new CO2 reduction targets for eco-products.

Higher targets for enhanced business processes, including measures to save power in

semiconductor and LCD clean rooms, underline our commitment to counter global

warming.

“Environmental Vision 2050”
Toward “People lead rich lifestyles in harmony with the Earth”
Factor
12

0
2000

Factor = Improved eco-efficiency

Eco-efficiency =

Value
Environmental impact

Create rich value

Creation of
Creation of
new values
new values

2010

Ease environmental impacts of
economic growth

Harmony
Harmony
with the Earth
with the Earth

2050

Respond to population growth
2025

Environmental Vision 2050 Factor 10

Concrete Action Plan Target year to FY2012

TOSHIBA GROUP’S 1.5 MILLION TREE-PLANTING PROJECT AROUND THE WORLD

Toshiba Group has developed campaigns to create forests and to plant 1.5 million trees

around the world as part of its contribution to a better global environment by 2025, the

year that marks Toshiba’s 150th anniversary.

In Japan, we are involved in creating “Toshiba Forest” near Gotemba City in

Shizuoka, at the same time as cooperating in the cultivation of national forests and

maintaining the “Corporate Forest Toshiba (Ontake)” in Ome, the western outskirts of

Tokyo. We are also cooperating with municipal governments in Tochigi, Oita, and Kyoto

Prefectures, to promote the creation and upkeep of forests.

Outside Japan, the main focus of our tree planting is Asia, where we have many

business bases, and we also support programs in North and South America, Europe,

Africa and the Middle East. We are very happy to contribute to the global environment

by supporting tree planting through donations and voluntary activities by employees.

Top of next page: Tree planting at Loess Plateau, China. Bottom: Tree planting in Ome, Tokyo

Research & Development and Intellectual Property

Research & Development

RESEARCH & DEVELOPMENT POLICY

With basic policies focused on “increase value through process innovation” and “create

value through value innovation,” and guided by the concepts of “surprise and sensa-

tion” and “safety and security,” Toshiba Group directs its energies into wide-ranging

research activities grounded in Eco & Energy, in areas as diverse as development of new

materials and new products and systems, production technology, and technology

advances that strengthen differentiation.

RESEARCH & DEVELOPMENT ORGANIZATION

Within Toshiba Group, the development centers of in-house companies and group

companies do research for today, while the Corporate Research & Development Center

does research for tomorrow. Beyond that, we are also advancing measures to take inno-

vation to the global level, promoting research in Toshiba facilities in Europe, the United

States, China and Southeast Asia.

Corporate Staff

Corporate Laboratories

Corporate Research & Development Center
Corporate Manufacturing Engineering Center
Corporate Software Engineering Center

Development Center

President
&
CEO

Digital Products Segment

Core Technology Center

Electronic Devices Segment

Social Infrastructure
Systems Segment

Process & Manufacturing Engineering Center

Center for Semiconductor Research &
Development

Power and Industrial Systems Research &
Development Center

ACTIVITIES IN FY2007

Toshiba Group promotes research & development into technologies and products for

its three main business domains, the Digital Products segment, Electronic Devices seg-

ment, and Social Infrastructure segment, following a strategic products map designed

to lead to Group-wide growth.

In FY2007, as Digital Products segment entered a new phase of growth, we took

measures to reinforce our business, starting with semiconductors and nuclear power,

by starting to focus on a new paradigm, “Eco & Energy.” At the same time, we took steps

to enhance our imaging technologies by further enhancing collaboration between the

Digital Products segment and Electronic Devices segment, intensifying efforts to create

cross-functional business synergies.

Research &
Development Cost
(Billion yen)

0
4
9
3

2
2
8

1
9
1

4
2
7
3

9
0
7

7
8
1

5
0
2

5
4
7
1

3
8
0
1

2
4
7
1

5
8
1
1

3
3
9
3

3
8
8

2
6
6
1

3
8
1
1

FY2005

FY2006

FY2007

Digital Products
Electronic Devices
Social Infrastructure
Home Appliances / Others

Toshiba Group will continue to create cutting edge technology by promoting constant

innovation, with “Creativity for Decommoditized Technology” as a technology slogan.

Major achievement of Research & Development

Commercialization of LCD TV with enhanced connectivity with AV equipment, etc.

Commercialization of NAND Flash memory fabricated with 43-nanometer process technology

Development of the Super Charge ion Battery (SCiBTM), an innovative rechargeable battery

Commercialization of X-ray CT systems that significantly shorten time for 3D imaging of internal organs

Commercialization of home air-conditioners with industry-leading power saving performance

Intellectual Property

INTELLECTUAL PROPERTY STRATEGY

Toshiba Group’s intellectual property (IP) strategy interweaves with its business strategy

and research & development strategy to bind the three into one. The intent is to pro-

mote proactive measures for realizing sustained growth with high profit that rests on

the three pillars of the patent application strategy, patent enforcement strategy, and IP

management.

O
u
r

r
e
a
t
i
v
e
p
a
t
e
n
t
p
o
w
e
r

Advantageous areas
Standard Licensing
Market enlargement,
RAND conditions

Differentiated products & technologies

Enclosure

Fair paying cross licensing
Maturity/non-commercialization

Alliances
Ensuring business options

Competitive areas
Cross licensing
Ensuring freedom of business

Differentiation

Our patent application strategy centers on building a strong portfolio by proactively

filing large numbers of patent applications in core technology areas. Efforts are also

underway to strengthen overseas patent applications in support of growth in overseas

business.

The Group’s patent enforcement strategy concentrates on preventing outflows of

technologies related to core businesses and differentiation, ensuring that they are

retained within Toshiba. In connection with this we actively license mature and non-

commercial technologies. In addition, we also make use of licenses with RAND (Reason-

able and Non-Discriminatory) conditions for technologies related to standardization,

cross license to ensure freedom of business, and promote alliances linked to our busi-

ness strategies.

Research & Development and Intellectual Property

Japanese patent
registrations
(2007)

Ranking

No. of
registrations

In IP management, we have worked to train expert IP personnel, to promote man-

agement of Toshiba Group‘s IP as a whole, and to prepare and maintain IP-related

regulations.

IMPORTANT PATENTS AND COMMENDATIONS FOR INVENTIONS

Toshiba Group has a large patent portfolio covering all areas of its business.

Digital Products Segment

HDD .................................................
Notebook PCs ...........................

MPEG-4 ..........................................
DVD ..................................................

Electronics Devices Segment

DRAM ..............................................
NAND Flash memory ............

Social Infrastructure Segment

Equipment for diagnostic
imaging systems ......................

IC cards ..........................................
Nuclear power generation ...

Home Appliances Segment

Washing machines .................

Inventions related to GMR (Giant Magneto Resistive) heads

Inventions related to BIOS (Basic Input Output System),
mounting and energy conservation

Inventions related to standard-compliant encoding of moving

Inventions related to optical disks and playback and recording

Inventions related to circuit structures and their manufacture

Inventions related to X-ray CT systems and diagnostic ultrasound
imaging systems

Inventions related to access control to data memory

Inventions related to nuclear power plant

Inventions related to DD (direct drive) methodology and noise sup-
pression technology

NUMBER OF PATENT APPLICATIONS BY BUSINESS SEGMENT (FY2007)

Number of
Patent
Applications

Japan

U.S.

China

Corporate
Laboratories
1,390
990
330

Digital Products

1,550
910
260

Electronic
Devices
2,010
1,220
150

Social
Infrastructure
2,570
360
270

Home
Appliances
410
10
30

Total

7,930
3,490
1,040

Toshiba’s high-tech capabilities have earned positive evaluations. In FY2007, the Japan

Institute of Invention and Innovation recognized the Group’s achievements in con-

tributing to the progress of science and technology and the development of industry

with the following awards at the National Commendation for Invention.

The Asahi Shimbun Invention Prize: Patent number 2642362
“Invention of MRI system that acquires high-quality images with EPI (Echo Planar Imaging) method”

The 21st Century Encouragement of Invention Prize: Patent number 3811142
“Invention of novel rare-earth complexes and application to emission devices”

The Invention Prize: Patent number 3346902
“Invention of stitched-pole magnetic heads for ultra-small size mobile HDDs and ultra-large
capacity HDDs”

4,760

Matsushita
Electric
Industrial
Toshiba
Ricoh
Hitachi
Canon
Sony
Seiko Epson
Denso
Fujitsu
Honda

2
3
4
5
6
7
8
9
10
Results shown above are based on
survey through PATOLIS

3,425
2,813
2,722
2,654
2,641
2,627
2,611
2,512
2,464

U.S. patent
registrations
(2007)

Ranking

No. of
registrations

5
6
7
8
9

IBM
Samsung
Electronics
Canon
Matsushita
Electric
Industrial
Intel
Microsoft
Toshiba
Sony
Micron
Hewlett-
Packard

3,148
2,725

1,987

1,941

1,865
1,637
1,549
1,481
1,476
1,470

Source: U.S. IFI Co., Inc.

Corporate Governance

Toshiba’s Governance System

Toshiba promotes corporate governance based on the fundamental policy and objec-

tives of enhancing management efficiency, increasing transparency, and seeking to

maximize corporate value from the shareholders’ perspective. Towards those ends,

Toshiba made the transition to a Company with Committees system in June 2003.

The board now has 14 directors, seven of them non-executive officers. Each of the

three committees has a majority of outside directors, and the Nomination Committee

and Compensation Committee are both chaired by outside directors.

Corporate Governance Structure

Appointment and Dismissal

Supervision

General Meeting of Shareholders

Appointment/Dismissal

Directors

Board of
Directors

Audit

Nomination
Committee
1 internal director,
2 outside directors

(

Audit
Committee
(
2 internal directors,
3 outside directors

(

Compensation
Committee
(
2 internal directors,
3 outside directors

(

President
& CEO

Executive
Officers

Divisions

Audit

Corporate Audit Division

Cooperation

TOSHIBA’S CORPORATE GOVERNANCE INITIATIVES

Q. Please explain Toshiba’s attitude toward corporate governance, and areas where you
think you can make a contribution as an outside director.

A. Toshiba made the transition to a Company with Committees, to maximizie corporate
value. But the point is to infuse it with spirit as well as to establish the system. I know
that everybody in Toshiba’s management emphasizes corporate governance, and that
they are taking action to achieve corporate management with spirit. At the Ministry of
Justice, my responsibilities included revision of corporate law, and as a judge, I handled
lawsuits, so as an outside director of Toshiba I can make proposals to management,
especially on compliance issues. Toshiba promotes a very wide range of businesses. I
will do my best to assure that everybody understands and observes compliance with
laws and regulations.

Atsushi Shimizu
Outside director

Corporate Governance

Toshiba’s Internal Control Systems

Everybody in Toshiba, management and employees alike, is required to respect the val-

ues and code of conduct clarified in the Toshiba Group Standards of Conduct. In

response to the Companies Act of Japan, which came into force in May 2006, Toshiba’s

board of directors resolved basic policies on the internal control system in April 2006.

Accordingly, Toshiba requested all Toshiba Group companies in Japan to adopt basic

policies on internal control systems by resolutions of their boards of directors, to rein-

force internal control systems throughout Toshiba Group. Toshiba supports Toshiba

Group companies in this by establishing models of basic policies and principal rules

covering internal control systems.

Beyond this, Toshiba has also asked all overseas group companies to adopt the

Toshiba Group Standards of Conduct and to establish internal control systems, includ-

ing introduction of self-audit and improvement programs, while taking into considera-

tion the local circumstances and legal requirements faced by each company.

STRUCTURE TO PROMOTE RISK AND COMPLIANCE MANAGEMENT

Toshiba strives to practice fair and transparent management through a combination of

risk management and legal compliance. A Risk-Compliance Committee has been estab-

lished to handle all related issues, and to support the Chief Risk-Compliance Manage-

ment Officer (CRO) in carrying out the task of risk compliance management for the

Company as a whole. Other committees, including the Technology & Production Com-

pliance Committee and Sales Compliance Committee, have been introduced as vehi-

cles for responding to urgent and serious risks.

Risk Management and Compliance Management Structure

Risk-Compliance Committee

President
& CEO

Technology & Production Compliance Committee

Sales Compliance Committee

Risk Management Committee

Litigation Committee

Overseas Safety Committee

CPL* Examination Committee

In-house
Company
Risk-Compliance
Committee etc.

*CPL: An abbreviation combining CL (contractual liability) and PL (product liability)

COMPLIANCE

Toshiba places the highest priority on human life and safety and on compliance with laws

and regulations in all business activities. To ensure that all employees thoroughly under-

stand and observe compliance, we provide education on the content of the Toshiba Group

Standards of Conduct.

Compliance programs covering Antitrust Law and code of conduct covering sales to gov-

ernment and public offices have been introduced, and all sales personnel get dedicated train-

ing in these areas. Toshiba is also concerned to ensure that its engineers have a strong sense

of ethics, as well as compliance, and all engineers, in all Toshiba Group companies worldwide,

attend training courses that emphasize the ethical importance of fairness and integrity.

IN-HOUSE INFORMATION REPORTING SYSTEM / WHISTLE-BLOWER SYSTEM

The Toshiba Group Standards of Conduct, adopted by all Group companies, require the

establishment of an in-house information reporting system. Such systems are now in

place, or in the process of introduction, in Toshiba Group companies around the world.

The reporting system allows anybody, from members of the board down, to report their

concerns anonymously, and make it possible to receive risk information directly.

In addition, Toshiba has introduced a “Clean Partner Line,” a whistle-blower system

for use by suppliers.

INTERNAL CONTROL OVER FINANCIAL REPORTING

In readiness for March 2009 implementation of an internal control report system pursuant

to the Financial Instruments and Exchange Law of Japan, Toshiba has introduced an

organization at the corporate level to promote assessment of the effectiveness of internal

control over financial reporting throughout the Company. In response to this initiative,

each in-house company and its affiliated companies worldwide have established systems.

We intend to further enhance the credibility of Toshiba Group’s financial reporting

through assessing the effectiveness of internal control over financial reporting.

Introduction of Takeover Defensive Measures

Toshiba introduced countermeasures against any large-scale acquisition of the Company’s

shares (the Plan), following approval from the shareholders at the Ordinary General Meeting

of Shareholders held in June 2006. The Plan is aimed at protecting and enhancing the cor-

porate value of the Company and the common interests of the shareholders.

The Plan explicitly sets forth procedure to be followed in the event of any large-

scale purchase of Toshiba stock, to ensure that shareholders are provided with all nec-

essary information and sufficient time to make appropriate decisions, and that the Com-

pany has sufficient opportunity to negotiate with the acquirer.

Directors and Executive Officers

Directors

Tadashi Okamura
Chairman of the Board
of Directors

Atsutoshi Nishida
Director

Masashi Muromachi
Director

Hisatsugu Nonaka
Director

Norio Sasaki
Director

Fumio Muraoka
Director

Executive
Officers

Representative Executive Officer
President and Chief Executive Officer
Atsutoshi Nishida

Representative Executive Officers
Corporate Senior Executive Vice Presidents
Masashi Muromachi
Hisatsugu Nonaka
Norio Sasaki

Representative Executive Officer
Corporate Executive Vice President
Fumio Muraoka

Executive Officers
Corporate Executive Vice Presidents
Masao Namiki
Chikahiro Yokota
Ichiro Tai
Kazuo Tanigawa
Yoshihiro Maeda

Masao Namiki
Director

Kazuo Tanigawa
Director

Shigeo Koguchi
Director

Toshiharu Kobayashi
Director

Atsushi Shimizu
Outside Director

Kiichiro Furusawa
Outside Director

Hiroshi Hirabayashi
Outside Director

Takeshi Sasaki
Outside Director

Executive Officers
Corporate Senior Vice Presidents
Yoshihide Fujii
Toshinori Moriyasu
Shozo Saito
Hidejiro Shimomitsu
Hisao Tanaka
Toshiharu Watanabe
Hideo Kitamura

Executive Officers
Corporate Vice Presidents
Nobuhiro Yoshida
Michiharu Watanabe
Koji Iwama
Satoshi Niikura
Keizo Tani
Hidemi Miura
Shoji Yoshioka
Kosei Okamoto
Kazuyoshi Yamamori
Shiro Kawashita

Ryuichi Nakata
Tsutomu Sanada
Akira Sudo
Makoto Kubo
Yasuharu Igarashi
Hiroshi Saito
Atsuhiko Izumi
Masahiko Fukakushi
Kiyoshi Kobayashi
Masakazu Kakumu

(As of June 25, 2008)

Basic Commitment of the Toshiba Group

BASIC COMMITMENT
OF THE
TOSHIBA GROUP

COMMITMENT TO PEOPLE

COMMITMENT TO THE FUTURE

Data Section

Consolidated Financial Summary . . . . . . . . . . . . . . . . . . 48

Consolidated Balance Sheets . . . . . . . . . . . . . . . . . . . . . 50

Consolidated Statements of Operations . . . . . . . . . . . . . 52

Quarterly Performance Highlights . . . . . . . . . . . . . . . . . 52

Consolidated Statements of Cash Flows . . . . . . . . . . . . . . 53

Industry Segment Performance . . . . . . . . . . . . . . . . . . . 54

Geographic Segment Performance . . . . . . . . . . . . . . . . 55

Long-term Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55

Organization Chart. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56

Global Network . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58

Consolidated Subsidiaries /
Affiliated Companies Accounted
for by the Equity Method . . . . . . . . . . . . . . . . . . . . . . . . . . 60

Stock / Shareholders Information . . . . . . . . . . . . . . . . . 61

Corporate History. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62

Major indices of the Data Section have been compiled
chronologically based on the fiscal years. For the details of
financial information for the year ended March 31, 2008,
please refer to the “Financial Review 2008.”

’98/3

’99/3

’00/3

’01/3

Consolidated Financial Summary

Net Sales, Operating Income (Loss) and

Net Income (Loss)
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)
EBITDA*1

Profitability Ratios

Operating income ratio (%)
Return on sales (%)
Cost of sales ratio (%)
Selling, general and administrative expenses ratio (%)

Total Assets, Total Shareholders’ Equity and

Interest-bearing Debt
Total assets
Total shareholders’ equity
Interest-bearing debt
Long-term debt
Short-term debt
Shareholders’ equity ratio (%)*2
Debt/equity ratio (Times)*3

R&D, Capital Expenditures, Depreciation

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

Return Indicators

Return on equity (ROE) (%)*4
Return on total assets (ROA) (%)*5

Efficiency Indicators

Inventory turnover (Times)*6
Total assets turnover (Times)*7
Inventory turnover (Days)*8

Cash Flows

Net cash provided by operating activities
Net cash used in investing activities
Net cash provided by (used in) financing activities
Effect of exchange rate changes on cash and cash equivalents
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at end of year

Liquidity Indicators

Debt/cash flow ratio (%)*9
Interest coverage ratio (Times)*10

Corporate Value

Free cash flow*11
Market capitalization*12

Other Data

¥5,458.5
3,960.2
1,416.0
82.3
30.6
17.3
14.7

378.5

1.5
0.3
72.6
25.9

6,166.3
1,305.9
2,260.8
1,012.4
1,248.4
21.2
1.7

322.9
339.6
291.4

1.1
0.2

5.27
0.90
69.21

272.8
(300.2)
65.6
(2.6)
35.5
615.9

14.64
1.9

¥5,300.9
3,890.6
1,379.8
30.5
13.2
20.9
(9.1)

378.3

0.6
(0.2)
73.4
26.0

6,101.9
1,128.8
2,181.7
1,178.4
1,003.3
18.5
1.9

316.7
375.5
309.8

(0.7)
(0.1)

5.30
0.86
66.85

264.9
(280.1)
(94.3)
(8.7)
(118.2)
497.8

13.68
1.0

(27.4)
1,738.3

(15.1)
2,604.2

¥5,749.4
4,254.4
1,394.0
101.0
(39.2)
(4.5)
(32.9)

352.9

1.8
(0.6)
74.0
24.2

5,780.0
1,060.1
1,967.3
1,121.9
845.4
18.3
1.9

334.4
298.5
329.6

(3.0)
(0.6)

6.27
0.97
58.25

435.9
(293.2)
(158.7)
(16.6)
(32.5)
465.2

15.23
2.8

142.8
3,367.1

191
58

1.6

¥5,951.4
4,323.5
1,395.7
232.1
197.5
96.1
96.2

578.4

3.9
1.6
72.6
23.5

5,724.6
1,047.9
1,787.6
990.3
797.3
18.3
1.7

327.9
269.5
308.3

9.1
1.7

7.18
1.03
50.81

453.6
(176.7)
(285.6)
31.1
22.4
487.6

23.22
6.1

276.9
2,356.3

188
53

1.6

Number of employees (Consolidated) (Thousands)
Number of employees (Non-Consolidated) (Thousands)
Ratios of Consolidated to Non-Consolidated

Performance (Times) (Net sales)

186
66

1.5

198
63

1.6

• ¥48.9 billion, ¥4.8 billion and ¥4.1 billion of “Subsidy received on return of substitutional
portion of Employees’ Pension Fund Plan, net of settlement loss of ¥188.1 billion in 2004,
¥8.0 billion in 2005, ¥5.0 billion in 2006” are classified as a reduction of selling, general and
administrative expenses for the years ended March 31, 2004, 2005 and 2006, respectively.
• Operating income (loss) has been determined under financial reporting practices generally
accepted in Japan and is defined as net sales less cost of sales and selling, general and
administrative expenses.

• 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 March 31, 1998
through 2000, has been restated to conform with SFAS No. 115.
• Beginning with the fiscal year ended March 31, 2006, equity in earnings (losses) of affiliates
has been included in income (loss) before income taxes and minority interest, prior-period
data for the fiscal years ended March 31, 1998 through 2005 has been reclassified to con-
form with the current classification.

’02/3

’03/3

’04/3

’05/3

’06/3

’07/3

¥5,394.0
4,070.1
1,437.5
(113.6)
(374.2)
(113.9)
(254.0)

(18.1)

(2.1)
(4.7)
75.5
26.6

5,407.8
705.3
1,818.5
888.7
929.8
13.0
2.6

326.2
348.2
311.2

(29.0)
(4.6)

7.13
0.97
51.19

149.2
(325.6)
53.5
5.8
(117.2)
370.4

4.01
(3.3)

(176.4)
1,815.5

176
46

1.7

¥5,655.8
4,146.5
1,393.8
115.5
55.7
48.5
18.5

340.8

2.0
0.3
73.3
24.6

5,238.9
571.1
1,653.4
882.0
771.4
10.9
2.9

331.5
230.5
237.9

2.9
0.3

8.55
1.06
42.69

271.6
(148.0)
(159.8)
(7.2)
(43.3)
327.1

16.09
5.3

123.6
1,007.6

166
40

1.7

¥5,579.5
4,075.3
1,329.6
174.6
135.8
102.2
28.8

405.4

3.1
0.5
73.0
24.7

4,462.2
755.0
1,199.5
701.9
497.6
16.9
1.6

336.7
227.3
223.9

4.3
0.6

8.87
1.15
41.15

322.7
(189.5)
(132.7)
(8.3)
(7.8)
319.3

19.47
8.9

133.2
1,519.4

161
32

1.9

¥5,836.1
4,296.6
1,384.8
154.8
111.2
55.9
46.0

374.3

2.7
0.8
73.6
23.7

4,571.4
815.5
1,111.4
683.4
428.0
17.8
1.4

348.0
318.4
215.8

5.9
1.0

9.13
1.29
40.00

305.5
(243.1)
(92.3)
5.6
(24.2)
295.0

24.87
7.6

62.4
1,442.1

165
31

2.1

¥6,343.5
4,659.8
1,443.1
240.6
178.2
90.1
78.2

457.0

3.8
1.2
73.5
22.7

4,727.1
1,002.2
917.5
611.4
306.1
21.2
0.9

372.4
338.8
228.6

8.6
1.7

9.65
1.36
37.83

501.4
(303.4)
(235.3)
13.2
(24.1)
270.9

32.77
10.3

198.0
2,201.8

172
32

1.9

¥7,116.4
5,312.2
1,545.8
258.4
298.5
145.4
137.4

623.3

3.6
1.9
74.6
21.7

5,932.0
1,108.3
1,158.5
956.2
202.3
18.7
1.0

394.0
375.3
259.9

13.0
2.6

9.71
1.34
37.61

561.5
(712.8)
154.8
34.9
38.4
309.3

41.46
8.9

(151.3)
2,533.4

191
32

2.0

(Billions of yen)
’08/3

¥7,668.1
5,759.9
1,670.1
238.1
255.6
113.4
127.4

675.5

3.1
1.7
75.1
21.8

5,935.6
1,022.3
1,261.0
740.7
520.3
17.2
1.2

393.3
465.0
340.9

12.0
2.1

9.28
1.29
39.34

247.1
(322.7)
46.6
(31.7)
(60.7)
248.6

41.96
6.7

(75.6)
2,155.9

198
33

2.1

*1. EBITDA = Income (loss) before income taxes and minority interest + Interest + Depreciation
*2. Shareholders’ equity ratio (%) = Total shareholders’ equity / Total assets X 100
*3. Debt/equity ratio (Times) = Interest-bearing debt / Total shareholders’ equity
*4. Return on equity (ROE) (%) = Net income (loss) / Average total shareholders’ equity X 100
*5. Return on total assets (ROA) (%) = Net income (loss) / Average total assets X 100
*6. Inventory turnover (Times) = Net sales / Average inventory
*7. Total assets turnover (Times) = Net sales / Average total assets
*8. Inventory turnover (Days) = 365 / Inventory turnover

*9. Debt/cash flow ratio (%) = (Net income (loss) + Depreciation and amortization) / Average

interest-bearing debt X 100

*10. Interest coverage ratio (Times) = (Operating income (loss) + Interest and dividends) / Inter-

est expense

*11. Free cash flow = Net cash provided by operating activities – Net cash used in investing

activities

*12. Market capitalization = Common stock price [Year-end/Yen/Close] X Total issued shares

Consolidated Balance Sheets

ASSETS

Current Assets:

’04/3

’05/3

’06/3

’07/3

(Millions of yen)
’08/3

Cash and cash equivalents

¥ 319,277

¥ 295,003

¥ 270,921

¥ 309,312

¥ 248,649

Notes and accounts receivable, trade

Notes

Accounts

Allowance for doubtful notes

and accounts

Finance receivables, net

Inventories

Deferred tax assets

Prepaid expenses and other

101,624

962,216

95,207

101,208

106,395

1,052,288

1,181,943

1,295,808

80,312

1,253,108

(27,682)

(26,599)

(28,671)

(30,599)

(21,417)

17,271

629,044

114,425

649,998

131,144

664,922

146,655

801,513

138,714

current assets

236,244

277,278

309,638

370,064

2,352,419

2,474,319

2,646,616

2,991,207

Long-term Receivables and Investments:

Long-term receivables

Long-term finance receivables, net

Investments in and advances

21,808

29,887

19,090

18,883

19,329

7,423

to affiliates

191,391

193,266

228,402

240,249

321,166

Marketable securities and other

investments

Property, Plant and Equipment:

Land

Buildings

Machinery and equipment

Construction in progress

197,901

440,987

194,191

406,547

240,456

487,741

250,536

510,114

264,149

592,738

165,255

1,070,607

2,311,773

51,897

169,464

1,064,760

2,349,258

60,547

161,503

1,084,433

2,402,752

64,345

156,445

1,146,350

2,594,284

104,612

3,599,532

3,644,029

3,713,033

4,001,691

Less—Accumulated depreciation

(2,481,287)

(2,479,846)

(2,536,483)

(2,681,489)

1,118,245

1,164,183

1,176,550

1,320,202

Other Assets:

Deferred tax assets

Other

375,244

175,305

550,549

348,713

177,650

526,363

237,334

178,872

416,206

211,336

899,103

285,757

795,582

1,110,439

1,081,339

¥4,462,200

¥4,571,412

¥4,727,113

¥5,931,962

¥5,935,637

For additional information, please visit our IR web site at http://www.toshiba.co.jp/about/ir/en/finance/index.htm

851,452

148,531

368,747

2,929,382

128,210

1,160,549

2,598,042

215,937

4,102,738

(2,770,560)

1,332,178

’04/3

’05/3

’06/3

’07/3

(Millions of yen)
’08/3

LIABILITIES AND SHAREHOLDERS’ EQUITY

Current Liabilities:

Short-term borrowings

¥ 306,711

¥ 197,765

¥ 142,530

71,626

¥ 257,831

Current portion of long-term debt

Notes payable, trade

Accounts payable, trade

Accounts payable, other and

accrued expenses

Accrued income and other taxes

Advance payments received

Other current liabilities

190,821

81,827

795,594

320,640

37,029

179,912

287,094

230,285

67,291

906,248

349,009

46,561

134,326

335,358

163,558

63,574

130,703

59,592

262,422

55,870

1,037,048

1,305,639

1,168,389

411,220

48,725

144,362

397,953

508,888

77,625

229,635

427,583

516,046

89,763

248,280

387,386

2,199,628

2,266,843

2,408,970

2,811,291

2,985,987

Long-Term Liabilities:

Long-term debt

Accrued pension and severance costs

Other liabilities

701,924

601,566

68,293

683,396

581,598

79,361

611,430

474,198

72,025

956,156

540,216

191,263

740,710

634,589

182,175

1,371,783

1,344,355

1,157,653

1,687,635

1,557,474

Minority Interest in Consolidated

135,799

144,707

158,325

324,715

369,911

280,126

290,936

774,461

(322,214)

(1,044)

Subsidiaries

Shareholders’ Equity:

Common stock

Additional paid-in capital

Retained earnings

274,926

285,736

481,227

274,926

285,736

511,185

274,926

285,743

570,080

274,926

285,765

681,795

Accumulated other comprehensive loss

(285,894)

(254,753)

(126,509)

(131,228)

Treasury stock, at cost

(1,005)

754,990

Commitments and contingent liabilities

(1,587)

(2,075)

(2,937)

815,507

1,002,165

1,108,321

1,022,265

¥4,462,200

¥4,571,412

¥4,727,113

¥5,931,962

¥5,935,637

Accumulated Other Comprehensive Loss:

Unrealized gains on securities

26,825

33,479

57,246

80,801

53,461

’04/3

’05/3

’06/3

’07/3

(Millions of yen)
’08/3

Foreign currency translation

adjustments

Minimum pension liability

(79,290)

(68,849)

(32,019)

(21,938)

(117,552)

adjustment

(234,283)

(219,315)

(151,351)

—

Pension liability adjustment

Unrealized gains (losses) on derivative

instruments

—

854

—

(68)

—

(190,118)

(256,839)

(385)

(1,284)

Consolidated Statements of Operations

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

in ’04/3, ¥7,992 million in ’05/3 and

¥5,045 million in ’06/3)

Interest and dividends

Equity in earnings of affiliates

Other income

Costs and Expenses:

Cost of sales

Selling, general and administrative

Interest

Equity in losses of affiliates

Other expense

Income before Income Taxes

and Minority Interest

Income Taxes:

Current

Deferred

Income before minority interest

Minority interest in income (loss)

’04/3

’05/3

’06/3

’07/3

(Millions of yen)
’08/3

¥5,579,506

¥5,836,139

¥6,343,506

¥7,116,350

¥7,668,076

48,945

10,470

—

88,394

4,836

10,564

665

58,156

4,085

13,485

—

49,605

—

24,375

27,878

155,270

5,727,315

5,910,360

6,410,681

7,323,873

4,075,336

1,378,529

20,832

9,271

107,577

4,296,572

1,389,596

4,659,795

1,447,186

21,749

—

91,211

24,601

4,452

96,470

5,312,179

1,545,807

31,934

—

135,493

5,591,545

5,799,128

6,232,504

7,025,413

—

26,865

28,023

212,839

7,935,803

5,759,840

1,670,137

39,827

—

210,441

7,680,245

135,770

111,232

178,177

298,460

255,558

50,092

52,145

33,533

50,419

5,525

55,288

57,051

33,091

88,035

88,911

56,444

153,105

102,745

10,635

142,178

of consolidated subsidiaries

4,708

9,247

9,849

15,676

14,765

Net income

28,825

46,041

78,186

137,429

¥ 127,413

Quarterly Performance Highlights

1st quarter

2nd quarter

3rd quarter

4th quarter

(Millions of yen)

Net sales

Operating income (loss)

Net income (loss)

Earnings

’07/3
¥1,452,796

’08/3
¥1,664,591

’07/3

¥1,709,230

’08/3
¥2,025,343

’07/3
¥1,793,271

’08/3
¥1,878,511

’07/3
¥2,161,053

’08/3
¥2,099,631

20,840

4,041

21,182

20,632

44,312

34,787

61,338

25,025

55,907

72,428

42,061

80,505

137,305

26,173

113,518

1,251

per share (Basic) (¥)

1.26

6.42

10.82

7.75

22.54

24.88

8.14

0.39

For additional information, please visit our IR web site at http://www.toshiba.co.jp/about/ir/en/finance/index.htm

payable, trade

(21,239)

82,427

90,482

220,619

(115,047)

Consolidated Statements of Cash Flows

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 (earnings) losses of affiliates
(Gain) loss from sales, disposal and

impairment of property and securities, net

(2,471)

Minority interest in income (loss) of

consolidated subsidiaries

(Increase) decrease in notes and
accounts receivable, trade

(Increase) decrease in finance receivables, net
(Increase) decrease in inventories
Increase (decrease) in notes and accounts

4,708

(10,841)
66,564
(35,852)

Increase (decrease) in accrued income and

other taxes

Increase (decrease) in advance payments received
Other

(12,493)
(47,050)
45,911

Net cash provided by operating activities

322,662

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
(Increase) decrease in investments in affiliates
Other

Net cash used in investing activities

Cash Flows from Financing Activities:

Proceeds from long-term debt
Repayment of long-term debt
Increase (decrease) in short-term borrowings, net
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 provided by (used in)

financing activities

Effect of Exchange Rate Changes on Cash and

Cash Equivalents

Net Increase (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:
Cash paid during the year for—

Interest
Income taxes

’04/3

’05/3

’06/3

’07/3

(Millions of yen)
’08/3

¥ 28,825

¥ 46,041

¥ 78,186

¥137,429

¥127,413

248,831

241,362

254,217

292,875

380,160

(8,001)
52,145
13,625

2,641
5,525
5,816

3,351

9,247

4,809
33,091
20,023

(22,720)
56,444
(12,579)

(19,035)
10,635
(13,340)

18,070

(79,416)

(146,369)

9,849

15,676

14,765

(63,750)
(3,927)
(10,107)

(86,420)
0
31,927

(51,620)
0
(82,926)

29,138
0
(64,688)

9,722
(51,263)
28,448

305,533

42,094
34,138
(271,635)
(12,397)
(7,051)
(28,255)

(243,106)

251,563
(211,280)
(105,416)
(17,104)
—
(634)
—
(586)
(8,867)

816
(7,121)
53,497

23,353
29,459
34,880

501,426

561,474

81,503
12,379
(316,702)
(14,940)
(20,872)
(44,753)

(303,385)

108,393
(250,884)
(60,638)
(22,808)
—
(86)
—
(481)
(8,794)

112,015
9,586
(376,707)
(13,508)
51,044
(495,212)

(712,782)

467,717
(199,570)
(81,305)
(30,431)
—
(829)
—
(841)
55

18,283
47,617
(22,404)

247,128

212,064
2,805
(407,692)
(82,898)
(41,367)
(5,614)

(322,702)

190,524
(283,013)
187,321
(46,406)
—
(715)
—
(1,138)
—

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)

(92,324)

(235,298)

154,796

46,573

(8,284)

5,623

13,175

34,903

(31,662)

(7,821)
327,098
¥319,277

(24,274)
319,277
¥295,003

(24,082)
295,003
¥270,921

38,391
270,921
¥309,312

(60,663)
309,312
¥248,649

¥ 27,852
¥ 58,496

¥ 21,761
¥ 38,539

¥ 24,538
¥ 62,925

¥ 30,892
¥ 59,272

¥ 40,356
¥107,431

*Includes the acquisition of Westinghouse Group in the amount of ¥461,338 million.

Industry Segment Performance

’04/3 Change (%)

’05/3 Change (%)

’06/3 Change (%)

’07/3 Change (%)

’08/3 Change (%)

(Billions of yen)

Digital Products

Net sales
Share of net sales (%)
Operating income (loss)
Operating income ratio (%)

Number of employees
R&D expenditures
Depreciation
Capital expenditures
Total assets

Electronic Devices

¥2,009.4

(3.1) ¥2,224.2

10.7 ¥2,536.5

14.0 ¥2,805.5

32.9 —
(23.8) —
(1.2) —

35.1 —
7.3 —
0.3 —

36.9 —
20.9 187.1
0.8 —

10.6
36.6 —
15.8 (24.3)
0.6 —

2.4
42,000 — 43,000
7.4
101.7
32.6
(8.3)
36.5 (24.9)
10.7
966.1

94.7 —
3.5
35.5
38.4
48.6
(3.6)
872.6

45,000
108.3
32.1
44.2
1,092.1

4.7
6.5
(1.5)
21.2
13.0

46,000
118.5
42.5
40.5
1,242.6

2.2
9.4
32.5
(8.3)
13.8

Net sales
Share of net sales (%)
Operating income
Operating income ratio (%)

1,283.6

0.7
21.0 —
117.0 267.3
9.1 —

1,307.2

1.8
20.7 —
92.5 (20.9)
7.1 —

1,388.1

6.2
20.2 —
33.3
123.3
8.9 —

1,657.3

19.4
21.6 —
(2.9)
119.7
7.2 —

Number of employees
R&D expenditures
Depreciation
Capital expenditures
Total assets

Social Infrastructure

35,000 — 33,000
164.5
156.9 —
132.7
112.5 (10.6)
239.3
17.7
136.2
1,271.0
0.7
1,241.5

(5.7)
4.9
18.0
75.8
2.4

33,000
174.5
148.0
239.5
1,323.7

0.0
6.1
11.6
0.0
4.1

35,000
174.2
169.1
269.7
1,449.8

6.1
(0.2)
14.3
12.6
9.5

Net sales
Share of net sales (%)
Operating income
Operating income ratio (%)

1,714.1

(6.0)
28.0 —
58.6
49.7
3.4 —

1,765.3

3.0
27.9 —
48.6 (17.1)
2.8 —

1,882.3

6.6
27.4 —
76.5
57.6
4.1 —

2,067.7

9.9
27.0 —
96.8
26.4
4.7 —

Number of employees
R&D expenditures
Depreciation
Capital expenditures
Total assets
Home Appliances

36,000 — 54,000
61.7
34.6
36.6
1,493.2

62.2 —
37.7 (11.9)
27.6 (20.1)
(8.5)

1,529.2

50.0
(0.8)
(8.1)
32.4
(2.4)

57,000
70.9
35.0
44.1
1,578.0

5.6
14.9
1.1
20.4
5.7

67,000
82.2
41.8
58.8
2,385.3

17.5
16.0
19.4
33.4
51.2

Net sales
Share of net sales (%)
Operating income (loss)
Operating income ratio (%)

637.3
0.6
10.4 —
3.5 (16.0)
0.5 —

661.0
3.7
10.4 —
(3.3) —
(0.5) —

687.5
4.0
10.0 —
2.7 —
0.4 —

748.9

8.9
9.8 —
9.7 257.0
1.3 —

Number of employees
R&D expenditures
Depreciation
Capital expenditures
Total assets

Others

18,000 — 22,000
19.0
18.0
22.0
390.2

18.4 —
0.3
18.8
(9.1)
19.3
(3.4)
371.9

22.2
3.0
(3.9)
13.9
4.9

25,000
17.7
16.6
27.4
400.8

13.6
(6.5)
(7.8)
24.5
2.7

27,000
18.7
18.3
24.7
438.8

8.0
5.5
9.9
(9.8)
9.5

Net sales
Share of net sales (%)
Operating income
Operating income ratio (%)

472.7

(3.7)
7.7 —
21.3
18.8
4.0 —

371.6 (21.4)
5.9 —
9.8 (47.7)
2.7 —

379.8

2.2
5.5 —
82.1
18.0
4.7 —

391.6

3.1
5.1 —
4.2
18.7
4.8 —

30,000 — 13,000 (56.7)
1.1 (75.0)
23.5 (47.1)
8.1 (64.9)
7.5

4.5 —
13.0
44.4
23.0 (54.2)
479.4 (55.6)

515.4

12,000

(7.7)
1.0 (12.2)
(4.3)
22.5
(4.2)
7.7
442.4 (14.2)

16,000

33.3
0.4 (66.1)
(5.8)
21.2
16.1 108.5
8.3
479.2

Number of employees
R&D expenditures
Depreciation
Capital expenditures
Total assets

¥2,951.2
35.7
15.0
0.5

49,000
118.3
38.5
37.5
1,290.4

1,738.5
21.0
74.1
4.3

35,000
166.2
229.5
367.4
1,552.8

2,419.0
29.3
131.3
5.4

70,000
88.3
59.9
67.7
2,338.0

774.3
9.4
3.9
0.5

28,000
19.2
22.7
20.0
439.0

384.6
4.6
14.7
3.8

16,000
1.3
29.6
9.4
379.3

5.2
—
(4.6)
—

6.5
(0.2)
(9.5)
(7.4)
3.9

4.9
—
(38.1)
—

0.0
(4.6)
35.7
36.2
7.1

17.0
—
35.7
—

4.5
7.4
43.3
15.2
(2.0)

3.4
—
(59.6)
—

3.7
2.7
24.1
(19.1)
0.0

(1.8)
—
(21.6)
—

0.0
370.1
39.7
(41.5)
(20.8)

Geographic Segment Performance

’04/3

’05/3

’06/3

Net Sales
Japan
Overseas
Asia
North America
Europe
Other
Eliminations
Consolidated

Operating Income (Loss)

Japan
Overseas
Asia
North America
Europe
Other
Eliminations
Consolidated

Long-term Debt

¥4,935.9
2,437.2
1,186.2
686.9
504.4
59.7
(1,793.6)
5,579.5

148.7
24.6
13.4
6.6
3.9
0.7
1.3
174.6

¥5,015.3
2,783.6
1,355.2
765.3
596.9
66.2
(1,962.8)
5,836.1

112.8
42.1
20.5
15.6
5.1
0.9
(0.1)
154.8

¥5,464.4
3,147.9
1,521.4
888.5
658.7
79.3
(2,268.8)
6,343.5

191.9
48.4
22.1
18.1
6.1
2.1
0.3
240.6

’07/3

¥5,993.1
3,680.0
1,724.1
1,028.4
830.2
97.3
(2,556.7)
7,116.4

204.1
44.4
26.1
7.8
7.2
3.3
9.9
258.4

(Billions of yen)
’08/3

¥6,144.6
4,216.5
1,855.3
1,208.2
1,039.5
113.5
(2,693.0)
7,668.1

152.9
74.6
37.6
7.6
25.6
3.8
10.6
238.1

Loans, principally from banks and insurance companies,

due 2007 to 2029 with weighted-average interest rate of 1.18% at March 31, 2007 and
due 2008 to 2029 with weighted-average interest rate of 1.29% at March 31, 2008

Unsecured yen bonds, due 2007 to 2016 with interest ranging

from 1.08% to 3.025% at March 31, 2007 and due 2008 to 2016
with interest ranging from 1.08% to 2.300% at March 31, 2008

Zero Coupon Convertible Bonds with stock acquisition rights:

Due 2009 convertible currently at ¥587 per share
Due 2011 convertible currently at ¥542 per share

Euro yen medium-term notes, due 2007 to 2008 with interest ranging

from 0.78% to 2.34% at March 31, 2007 and due 2008
with interest rate of 2.34% at March 31, 2008

Euro yen medium-term notes of subsidiaries, due 2007 to 2015 with interest ranging

from 0.61% to 2.60% at March 31, 2007 and due 2008 to 2015
with interest rangingfrom 0.77% to 2.60% at March 31, 2008

Euro medium-term note of a subsidiary, due 2008
with interest rate of 4.41% at March 31, 2008

Capital lease obligations

Less-Portion due within one year

(Millions of yen)

’07/3 Amount
¥ 5,102
¥525,815

Secured
Unsecured

’08/3 Amount
4,268
¥
¥532,352

Secured
Unsecured

290,934

213,307

50,000
100,000
3,000

69,301

—

42,707
1,086,859
(130,703)
¥956,156

41,430
95,310
1,000

58,881

7,938

48,646
1,003,132
(262,422)
¥740,710

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

’08/3
’09/3
’10/3
’11/3
’12/3
’13/3 and thereafter
’13/3
’14/3 and thereafter
Total

As of March 31, 2007 As of March 31, 2008

(Millions of yen)

¥ 116,290
220,692
228,506
174,608
119,558
184,498
—
—
¥1,044,152

—
246,675
227,674
177,452
116,731
—
126,051
59,903
¥ 954,486

For more information on corporate bond and ratings, please visit our IR web site at
http://www.toshiba.co.jp/about/ir/en/stock/bond.htm

Organization Chart

Board of Directors

Nomination
Committee

Audit
Committee

Compensation
Committee

President & Chief Executive Officer

Audit Committee
Office

> Innovation Div.

> Information &

> Legal Affairs

> Export

Security Group

Group

Control Group

> Legal Affairs

> Export Control

Div.

> Corporate
Alliances &
Legal Div.

> Quality Div.

> Quality

> Information

Systems Center

Promotion Office

> Information

Security Center

> Corporate Social
Responsibility Div.

> CSR

Implementation
Office

> External Relations

Div.

> Human

Resources
Group

> Finance &

Accounting
Group

> Finance &

Accounting
Div.
> Internal
Control
Promotion Div.

> Human

Resources &
Administration
Div.

> Employee

Wellness Div.

> Diversity

Development
Div.
> Toshiba
General
Hospital

(In-house Companies)
Digital Products Group

Electronic Devices & Components Group

> Mobile

Communications
Company

> Hino Operations

> Digital Media
Network
Company

> Personal

> Semiconductor

Computer &
Network Company

Company

> Discrete

> Display Devices
& Components
Control Center

> Storage Device Div.
> TV & Visual Media
Equipment Div.
> Optical Imaging

System Div.
> Digital AV Div.
> Core Technology

Center

> Ome Operations
- Digital Media

Network

> Fukaya Operations

> Personal

Computer Div.
- Japan & Asia
Operations

> Personal

Computer Div.
- America, EMEA &

Oceania
Operations
> Server & Network

Div.

> PC Development

Center

> Global Production

& Logistics
Management
Center

> Ome Complex

Semiconductor
Div.
> Himeji Operations
- Semiconductor

> System LSI Div.

> Oita Operations
> Kitakyushu Operations
> Microelectronics Center

> Memory Div.

> Yokkaichi Operations
> Electronic Devices Sales &

Marketing Div.

> Process & Manufacturing

Engineering Center

> Center For Semiconductor
Research & Development

> Corporate Audit Div.

> Strategic Planning &

Communications Group

> Corporate Representatives

> Corporate Strategic Planning Div.

America, Europe, Asia, China

> Regional Business Strategy Div.

> Corporate Communications Office

> Procurement

Group

> Corporate

Procurement
Div.

> Productivity &
Environment
Group

> Technology &
Intellectual
Property Group

> Corporate

Productivity
Planning Div.

> Corporate

Environment
Management Div.

> Corporate

Manufacturing
Engineering
Center
> Yokohama
Complex

> Himeji

Operations

> Technology
Planning Div.

> Intellectual
Property Div.

> Corporate
Research &
Development
Center
> Corporate
Software
Engineering
Center

> Marketing
Group

> Marketing

Planning Div.

> Customer

Satisfaction
Center

> Corporate Sales
& Marketing Div.

> Global

Marketing Div.
> Advertising Div.
> Design Center

Infrastructure Systems Group

> Power Systems

Company

> Nuclear Energy

Systems &
Services Div.
> Isogo Nuclear

> Transmission
Distribution &
Industrial
Systems
Company

Engineering Center
> WEC Coordination Div.
> Thermal & Hydro
Power Systems &
Services Div.

> Power and Industrial
Systems Research and
Development Center

> Transmission &
Distribution
Systems Div.

> Industrial

Systems Div.
> Transportation
Systems Div.

> Fuchu

Complex

> Keihin Product
Operations

> Hamakawasaki
Operations

> Mie

Operations

> Social

Infrastructure
Systems
Company

> Infrastructure
Systems Div.
> Environmental
Systems Div.
> Broadcasting &

Network
Systems Div.

> Defense &
Electronic
Systems Div.

> Security &

Automation
Systems Div.

> Komukai

Operations

> Automotive

Systems Div.

[Branch Offices]

> Kansai

Branch Office

> Network

Services Div.

> Chubu

Branch Office

> New Lighting
Systems Div.

> Kyushu

Branch Office

> Chugoku

Branch Office

> Hokuriku

Branch Office

> Tohoku

Branch Office

> Hokkaido

Branch Office

> Shikoku

Branch Office

> Shutoken

Branch Office

> South-Shutoken
Branch Office

(As of June 25, 2008)

Global Network

Overseas Offices

Overseas Subsidiaries & Affiliates

NORTH AMERICA
Canada
• Toshiba of Canada, Ltd.
• Toshiba TEC Canada Inc.
U.S.A.
• Toshiba America, Inc.
• Toshiba America Capital Corporation
• Toshiba America Research, Inc.
• Toshiba America Information Systems, Inc.
• Toshiba America Consumer Products, L.L.C.
• Toshiba International Corporation
• Toshiba America Nuclear Energy Corporation
• ReGENco L.L.C.
• Hydro Power Service, L.L.C.
• ST Inverter America, Inc.
• Toshiba America Electronic Components, Inc.
• Toshiba America Medical Systems, Inc.
• Toshiba Nuclear Energy Holdings (US) Inc.
• Westinghouse Electric Company L.L.C.
• Toshiba TEC America Retail Information Systems, Inc.
• Toshiba America Business Solutions, Inc.
• Harison Toshiba Lighting (U.S.A.), Inc.

LATIN AMERICA
Mexico
• Toshiba de Mexico, S.A. de C.V.
• Toshiba Electromex, S.A. de C.V.
• GE Toshiba Turbine Components de Mexico S.R.L de
C.V.
Venezuela
• Toshiba de Venezuela C.A.
Brazil
• Toshiba Representacao Comercial do Brasil Ltda.
• Semp Toshiba Amazonas S.A.
• T and S Servicos Industrias Ltda.
• Toshiba Electronics do Brasil Ltda.
• Toshiba do Brasil, S.A.
• Toshiba Transmissao e Distribuicao do Brasil Ltda.
• Toshiba Medical do Brasil Ltda.

EUROPE
UK
• Toshiba of Europe Ltd.
• Toshiba International Finance (UK) Plc.
• Toshiba Research Europe Ltd.
• Toshiba Information Systems (UK) Ltd.
• Toshiba International (Europe) Ltd.
• Toshiba TEC U.K. Imaging Systems Ltd.
• Toshiba Medical Systems Ltd.
• Toshiba Carrier UK Ltd.
Sweden
• Toshiba TEC Nordic AB
The Netherlands
• Toshiba International Finance (Netherlands) B.V.
• Toshiba TEC Netherlands Retail Information
Systems B.V.
• Toshiba Medical Systems Europe B.V.
Belgium
• Toshiba TEC Europe Retail Information Systems S.A.
• Toshiba Medical Systems NV/SA
Germany
• Toshiba Europe GmbH
• Toshiba Electronics Europe GmbH
• Toshiba TEC Germany Imaging Systems GmbH
• Toshiba Medical Systems GmbH
France
• Toshiba Systèmes (France) S.A.
• Schneider Toshiba Inverter S.A.S.
• Schneider Toshiba Inverter Europe S.A.S.
• Toshiba TEC France Imaging Systems S.A.
• Toshiba TEC Europe Imaging Systems S.A.
• Toshiba Medical France S.A.
• Toshiba Lighting Products (France) S.A.
Austria
• STI Power Drives GmbH
• Toshiba Medical Systems GmbH
Switzerland
• Toshiba TEC Switzerland AG
• Toshiba Medical Systems AG (Switzerland)
Poland
• Toshiba Television Central Europe Sp. z o. o.
• Toshiba TEC Poland S.A.
• TEC Polska Sp. z o. o.
Italy
• Toshiba TEC Italia Imaging Systems S.P.A.
• TEC Italia, S.R.L.
• Toshiba Medical Systems S.R.L.
Spain
• Toshiba Medical Systems S.A.
Russia
• LLC Toshiba Digital Media Network CIS
• Toshiba RUS LLC
• ZAO Toshiba Medical Systems

AFRICA
Egypt
• Toshiba El Araby Home Appliances Marketing
Company

EUROPE
Moscow

AFRICA
Johannesburg

MIDDLE EAST
Baghdad

MIDDLE EAST
U.A.E.
• Toshiba Gulf FZE
Kuwait
• Toshiba Power Systems (Kuwait) Co. W.L.L.

ASIA
The People’s Republic of China
• Toshiba China Co., Ltd.
• Toshiba Dalian Co., Ltd.
• Toshiba Hangzhou Co., Ltd.
• Hangzhi Machinery & Electronics Co., Ltd.
• Dalian Toshiba Television Co., Ltd.
• Toshiba Storage Device (Shanghai) Co., Ltd.
• Toshiba Visual Imaging Systems (Shenzhen) Ltd.
• Toshiba Information Equipment (Hangzhou) Co., Ltd.
• Toshiba Personal Computer & Network (Shanghai)
Co., Ltd.
• Ningbo Toshiba Huatong Switchgear Co., Ltd.
• Guangzhou Toshiba Baiyun Electrical Equipment
Co., Ltd.
• Dalian Toshiba Locomotive Electric Equipment Co.,
Ltd.
• Toshiba Baiyun Vacuum Interrupters (Jinzhou) Co., Ltd.
• Changzhou Toshiba Transformer Co., Ltd.
• Henan Pinggao Toshiba High-Voltage Switchgear
Co., Ltd.
• Zhuhai Xujizhi Power System Automation Co., Ltd.
• Langfang EPRI Toshiba Arrester Co., Ltd.
• Toshiba Hydro Power (Hangzhou) Co., Ltd.
• Toshiba Xingyi Control System (Xian) Co., Ltd.
• Guangzhou Toshiba Baiyun Control System
Engineering Co., Ltd.
• Dalian Toshiba Broadcasting Systems Co., Ltd.
• Toshiba Electronics Management (China) Co., Ltd.
• Toshiba Electronics (Shanghai) Co., Ltd.
• Toshiba Electronics (Shenzen) Co., Ltd.
• Toshiba Semiconductor (Wuxi) Co., Ltd.
• Tsurong Xiamen Xiangyu Trading Co., Ltd.
• Toshiba Electronics (Dalian) Co., Ltd.
• Toshiba TEC Information Systems (Shenzhen) Co., Ltd.
• Toshiba Elevator Shenyang Co., Ltd.
• Toshiba Elevator China Co., Ltd.
• Toshiba Medical Systems (China) Co., Ltd.
• Toshiba Products & Services (Shanghai) Co., Ltd.
• Toshiba HA Sales (Nanhai) Co., Ltd.
• Toshiba HA Manufacturing (Shenzhen) Co., Ltd.
• Toshiba HA Manufacturing (Nanhai) Co., Ltd.
• Toshiba Refrigerator (Xi’an) Co., Ltd.
• T.G. BATTERY Co., (China) Ltd.
• Fuzhou TLT Lighting Co., Ltd.
• Toshiba Lighting & Display Systems (Shanghai)
Co., Ltd.
• Toshiba Lighting (Beijing) Co., Ltd.
• Shenzhen Shenzhi Precision Parts Co., Ltd.
• Harison Toshiba Lighting (Kunshan) Co., Ltd.
• Toshiba Consumer & Lighting Products Trading
(Shanghai) Co., Ltd.
• Guangdong Meizhi Compressor Ltd.
• Guangdong Meizhi Precision Manufacturing Co., Ltd.
• Guangdong Midea Air-Conditioning Equipment
Co., Ltd.

• Guangdong Midea Commercial Air-Conditioning
Equipment Co., Ltd.
• Guangdong Midea Group Wuhu Air-Conditioning
Equipment Co., Ltd.
• Guangdong Midea Group Wuhan Air-Conditioning
Equipment Co., Ltd.
• Toshiba Carrier Airconditioning Sales (Shanghai)
Co., Ltd.
Korea
• Toshiba Electronics Korea Corporation
• Toshiba Digital Media Network Korea Corporation
• Toshiba TEC Korea Co., Ltd.
• Toshiba Elevator Korea, Inc.
• Harison Engineering (Korea) Co., Ltd.
• Kumho HT Autonix Corporation
Taiwan
• Taiwan Toshiba International Procurement

Corporation

• Toshiba Information, Industrial and Power Systems

Taiwan Corporation

• Toshiba Digital Media Network Taiwan Corporation
• Toshiba Memory Semiconductor Taiwan

Corporation

• Toshiba Electronics Taiwan Corporation
• Harison Toshiba Lighting Taiwan Co., Ltd.
Hong Kong SAR
• Toshiba Hong Kong Ltd.
• Toshiba Electronics Asia, Ltd.
• Toshiba International Procurement Hong Kong Ltd.
• Toshiba TEC (H.K.) Logistics & Procurement Ltd.
• Toshiba Home Appliances (H.K.) Logistics &
Procurement Ltd.
• T.G. BATTERY Co., (Hong Kong) Ltd.
• Wako Electric (Far East) Co., Ltd.
• Toshiba Lighting Hong Kong Ltd.
Philippines
• Toshiba Information Equipment (Philippines), Inc.
• Toshiba Electronics Philippines, Inc.
Vietnam
• Toshiba Vietnam Consumer Products Co., Ltd.
• Toshiba Software Development (Vietnam) Co., Ltd.
• Toshiba Vietnam Home Appliances Co., Ltd.
Thailand
• Toshiba Thailand Co., Ltd.
• Toshiba Semiconductor (Thailand) Co., Ltd.
• Toshiba Electronics Service (Thailand) Co., Ltd.
• Toshiba Consumer Products (Thailand) Co., Ltd.
• Thai Toshiba Electric Industries Co., Ltd.
• Thai Toshiba Fluorescent Lamp Co., Ltd.
• Thai Toshiba Lighting Co., Ltd.
• Toshiba Lighting Components (Thailand) Ltd.
• Toshiba Carrier (Thailand) Co., Ltd.
Malaysia
• Toshiba Sales & Services Sdn. Bhd.
• Toshiba Electronics Malaysia Sdn. Bhd.
• Toshiba Electronics Trading (Malaysia) Sdn. Bhd.
• TOS Energy Malaysia Sdn. Bhd.
• TIM Electronics Sdn. Bhd.
• M S Elevators Engineering Sdn. Bhd.
• M S Elevators Sdn. Bhd.

Singapore
• Toshiba Capital (Asia) Ltd.
• Toshiba Asia Pacific Pte., Ltd.
• Toshiba Data Dynamics Pte., Ltd.
• Toshiba Singapore Pte., Ltd.
• Toshiba Electronics Asia (Singapore) Pte., Ltd.
• Toshiba TEC Singapore Pte., Ltd.
• Toshiba Medical Systems Asia Pte., Ltd.
• Toshiba Consumer Marketing (Singapore) Pte., Ltd.
• AFPD Pte., Ltd.
Indonesia
• P.T. Nusantara Energy Solution
• P.T. Toshiba Consumer Products Indonesia
• PT. Toshiba Visual Media Network Indonesia
• P.T. TEC Indonesia
India
• Toshiba India Private Ltd.
• Toshiba Embedded Software India Private Ltd.

OCEANIA
Australia
• Toshiba International Corporation Pty., Ltd.
• Toshiba (Australia) Pty., Ltd.
• Toshiba TEC Australia Pty., Ltd.

(As of April 1, 2008)

Consolidated Subsidiaries / Affiliated Companies Accounted for by the Equity Method

Consolidated Subsidiaries

Affiliated Companies Accounted
for by the Equity Method

DOMESTIC

OVERSEAS

DOMESTIC

• Device Link, Inc.
• Harison Toshiba Lighting Corporation
• Iwate Toshiba Electronics Co., Ltd.
• Joint Fuel Co., Ltd.
• Kaga Toshiba Electronics Corporation
• Mobile Broadcasting Corporation
• NuFlare Technology, Inc.*
• Toshiba Building Co., Ltd.
• Toshiba Capital Corporation
• Toshiba Carrier Airconditioning Systems
Corporation
• Toshiba Carrier Corporation
• Toshiba Consumer Marketing Corporation
• Toshiba Denzai Marketing Co., Ltd.
• Toshiba Device Corporation
• Toshiba Elevator and Building Systems 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 Systems Corporation
• Toshiba Plant Systems & Services Corporation*
• Toshiba Solutions Corporation
• Toshiba TEC Corporation*
• A&T Battery Corporation
257 companies in total including the above 28.

*Listed company in stock market

• Flash Alliance, Ltd.
• Flash Partners, Ltd.
• Ikegami Tsushinki Co., Ltd.*
• NEC Toshiba Space Systems, Ltd.
• Nishishiba Electric Co., Ltd.*
• Shibaura Mechatronics Corporation*
• Topcon Corporation*
• Toshiba Finance Corporation
• Toshiba Housing Loan Service Corporation
• Toshiba Machine Co., Ltd. *
• Toshiba Medical Finance Co., Ltd.
• Toshiba Mitsubishi-Electric Industrial Systems
Corporation
82 companies in total including the above 12.

*Listed company in stock market

OVERSEAS
• Guangdong Midea Air-Conditioning Equipment
Co., Ltd.
• Guangdong Midea Commercial Air-Conditioning
Equipment Co., Ltd.
• Guangdong Midea Group Wuhan Air-Conditioning
Equipment Co., Ltd.
• Guangdong Midea Group Wuhu Air-Conditioning
Epuipment Co., Ltd
• Guangdong Meizhi Compressor Ltd.
• Henan Pinggao Toshiba High-voltage Switchgear
Co., Ltd.
• Schneider Toshiba Inverter S.A.S.
• Semp Toshiba Amazonas S.A.
• TM GE Automation Systems L.L.C.
• Toshiba Carrier (Thailand) Co., Ltd.
• Toshiba Carrier UK Ltd.
111 companies in total including the above 11.

(As of March 31, 2008)

• AFPD Pte., Ltd.
• Changzhou Toshiba Transformer Co., Ltd.
• Dalian Toshiba Television Co., Ltd.
• Harison Engineering (Korea) Co., Ltd.
• Harison Toshiba Lighting (Kunshan) Co., Ltd.
• Northern Virginia Semiconductor L.L.C.
• Taiwan Toshiba International Procurement
Corporation
• Toshiba (China) Co., Ltd.
• Toshiba America Business Solutions, Inc.
• Toshiba America Capital Corporation
• Toshiba America Consumer Products, L.L.C.
• Toshiba America Electronic Components, Inc.
• Toshiba America Information Systems, Inc.
• Toshiba America Medical Systems, Inc.
• Toshiba America MRI, Inc.
• Toshiba America, Inc.
• Toshiba Capital (Asia) Ltd.
• Toshiba Consumer Products (Thailand) Co., Ltd.
• Toshiba Dalian Co., Ltd.
• Toshiba Digital Media Network Taiwan Corporation
• Toshiba Electronics Asia, Ltd.
• Toshiba Electronics Europe GmbH
• Toshiba Electronics Korea Corporation
• Toshiba Electronics Malaysia Sdn. Bhd.
• Toshiba Electronics Taiwan Corporation
• Toshiba Europe GmbH
• Toshiba HA Manufacturing (Nanhai) Co., Ltd.
• Toshiba Hydro Power (Hangzhou) Co., Ltd.
• Toshiba Information Equipment (Philippines), Inc.
• Toshiba Information Systems (UK) Ltd.
• Toshiba Information, Industrial and Power Systems
Taiwan Corporation
• Toshiba International Corporation
• Toshiba International Finance (Netherlands) B.V.
• Toshiba International Finance (UK) Plc.
• Toshiba International Procurement Hong Kong, Ltd.
• Toshiba Medical Systems Europe B.V.
• Toshiba Nuclear Energy Holdings (UK) Ltd.
• Toshiba Nuclear Energy Holdings (US) Inc.
• Toshiba of Canada, Ltd.
• Toshiba Samsung Storage Technology Korea
Corporation
• Toshiba Semiconductor (Wuxi) Co., Ltd.
• Toshiba Systèmes (France) S.A.
• Toshiba TEC Europe Imaging Systems S.A.
• Toshiba TEC France Imaging Systems S.A.
• Toshiba TEC U.K. Imaging Systems Ltd.
• Toshiba Television Central Europe Sp. z o. o.
• Toshiba Transmission and Distribution Brazil Ltd.
• TSB Nuclear Energy Investment UK Ltd.
• TSB Nuclear Energy Investment US Inc.
• Westinghouse Electric Company L.L.C.
293 companies in total including the above 50.

Stock / Shareholders Information

Common Stock Price Trends

Common stock price (¥, fiscal year)

High

Low

’04/3

’05/3

’06/3

’07/3

’08/3

541

303

576

379

815

416

842

652

1,185

649

Nikkei average (¥)

11,715.39

11,668.95

17,059.66

17,287.65

12,525.54

Number of shares issued (Millions of shares)

Market capitalization (¥ Billion)

Earnings per share—Basic (EPS) (¥)

Earnings per share—Diluted (EPS) (¥)

Annual Dividends per share (¥)

Payout ratio (%) (Consolidated)

Number of shareholders

Price-to-earnings ratio (PER) (Times)

Price-to-cash flows ratio (PCFR) (Times)

Price-to-book value ratio (PBR) (Times)

3,219

1,519.4

8.96

33.5

3,219

1,442.1

14.32

13.52

34.9

483,591

479,808

52.7

5.4

2.0

31.3

5.0

1.8

3,219

2,201.8

24.32

22.44

6.5

26.7

454,849

28.13

6.6

2.2

3,219

2,533.4

42.76

39.45

25.7

411,723

18.41

5.9

2.3

3,237

2,155.9

39.46

39.59

30.4

375,115

16.88

4.2

2.1

Note: Common stock price is based on the Tokyo Stock Exchange, Inc. market quotation.

Distribution of Shareholders

(Percentage of total voting rights)

’04/3
■ Individuals and others in Japan 38.4%

’05/3

’06/3

(As of March 31)
’08/3

’07/3

39.2%

35.9%

31.2%

27.3%

■ Overseas investors

19.0

18.1

■ Companies in Japan

■ Securities companies in Japan

3.0

1.2

■ Financial institutions in Japan 38.4

2.9

0.7

39.1

22.3

2.7

1.4

37.7

25.0

2.7

1.7

39.4

24.6

4.1

1.0

43.0

(%)
100

38.4

39.2

35.9

31.2

27.3

19.0
3.0
1.2

18.1
2.9
0.7

38.4

39.1

22.3

2.7
1.4

37.7

25.0

2.7
1.7

39.4

24.6

4.1
1.0

43.0

’04/3

’05/3

’06/3

’07/3

’08/3

Major Shareholders

The Master Trust Bank of Japan, Limited (trust accounts)

Japan Trustee Service Bank, Limited (trust accounts)

The Dai-ichi Mutual Life Insurance Company

Nippon Life Insurance Company

Japan Trustee Service Bank, Limited (trust accounts 4)

NIPPONKOA Insurance Company, Limited

Sumitomo Mitsui Banking Corporation

Mizuho Corporate Bank, Limited

JP Morgan Chase Bank 380055

State Street Bank and Trust Company

(As of March 31, 2008)

Percentage of
total voting rights
8.0%

5.2

3.6

3.4

2.2

1.6

1.5

Corporate History

Governance structure

Introduced corporate exec-
utive officer system.

Introduced in-house com-
pany system.

Adopted the Company
with Committees system
and introduced Corporate
Social Responsibility Divi-
sion.

Introduced Takeover
Defensive Measures.

Significant events

1875

Hisashige Tanaka opened a telegraph equipment factory
(later Shibaura Engineering Works Co., Ltd.) in Shinbashi, Tokyo.

1890 Ichisuke Fujioka and Shoichi Miyoshi established Hakunetsusha & Co.,

Ltd. (later Tokyo Electric Company), in Kyobashi, Tokyo.

1939

Tokyo Electric Company merged with Shibaura Engineering Works
Co., Ltd. and established Tokyo Shibaura Electric Co., Ltd.

1978

Released the first Japanese word processor.

Changed name to Toshiba Corporation.

1985

Developed 1Mb DRAM.

Introduced the world’s first laptop PCs.

1991

Developed 4Mb NAND Flash EEPROM.

1995

Developed the DVD high-density optical disc.

1998

1999

2000 Released SD Card and 1.8-inch HDD.

2001

Released “01 Action Plan. ”

Commercialized the world’s first HDD/DVD video recorder.

Commenced joint development of Cell, the next-generation proces-
sor, with Sony Computer Entertainment Inc. and IBM Corporation.

2002 Withdrew from commodity DRAM business.

Formed a joint venture with Matsushita Electric Industrial Co., Ltd. for LCDs.

2003 Home Appliance, IT-Solution and Medical System businesses trans-

ferred and integrated with subsidiaries.

2004 Joined the United Nations’ Global Compact.

Developed the world’s smallest direct methanol fuel cell (DMFC).

Released a 64 multi-slice CT system.

2005 Developed 8Gb NAND Flash memory.

2006 Westinghouse Group joined the Toshiba Group (acquired shares of

Westinghouse from British Nuclear Fuels (BNFL)).

Developed 16Gb NAND Flash memory.

2007 Shipped steam turbines with cumulative total output of 150GW.

Developed 320 slices Dynamic Volume CT system which can capture
complete image of the heart or brain in only one rotation.

Achieved cumulative output of 200 million HDDs.

Achieved cumulative sales of 60 million notebook PCs.

Corporate Data

As of March 31, 2008
Headquarters: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1-1, Shibaura 1-chome, Minato-ku, Tokyo, Japan
Founded:

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . July 1875

. . . . . . . . . . . . . . . . . . . . . . Approx. 198,000 (consolidated)

Number of Employees:
Fiscal Year: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . April 1 to March 31
Authorized Number of Shares: . . . . . . . . . . . . . . . 10 billion shares
Number of Shares Issued: . . . . . . . . . . . . . . . . . . . . 3,237,031,486 shares
Number of Shareholders: . . . . . . . . . . . . . . . . . . . . 375,115
Stock Exchange Listings: . . . . . . . . . . . . . . . . . . . . . Tokyo, Osaka, Nagoya, London
ISIN: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . JP359 2200004
Ticker Code on the Tokyo Stock Exchange: . . 6502
Shareholder Registration Agent: . . . . . . . . . . . . . The Chuo Mitsui Trust and Banking Company, Limited
For further information, please contact: . . . . . . Toshiba Corporation

Corporate Communications Office

Investor Relations Group

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

INVESTOR RELATIONS

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

Toshiba Corporation makes every effort to provide shareholders and investors with
reliable information in a timely manner, and toward this we make full and proactive
use of the Internet in our IR activities. On our investor relations site we publish a
wide range of resources, including news releases, information for shareholders, our
statements of accounts, and explanations of our business results, as well as videos
and other materials related to business information meetings. The site also supports
interactive communication, allowing investors to ask questions and offer opinions
that will help us to improve the quality of our IR activities.

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.

Product names may be trademarks of their respective companies.

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The white-colored pages of this report are printed on FSC certified paper.

TOSHIBA CORPORATION

2008

FINANCIAL REVIEW

Annual Report 2008 • Financial Review

Management’s Discussion and Analysis

Five-year Summary

Toshiba Corporation and Subsidiaries
Years ended March 31

Net sales
Cost of sales
Selling, general and administrative expenses (Note 1)
Operating income (Note 2)
Income (loss) before income taxes and minority interest
Income taxes
Net income

Millions of yen,
except per share amounts

2008
¥7,668,076
5,759,840
1,670,137
238,099
255,558
113,380
127,413

2007
¥7,116,350
5,312,179
1,545,807
258,364
298,460
145,355
137,429

2006
¥6,343,506
4,659,795
1,443,101
240,610
178,177
90,142
78,186

2005
¥5,836,139
4,296,572
1,384,760
154,807
111,232
55,944
46,041

2004
¥5,579,506
4,075,336
1,329,584
174,586
135,770
102,237
28,825

Per share of common stock:
Net income (Note 3)

—Basic
—Diluted
Cash dividends

¥39.46
36.59
12.00

¥42.76
39.45
11.00

¥24.32
22.44
6.50

¥14.32
13.53
5.00

¥8.96
8.96
3.00

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

¥5,935,637
1,022,265
465,044
340,852
393,293
198,000

¥5,931,962
1,108,321
375,335
259,882
393,987
191,000

¥4,727,113
1,002,165
338,800
228,637
372,447
172,000

¥4,571,412
815,507
318,394
215,844
348,010
165,000

¥4,462,200
754,990
227,273
223,946
336,714
161,000

Notes: 1) ¥4,085 million, ¥4,836 million and ¥48,945 million of “Subsidy received on return of substitutional portion of Employees’ Pension Fund Plan, net of settlement loss of ¥5,045 million in

2006, ¥7,992 million in 2005 and ¥188,106 million in 2004” are classified as a reduction of selling, general and administrative expenses for the fiscal years ended March 31, 2006, 2005 and
2004, respectively.

2) Operating income (loss) presented hereinafter is, in accordance with accounting practices in Japan, derived from a value that deducts the cost of sales and selling, general and adminis-

trative from net sales, allowing comparison with that of other companies in Japan. Some items which are classified as operating income (loss) under U.S.GAAP may be presented as non-
operating income (loss). In the FY2007 accounts, such items as the withdrawal from the HD DVD business, the sale of Ginza Toshiba Building, and the change in accounting estimates
effected by a change in accounting principle for depreciation of property, plant and equipment (P.P.E.), are presented as non-operating income (loss).

3) 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 convertible bonds were converted or stock acquisition rights were exercised to issue common stock, unless their inclusion would
have an antidilutive effect.

4) Beginning with the fiscal year ended March 31, 2006, equity in earnings (losses) of affiliates has been included in income (loss) before income taxes and minority interest. Prior-period

data for the fiscal years ended from March 31, 2004 through 2005 has been reclassified to conform with the current classification.

2. Management’s Discussion and Analysis 15. Consolidated Balance Sheets 17. Consolidated Statements of Income

18. Consolidated Statements of Shareholders’ Equity 19. Consolidated Statements of Cash Flows

20. Notes to Consolidated Financial Statements 47. Report of Independent Auditors

SCOPE OF CONSOLIDATION

As of the end of March 2008, Toshiba Group comprised Toshiba Corporation and 550 consolidated subsidiaries and its
principal operations were in the Digital Products, Electronic Devices, Social Infrastructure and Home Appliances business
domains.

133 consolidated subsidiaries were involved in Digital Products, 59 in Electronic Devices, 211 in Social Infrastructure, 77

in Home Appliances and 70 in Others.

The number of consolidated subsidiaries was 31 more than at the end of March 2007.
193 affiliates were accounted by the equity method as of the end of March 2008.

RESULTS OF OPERATIONS

NET SALES AND NET INCOME (LOSS)
The Japanese economy continued to expand during the first half of FY2007, mainly on increased capital expenditure. The
economy faced difficulties in the second half, as the subprime mortgage crisis impacted on the US economy and the continu-
ing rise in crude oil prices cast darkening shadows over corporate profitability.

Overseas, the US economy slowed due to the subprime mortgage crisis in the second half of FY2007, and the pace of eco-

nomic expansion in the Europe slowed as well. Asia, including China, continued to see economic expansion.

In these circumstances, Toshiba posted higher consolidated sales, reflecting proactive managements, including strategic
allocation of resources grounded in the Group strategy of achieving sustained growth with profit. Toshiba’s overall consoli-
dated sales for the full-year term were 7,668.1 billion yen, an increase of 551.7 billion yen. Consolidated operating income
declined by 20.3 billion yen to 238.1 billion yen. Social Infrastructure recorded substantially increased operating income,
while Electronic Devices saw significantly lower operating income. Income before income taxes and minority interest
decreased by 42.9 billion yen to 255.6 billion yen, a figure primarily reflecting the costs incurred in the withdrawal from the
HD DVD business and the impact of changes in estimate of salvage value of property, plant and equipment (P.P.E.), in spite
of the gain from the sale of the Ginza Toshiba Building. Net income decreased by 10.0 billion yen to 127.4 billion yen.

2
33

NET SALES BY REGION

Year ended March 31
Japan
Asia
North America
Europe
Others
Net Sales

2008
¥3,705,218
1,498,045
1,151,932
1,079,485
233,396
¥7,668,076

Millions of yen
2007
¥3,599,385
1,412,446
1,057,810
863,224
183,485
¥7,116,350

2006
¥3,382,143
1,144,568
945,137
699,584
172,074
¥6,343,506

(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.7, which are based on the location of the distribution

source.

Management’s Discussion and Analysis

DIVIDEND
The Company while giving full consideration to such factors as the strategic investments necessary to secure medium- to
long-term growth, seeks to achieve continuous increases in its actual dividend payments, in line with a payout ratio in the
region of 30 percent, on a consolidated basis.

The Company paid an interim dividend of ¥6.00 per share and a year-end dividend of ¥6.00 per share. As a result, the

annual dividend for the full term reached a record high of ¥12.0, up ¥1.0 from the previous term.

The dividend for FY2008 has not yet been decided.

RESULTS BY INDUSTRY SEGMENT

Year ended March 31
Digital Products
Electronic Devices
Social Infrastructure
Home Appliances
Others
Eliminations
Total

Net Sales

Billions of yen

—
2,951.2
1,738.5
2,419.0
774.3
384.6
–599.5
7,668.1

Change (%)
+5%
+5%
+17%
+3%
–2%
—
+8%

Operating Income (loss)
—
15.0
74.1
131.3
3.9
14.7
–0.9
238.1

Change
–0.8
–45.6
+34.5
–5.8
–4.0
—
–20.3

DIGITAL PRODUCTS
Consolidated sales of Digital Products rose by 145.7 billion yen to 2,951.2 billion yen. The PC business saw sales growth on
increased sales worldwide, and the Digital Media business also saw higher sales in TVs. Sales in the mobile phone business
were flat, while the Retail Information Systems and Office Equipment business saw lower sales.

The segment’s consolidated operating income decreased by 0.8 billion yen, resulting in a profit of 15.0 billion yen. The PC
business recorded a significant increase in operating income on the strength of higher sales, and the Retail Information
Systems and Office Equipment business also increased operating income, the result of focusing sales on high-value added
products. The Digital Media business, however, recorded a significantly lower performance, reflecting costs incurred in the
withdrawal from the HD DVD business.

ELECTRONIC DEVICES
The Semiconductor business saw sales increase, mainly in NAND flash memory. Sales in the Devices and Components
business remained flat. The LCD business saw sales decline on sluggish sales of LCDs for mobile applications and a decline
in sales prices. Overall consolidated segment sales increased by 81.2 billion yen to 1,738.5 billion yen.

Consolidated operating income for the segment was 74.1 billion yen, a decrease of 45.6 billion yen. Both the

Semiconductor business and the LCD business saw significantly lower operating income, the result of declining sales prices.

SOCIAL INFRASTRUCTURE
Consolidated sales in the Social Infrastructure segment increased by 351.3 billion yen to 2,419.0 billion yen. The Power
Systems business saw solid sales of thermal power plant and equipment, and electric power transmission and distribution
systems, mainly in overseas markets, and sales were also boosted by the consolidation of Westinghouse into the Group. The
Industrial Systems business also recorded increased sales, on a good performance in transportation systems. Sales in the
Medical Systems business rose against the previous year, on higher sales in overseas markets. The IT Solutions business and
the Elevator business also saw increased sales. In the Social Infrastructure Systems business, sales were lower as TV broad-
casting companies completed their initial round of capital investment in digital broadcasting.

Consolidated operating income in the segment was 131.3 billion yen, an improvement of 34.5 billion yen. While the Social
Infrastructure Systems business saw lower results, the Power Systems business and the Industrial Systems business posted
solid performances. The Medical Systems business and IT Solutions business continued to see the same levels of high prof-
itability as in the previous period, and the Elevator business also recorded a good performance.

HOME APPLIANCES
Consolidated sales of Home Appliances increased by 25.4 billion yen to 774.3 billion yen, on higher sales of air conditioners,
refrigerators and washing machines, mainly in overseas markets.
Consolidated segment operating income declined by 5.8 billion yen to 3.9 billion yen, largely as the result of amendment of
the Building Standards Law, declines in prices for white goods and industrial lighting, and increased costs involved in
restructuring domestic manufacturing bases.

OTHERS
Consolidated net sales of Others decreased by 7.0 billion yen from the previous year to 384.6 billion yen, and consolidated
operating income also decreased by 4.0 billion from the year earlier to 14.7 billion yen.

The consolidated segment information has been prepared based on Article 15-2 of the Regulations for Consolidated
Financial Statements instead of Statement of Financial Accounting Standards (“SFAS”) No. 131.

INDUSTRY SEGMENTS

Year ended March 31
Sales:

Digital Products

Unaffiliated customers
Intersegment

Total

Electronic Devices

Unaffiliated customers
Intersegment

Total

Social Infrastructure

Unaffiliated customers
Intersegment

Total

Home Appliances

Unaffiliated customers
Intersegment

Total

Others

Unaffiliated customers
Intersegment

Total
Eliminations
Consolidated

4
55

2008

Millions of yen
2007

2006

Thousands of
U.S. dollars
2008

¥2,845,843
105,343
2,951,186

¥2,720,522
84,968
2,805,490

¥2,459,270
77,278
2,536,548

$28,458,430
1,053,430
29,511,860

1,654,842
83,704
1,738,546

2,305,984
113,007
2,418,991

754,091
20,203
774,294

107,316
277,314
384,630
(599,571)
¥7,668,076

1,572,967
84,334
1,657,301

1,991,083
76,583
2,067,666

726,878
22,052
748,930

104,900
286,736
391,636
(554,673)
¥7,116,350

1,301,665
86,419
1,388,084

1,815,115
67,146
1,882,261

669,058
18,448
687,506

16,548,420
837,040
17,385,460

23,059,840
1,130,070
24,189,910

7,540,910
202,030
7,742,940

98,398
281,357
379,755
(530,648)
¥6,343,506

1,073,160
2,773,140
3,846,300
(5,995,710)
$76,680,760

Management’s Discussion and Analysis

Year ended March 31
Operating income (loss):

Digital Products
Electronic Devices
Social Infrastructure
Home Appliances
Others
Eliminations
Consolidated

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

Depreciation and amortization:

Digital Products
Electronic Devices
Social Infrastructure
Home Appliances
Others
Corporate
Consolidated

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
Consolidated

2008

Millions of yen
2007

15,059
74,130
131,274
3,912
14,669
(945)
¥ 238,099

¥1,290,442
1,552,752
2,337,972
438,989
379,305
(63,823)
¥5,935,637

38,459
229,539
59,864
22,717
29,581
—
¥ 380,160

16,708
63
134
—
54
—
16,959

37,513
367,368
67,696
20,019
9,432
—
¥ 502,028

15,784
119,750
96,760
9,676
18,721
(2,327)
¥ 258,364

¥1,242,567
1,449,764
2,385,297
438,793
479,155
(63,614)
¥5,931,962

42,493
169,113
41,782
18,307
21,180
—
¥ 292,875

7,921
1
6
216
472
—
8,616

40,526
269,654
58,750
24,744
16,123
—
¥ 409,797

2006

20,864
123,287
76,553
2,710
17,964
(768)
¥ 240,610

¥1,092,075
1,323,693
1,577,973
400,825
442,389
(109,842)
¥4,727,113

32,071
148,016
34,982
16,654
22,494
—
¥ 254,217

7,126
2,861
444
116
1,427
—
11,974

44,209
239,480
44,034
27,428
7,733
—
¥ 362,884

Thousands of
U.S. dollars
2008

150,590
741,300
1,312,740
39,120
146,690
(9,450)
$ 2,380,990

$12,904,420
15,527,520
23,379,720
4,389,890
3,793,050
(638,230)
$59,356,370

384,590
2,295,390
598,640
227,170
295,810
—
$ 3,801,600

167,080
630
1,340
—
540
—
169,590

375,130
3,673,680
676,960
200,190
94,320
—
$ 5,020,280

GEOGRAPHIC SEGMENTS

Year ended March 31
Sales:
Japan

Unaffiliated customers
Intersegment

Total

Asia

Unaffiliated customers
Intersegment

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
Corporate and Eliminations
Consolidated

2008

Millions of yen
2007

2006

Thousands of
U.S. dollars
2008

¥4,103,301
2,041,284
6,144,585

¥4,070,662
1,922,480
5,993,142

¥3,787,378
1,677,041
5,464,419

$41,033,010
20,412,840
61,445,850

1,260,522
594,820
1,855,342

1,187,279
20,958
1,208,237

1,016,175
23,297
1,039,472

100,799
12,654
113,453
(2,693,013)
¥7,668,076

¥ 152,892
37,579
7,619
25,625
3,799
10,585
¥ 238,099

¥4,263,120
762,011
737,911
589,932
42,621
(459,958)
¥5,935,637

1,143,500
580,604
1,724,104

1,002,117
26,230
1,028,347

809,031
21,200
830,231

91,040
6,203
97,243
(2,556,717)
¥7,116,350

¥ 204,089
26,080
7,816
7,248
3,304
9,827
¥ 258,364

¥4,010,563
835,668
789,392
661,853
77,116
(442,630)
¥5,931,962

980,360
541,060
1,521,420

863,732
24,769
888,501

634,245
24,489
658,734

12,605,220
5,948,200
18,553,420

11,872,790
209,580
12,082,370

10,161,750
232,970
10,394,720

77,791
1,454
79,245
(2,268,813)
¥6,343,506

1,007,990
126,540
1,134,530
(26,930,130)
$76,680,760

6
77

¥ 191,949
22,063
18,107
6,145
2,075
271
¥ 240,610

$ 1,528,920
375,790
76,190
256,250
37,990
105,850
$ 2,380,990

¥3,790,544
750,481
254,649
241,598
30,379
(340,538)
¥4,727,113

$42,631,200
7,620,110
7,379,110
5,899,320
426,210
(4,599,580)
$59,356,370

Management’s Discussion and Analysis

RESEARCH AND DEVELOPMENT

The Group, inspired by the concepts of “surprise and sensation” and “safety and security”, is dedicated to the increase of
value through process innovation and the creation of value through value innovation. Considering “Eco & Energy”, wide-
ranging research projects promote the development of differentiated technologies and proprietary knowledge in new materi-
als, products and systems, and further the development of manufacturing technology. In the core business segments of
Digital Products, Electronic Devices and Social Infrastructure, research and development draws on the Group’s technologi-
cal strengths to develop engines for future growth to a strategic product map. Efforts are also made to achieve cross function-
al business synergies, such as those between the Digital Products segment and Electronic Devices segment, with the goal of
expanding customer value to generate new competitive strengths.

The Group’s overall R&D expenditure reached ¥393.3 billion in the fiscal year ended March 31, 2008. Expenditures for

each business segment were as follows:

Digital Products
Electronic Devices
Social Infrastructure
Home Appliances
Others

CAPITAL EXPENDITURES

Billions of yen
118.3
166.2
88.3
19.2
1.3

CAPITAL EXPENDITURE OVERVIEW
The Group’s basis strategy stresses proactive managements including the strategic allocation of resources in growing fields
grounded in achieving sustained growth with profit, one pillar of corporate management of the Group. In the term under
review, overall capital investments (based on the value of orders placed and including intangible assets; the same hereafter)
reached ¥618.9billion, mainly for the Electronic Devices segments. This capital investment amount includes ¥181.5 billion,
which is the Group’s portion of the investments made by Flash Alliance, Ltd., etc., which are companies accounted for by the
equity method. The Group’s capital investments (consolidated basis) excluding abovementioned investment by Flash
Alliance, Ltd., etc., are ¥437.4 billion.

In the Electronic Devices segment, capital investments of ¥436.5 billion (including ¥181.5 billion, which is the Group’s
portion of the investments made by Flash Alliance, Ltd., etc., which are companies accounted for by the equity method) were
directed at increasing capacity and promoting development of semiconductor products and raising output of LCDs.

Major projects completed by the Group in this fiscal year included leading-edge LSI manufacturing facilities (at the Oita
Operations), manufacturing building equipment and power equipment for NAND flash memories (at the Yokkaichi
Operations), manufacturing facilities for discrete semiconductors (at Kaga Toshiba Electronics Corporation).

In the Digital Products segment, capital investments totaling ¥48.3 billion were channeled into development and manufac-

turing of new products, including PCs, imaging products and HDDs.

In the Social Infrastructure segment, capital investments of ¥86.6 billion were made in areas that included system develop-
ment and renewal infrastructure equipment for manufacturing. In the Home Appliances segment, ¥30.7 billion was invested
for to development of new models and manufacturing.

Capital expenditures in the Others segment totaled ¥16.8 billion.

PLANS FOR CONSTRUCTING NEW FACILITIES AND RETIRING EXISTING FACILITIES
In the fiscal year ending March 31, 2009, investment in new facilities and equipment upgrades, including intangible assets, is
projected to total ¥656.0 billion (based on the value of orders placed; the same hereafter). This figure includes ¥178.0 billion,
which is the Group’s portion of the investment made by Flash Alliance, Ltd., etc., which are companies accounted for by the
equity method. The Group’s planned capital investments (consolidated basis), excluding abovementioned investments by
Flash Alliance, Ltd., etc., are ¥478.0 billion.

The Group’s planned capital investments for each business segment are described below:

Digital Products
Electronic Devices
Social Infrastructure
Home Appliances
Others

Billions of yen
52.0
413.0
116.0
31.0
44.0

Notes: 1) Consumption taxes are not included in these capital investments.

2) These capital investments will be primarily financed by internal funds and borrowings.
3) Retiring material facilities is not planed except for routine renewal of facilities.
4) Capital investment for Electronic Devices includes ¥178.0 billion, which is the Group’s portion of the investment made by Flash Alliance, Ltd., etc., which are companies accounted for

by the equity method.

5) Brief of investments plan for each business segment is described below:

- Digital Products plans to invest ¥52.0 billion in manufacturing facilities for HDDs, etc.
- Electronic Devices plans to invest ¥413.0 billion in enhancement of manufacturing facilities for NAND flash memories, construction of new facilities and manufacturing facilities for

LCDs, etc.

- Social Infrastructure plans to invest ¥116.0 billion in nuclear power business, enhancement of overseas manufacturing bases of thermal power business and manufacturing facilities

for new type rechargeable battery, etc.

- Home Appliances plans to invest ¥31.0 billion in manufacturing facilities for home appliances and molds, etc.
- Others plans to invest ¥44.0 billion.

FINANCIAL POSITION AND CASH FLOWS

Total assets increased by 3.6 billion yen from the end of March 2007 to 5,935.6 billion yen.

Shareholders’ equity decreased by 86.0 billion yen from the end of March 2007 to 1,022.3 billion yen, largely reflecting a
decline in other comprehensive income (loss) of 191.0 billion yen due to yen appreciation, etc. in spite of a net income of
127.4 billion yen.

Total debt increased by 102.5 billion yen from the end of March 2007 to 1,261.0 billion yen, mainly as a result of increased

working capital.

As a result of the foregoing, the debt-to-equity ratio as of the end of March 2008 was 123%, an 18-point worsening from

the end of March 2007.

Free cash flow was minus 75.6 billion yen, a 75.7 billion yen improvement from the same period of the previous year, as
improved cash flows from investing activities compensated for deterioration in cash flows from operating activities. The main
cause of improved cash flows from investing activities is that Toshiba paid cash for the acquisition of Westinghouse in the
FY2006 and received cash from the sale of the Ginza Toshiba Building in the FY2007.
CASH FLOWS

In the fiscal year under review, net cash provided by operating activities amounted to ¥247.1 billion, a decrease of ¥314.4 bil-
lion from the previous fiscal year.

Net cash used in investing activities totaled ¥322.7 billion, a decrease of ¥390.1 billion from the previous fiscal year. This
was due to costs incurred from the acquisition of Westinghouse in prior year and proceeds from the sale of the Ginza
Toshiba Building in current year.

Net cash provided by financing activities amounted to ¥46.6 billion in current year compared with ¥154.8 billion in net
cash provided by financing activities during the prior year. This decrease was due to the finance acquisition of Westinghouse
in prior year.

The effect of exchange rate movements was to decrease cash by ¥31.7 billion. After accounting for the aforementioned and

other factors, cash and cash equivalents at the fiscal year-end decreased by ¥60.7 billion to ¥248.6 billion.

8
99

TREASURY STOCK

Shares held as of the closing
date of last period:
Shares acquired during the
period:

Demand for purchase of shares
less than one unit from
shareholders

Shares disposed during the
period:

Demand for sale of shares
less than one unit from
shareholders

Conversion of convertible
bonds

Shares held as of the closing
date of this period:

Aggregate amount of
acquisition costs:

Aggregate amount of
sales value:

5,537,542
(common stock)
1,285,859
(common stock)

1,235
(million yen)
132,295
(common stock)

113
(million yen)
5,248,461
(common stock)
2,860
(million yen)
1,442,645
(common stock)

Management’s Discussion and Analysis

PRINCIPAL SUBSIDIARIES AND AFFILIATED COMPANIES

As of March 31, 2008

Name of Company

Toshiba TEC Corporation
Toshiba America Business Solutions, Inc.
Toshiba Matsushita Display Technology Co., Ltd.
AFPD Pte., Ltd.
Toshiba Plant Systems & Services Corporation
Toshiba Elevator and Building Systems Corporation
Toshiba Solutions Corporation
Toshiba Medical Systems Corporation
Toshiba Nuclear Energy Holdings (US) Inc.
Toshiba Nuclear Energy Holdings (UK) Ltd.
Toshiba America Medical Systems, Inc.
Toshiba Consumer Marketing Corporation
Toshiba Capital Corporation
Toshiba America, Inc.
Toshiba International Finance (UK) Plc.
Toshiba Capital (Asia) Ltd.
Taiwan Toshiba International Procurement Corporation

Voting Rights Ratio (Percentage)
52.5
100.0
60.0
100.0
61.6
80.0
100.0
100.0
67.0
67.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0

Location
Shinagawa-ku, Tokyo
U.S.
Minato-ku, Tokyo
Singapore
Ota-ku, Tokyo
Shinagawa-ku, Tokyo
Minato-ku, Tokyo
Otawara
U.S.
U.K.
U.S.
Chiyoda-ku, Tokyo
Minato-ku, Tokyo
U.S.
U.K.
Singapore
Taiwan

(Notes) 1. The Company has 550 consolidated subsidiaries (including the above 17 companies) in accordance with Generally Accepted Accounting Standards in the U.S., and 193 affiliated com-

panies accounted for by the equity method. The main affiliated companies accounted for by the equity method are Ikegami Tsushinki Co., Ltd., Shibaura Mechatronics Corporation,
Toshiba Machine Co., Ltd., and Topcon Corporation.

2. Toshiba Nuclear Energy Holdings (US) Inc. substantially owns all of the equity of Westinghouse Electric Company.
3. Effective in April 2008, Toshiba Consumer Marketing Corporation became a holding company controlling the Home Appliances Segment in conjunction with the reorganization of the

Group companies in this business segment, and its trade name has been changed to Toshiba Consumer Electronics Holdings Corporation.

Main Places of Business and Facilities of the Company

Segment

Company-wide

Offices

Laboratories
and others

Digital Products

Laboratories

Major Distribution

As of March 31,2008

Principal Office (Minato-ku, Tokyo), Hokkaido Branch Office (Sapporo), Tohoku
Branch Office (Sendai), Shutoken Branch Office (Saitama), South-Shutoken
Branch Office (Yokohama), Hokuriku Branch Office (Toyama), Chubu Branch
Office (Nagoya), Kansai Branch Office (Osaka), Chugoku Branch Office
(Hiroshima), Shikoku Branch Office (Takamatsu), Kyushu Branch Office (Fukuoka)

Corporate Research & Development Center (Kawasaki), Software Engineering
Center (Kawasaki), Corporate Manufacturing Engineering Center (Yokohama),
Yokohama Complex (Yokohama)

Core Technology Center (Ome), PC Development Center (Ome), Mobile
Communications Development Center (Hino)

Production Facilities

Fukaya Operations (Fukaya), Ome Complex (Ome), Hino Operations (Hino)

Electronic Devices

Laboratories

Center For Semiconductor Research & Development (Kawasaki), Process &
Manufacturing Engineering Center (Yokohama)

Production Facilities

Microelectronics Center (Kawasaki), Yokkaichi Operations (Yokkaichi), Himeji
Operations (Himeji), Kitakyushu Operations (Kitakyushu), Oita Operations (Oita)

Social Infrastructure

Laboratories

Production Facilities

Power and Industrial Systems Research and Development Center (Yokohama),
Isogo Nuclear Engineering Center (Yokohama)

Fuchu Complex (Fuchu, Tokyo), Komukai Operations (Kawasaki), Hamakawasaki
Operations (Kawasaki), Keihin Product Operations (Yokohama), Mie Operations
(Asahi Cho, Mie)

RISK FACTORS RELATING TO THE TOSHIBA GROUP AND ITS BUSINESS

The Group’s business areas of energy and electronics require highly advanced technology. At the same time, the Group faces
fierce global competition. Therefore, appropriate risk management is indispensable. Major risk factors related to the Group
are described below. The actual occurrence of any of those risk factors may adversely affect the Group’s results and financial
condition.

Risks identified by the Group are based on information available to the Group at June 25, 2008. They also include issues
that may not affect investment decisions, but which are mentioned in line with the Group’s policy of proactive disclosure.
The Group recognizes these risks and makes every effort to manage them and to minimize any impact from them.

(1) Business environment of Digital Products business
The market for the Digital Product segment is intensely competitive, with many companies manufacturing and selling prod-
ucts similar to those offered by the Group. In addition, demand for products in this segment can be volatile. In times of
decreased consumer spending, demand for the Group’s products can be low, while times of rapid increases in demand may
result in shortages of parts and components, hampering the Group’s ability to supply products to the market in a timely
manner. While the segment makes every effort to monitor the demand situation, any rapid fluctuation in demand may result
in price erosion or increases in component prices.

Furthermore, some products in this segment are dependent on particular customers.

(2) Business environment of Electronic Devices business
The market for the Electronic Devices segment is highly cyclical in demand. In addition, there is intense competition to
develop and market new products. The Group makes every effort to monitor shifts in the market, but if the market faces a
downturn, if the Group fails to market new products in a timely manner, or if there is a rapid introduction of new technolo-
gy, the Group’s current products may become obsolete.

This business segment requires significant levels of capital expenditure. While efforts are made to invest in stages by care-
fully monitoring demand, unanticipated market change may result in production capacity for particular products becoming
available at a time when demand for those products is on the wane, causing oversupply.

In addition, the Electronic Devices business segment is prone to large fluctuation in operating income, and if the market
conditions worsen significantly, the Segment’s performance may have a large influence on the overall company’s profit and
loss.

(3) Business environment of Social Infrastructure business
A significant portion of net sales in the Social Infrastructure segment is attributable to government and local municipality
expenditure on public works, and to capital expenditure by the private sector. The segment monitors trends in such capital
expenditures, and also makes best efforts to cultivate new business and customers, in order to avoid undue impact from any
fluctuations. However, reductions and delays in public works spending, as well as low levels of private capital expenditure,
can adversely affect the segment business.

Furthermore, the segment’s business involves supply of products and services for large-scale projects on a worldwide basis.
Delays, changes in plans, stoppages, natural and other disasters, and other factors, may adversely affect the progress of such
large-scale plant projects. The percentage of completion method is applied for revenue recognition for long term construction
work contracts. The Company reassesses expected costs and profits accordingly, and if the expected profits from such a pro-
ject do not meet original expectations, a loss will be recognized against prior accrued profits.

(4) Acquisitions and others
As a result of the acquisition of Westinghouse group on October 2006, a substantial amount of goodwill has been recorded
in the Company’s consolidated balance sheet, pursuant to U.S. generally accepted accounting principles (US GAAP). The
Company believes that this goodwill is appropriate, reflecting Westinghouse’s future capabilities for profit generation and
the synergy that is being obtained from combining Westinghouse and the Group. It is an important managerial task for the
Group to maintain the value of this goodwill.

In August 2007, the Group entered into a share transfer agreement with National Atomic Company Kazatomprom JSC
(hereafter “Kazatomprom”), a Republic of Kazakhstan state-owned enterprise and a major supplier of uranium, under which
the Company transferred 10 percent of its ownership interest in Westinghouse’s holding companies to Kazatomprom. As a
result of this transfer, the Company’s ownership interest in Westinghouse was reduced to 67%. The remainder of the stock is
held by the Shaw Group Inc. (hereafter “Shaw”), which holds 20%, and IHI Corporation (hereafter “IHI”), which holds 3
percent.

Under the relevant shareholders agreements, Shaw, IHI and Kazatomprom are restricted from transferring their owner-

10
1111

Management’s Discussion and Analysis

ship interests in Westinghouse for approximately six years from the date of the initial shareholders agreements. To protect
the Company from capital participations by unfavorable third parties and to protect minority shareholders’ interests, the
Company also provided each of Shaw, IHI and Kazatomprom with an option to sell all or part of its ownership interest to
the Company during a certain period, while the Company has an option to purchase all or part of the ownership interest of
Shaw, IHI or Kazatomprom, under certain conditions. In the event that Shaw, IHI or Kazatomprom exercise the sell
option, or the Company exercises its purchase option, the Group may need to raise further funds.

(5) Lawsuits and others
The Group undertakes global business operations and is involved from time to time in disputes, including lawsuits and other
legal proceedings and investigations by relevant authorities. There will be also possibility of such a case in future. Due to the
differences in judicial systems and the uncertainties inherent of such proceedings, the Group may be subject to a ruling
requiring payments of amounts far exceeding its expectations. Any judgement or decision unfavorable to the Group could
have a materially adverse effect on the Group’s financial condition or results of operations. In addition, the pursuit of or
defense of such lawsuits, legal proceedings and investigations may require significant resources and significant involvement of
the Group’s senior management, which may divert management attention from normal operations.

In January 2007, the European Commission (the “Commission”) imposed fines on 19 companies, including the Company,
for infringing EU competition laws in the gas insulated switchgear market. The Company was directly fined EUR86.25 mil-
lion, and was also fined EUR4.65 million jointly and severally with Mitsubishi Electric Corporation. The Company contends
that it did not infringe EU competition laws and appealed these fines in April 2007. However, there can be no assurances
that the Company will be successful in its appeal.

The Group is also being investigated by the Commission and/or the US Department of Justice for potential violations of
competition laws with respect to semiconductors, LCD products, cathode ray tubes (CRT) and heavy electrical equipment.
In addition, individuals and corporations in the United States have filed class action lawsuits against the Group with respect
to alleged anti-competitive behavior.

(6) Development of new products
It is critically important for the Group to offer the market viable and innovative new products and services. The Group iden-
tifies strategic products that will drive future profits, and defines strategic product areas to support through the timely intro-
duction of successive products. However due to the rapid pace of technological innovation, the introduction of new technolo-
gies and products that replace current products, and changes in technology standards, the introduction to market of opti-
mum new products may be delayed, and new products that are brought to market may be accepted by the market for a short-
er period than anticipated. In addition, any failure on the part of the Group to assure sufficient funding and resources for
continuous product development may affect the Group’s ability to develop new products and services and to introduce them
to the market.

(7) Investments in new business
The Group invests in companies involved in new businesses as well as developing its own new businesses. Many technological
issues need to be resolved, and potential demand effectively discovered and captured, before a new line of business can become
successful, and as such the progress and success of new businesses are uncertain. If any new business in which the Group invests
or which the Group attempts to develop does not progress as planned, the Group may not recover the funds and resources it has
spent, and this may adversely affect the Group. Mobile Broadcasting Corporation, a Toshiba consolidated subsidiary that oper-
ates a digital satellite broadcasting service, accounts for a significant loss, and any failure to make favorable progress in reforming
its business may have an adverse effect on Group results.

(8) Success of joint ventures and other business alliances
A key strategy of the Group in many of its businesses is the formation of joint ventures and business alliances optimized for
each business, in every area of the business, including research and development, production and marketing. If the Group
experiences differences with a partner in a joint venture or business alliance, in respect of financing, technological manage-
ment, product development or management strategies, such joint ventures or business alliances may be terminated.

(9) Global environment
The Group undertakes global business operations. Any changes in political, economic and social conditions, legal or regula-
tory changes and exchange rate fluctuations, in any region, may impact on market demand and the Group’s business opera-
tions.

As the Group expands overseas production, particularly in Asia, any occurrence of terrorism or of epidemic illness, such as

avian flu, could have a significant adverse effect on Group results.

(10)Natural disasters
Most of the Group’s Japanese production facilities are located in the Keihin region, part of the capital region, while key semi-
conductor production facilities are located in Kyushu, Tokai, Hanshin and Tohoku. The Group expands overseas production,
particularly in Asia. While the Group promotes measures such as earthquake-resistant buildings at production facilities, large-
scale disasters, such as earthquakes or typhoons in regions with production sites, may damage or destroy production capabili-
ties, cause operational and transportation interruptions, and affect production capabilities significantly.

(11) Measures against counterfeit products
While the Group protects and seeks to enhance the value of the Toshiba brand, lesser-quality counterfeit products created
by third parties can be found worldwide, which may dilute the value of the Toshiba brand. Distribution of those counterfeit
products may decrease the Group’s net sales.

(12) Product quality claims
While the Group has instituted measures to manufacture its products in accordance with appropriate quality-control stan-
dards, there can be no assurance that all products are free of defects, or that such defects will not result in a large-scale recall,
lawsuits or other claims relating to product quality.

(13) Information securities
The Group keeps and manages various personal information obtained through business operations. The Group also keeps
various trade secrets regarding the Group’s technology, marketing and other business operations. While the Group makes
every effort to manage this information properly, an unanticipated leak of such information could occur, and it may be
obtained and used illegally by a third party. In such circumstances, the Group’s business performance and financial situation
may be subject to negative influences.

Additionally, the role of information systems in the Group is critical to carrying out business activities. While the Group
makes every effort to assure stable operation of its information systems, it is possible that their functionality could be
impaired or destroyed by computer viruses, software or hardware failures, disaster, terrorism, and other factors.

(14) Procurement of components and materials
It is important for the Group’s business activities to procure materials, components and other goods in a timely and proper
manner. Procured goods include products whose suppliers are limited due to the product’s particularity, and products that
are difficult to replace. In cases of delay or other problems in receiving supply of such components and materials, shortages
may occur or procurement costs may rise. Also, it is necessary to procure components and materials at competitive costs and
to optimize the entire supply chain, including suppliers, in order for the Group to bring competitive products to market. Any
failure by the Group to achieve proper cooperation with key suppliers may impact on the Group’s competitiveness.

Any case of defective components and materials or failure to meet required specifications may also have an adverse effect

on the reliability and reputation of the Group and Toshiba brand products.

(15) Securing human resources
The success of the Group’s businesses depends in large part on securing excellent human resources in every business area and
process, including product development, production, marketing and business management. Competition to secure human
resources is intensifying, as the number of qualified personnel in each area and process is limited. Due to this, the Group may
fail to retain existing employees or to obtain new human resources.

(16) Compliance and internal control
The Group is active in various businesses in various regions worldwide, and its business activities are subject to laws and regula-
tions in each country or region. The Group puts in place appropriate internal control systems from perspectives that include
assuring management effectiveness and efficiency, assuring the reliability of business and financial reports, compliance with laws
and regulations, and risk management, and operates within those systems. However, by their nature, such internal control sys-
tems may themselves have limitations, and it is not possible to guarantee that they will fully achieve their objectives. Due to these
inherent limitations, the Group cannot guarantee that there will never be any violation of laws and regulations. Changes in laws
and regulations or changes in interpretations of laws and regulations by the authorities may also cause difficulty in achieving com-
pliance with laws and regulations, or may result in increased compliance costs.

(17) Strategic concentrated investment
The Group makes strategic investments that concentrate on specific business areas, including NAND flash memory and
nuclear power generation systems. While it is essential to allocate limited management resources to strategic, high growth
areas and businesses in which the Group enjoys competitiveness, in order to secure and maintain the Group’s advantages, the

12
1313

Management’s Discussion and Analysis

strategic businesses in which such investments are made may not generate profit commensurate with the investments.

(18) Protection of intellectual property rights
The Group makes every effort to secure intellectual property rights. However, in some regions, it may not be possible to
secure sufficient protection.

Also, the Group uses intellectual property from third parties, which the Group has acquired license to use. It may be pos-
sible that the Group fails to receive such third-party license for an essential intellectual property, or receives permission only
on unfavorable terms.

It is also possible that the Group may have to file suit in order to protect its intellectual property rights, or that a suit for
breach of intellectual property rights may be brought against the Group. Such lawsuits may require time, costs and other
management resources, and, depending on the decision handed down, it may become impossible for the Group to use an
important technology, or the Group may become liable for significant damages.

(19) Environment
In the Group’s global business activities, various environmental laws, including laws on air pollution, water pollution, toxic
substances, waste disposal, product recycling, prevention of global warming and energy policies, are in force around the
world. While the Group pays careful attention to those laws and regulations, it may be possible that the Group discovers a
legal or social liability for the environment, regardless of whether it is at fault or not, in past, present or future business activi-
ties. It may also be possible that, in future, the Group will be more strongly required to remove environmental hazards,
including toxic substances, or to further reduce emissions of greenhouse gases, as a result of the introduction of more
demanding environmental regulations or in accordance with societal requirements.

(20) Parent company’s guarantee
When the Group’s US subsidiaries, such as Westinghouse Electric Company, LLC or Toshiba International Corporation, accept
orders for large projects, the Company, as the parent company, may provides guarantees regarding contracts, etc. Upon the request of
the customers, these parent company’s guarantees are required in accordance with ordinary business practice and are provided under
the ordinary course of business to fulfill ordinary contractual obligations. However, should the relevant subsidiaries fail to fulfill con-
tractual obligations, the Company may be obliged to bear any resulting compensation, resulting in a loss.

(21) Employee retirement benefit costs and obligations
The amount of the Group’s employee retirement benefit costs and obligations are calculated on assumptions used in the rele-
vant actuarial calculations. Those assumptions may change due to adverse economic or other factors, or planned returns on
assets may be lower than anticipated.

(22) Financing environment
The Group has substantial amounts of interest-bearing debt for financing that is highly susceptible to the market environ-
ment, including interest rate movements and fund supply and demand. Changes in these factors may have an adverse effect
on the Group’s funding activities.

Consolidated Balance Sheets

Toshiba Corporation and Subsidiaries
As of March 31, 2008 and 2007

Assets
Current assets:

Cash and cash equivalents
Notes and accounts receivable, trade:

Notes (Note 5)
Accounts (Note 5)
Allowance for doubtful notes and accounts

Inventories (Note 6)
Deferred tax assets (Note 16)
Other receivables
Prepaid expenses and other current assets
Total current assets

Long-term receivables and investments:

Long-term receivables (Note 5)
Investments in and advances to affiliates (Note 7)
Marketable securities and other investments (Note 4)
Total long-term receivables and investments

Property, plant and equipment (Notes 9, 15 and 20):

Land
Buildings
Machinery and equipment
Construction in progress

Less—Accumulated depreciation
Total property, plant and equipment

Goodwill and other intangible assets (Note 8)
Deferred tax assets (Note 16)
Other assets

Total assets

The accompanying notes are an integral part of these statements..

Millions of yen

2008

2007

Thousands of
U.S. dollars
(Note 3)
2008

¥ 248,649

¥ 309,312

$ 2,486,490

80,312
1,253,108
(21,417)
851,452
148,531
166,622
202,125
2,929,382

7,423
321,166
264,149
592,738

128,210
1,160,549
2,598,042
215,937
4,102,738
(2,770,560)
1,332,178

653,910
285,757
141,672

106,395
1,295,808
(30,599)
801,513
138,714
164,894
205,170
2,991,207

19,329
240,249
250,536
510,114

156,445
1,146,350
2,594,284
104,612
4,001,691
(2,681,489)
1,320,202

746,720
211,336
152,383

803,120
12,531,080
(214,170)
8,514,520
1,485,310
1,666,220
2,021,250
29,293,820

74,230
3,211,660
2,641,490
5,927,380

1,282,100
11,605,490
25,980,420
2,159,370
41,027,380
(27,705,600)
13,321,780

6,539,100
2,857,570
1,416,720

¥5,935,637

¥ 5,931,962

$59,356,370

14
15

Consolidated Balance Sheets

Toshiba Corporation and Subsidiaries
As of March 31, 2008 and 2007

Liabilities and shareholders’ equity
Current liabilities:

Short-term borrowings (Note 9)
Current portion of long-term debt (Notes 9 and 19)
Notes payable, trade
Accounts payable, trade
Accounts payable, other and accrued expenses (Note 24)
Accrued income and other taxes
Advance payments received
Other current liabilities (Notes 16 and 22)

Total current liabilities

Long-term liabilities:

Long-term debt (Notes 9, 10 and 19)
Accrued pension and severance costs (Note 11)
Other liabilities (Note 16)

Total long-term liabilities

Millions of yen

2008

2007

¥ 257,831
262,422
55,870
1,168,389
516,046
89,763
248,280
387,386
2,985,987

71,626
130,703
59,592
1,305,639
508,888
77,625
229,635
427,583
2,811,291

Thousands of
U.S. dollars
(Note 3)
2008

$ 2,578,310
2,624,220
558,700
11,683,890
5,160,460
897,630
2,482,800
3,873,860
29,859,870

740,710
634,589
182,175
1,557,474

956,156
540,216
191,263
1,687,635

7,407,100
6,345,890
1,821,750
15,574,740

Minority interest in consolidated subsidiaries

369,911

324,715

3,699,110

Shareholders’ equity (Notes 10 and 17):

Common stock:

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

2008—3,237,031,486 shares
2007—3,219,027,165 shares

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

2008—1,442,645 shares
2007—5,537,542 shares
Total shareholders’ equity

280,126
—
290,936
774,461
(322,214)

(1,044)
—
1,022,265

—
274,926
285,765
681,795
(131,228)

—
(2,937)
1,108,321

2,801,260
—
2,909,360
7,744,610
(3,222,140)

(10,440)
—
10,222,650

Commitments and contingent liabilities (Notes 21, 22 and 23)

Total liabilities and shareholders’ equity

¥5,935,637

¥ 5,931,962

$59,356,370

Consolidated Statements of Income

Toshiba Corporation and Subsidiaries
For the years ended March 31, 2008 and 2007

Sales and other income:

Net sales
Interest and dividends
Equity in earnings of affiliates (Note 7)
Other income (Notes 4, 5 and 14)

Costs and expenses:

Cost of sales (Notes 8, 12, 15, 20 and 24)
Selling, general and administrative (Notes 8, 12, 13 and 20)
Interest
Other expense (Notes 4, 5, 14 and 15)

Millions of yen

2008

2007

¥7,668,076
26,865
28,023
212,839
7,935,803

5,759,840
1,670,137
39,827
210,441
7,680,245

¥ 7,116,350
24,375
27,878
155,270
7,323,873

5,312,179
1,545,807
31,934
135,493
7,025,413

Thousands of
U.S. dollars
(Note 3)
2008

$76,680,760
268,650
280,230
2,128,390
79,358,030

57,598,400
16,701,370
398,270
2,104,410
76,802,450

Income before income taxes and minority interest

255,558

298,460

2,555,580

Income taxes (Note 16):

Current
Deferred

102,745
10,635
113,380

88,911
56,444
145,355

1,027,450
106,350
1,133,800

Income before minority interest

142,178

153,105

1,421,780

16
17

Minority interest in income of consolidated subsidiaries

14,765

15,676

147,650

Net income

Basic net income per share (Note 18)
Diluted net income per share (Note 18)

Cash dividends per share (Note 17)
The accompanying notes are an integral part of these statements.

¥ 127,413

¥ 137,429

$ 1,274,130

¥
¥

39.46
36.59

12.00

Yen

¥
¥

42.76
39.45

11.00

U.S. dollars
(Note 3)
0.39
0.37

0.12

$
$

Consolidated Statements of Shareholders’ Equity

Toshiba Corporation and Subsidiaries
For the years ended March 31, 2008 and 2007

Millions of yen

Balance at March 31, 2006
Comprehensive income (loss):

Common
stock

Additional
paid-in
capital
¥ 274,926 ¥ 285,743 ¥ 570,080

Retained
earnings

Accumulated
other
comprehensive
loss

Treasury
stock
(126,509) ¥ (2,075) ¥ 1,002,165

Total

Net income
Other comprehensive income (loss),
net of tax (Note 17):
Net unrealized gains and losses on securities (Note 4)
Foreign currency translation adjustments
Minimum pension liability adjustment (Note 11)
Net unrealized gains and losses
on derivative instruments

Comprehensive income

Adjustment to initially apply SFAS 158, net of tax (Note 11)
Dividends
Purchase of treasury stock, net, at cost
Balance at March 31, 2007
Comprehensive income (loss):

Net income
Other comprehensive income (loss),
net of tax (Note 17):
Net unrealized gains and losses on securities (Note 4)
Foreign currency translation adjustments
Pension liability adjustment (Note 11)
Net unrealized gains and losses
on derivative instruments

Comprehensive loss

Adjustment to initially apply FIN 48 (Note 16)
Dividends
Conversion of convertible bonds (Note 10)
Purchase of treasury stock, net, at cost
Balance at March 31, 2008

Balance at March 31, 2007
Comprehensive income (loss):

Comprehensive loss

Adjustment to initially apply FIN 48 (Note 16)
Dividends
Conversion of convertible bonds (Note 10)
Purchase of treasury stock, net, at cost
Balance at March 31, 2008
The accompanying notes are an integral part of these statements.

137,429

23,555
10,081
4,214

412

(42,981)

(25,714)

274,926

22
285,765

681,795

(131,228)

(862)
(2,937)

127,413

(27,340)
(95,614)
(66,721)

137,429

23,555
10,081
4,214

412
175,691
(42,981)
(25,714)
(840)
1,108,321

127,413

(27,340)
(95,614)
(66,721)

(1,311)

(1,311)
(63,573)
5,555
(40,302)
10,400
1,864
¥ 280,126 ¥ 290,936 ¥ 774,461 ¥ (322,214) ¥ (1,044) ¥ 1,022,265

5,555
(40,302)

5,200
(29)

1,893

5,200

Thousands of U.S. dollars (Note 3)

Common
stock

Additional
paid-in
capital
$2,749,260 $2,857,650 $6,817,950

Retained
earnings

Accumulated
other
comprehensive
loss

Treasury
stock

Total

$ (1,312,280) $ (29,370)$11,083,210

1,274,130

(273,400)
(956,140)
(667,210)

(13,110)

(13,110)
(635,730)
55,550
(403,020)
104,000
18,640
$2,801,260 $2,909,360 $7,744,610 $ (3,222,140) $(10,440)$10,222,650

55,550
(403,020)

52,000
(290)

52,000

18,930

Consolidated Statements of Cash Flows

Toshiba Corporation and Subsidiaries
For the years ended March 31, 2008 and 2007

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
Equity in earnings of affiliates, net of dividends
Gain from sales, disposal and impairment of
property, plant and equipment, net
Gain from sales and impairment of securities
and other investments, net
Minority interest in income of consolidated subsidiaries
(Increase) decrease in notes and accounts receivable, trade
Increase in inventories
Increase (decrease) in notes and accounts payable, trade
Increase in accrued income and other taxes
Increase in advance payments received
Other

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
(Increase) decrease in investments in affiliates
Acquisition of Westinghouse, net of cash acquired
Other

Net cash used in investing activities

Cash flows from financing activities

Proceeds from long-term debt
Repayment of long-term debt
Increase (decrease) in short-term borrowings, net
Dividends paid
Repurchase of subsidiary common stock
Purchase of treasury stock, net
Other

Net cash provided by financing activities

Effect of exchange rate changes on cash and cash equivalents
Net increase (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

Cash paid during the year for—

Interest
Income taxes

Non-cash financing activities—

Conversion of convertible bonds
The accompanying notes are an integral part of these statements.

Millions of yen

2008

2007

Thousands of
U.S. dollars
(Note 3)
2008

¥ 127,413

¥ 137,429

$ 1,274,130

380,160
(19,035)
10,635
(13,340)

292,875
(22,720)
56,444
(12,579)

3,801,600
(190,350)
106,350
(133,400)

(127,093)

(16,447)

(1,270,930)

(19,276)
14,765
29,138
(64,688)
(115,047)
18,283
47,617
(22,404)
247,128

212,064
2,805
(407,692)
(82,898)
(41,367)
—
(5,614)
(322,702)

190,524
(283,013)
187,321
(46,406)
(715)
(1,138)
—
46,573
(31,662)
(60,663)
309,312
¥ 248,649

(62,969)
15,676
(51,620)
(82,926)
220,619
23,353
29,459
34,880
561,474

112,015
9,586
(376,707)
(13,508)
51,044
(461,338)
(33,874)
(712,782)

467,717
(199,570)
(81,305)
(30,431)
(829)
(841)
55
154,796
34,903
38,391
270,921
¥ 309,312

(192,760)
147,650
291,380
(646,880)
(1,150,470)
182,830
476,170
(224,040)
2,471,280

2,120,640
28,050
(4,076,920)
(828,980)
(413,670)
—
(56,140)
(3,227,020)

1,905,240
(2,830,130)
1,873,210
(464,060)
(7,150)
(11,380)
—
465,730
(316,620)
(606,630)
3,093,120
$ 2,486,490

¥ 40,356
107,431

¥ 30,892
59,272

$ 403,560
1,074,310

13,260

—

132,600

18
19

Notes to Consolidated Financial Statements

Toshiba Corporation and Subsidiaries
March 31, 2008

1. DESCRIPTION OF BUSINESS

Toshiba Corporation and its subsidiaries (collectively, the “Company”) are engaged in research and development, manufactur-
ing 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, 2008, sales of Digital Products
represented the most significant portion of the Company’s total sales or approximately 36 percent. Social Infrastructure repre-
sented approximately 29 percent, Electronic Devices approximately 21 percent, and Home Appliances approximately 9 per-
cent of the Company’s total sales. The Company’s products were manufactured and marketed throughout the world with
approximately 48 percent 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 accor-
dance 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. These adjustments were not recorded in the
statutory books of account.

BASIS OF CONSOLIDATION AND INVESTMENTS IN AFFILIATES
The consolidated financial statements of the Company include the accounts of Toshiba Corporation, its majority-owned sub-
sidiaries and variable interest entities (“VIEs”) for which the Company is the primary beneficiary under 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”). All significant intercompany transactions and accounts are eliminated in consolidation.

Investments in affiliates in which the ability to exercise significant influence exists are accounted for under the equity method of
accounting. The Company eliminates unrealized intercompany profits in determining its equity in the current net earnings (losses)
of such companies.

USE OF ESTIMATES
The preparation of the consolidated financial statements in conformity with accounting principles generally accepted in the
United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabili-
ties, 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 periods. The Company has identified significant areas where it
believes assumptions and estimates are particularly critical to the consolidated financial statements. These are determination
of impairment on long-lived tangible and intangible assets and goodwill, realization of deferred tax assets, uncertain tax posi-
tions, pension accounting assumptions, revenue recognition and other valuation allowances and reserves. Actual results could
differ from those estimates.

CASH EQUIVALENTS
All highly liquid investments with original maturities of 3 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 aver-
age exchange rates prevailing during the year. The effects of these translation adjustments are included in accumulated 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
income or other expense 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.

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 loss-
es 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 amount
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 products are stated at the lower of cost or market, cost being deter-
mined principally by the average method. Finished products and work in process for contract items are stated at the lower of
cost or estimated realizable value, cost being determined by accumulated production costs.

In accordance with general industry practice, items with long manufacturing periods are included among inventories even

when not realizable within one year.

PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment, including significant renewals and additions, are carried at cost. Depreciation for property,
plant and equipment associated with domestic operations has been computed generally by the declining-balance method.
Depreciation for property, plant and equipment for foreign subsidiaries has been generally computed using the straight line
method.

Effective April 1, 2007, Toshiba Corporation and its domestic subsidiaries changed the method of calculating depreciation
of machinery, equipment and other fixed assets, from the fixed-percentage-on declining base application to the 250% declin-
ing-balance method with estimated residual value reduced to a nominal value. Based on the results of analysis of the revenues
associated with the depreciation expenses of machinery, equipment, other assets and the estimated residual value, the
Company believes that the 250% declining-balance method, which makes cost allocation of machinery, equipment and other
assets, more properly, is preferable. This change in depreciation is a change in accounting estimate effected by a change in
accounting principle in accordance with SFAS No.154, Accounting Changes and Error Corrections - a replacement of APB Opinion
No.20 and FASB Statement No.3. Therefore, this change in the depreciation method will impact on financial results on and
after April 1, 2007. Income before income taxes and minority interest and net income respectively decreased ¥76,519 million
($765,190 thousand) and ¥44,730 million ($447,300 thousand), respectively compared with the figures under the previous
method. Basic net income per share and diluted net income per share also declined ¥13.85 ($0.14) and ¥12.84 ($0.13),
respectively.

The estimated useful lives of the buildings are 3 to 50 years, and those of the machinery and equipment are 2 to 20 years.

Maintenance and repairs, including minor renewals and betterments, are expensed as incurred.

IMPAIRMENT OF LONG-LIVED ASSETS
Long-lived assets, other than goodwill and intangible assets with indefinite useful 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 flow is less than the carrying amount of the asset, an impair-
ment 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.

GOODWILL AND OTHER INTANGIBLE ASSETS
Goodwill and intangible assets with indefinite useful lives are not amortized, but instead are tested for impairment at least
annually. Intangible assets with finite useful lives, consisting primarily of core and current technology and software, are amor-
tized using the straight-line method over their respective contractual periods or estimated useful lives.

ENVIRONMENTAL LIABILITIES
Liabilities for environmental remediation and other environmental costs are accrued when environmental assessments or remedial
efforts are probable and the costs can be reasonably estimated, based on current law and existing technologies. Such liabilities are adjust-
ed as further information develops or circumstances change. Costs of future obligations are not discounted to their present values.

INCOME TAXES
The provision for income taxes is computed based on the pre-tax income 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.

The company recognizes the financial statement effects of tax positions when they are more likely than not, based on the technical
merits, that the tax positions will be sustained upon examination by the tax authorities. Benefits from tax positions that meet the
more-likely-than-not recognition threshold are measured at the largest amount of benefit that is greater than 50 percent likely of being
realized upon settlement.

ACCRUED PENSION AND SEVERANCE COSTS
The Company has various retirement benefit plans covering substantially all employees. The unrecognized net obligation
existing at initial application of Statement of Financial Accounting Standards (“SFAS”) No. 87, Employers’ Accounting for
Pensions, and prior service costs resulting from amendments to the plans are amortized over the average remaining service

20
21

Notes to Consolidated Financial Statements

Toshiba Corporation and Subsidiaries
March 31, 2008

period of employees expected to receive benefits. Unrecognized actuarial gains and 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.

NET INCOME PER SHARE
Basic net income per share (“EPS”) is computed based on the weighted-average number of shares of common stock out-
standing during each period. Diluted EPS assumes the dilution that could occur if stock acquisition rights were exercised to
issue common stock, unless their inclusion would have an antidilutive effect.

REVENUE RECOGNITION
Revenue of mass-produced standard products, such as digital products and electronic devices, is recognized when there is
persuasive evidence of an arrangement, the product has been delivered, the sales price is fixed or determinable, and collectibil-
ity 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 related to equipment that requires installation, such as social infrastructure business, is recognized when the
installation of the equipment is completed, the equipment is accepted by the customer and other specific criteria of the
equipment are demonstrated by the Company.

Revenue from services, such as maintenance service for plant and other systems, that are priced and sold separately from

the equipment is recognized ratable over the contract term or as the services are provided.

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.

Revenue from arrangements with multiple elements, which may include any combination of products, equipment, install-
ment and maintenance, is allocated to each element based on its relative fair value if such element meets the criteria for treat-
ment as a separate unit of accounting as prescribed in the Emerging Issues Task Force Issue 00-21, Revenue Arrangements with
Multiple Deliverables. Otherwise, revenue is deferred until the undelivered elements are fulfilled as a single unit of accounting.

Revenue from the development of custom software products is recognized when there is persuasive evidence of an arrange-
ment, the sales price is fixed or determinable, collectibility is probable, and the software product has been delivered and
accepted by the customer.

SHIPPING AND HANDLING COSTS
The Company includes shipping and handling costs which totaled ¥95,602 million ($956,020 thousand) and ¥90,647 million
for the years ended March 31, 2008 and 2007, 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 19 for descriptions of these financial instruments.

The Company recognizes all derivative financial instruments, such as forward exchange contracts, interest rate swap agree-
ments, 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 instru-
ments are either recognized periodically in income or in shareholders’ equity as a component of accumulated other compre-
hensive 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 accumulated 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 notes receivable and trade accounts receivable. 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 amount 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 expect-
ed cash flows less credit losses.

GUARANTEES
The Company recognizes, at the inception of a guarantee, a liability for the fair value of the obligation it has undertaken in
issuing guarantees for guarantees issued or modified after December 31, 2002.

ASSET RETIREMENT OBLIGATIONS
The Company records asset retirement obligations at fair value in the period incurred. The fair value of the liability is added
to the carrying amount of the associated asset. This additional carrying amount is then depreciated over the life of the asset.
The liability increases due to the passage of time based on the time value of money until the obligation is settled. Subsequent
to the initial recognition, the liability is adjusted for any revisions to the expected value of the retirement obligation, and for
accretion of the liability due to the passage of time.

RECENT PRONOUNCEMENTS
In September 2006, the FASB issued SFAS No. 157, Fair Value Measurements (“SFAS 157”). SFAS 157 defines fair value, establish-
es a framework for measuring fair value in generally accepted accounting principles, and expands disclosures about fair value measure-
ments. SFAS 157 shall be effective for fiscal years beginning after November 15, 2007, and is required to be adopted by the
Company in the fiscal year beginning April 1, 2008. In February 2008, the FASB issued Staff Position No. FAS157-1, Application of
FASB Statement No. 157 to FASB Statement No. 13 and Other Accounting Pronouncements That Address Fair Value Measurements for Purposes
of Lease Classification or Measurement under Statement 13 and No. FAS157-2, Effective Date of FASB Statement No. 157, which partially
delay the effective date of SFAS 157 for one year for certain nonfinancial assets and liabilities and remove certain leasing transactions
from its scope. The Company is currently evaluating the impact of adoption of SFAS 157.

In February 2007, the FASB issued SFAS No. 159, The Fair Value Option for Financial Assets and Financial Liabilities-Including, an
amendment of FASB Statement No. 115 (“SFAS 159”). SFAS 159 provides companies with an option to report selected financial assets
and liabilities at fair value. Unrealized gains and losses on items for which the fair value option has been elected will be recognized in
earnings. SFAS 159 is effective for fiscal years beginning after November 15, 2007, and is required to be adopted by the Company in
the fiscal year beginning April 1, 2008. The Company is currently evaluating the impact of adoption of SFAS 159.

In December 2007, the FASB issued SFAS No. 141 (revised 2007), Business Combinations (“SFAS 141R”). SFAS 141R establish-
es principles and requirements for how an acquirer recognizes and measures in its financial statements the identifiable assets acquired,
the liabilities assumed, any noncontrolling interest in the acquiree and the goodwill acquired in the business combination or a gain
from a bargain purchase. SFAS 141R also requires to disclose to enable users of the financial statements to evaluate the nature and
financial effects of the business combination. SFAS 141R is effective for fiscal years beginning on or after December 15, 2008, and is
required to be adopted by the Company in the fiscal year beginning April 1, 2009. The Company is currently evaluating the impact
of adoption of SFAS 141R on the Company's financial position and results of operations.

In December 2007, the FASB issued SFAS No. 160, Noncontrolling Interests in Consolidated Financial Statements, an amendment of
ARB No. 51 (“SFAS 160”). SFAS 160 establishes accounting and reporting standards for ownership interests in subsidiaries held by
parties other than the parent, the amount of consolidated net income attributable to the parent and to the noncontrolling interest,
changes in a parent’s ownership interest while the parent retains its controlling financial interest in its subsidiary, and to measure at
fair value of retained noncontrolling equity investments when a subsidiary is deconsolidated. SFAS 160 also requires to disclose that
clearly identify and distinguish between the interests of the parent and the interests of the noncontrolling owners. SFAS 160 is effec-
tive for fiscal years beginning on or after December 15, 2008, and is required to be adopted by the Company in the fiscal year begin-
ning April 1, 2009. The Company is currently evaluating the impact of adoption of SFAS 160 on the Company’s financial position
and results of operations.

In March 2008, the FASB issued SFAS No. 161, Disclosures about Derivative Instruments and Hedging Activities, an amendment of
FASB Statement No. 133 (“SFAS 161”). SFAS 161 requires enhanced disclosures about an entity’s derivative and hedging activities
including (a) how and why an entity uses derivative instruments, (b) how derivative instruments and related hedged items are
accounted for under SFAS 133 and its related interpretations, and (c) how derivative instruments and related hedged items affect an
entity’s financial position, financial performance, and cash flows. SFAS 161 is effective for financial statements issued for fiscal years
and interim periods beginning after November 15, 2008, and is required to be adopted by the Company in the fiscal year beginning
April 1, 2009. The Company is currently evaluating the impact of SFAS 161 on its footnote disclosures related to its combined
results of operations and financial condition of the Company.

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 of readers. 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 ¥100=U.S.$1, the approximate current rate of exchange at March 31, 2008, has been used
throughout for the purpose of presentation of the U.S. dollar amounts in the accompanying consolidated financial statements.

22
23

Notes to Consolidated Financial Statements

Toshiba Corporation and Subsidiaries
March 31, 2008

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, 2008 and 2007 are as follows:

March 31, 2008:

Equity securities
Debt securities

March 31, 2007:

Equity securities
Debt securities

March 31, 2008:

Equity securities
Debt securities

Cost

Gross unrealized
holding gains

Gross unrealized
holding losses

Fair value

Millions of yen

¥ 120,380
3,515
¥ 123,895

¥ 60,483
3,533
¥ 64,016

¥ 104,205
0
¥ 104,205

¥ 141,059
0
¥ 141,059

¥ 5,847
0
¥ 5,847

¥ 1,353
0
¥ 1,353

¥ 218,738
3,515
¥ 222,253

¥ 200,189
3,533
¥ 203,722

Cost

Gross unrealized
holding gains

Gross unrealized
holding losses

Fair value

Thousands of U.S. dollars

$ 1,203,800
35,150
$ 1,238,950

$ 1,042,050
0
$ 1,042,050

$ 58,470
0
$ 58,470

$ 2,187,380
35,150
$ 2,222,530

At March 31, 2008, debt securities mainly consisted of corporate debt securities.

Contractual maturities of debt securities classified as available-for-sale at March 31, 2008 are as follows:

March 31, 2008:
Due within one year
Due after one year within five years

Millions of yen

Cost
¥

0
3,515
¥ 3,515

Fair value
¥

0
3,515
¥ 3,515

Thousands of U.S. dollars
Cost

0
35,150
$ 35,150

Fair value
$

0
35,150
$ 35,150

The proceeds from sales of available-for-sale securities for the years ended March 31, 2008 and 2007 were ¥175 million
($1,750 thousand) and ¥1,451 million, respectively. The gross realized gains on those sales for the years ended March 31,
2008 and 2007 were ¥49 million ($490 thousand) and ¥615 million, respectively. The gross realized losses on those sales for
the years ended March 31, 2008 and 2007 were ¥217 million ($2,170 thousand) and ¥82 million, respectively.

Included in other expense are charges of ¥13,379 million ($133,790 thousand) and ¥1,596 million related to other-than-
temporary declines in the marketable and non-marketable equity securities for the years ended March 31, 2008 and 2007,
respectively.

At March 31, 2008, the cost and fair value of available-for-sale securities in an unrealized loss position over 12 consecutive

months were not significant.

Aggregate cost of non-marketable equity securities accounted for under the cost method totaled ¥41,075 million ($410,750
thousand) and ¥45,741 million at March 31, 2008 and 2007, respectively. At March 31, 2008, investments with an aggregate
cost of ¥39,737 million ($397,370 thousand) were not evaluated for impairment because (a)the Company did not estimate
the fair values of those investments as it was not practicable to estimate the fair value of the investment and (b)the Company
did not identify any events or changes in circumstances that might have had significant adverse effects on the fair values of
those investments.
5. SECURITIZATIONS

The Company has transferred certain trade notes receivable and trade accounts receivable under several securitization pro-
grams. These securitization transactions are accounted for as a sale in accordance with SFAS No. 140, Accounting for
Transfers and Servicing of Financial Assets and Extinguishments of Liabilities, a replacement of FASB Statement 125, because the
Company has relinquished control of the receivables. Accordingly, the receivables sold under these facilities are excluded

from the accompanying consolidated balance sheets.

Upon the sale of receivables, the Company holds subordinated retained interests for certain trade notes receivable and
trade accounts receivable. A portion of these receivables, where the Company holds subordinated retained interests, is not
taken off the balance sheet and is recorded at their fair value. Such carrying amount is adjusted to reflect the portion that is
not expected to be collectible. As of March 31, 2008 and 2007, the fair values of retained interests were ¥40,566 million
($405,660 thousand) and ¥48,204 million, respectively. The Company recognized losses of ¥3,283 million ($32,830 thou-
sand) and ¥3,470 million on the securitizations of receivables for the years ended March 31, 2008 and 2007, respectively.

Subsequent to sale, the Company retains collection and administrative responsibilities for the receivables. Servicing fees
received by the Company approximate 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 special purpose entities (“SPEs”) on the above

securitization transactions.

Year ended March 31
Proceeds from new securitizations
Servicing fees received
Cash flows received on retained interests
Purchases of delinquent and foreclosed receivables

Millions of yen

2008
¥956,759
474
168,446
972

2007
¥1,174,438
567
76,422
564

Thousands of
U.S. dollars
2008
$9,567,590
4,740
1,684,460
9,720

At March 31, 2008, the assumed weighted-average life and residual cash flow discount rate used to compute the fair value of
retained interests were 0.18 years and 3.64 percent, respectively.

Quantitative information about delinquencies, net credit losses, and components of securitized receivables as of and for the
years ended March 31, 2008 and 2007 are as follows:

24
25

Accounts receivable
Notes receivable
Total managed portfolio
Securitized receivables
Total receivables

Total principal amount
of receivables

March 31

2008
¥1,475,252
167,567
1,642,819
(301,976)
¥1,340,843

2007
¥1,537,190
203,682
1,740,872
(319,340)
¥1,421,532

Millions of yen
Amount 90 days
or more past due

Net credit losses
Year ended March 31

2008
¥27,122
51
¥27,173

2007
¥24,493
70
¥24,563

2008
¥5,102
356
¥5,458

2007
¥4,569
356
¥4,925

Total principal amount
of receivables

March 31, 2008

Thousands of U.S. dollars
Amount 90 days
or more past due

$14,752,520
1,675,670
16,428,190
(3,019,760)
$13,408,430

$271,220
510
$271,730

Net credit losses
Year ended March 31, 2008
$51,020
3,560
$54,580

Notes to Consolidated Financial Statements

Toshiba Corporation and Subsidiaries
March 31, 2008

6. INVENTORIES

Inventories consist of the following:

March 31
Finished products
Work in process:

Long-term contracts
Other

Raw materials

Millions of yen

2008
¥306,601

94,251
274,739
175,861
¥851,452

2007
¥319,982

94,121
243,588
143,822
¥801,513

Thousands of
U.S. dollars
2008
$3,066,010

942,510
2,747,390
1,758,610
$8,514,520

7. INVESTMENTS IN AND ADVANCES TO AFFILIATES

The Company’s significant investments in affiliated companies accounted for by the equity method together with the per-
centage of the Company’s ownership of voting shares at March 31, 2008 were: Topcon Corporation (35.5%); Toshiba
Machine Co., Ltd. (21.4%); Toshiba Finance Corporation (“TFC”) (35.0%); Toshiba Mitsubishi-Electric Industrial Systems
Corporation (50.0%); and Semp Toshiba Amazonas S.A. (40.0%).

Of the affiliates which were accounted for by the equity method, the investments in common stock of the listed companies
were carried at ¥48,596 million ($485,960 thousand) and ¥50,576 million at March 31, 2008 (5 companies) and 2007 (4 com-
panies), respectively. The Company’s investments in these companies had market values of ¥60,357 million ($603,570 thou-
sand) and ¥141,378 million at March 31, 2008 and 2007, respectively, based on quoted market prices at those dates.

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

March 31
Current assets
Other assets including property, plant and equipment

Total assets
Current liabilities
Long-term liabilities
Shareholders’ equity

Total liabilities and shareholders’ equity

Year ended March 31
Sales
Net income

Millions of yen

2008
¥1,288,502
1,077,066
¥2,365,568
¥1,181,753
575,440
608,375
¥2,365,568

2007
¥1,266,067
953,224
¥2,219,291
¥1,158,622
466,049
594,620
¥2,219,291

Millions of yen

2008
¥2,220,466
71,407

2007
¥1,783,737
29,503

Thousands of
U.S. dollars
2008
$12,885,020
10,770,660
$23,655,680
$11,817,530
5,754,400
6,083,750
$23,655,680

Thousands of
U.S. dollars
2008
$22,204,660
714,070

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

Year ended March 31
Sales
Purchases
Dividends

Millions of yen

2008
¥190,154
184,823
13,977

2007
¥154,836
131,066
18,036

Thousands of
U.S. dollars
2008
$1,901,540
1,848,230
139,770

March 31
Notes and accounts receivable, trade
Other receivables
Long-term loans receivable
Notes and accounts payable, trade
Other payables
Capital lease obligations

Millions of yen

2008
¥ 40,649
13,005
76,250
128,205
38,869
42,371

2007
¥ 46,642
16,875
12,550
182,748
53,388
39,999

Thousands of
U.S. dollars
2008
$ 406,490
130,050
762,500
1,282,050
388,690
423,710

8. GOODWILL AND OTHER INTANGIBLE ASSETS

The Company tested goodwill for impairment under SFAS No.142, Goodwill and Other Intangible Assets, applying a fair value-
based test and has concluded that there was no impairment as of March 31, 2008 and 2007.

The components of acquired intangible assets excluding goodwill at March 31, 2008 and 2007 are as follows:

March 31, 2008
Other intangible assets subject to amortization:

Software
Technical license fees
Core and current technology
Other
Total

Other intangible assets not subject to amortization:

Brand name
Other
Total

March 31, 2007
Other intangible assets subject to amortization:

Software
Technical license fees
Core and current technology
Other
Total

Other intangible assets not subject to amortization:

Brand name
Other
Total

Gross carrying
amount

¥ 164,152
57,154
144,374
70,172
¥ 435,852

Gross carrying
amount

¥ 163,344
83,499
172,162
59,452
¥ 478,457

Millions of yen
Accumulated
amortization

¥102,561
23,123
9,760
28,089
¥163,533

Millions of yen
Accumulated
amortization

¥ 102,599
33,423
3,801
14,950
¥ 154,773

26
27

Net carrying
amount

¥ 61,591
34,031
134,614
42,083
272,319

42,080
10,959
53,039
¥325,358

Net carrying
amount

¥ 60,745
50,076
168,361
44,502
323,684

49,581
4,918
54,499
¥ 378,183

Notes to Consolidated Financial Statements

Toshiba Corporation and Subsidiaries
March 31, 2008

March 31, 2008
Other intangible assets subject to amortization:

Software
Technical license fees
Core and current technology
Other
Total

Other intangible assets not subject to amortization:

Brand name
Other
Total

Gross carrying
amount

$1,641,520
571,540
1,443,740
701,720
$4,358,520

Thousands of U.S. dollars
Accumulated
amortization

Net carrying
amount

$1,025,610
231,230
97,600
280,890
$1,635,330

$ 615,910
340,310
1,346,140
420,830
2,723,190

420,800
109,590
530,390
$ 3,253,580

Intangible assets acquired during the year ended March 31, 2008 primarily consisted of software of ¥23,829 million
($238,290 thousand) and goodwill of ¥11,011 million ($110,110 thousand). The weighted-average amortization period of
software for the year ended March 31, 2008 was approximately 5.0 years.

The weighted-average amortization periods for other intangible assets were approximately 10.3 years and 15.2 years for
the years ended March 31, 2008 and 2007, respectively. Amortization expenses of other intangible assets subject to amortiza-
tion for the years ended March 31, 2008 and 2007 were ¥44,436 million ($444,360 thousand) and ¥42,376 million, respec-
tively. The future amortization expense for each of the next 5 years relating to intangible assets currently recorded in the con-
solidated balance sheets at March 31, 2008 is estimated as follows:

Year ending March 31
2009
2010
2011
2012
2013

Millions of yen
¥39,590
33,021
27,982
21,537
15,568

Thousands of
U.S. dollars
$395,900
330,210
279,820
215,370
155,680

Goodwill represents the excess of the purchase price over the fair value of the net assets acquired. The changes in the carrying
amount of goodwill for the years ended March 31, 2008 and 2007 are as follows:

Year ended March 31
Balance at beginning of year

Goodwill acquired during the year
Price adjustment and purchase price allocation
Foreign currency translation adjustments

Balance at end of year

Millions of yen

2008
¥368,537
11,011
1,277
(52,273)
¥328,552

2007
¥ 24,191
350,785
—
(6,439)
¥368,537

Thousands of
U.S. dollars
2008
$3,685,370
110,110
12,770
(522,730)
$3,285,520

9. SHORT-TERM BORROWINGS AND LONG-TERM DEBT

Short-term borrowings at March 31, 2008 and 2007 consist of the following:

March 31
Loans, principally from banks, including bank
overdrafts, with weighted-average interest rate of
2.68% at March 31, 2008 and 4.37% at March 31, 2007:
Secured
Unsecured

Commercial paper with weighted-average interest rate of
0.69% at March 31, 2008
Euro yen medium-term notes of a subsidiary, with
weighted-average interest rate of 0.97% at March 31,
2008 and 0.60% at March 31, 2007
Euro Hong Kong dollar medium-term note of a subsidiary,
with interest rate of 5.00% at March 31, 2007

Millions of yen

2008

2007

Thousands of
U.S. dollars
2008

29
113,529

132,000

¥ —
53,532

290
1,135,290

—

1,320,000

12,273

14,945

122,730

—
¥ 257,831

3,149
¥ 71,626

—
$ 2,578,310

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, 2008, the Company had unused committed lines of credit from short-term financing arrangements aggregat-
ing ¥347,219 million ($3,472,190 thousand), of which ¥10,019 million ($100,190 thousand) was in support of the Company’s
commercial paper. The lines of credit expire on various dates from April 2008 through March 2009. Under the agreements,
the Company is required to pay commitment fees ranging from 0.080 percent to 0.550 percent on the unused portion of the
lines of credit.

28
29

Long-term debt at March 31, 2008 and 2007 consist of the following:

March 31
Loans, principally from banks and insurance companies,
due 2008 to 2029 with weighted-average interest rate
of 1.29% at March 31, 2008 and due 2007 to 2029 with
weighted-average interest rate of 1.18% at March 31, 2007:
Secured
Unsecured

Unsecured yen bonds, due 2008 to 2016 with interest
ranging from 1.08% to 2.300% at March 31, 2008 and due
2007 to 2016 with interest ranging from 1.08% to
3.025% at March 31, 2007
Zero Coupon Convertible Bonds with stock acquisition rights:

Due 2009 convertible currently at ¥587 per share
Due 2011 convertible currently at ¥542 per share
Euro yen medium-term notes, due 2008 with interest
rate of 2.34% at March 31, 2008 and due 2007 to
2008 with interest ranging from 0.78% to 2.34% at March 31, 2007
Euro yen medium-term notes of subsidiaries, due 2008 to
2015 with interest ranging from 0.77% to 2.60% at
March 31, 2008 and due 2007 to 2015 with interest
ranging from 0.61% to 2.60% at March 31, 2007
Euro medium-term note of a subsidiary, due 2008 with
interest rate of 4.41% at March 31, 2008
Capital lease obligations

Less-Portion due within one year

Millions of yen

2008

2007

Thousands of
U.S. dollars
2008

4,268
532,352

5,102
525,815

42,680
5,323,520

213,307

290,934

2,133,070

41,430
95,310

50,000
100,000

414,300
953,100

1,000

3,000

10,000

58,881

69,301

588,810

7,938
48,646
1,003,132
(262,422)
¥ 740,710

—
42,707
1,086,859
(130,703)
¥ 956,156

79,380
486,460
10,031,320
(2,624,220)
$ 7,407,100

Notes to Consolidated Financial Statements

Toshiba Corporation and Subsidiaries
March 31, 2008

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 guarantees for such loans.
Certain of the secured and unsecured loan agreements may require prior approval by the banks and trustees before any distri-
butions (including cash dividends) may be made from current or retained earnings.

Assets pledged as collateral for long-term debt at March 31, 2008 were property, plant and equipment with a book value of

¥11,749 million ($117,490 thousand).

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

Year ending March 31
2009
2010
2011
2012
2013
Thereafter

Millions of yen
¥246,675
227,674
177,452
116,731
126,051
59,903
¥954,486

Thousands of
U.S. dollars
$2,466,750
2,276,740
1,774,520
1,167,310
1,260,510
599,030
$9,544,860

10. ISSUANCE OF CONVERTIBLE BOND

In July, 2004, Toshiba Corporation issued ¥50,000 million Zero Coupon Convertible Bonds due 2009 (the “2009 Bonds”)
and ¥100,000 million Zero Coupon Convertible Bonds due 2011 (the “2011 Bonds”).

The bonds include stock acquisition rights which entitle bondholders to acquire common stock under certain circum-
stances, and are exercisable on and after August 4, 2004 up to, and including, July 7, 2009 (in the case of the 2009 Bonds) and
up to, and including, July 7, 2011 (in the case of the 2011 Bonds).

The initial conversion prices are ¥587 per share (in the case of the 2009 Bonds) and ¥542 (in the case of the 2011 Bonds),
subject to adjustment for certain events such as a stock split, consolidation of stock or issuance of stock at a consideration per
share which is less than the current market price.

(Conditions allowing exercise of stock acquisition rights)

The period prior to (but not including) July
21, 2008 (in the case of the 2009 Bonds) or
July 21, 2010 (in the case of the 2011 Bonds)

In the case that as of the last trading day of any calendar quarter, the closing
price of the shares for any 20 trading days in a period of 30 consecutive
trading days ending on the last trading day of such quarter is more than
120% of the conversion price in effect on each such trading day.

The period on or after July 21, 2008 (in the
case of the 2009 Bonds) or July 21, 2010 (in
the case of the 2011 Bonds)

At any time after the closing price of the shares on at least one trading
day is more than 120% of the conversion price in effect on each such
trading day.

The 2009 Bonds and the 2011 Bonds were converted into 14,599,654 shares and 8,653,128 shares of common stock for the
year ended March 31, 2008. In accordance with the Corporation Law of Japan, the issuance of common stock in connection
with the conversion of convertible bonds is accounted for by crediting one-half or more of the conversion price to the com-
mon stock and the remainder to the additional paid-in capital.

The additional 70,579,221 shares and 175,848,717 shares relating to the potential conversion of the 2009 Bonds and the
2011 Bonds were included in the diluted net income per share calculations for the year ended March 31, 2008 and 2007.
11. ACCRUED PENSION AND SEVERANCE COSTS

All employees who retire or are terminated are usually entitled to lump-sum severance indemnities or pension benefits deter-
mined by reference to service credits allocated to employees each year according to the regulation of retirement benefit,
length of service and conditions under which their employment terminates. The obligation for the severance indemnity bene-
fit is provided for through accruals and funding of the defined benefit corporate pension plan.

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.

On March 31, 2007, the Company adopted SFAS 158, Employers’ Accounting for Defined Benefit Pension and Other Postretirement
Plans, an amendment of FASB Statements No. 87, 88, 106 and 132(R) (“SFAS 158”). SFAS 158 required the Company to recog-
nize the funded status (i.e., the difference between the fair value of plan assets and the benefit obligations) of its pension plan
in the March 31, 2007 statement of financial position, with a corresponding adjustment to accumulated other comprehensive
income (loss), net of tax. The adjustment to accumulated other comprehensive income (loss) at adoption represents the net
unrecognized actuarial losses, unrecognized prior service costs, and unrecognized transition obligation remaining from the
initial adoption of SFAS 87, all of which were previously accounted for pursuant to the provisions of SFAS 87. These
amounts will be subsequently recognized as net periodic pension cost pursuant to the Company’s historical accounting policy
for amortizing such amounts. Further, actuarial gains and losses that arise in subsequent periods and are not recognized as
net periodic pension cost in the same periods will be recognized a component of other comprehensive income. Those
amounts will be subsequently recognized as a component of net periodic pension cost on the same basis as the amounts
recognized in accumulated other comprehensive income (loss) at adoption of SFAS 158.

The changes in the benefit obligation and plan assets for the years ended March 31, 2008 and 2007 and the funded status at
March 31, 2008 and 2007 are 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 (gain)
Benefits paid
Acquisitions and divestitures
Foreign currency exchange impact
Benefit obligation at end of year

Change in plan assets:

Fair value of plan assets at beginning of year
Actual return on plan assets
Employer contributions
Plan participants’ contributions
Benefits paid
Acquisitions and divestitures
Foreign currency exchange impact
Fair value of plan assets at end of year
Funded status

Millions of yen

2008

2007

¥1,453,820
53,038
38,190
4,221
9,760
(10,001)
(70,710)
—
(14,983)
¥1,463,335

¥ 911,649
(93,882)
60,918
4,221
(43,454)
—
(10,995)
¥ 828,457
¥ (634,878)

¥ 1,349,768
48,651
33,983
2,659
15,179
3,348
(63,454)
61,900
1,786
¥ 1,453,820

¥ 811,301
34,113
62,925
2,659
(35,819)
34,891
1,579
¥ 911,649
¥ (542,171)

Amounts recognized in the consolidated balance sheet at March 31, 2008 and 2007 are as follows:

March 31
Other assets
Other current liabilities
Accrued pension and severance costs

Millions of yen

2008

1,042
(1,331)
(634,589)
¥ (634,878)

2007

—
(1,955)
(540,216)
¥ (542,171)

30
31

Thousands of
U.S. dollars
2008

$ 14,538,200
530,380
381,900
42,210
97,600
(100,010)
(707,100)
—
(149,830)
$ 14,633,350

$ 9,116,490
(938,820)
609,180
42,210
(434,540)
—
(109,950)
$ 8,284,570
$ (6,348,780)

Thousands of
U.S. dollars
2008

10,420
(13,310)
(6,345,890)
$ (6,348,780)

Notes to Consolidated Financial Statements

Toshiba Corporation and Subsidiaries
March 31, 2008

Amounts recognized in accumulated other comprehensive loss at March 31, 2008 and 2007 are as follows:

March 31
Unrecognized actuarial loss
Unrecognized prior service cost

Millions of yen

2008
¥475,515
(28,179)
¥447,336

2007
¥375,994
(40,619)
¥335,375

Thousands of
U.S. dollars
2008
$4,755,150
(281,790)
$4,473,360

The accumulated benefit obligation at March 31, 2008 and 2007 are as follows:

March 31
Accumulated benefit obligation

Millions of yen

2008
¥1,377,086

2007
¥1,370,898

Thousands of
U.S. dollars
2008
$13,770,860

The components of the net periodic pension and severance cost for the years ended March 31, 2008 and 2007 are as follows:

Year ended March 31
Service cost — benefits earned during the year
Interest cost on projected benefit obligation
Expected return on plan assets
Amortization of prior service cost
Recognized actuarial loss

Net periodic pension and severance cost

Millions of yen

2008
¥ 53,038
38,190
(34,323)
(2,803)
16,089
¥ 70,191

2007
¥ 48,651
33,983
(27,590)
(3,766)
17,981
¥ 69,259

Thousands of
U.S. dollars
2008
$ 530,380
381,900
(343,230)
(28,030)
160,890
$ 701,910

Other changes in plan assets and benefit obligation recognized in the other comprehensive loss for the year ended March 31,
2008 are as follows:

Year ended March 31
Current year actuarial loss
Recognized actuarial loss
Prior service cost due to plan amendments
Amortization of prior service cost

Millions of yen
2008
¥118,204
(16,089)
9,760
2,803
¥114,678

Thousands of
U.S. dollars
2008
$ 1,182,040
(160,890)
97,600
28,030
$ 1,146,780

The estimated prior service cost and actuarial loss that will be amortized from accumulated other comprehensive loss into
net periodic pension and severance cost over the next year are summarized as follows:

Year ending March 31
Prior service cost
Actuarial loss

Millions of yen
2009
¥ (2,115)
21,844

Thousands of
U.S. dollars
2009
$ (21,150)
218,440

The Company expects to contribute ¥58,415 million ($584,150 thousand) to its defined benefit plans in the year ending
March 31, 2009.
The following benefit payments are expected to be paid:

Year ending March 31
2009
2010
2011
2012
2013
2014 - 2018

Millions of yen
¥ 69,341
73,477
74,767
83,247
82,147
424,780

Thousands of
U.S. dollars
$ 693,410
734,770
747,670
832,470
821,470
4,247,800

Weighted-average assumptions used to determine benefit obligations as of March 31, 2008 and 2007 and net periodic pen-
sion and severance cost for the years then ended are as follows:

March 31
Discount rate
Rate of compensation increase

Year ended March 31
Discount rate
Expected long-term rate of return on plan assets
Rate of compensation increase

2008
2.8%
3.0%

2008
2.5%
3.9%
3.0%

2007
2.5%
3.0%

2007
2.5%
4.0%
3.0%

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, 2008 and 2007, by asset category are as follows:

March 31
Asset category :

Equity securities
Debt securities
Life insurance company general accounts
Other

Total

2008

50%
31%
2%
17%
100%

2007

55%
27%
2%
16%
100%

32
33

The other category includes hedge funds and real estate.

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.

Certain of the Company’s subsidiaries provide certain health care and life insurance benefits to retired employees. Such

benefits have no material impact on the consolidated financial statements of the Company.
12. RESEARCH AND DEVELOPMENT COSTS

Research and development costs are expensed as incurred and amounted to ¥393,293 million ($3,932,930 thousand) and
¥393,987 million for the years ended March 31, 2008 and 2007, respectively.
13. ADVERTISING COSTS

Advertising costs are expensed as incurred. Advertising costs amounted to ¥53,201 million ($532,010 thousand) and ¥49,230
million for the years ended March 31, 2008 and 2007, respectively.
14. OTHER INCOMES AND OTHER EXPENSE
FOREIGN EXCHANGE GAINS AND LOSSES
For the years ended March 31, 2008 and 2007, the net foreign exchange impacts were ¥16,861 million ($168,610 thousand)
loss and ¥14,639 million gain, respectively.

GAINS ON SALES OF SECURITIES
The gains on sales of securities for the years ended March 31, 2008 and 2007 were ¥33,953 million ($339,530 thousand) and
¥63,074 million, respectively. For the year ended March 31, 2008, the gains on sales of securities were related mainly to
Toshiba-EMI Limited and Toshiba Machine Co., Ltd.. For the year ended March 31, 2007, the gains on sales of securities
were related mainly to GE Toshiba Silicones Co., Ltd. and Toshiba Ceramics Co., Ltd..

Notes to Consolidated Financial Statements

Toshiba Corporation and Subsidiaries
March 31, 2008

GAINS AND LOSSES ON SALES OR DISPOSAL OF FIXED ASSETS
For the years ended March 31, 2008 and 2007, the sale and disposal of fixed assets resulted in net gains of ¥132,725 million
($1,327,250 thousand) and ¥25,062 million, respectively. Gains on sales of fixed assets were ¥144,716 million ($1,447,160
thousand), and losses on disposal of fixed assets were ¥11,991 million ($119,910 thousand) for the year ended March 31, 2008.
The gains on sales of fixed assets were related mainly to the Ginza Toshiba Building and the land sale. Gains on sales of fixed
assets were ¥40,137 million, and losses on disposal of fixed assets were ¥15,075 million for the year ended March 31, 2007.

WITHDRAWAL FROM HD DVD BUSINESS
In response to the major changes observed in the business environment since the beginning of 2008, the Company decided to
withdraw from the HD DVD business after conducting an overall assessment of the future business strategy. The Company
will continue market conventional DVD players and recorders, and accordingly there was no separate financial reporting for
the HD DVD business.

The Company anticipates that substantially all of the liabilities associated with the withdrawal from HD DVD business

were paid during the year ended March 31, 2008.

The major type of costs associated with the withdrawal from HD DVD business for the year ended March 31, 2008 are as

follows:

Year ended March 31

Impairment losses of fixed assets
Impairment losses of other long-lived assets
Losses on disposal or write-off of inventories
Other

Total

Millions of yen
2008
¥ 5,094
11,614
25,112
6,508
¥48,328

Thousands of
U.S. dollars
2008
$ 50,940
116,140
251,120
65,080
$483,280

CHANGE IN THE METHOD OF DEPRECIATION
Effective April 1, 2007, Toshiba Corporation and its domestic subsidiaries changed the method of calculating depreciation of
machinery, equipment and other fixed assets, from the fixed-percentage-on declining base application to the 250% declining-
balance method with estimated residual value reduced to a nominal value. For the year ended March 31, 2008, ¥46,648 million
($466,480 thousand), the part of the effect, is included under other expense.
15. IMPAIRMENT OF LONG-LIVED ASSETS

The Company recorded impairment charges of ¥16,959 million ($169,590 thousand) related primarily to the costs associated
with the withdrawal from HD DVD business for the year ended March 31, 2008, and ¥8,616 million related primarily to the
manufacturing facilities of the Digital Products division for the year ended March 31, 2007.

For the years ended March 31, 2008 and 2007, these impairment charges related to HD DVD are included mainly under
other expense, and the other impairment charges are included in cost of sales in the accompanying consolidated statements of
income.
16. INCOME TAXES

The Company is subject to a number of different income taxes which, in the aggregate, result in an effective statutory tax rate
in Japan of approximately 40.7 percent for the years ended March 31, 2008 and 2007.

A reconciliation between the reported income tax expense and the amount computed by multiplying the income before

income taxes and minority interest by the applicable statutory tax rate is as follows:

Year ended March 31
Expected income tax expense
Increase (decrease) in taxes resulting from:

Tax credits
Non-deductible expenses for tax purposes
Dividends
Net changes in valuation allowance
Effect of income tax rate change
Other

Income tax expense

Millions of yen

2008
¥ 104,012

(15,209)
3,274
8,877
19,241
(2,376)
(4,439)
¥ 113,380

2007
¥121,473

(14,883)
3,121
12,758
17,100
—
5,786
¥145,355

Thousands of
U.S. dollars
2008
$ 1,040,120

(152,090)
32,740
88,770
192,410
(23,760)
(44,390)
$ 1,133,800

The significant components of deferred tax assets and deferred tax liabilities as of March 31, 2008 and 2007 are as follows:

March 31
Gross deferred tax assets:

Inventories
Accrued pension and severance costs
Tax loss carryforwards
Pension liability adjustment
Accrued expenses
Depreciation and amortization
Other

Valuation allowance for deferred tax assets
Deferred tax assets

March 31
Gross deferred tax liabilities:

Property, plant and equipment
Unrealized gains on securities
Gain on securities contributed to employee retirement benefit trusts
Undistributed earnings of foreign subsidiaries and affiliates
Assets acquired in business combinations
Other
Deferred tax liabilities
Net deferred tax assets

Millions of yen

2008

2007

¥ 33,104
106,125
108,324
183,240
122,014
62,807
96,251
711,865
(113,869)
¥ 597,996

¥ 22,856
113,229
104,038
134,556
135,958
47,521
91,321
649,479
(97,843)
¥ 551,636

Millions of yen

2008

2007

¥ (38,175)
(36,827)
(17,381)
(61,688)
(76,118)
(14,240)
(244,429)
¥ 353,567

¥ (60,287)
(56,289)
(17,381)
(58,646)
(81,739)
(15,127)
(289,469)
¥ 262,167

Thousands of
U.S. dollars
2008

331,040
1,061,250
1,083,240
1,832,400
1,220,140
628,070
962,510
7,118,650
(1,138,690)
$ 5,979,960

Thousands of
U.S. dollars
2008

$ (381,750)
(368,270)
(173,810)
(616,880)
(761,180)
(142,400)
(2,444,290)
$ 3,535,670

34
35

Deferred tax liabilities included in other current liabilities and other liabilities at March 31, 2008 and 2007 were ¥80,721 mil-
lion ($807,210 thousand) and ¥87,883 million, respectively.

The net changes in the total valuation allowance for the years ended March 31, 2008 and 2007 were an increase of ¥16,026

million ($160,260 thousand) and an increase of ¥16,896 million, respectively.

The Company’s tax loss carryforwards for each of the corporate and local taxes at March 31, 2008 amounted to ¥209,139
million ($2,091,390 thousand) and ¥304,208 million ($3,042,080 thousand), respectively, the majority of which will expire
during the period from 2009 through 2015. The Company utilized tax loss carryforwards of ¥19,825 million ($198,250 thou-
sand) and ¥8,598 million ($85,980 thousand) to reduce current corporate and local taxes, respectively, during the year ended
March 31, 2008.

Realization of tax loss carryforwards and other deferred tax assets is dependent on the Company generating sufficient tax-
able 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 esti-
mates of future taxable income during the carryforward period are reduced.

The Company adopted FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes-an interpretation of FASB
Statement No. 109 (“FIN 48”) effective April 1, 2007. As a result of implementing FIN 48, the Company identified unrecog-
nized tax benefits of ¥7,906 million ($79,060 thousand) as of April 1, 2007, and made a cumulative-effect adjustment of
¥5,555 million ($55,550 thousand) to retained earnings.

The Company recognizes interest and penalties accrued related to unrecognized tax benefits in income taxes in the consol-
idated statements of income. Both interest and penalties accrued as of March 31, 2008 and interest and penalties included in
income taxes for the year ended March 31, 2008 are not material.

A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:

Notes to Consolidated Financial Statements

Toshiba Corporation and Subsidiaries
March 31, 2008

Balance at April 1, 2007
Additions for tax positions of the current year
Reductions for tax positions of prior years
Lapse of statute of limitations or closed audits
Foreign currency translation adjustments
Balance at March 31, 2008

Millions of yen
¥ 7,906
542
(2,009)
(313)
(1,023)
¥ 5,103

Thousands of
U.S. dollars
$ 79,060
5,420
(20,090)
(3,130)
(10,230)
$ 51,030

Total amount of unrecognized tax benefits that would reduce the effective tax rate, if recognized, is ¥1,148 million ($11,480
thousand).

The Company believes its estimates and assumptions of unrecognized tax benefits are reasonable and based on each of the
items of which the Company is aware at March 31, 2008, no significant changes to the unrecognized tax benefits are expected
within the next twelve months.

The Company files income tax returns in Japan and various foreign tax jurisdictions. In Japan, the Company is no longer
subject to regular income tax examinations by the tax authority for years before the fiscal year ended March 31, 2006 with
few exceptions. In other major foreign tax jurisdictions, the Company is no longer subject to regular income tax examinations
by tax authorities for years before the fiscal year ended March 31, 2002 with few exceptions.
17. SHAREHOLDERS’ EQUITY

RETAINED EARNINGS
Retained earnings at March 31, 2008 and 2007 included a legal reserve of ¥20,042 million ($200,420 thousand) and ¥17,921
million, respectively. The Corporation Law of Japan provides that an amount equal to 10% of distributions from retained
earnings paid by Toshiba Corporation and its Japanese subsidiaries be appropriated as a legal reserve. No further appropria-
tions are required when the total amount of the additional paid-in capital and the legal reserve equals 25% of their respective
stated capital. The Corporation Law of Japan also provides that additional paid-in capital and legal reserve are available for
appropriations by the resolution of the stockholders.

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 Corporation Law of Japan. Retained earnings at
March 31, 2008 do not reflect current year-end dividends of ¥19,414 million ($194,140 thousand) which will be paid from
June 2, 2008.

Retained earnings at March 31, 2008 included the Company’s equity in undistributed earnings of affiliated companies

accounted for by the equity method in the amount of ¥59,982 million ($599,820 thousand).

ACCUMULATED OTHER COMPREHENSIVE LOSS
An analysis of the changes in accumulated other comprehensive loss, net of tax, for the years ended March 31, 2008 and 2007
are shown below:

March 31
Net unrealized gains and losses 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

Pension liability adjustments:
Balance at beginning of year
Current year change
Adjustment to initially apply SFAS 158
Balance at end of year

Minimum pension liability adjustments:

Balance at beginning of year
Current year change
Adjustment to initially apply SFAS 158
Balance at end of year

Net unrealized gains and losses on derivative instruments:

Balance at beginning of year
Current year change
Balance at end of year

Total accumulated other comprehensive loss:

Balance at beginning of year
Current year change
Adjustment to initially apply SFAS 158
Balance at end of year

Millions of yen

2008

2007

80,801
(27,340)
53,461

¥ (21,938)
(95,614)
¥ (117,552)

¥ (190,118)
(66,721)
—
¥ (256,839)

—
—
—
—

27
(1,311)
(1,284)

¥ (131,228)
(190,986)
—
¥ (322,214)

57,246
23,555
80,801

¥ (32,019)
10,081
¥ (21,938)

—
—
(190,118)
¥ (190,118)

¥ (151,351)
4,214
147,137
—

(385)
412
27

¥ (126,509)
38,262
(42,981)
¥ (131,228)

Thousands of
U.S. dollars
2008

808,010
(273,400)
534,610

$ (219,380)
(956,140)
$ (1,175,520)

$ (1,901,180)
(667,210)
—
$ (2,568,390)

—
—
—
—

270
(13,110)
(12,840)

$ (1,312,280)
(1,909,860)
—
$ (3,222,140)

36
37

Notes to Consolidated Financial Statements

Toshiba Corporation and Subsidiaries
March 31, 2008

Tax effects allocated to each component of other comprehensive income (loss) for the years ended March 31, 2008 and 2007
are shown below:

Pre-tax
amount

Millions of yen
Tax benefit
(expense)

Net-of-tax
amount

For the year ended March 31, 2008:

Net unrealized gains and losses on securities:

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

¥ (59,136)
13,018

¥ 24,076
(5,298)

¥ (35,060)
7,720

Foreign currency translation adjustments:

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

Pension liability adjustments:

Pension liability adjustments arising during year
Less: reclassification adjustment for losses included in net income

Net unrealized gains and losses on derivative instruments:

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

Other comprehensive income (loss)
For the year ended March 31, 2007:

Net unrealized gains and losses 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 losses included in net income

Minimum pension liability adjustments
Net unrealized gains and losses on derivative instruments:

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

Other comprehensive income (loss)

(100,966)
802

(125,247)
13,286

(10,627)
8,408
¥(260,462)

4,550
—

50,647
(5,407)

(96,416)
802

(74,600)
7,879

4,330
(3,422)
¥ 69,476

(6,297)
4,986
¥(190,986)

¥ 39,705
(714)

¥ (15,742)
306

¥ 23,963
(408)

12,778
7
7,106

(2,704)
—
(2,892)

10,074
7
4,214

(16,431)
17,083
¥ 59,534

6,713
(6,953)
¥ (21,272)

(9,718)
10,130
¥ 38,262

Pre-tax
amount

Thousands of U.S. dollars
Tax benefit
(expense)

Net-of-tax
amount

For the year ended March 31, 2008:

Net unrealized gains and losses on securities:

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

$ (591,360)
130,180

$ 240,760
(52,980)

$ (350,600)
77,200

Foreign currency translation adjustments:

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

Pension liability adjustments:

Pension liability adjustments arising during year
Less: reclassification adjustment for losses included in net income

Net unrealized gains and losses on derivative instruments:

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

Other comprehensive income (loss)

(1,009,660)
8,020

(1,252,470)
132,860

45,500
—

(964,160)
8,020

506,470
(54,070)

(746,000)
78,790

(106,270)
84,080
$ (2,604,620)

43,300
(34,220)
$ 694,760

(62,970)
49,860
$ (1,909,860)

TAKEOVER DEFENSE MEASURE
The Company introduced a plan for countermeasures to any large-scale acquisitions of the Company’s shares (the “Plan”), based on
the shareholders’ approval of the basic concept of the Plan at the Ordinary General Shareholders Meeting held in June 2006, for the
purpose of protection and enhancement of the corporate value of the Company and the common interests of shareholders.

Specifically, if an acquirer starts or plans to start an acquisition or a takeover bid that would result in the acquirer holding 20% or
more of the Company’s total outstanding shares, the Company will require the acquirer to provide certain necessary information in
advance to its Board of Directors. The Board of Directors will then establish a Special Committee that will, at its discretion, obtain
advice from outside experts, consider the details of the acquisition, disclose to the Company’s shareholders the necessary information
regarding the acquisition, as well as the alternative proposal prepared by the Company’s Chief Executive Officer, and then negotiate
with the acquirer. If the acquirer does not comply with the procedures under the Plan, or the Special Committee decides that the
acquisition would damage the corporate value of the Company or the common interests of shareholders, the Special Committee will
recommend to the Board of Directors that the Company implement countermeasures (a gratis allotment of stock acquisition rights
(shinkabu yoyakuken no mushou wariate), a condition of which will be that they cannot be exercised by acquirers or the like) and
protect the corporate value of the Company and the common interests of shareholders.
18. NET INCOME PER SHARE

A reconciliation of the numerators and denominators between basic and diluted net income per share for the years ended
March 31, 2008 and 2007 is as follows:

Year ended March 31
Net income available to common shareholders
Net income effect of dilutive convertible debentures
Net income available to common shareholders and assumed conversions

Year ended March 31
Weighted-average number of shares
of common stock outstanding for the year
Incremental shares from assumed conversions
of dilutive convertible debentures
Weighted-average number of shares of diluted common
stock outstanding for the year

Year ended March 31
Net income per share of common stock:
—Basic
—Diluted

Thousands of
U.S. dollars
2008
$1,274,130
—
$1,274,130

38
39

Millions of yen

2008
¥ 127,413
—
¥ 127,413

2007
¥137,429
—
¥137,429

Thousands of shares

2008

2007

3,229,055

3,214,078

253,398

269,681

3,482,453

3,483,759

Yen

2008

¥39.46
36.59

2007

¥42.76
39.45

U.S. dollars
2008

$0.39
0.37

Notes to Consolidated Financial Statements

Toshiba Corporation and Subsidiaries
March 31, 2008

19. 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 consisted principally of forward exchange contracts, interest rate swap agreements, currency swap agreements, and curren-
cy 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 agree-
ments, 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 pri-
marily within a few years 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 accounts receivable and payable denominated in foreign currencies resulting from
adverse fluctuations in foreign currency exchange and interest rates. These agreements mature during the period 2008 to 2015.

Forward exchange contracts, interest rate swap agreements, currency swap agreements and currency options are designated as
either fair value hedges or cash flow hedges depending on accounts receivable and payable denominated in foreign currencies or com-
mitments on future trade transactions and the interest rate characteristics of the underlying debt as discussed below.

Fair Value Hedge Strategy
The forward exchange contracts and currency swap agreements utilized by the Company effectively reduce fluctuation in fair
value of accounts receivable and payable 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 and currency options utilized by the Company effectively reduce fluctuation in cash flow from
commitments on future trade transactions denominated in foreign currencies for the next 7 years.

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 7 years.

The Company expects to reclassify ¥82 million ($820 thousand) of net gains on derivative financial instruments from accu-
mulated other comprehensive income (loss) to earnings during the next 12 months due to the collection of accounts receivable
denominated in foreign currencies and the payments of accounts payable denominated in foreign currencies and variable inter-
est associated with the floating-rate debts.

At March 31, 2008, 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 agree-

ments, currency swap agreements, and currency options outstanding at March 31, 2008 and 2007 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

2008

2007

¥329,575
330,063
241,550
133,136
8,817

¥225,965
156,092
253,450
161,362
18,408

Thousands of
U.S. dollars
2008

$3,295,750
3,300,630
2,415,500
1,331,360
88,170

(2) FAIR VALUE OF FINANCIAL INSTRUMENTS
The estimated fair values of the Company’s financial instruments at March 31, 2008 and 2007 are summarized as follows:

March 31
Nonderivatives:
Liabilities:

2008

2007

Millions of yen

Carrying
amount

Estimated
fair value

Carrying
amount

Estimated
fair value

Long-term debt, including current portion

¥ (954,486)

¥ (998,490)

¥ (1,044,152)

¥ (1,114,148)

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

March 31
Nonderivatives:
Liabilities:

(1,308)
(2,063)
2,275
458

1,408
(799)
(797)
(41)

Thousands of U.S. dollars
2008

Carrying
amount

Estimated
fair value

Long-term debt, including current portion

$ (9,544,860)

$ (9,984,900)

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

(13,080)
(20,630)
22,750
4,580

40
41

The above table excludes the financial instruments for which fair values approximate their carrying amounts and those related
to leasing activities. The table also excludes marketable securities and other investments which are disclosed in Note 4.

In assessing the fair value of these financial instruments, the Company uses a variety of methods and assumptions, which are
based on estimates of market conditions and risks existing at that time. For certain instruments, including cash and cash equiv-
alents, notes and accounts receivable-trade, short-term borrowings, notes payable-trade, accounts payable-trade and accounts
payable-other and accrued expenses, it is assumed that the carrying amount approximated fair value for the majority of these
instruments because of their short maturities. Quoted market prices are used for a part of marketable securities and other
investments. For long-term debt, fair value is estimated using market quotes, or where market quotes are not available, using
estimated discounted future cash flows. Other techniques, such as estimated discounted value of future cash flows, and
replacement cost, are 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.

Notes to Consolidated Financial Statements

Toshiba Corporation and Subsidiaries
March 31, 2008

20. 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, 2008 and 2007 were ¥91,130 million ($911,300 thousand) and
¥80,340 million, respectively.

The Company also leases certain machinery and equipment which are accounted for as capital leases. As of March 31, 2008
and 2007, the costs under capital leases were approximately ¥90,000 million ($900,000 thousand) and ¥80,000 million, and the
related accumulated amortization were approximately ¥41,200 million ($412,000 thousand) and ¥36,500 million, respectively.
As of March 31, 2008 and 2007, the costs under capital leases from TFC and Toshiba Medical Finance Co., Ltd., affiliates
of the Company, were approximately ¥81,200 million ($812,000 thousand) and ¥74,900 million, and the related accumulated
amortization were approximately ¥38,800 million ($388,000 thousand) and ¥34,900 million, respectively.

Minimum lease payments for the Company’s capital and non-cancelable operating leases as of March 31, 2008 are as fol-

lows:

Year ending March 31

2009
2010
2011
2012
2013
Thereafter

Total minimum lease payments
Executory costs
Amounts representing interest
Present value of net minimum lease Payments
Less—current portion

Millions of yen

Thousands of U.S. dollars

Capital leases
¥ 17,674
14,261
9,179
5,571
2,818
7,487
56,990
(4,012)
(4,332)
48,646
(15,747)
¥ 32,899

Operating leases
¥ 43,476
33,330
26,898
17,932
10,219
18,300
¥150,155

Operating leases
$ 434,760
333,300
268,980
179,320
102,190
183,000
$1,501,550

Capital leases
$ 176,740
142,610
91,790
55,710
28,180
74,870
569,900
(40,120)
(43,320)
486,460
(157,470)
$ 328,990

LESSOR
The Company is also a lessor of office buildings, commercial facilities and other assets under operating leases. As of March 31,
2008 and 2007, the costs under operating leases were approximately ¥24,100 million ($241,000 thousand) and ¥20,600 million,
and the related accumulated amortization were approximately ¥3,900 million ($39,000 thousand) and ¥2,900 million, respec-
tively. Future minimum lease payments to be received under the Company’s non-cancelable operating leases as of March 31,
2008 are as follows:

Year ending March 31

2009
2010
2011
2012
2013
Thereafter

Millions of yen
¥ 2,759
2,698
2,691
2,630
2,573
17,715
¥ 31,066

Thousands of
U.S. dollars
$ 27,590
26,980
26,910
26,300
25,730
177,150
$310,660

21. COMMITMENTS AND CONTINGENT LIABILITIES

Commitments outstanding at March 31, 2008 for the purchase of property, plant and equipment approximated ¥52,078 mil-
lion ($520,780 thousand).

At March 31, 2008, contingent liabilities, other than guarantees disclosed in Note 22, approximated ¥4,519 million ($45,190

thousand) principally for recourse obligations related to notes receivable transferred.

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 2008 to 2017 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 payments under these guarantees were ¥174,312 million
($1,743,120 thousand) as of March 31, 2008.

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 25 years. A payment would be triggered by failure of the guaranteed party to fulfill its obligation covered by the guaran-
tee. The maximum potential payments under these guarantees were ¥15,267 million ($152,670 thousand) as of March 31, 2008.
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 ¥1,993 million ($19,930 thousand) at March 31, 2008.

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 transac-
tions. The operating leases will expire on various dates through March 2013. The maximum potential payments by the
Company for such residual value guarantees were ¥26,468 million ($264,680 thousand) at March 31, 2008.

GUARANTEES OF DEFAULTED NOTES AND ACCOUNTS RECEIVABLE
The Company has transferred trade notes receivable and trade accounts receivable 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 3 months.
The maximum potential payment for such repurchase obligation was ¥14,341 million ($143,410 thousand) as of March 31, 2008.

The carrying amounts of the liabilities for the Company’s obligations under the guarantees described above at March 31, 2008 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:

42
43

March 31
Balance at beginning of year

Warranties issued
Settlements made
Foreign currency translation adjustments

Balance at end of year

Millions of yen

2008
¥38,814
48,316
(39,578)
(3,974)
¥43,578

2007
¥32,902
44,846
(40,149)
1,215
¥38,814

Thousands of
U.S. dollars
2008
$388,140
483,160
(395,780)
(39,740)
$435,780

Notes to Consolidated Financial Statements

Toshiba Corporation and Subsidiaries
March 31, 2008

23. LEGAL PROCEEDINGS

In January 2007, the European Commission adopted a decision that imposed fines on 19 companies, including Toshiba
Corporation, for infringing EU Competition Law in the gas insulated switchgear market. The decision imposed a fine of
86.25 million on Toshiba Corporation, plus a fine of 4.65 million jointly and severally with Mitsubishi Electric
Corporation. Following its own investigation, Toshiba Corporation contends that it has not found any infringement of EU
Competition Law, and it is bringing an action to the European Court of First Instance seeking annulment of the European
Commission’s decision.

The Company undertakes global business operation, and is involved in disputes, including lawsuits, and other legal proce-
dures and is investigated by authorities. There will be also possibility of such a case in future. Due to differences in judicial sys-
tems and difficulties in predicting prospects in these procedures, it is difficult to rule out the possibility that the Company may
be subject to an authoritative order requiring payment of an amount far exceeding normal expectations. Judgements unfavor-
able to the Company in these cases may impact on Company’s operations.

The Company’s Management believes that there are meritorious defenses to all of these legal procedures, including lawsuits
and investigations. Based on the information currently available to both the Company and its legal counsel, Management
believes that such legal procedures, if any, would not have a material adverse effect on the financial position or the results of
operations of the Company.
24. ENVIRONMENTAL LIABILITIES

The Japanese environmental regulation, “Law Concerning Special Measure against poly chlorinated biphenyl (“PCB”) waste”
requires PCB waste holders dispose of all PCB waste by July 2016. The Company accrued ¥10,643 million ($106,430thou-
sand) and ¥10,647 million at March 31, 2008 and 2007, respectively, for environmental remediation and restoration costs for
products or equipment with PCB which some Toshiba operations in Japan have retained. The costs recorded during the year
are included as cost of sales in the accompanying consolidated statements of income.

The accrual will be adjusted as assessment and remediation efforts progress or as additional technical or legal information
available. Management is of opinion that the ultimate costs in excess of the amount accrued, if any, would not have a material
adverse effect on the financial position or the results of operations of the Company.
25. ASSET RETIREMENT OBLIGATIONS

The Company records asset retirement obligations in accordance with SFAS No. 143, Accounting for Asset Retirement Obligations
(“SFAS 143”), and FASB Interpretation No. 47, Accounting for Conditional Asset Retirement Obligations, an Interpretation of SFAS
143 (“FIN 47”).

Asset retirement obligation was related primarily to the decommissioning of nuclear power facilities. These obligations
address the decommissioning, clean up and release for acceptable alternate use of such facilities. The Company identified cer-
tain assets that have an indeterminate life, and thus the fair value of the retirement obligation is not reasonably estimable. A
liability for these asset retirement obligations will be recorded when a fair value is reasonably estimable.

The changes in the carrying amount of asset retirement obligations for the year ended March 31, 2008 and 2007 are as fol-

lows:

March 31
Balance at beginning of year

Accretion expense
Liabilities settled
Liabilities incurred
Foreign currency translation adjustments

Balance at end of year

Millions of yen

2008
¥ 17,149
1,044
(1,422)
15,412
(3,628)
¥ 28,555

2007

492
68
(345)
17,180
(246)
¥ 17,149

Thousands of
U.S. dollars
2008
$ 171,490
10,440
(14,220)
154,120
(36,280)
$ 285,550

26. ACQUISITION OF WESTINGHOUSE

On October 16, 2006 (Eastern Standard Time), Toshiba completed its procedure to acquire all the shares of BNFL USA
Group Inc., the holding company for the Westinghouse Group whose main business is nuclear power systems, and of
Westinghouse Electric UK Limited (collectively “Westinghouse”) for $5.4 billion. On acquiring Westinghouse, Toshiba
established two special-purpose acquisition companies in the U.S. and U.K. (Toshiba Nuclear Energy Holdings (US) Inc. and
Toshiba Nuclear Energy Holdings (UK) Limited; collectively “TNEHs”), and acquired it through these TNEHs. By build-
ing a collaborative relation, Toshiba’s Nuclear Energy System Business, with its forte in boiling water reactors mainly in the
Japanese market, and Westinghouse, with its advantage in pressurized water reactors in the world market, would be able to
complement each other in the fields of manufacturing, marketing and technology, and exert synergistic effects by penetrating
new business fields that neither Toshiba nor Westinghouse have been able to handle independently.

Westinghouse’s operating results are included in Company’s Consolidated Statements of Income from October 1, 2006.
In connection with the acquisition, Toshiba entered into an equity participation agreement with The Shaw Group Inc., a
leading U.S. general engineering firm (“Shaw”) and Ishikawajima-Harima Heavy Industries Co., Ltd. (IHI Co. ,“IHI”), and
Shaw and IHI participated as Toshiba’s strategic partners in the acquisition of Westinghouse. In accordance with the equity
participation agreement, Shaw and IHI acquired 20% (for $1,080 million) and 3% (for $162 million) of the issued and out-
standing shares of TNEHs, respectively. Consequently, Toshiba’s equity percentage came to 77% ($4,158 million) at March
31, 2007.

Toshiba initially raised the funds for acquisition ($4,158 million) from commercial papers and bank loans, but is currently
moving ahead to repay and replace them with a long-term financing obtained from issuance of bonds (¥100 billion) and long-
term syndicated loans (¥250 billion).

On October 1, 2007 (Eastern Standard Time), Toshiba transferred 10% ($540 million) ownership to National Atomic
Company Kazatomprom, a major supplier of uranium based in the Republic of Kazakhstan. Consequently, Toshiba’s current
equity percentage stands at 67%($3,618 million).

The following table summarizes the preliminary estimated fair values of Westinghouse’s assets acquired and liabilities

assumed as of acquisition date:

Current assets
Intangible assets subject to amortization
Intangible assets not subject to amortization
Goodwill
Other fixed assets
Current liabilities
Long-term liabilities
Minority interest
Net assets acquired

Goodwill based on the preliminary valuation and other intangible assets are as follows:

Core and current technology
(Weighted-average amortization period: 22.4)
Other intangible assets subject to amortization
(Weighted-average amortization period: 18.1)
Brand name
Goodwill

Millions of yen
¥119,530
201,677
50,299
350,785
222,775
117,042
181,320
148,742
497,962

Millions of yen

¥171,377

30,300
50,299
350,785

44
45

Notes to Consolidated Financial Statements

Toshiba Corporation and Subsidiaries
March 31, 2008

The acquired assets did not include any research and development in progress. Pursuant to the terms of the agreement among
the shareholders of TNEHs, Shaw and IHI will not be allowed to assign their equity interests in TNEHs to a third party for
a period of six years except under certain specified circumstances, whereas they are entitled to sell the whole or a part of their
equity interests to Toshiba during the said period (except the period up to March 31, 2010). For its part, Toshiba is also enti-
tled to purchase from Shaw or IHI the whole or a part of their equity interests in TNEHs on certain specified conditions.
These rights are in place for the purpose of protecting the interests of the minority shareholders and preventing equity partici-
pation by a third party who may put Toshiba at disadvantage.

Subsequently, pursuant to the terms of the sale/purchase agreement with British Nuclear Fuels plc as seller,
Westinghouse’s assets and liabilities at the time of acquisition of the shares were revalued and the purchase price ($5.44 bil-
lion) was adjusted. The allocation process of the relevant purchase price has finished.

If the acquisition had taken place on April 1, 2006, Toshiba’s unaudited pro-forma operating results would have been as

summarized below:

Year ended March 31
Net sales
Net income

Year ended March 31
Net income per share of common stock
Diluted net income per share of common stock

Billions of yen
2007
¥ 7,232.0
140.2

yen
2007
¥ 43.61
40.24

Pro-forma data has been prepared for comparative purpose only and is not intended to be indicative of what the Company’s
results would have been had the acquisition occurred at the beginning of the periods presented or the results which may occur
in the future.

Report of Independent Auditors

The Board of Directors and Shareholders of
Toshiba Corporation

We have audited the accompanying consolidated balance sheets of Toshiba Corporation and subsidiaries (the
“Company”) as of March 31, 2008 and 2007, and the related consolidated statements of income, shareholders’ equi-
ty, and cash flows for the years then ended, all expressed in Japanese yen. These financial statements are the respon-
sibility 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. Those stan-
dards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. We were not engaged to perform an audit of the Company’s internal control over
financial reporting. Our audits included consideration of internal control over financial reporting as a basis for design-
ing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An
audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial state-
ments, assessing the accounting principles used and significant estimates made by management, and evaluating the
overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

46
47

The Company’s consolidated financial statements do not disclose segment information required by Statement of
Financial Accounting Standards No. 131, “Disclosures about Segments of an Enterprise and Related Information.”
In our opinion, disclosure of segment information is required by U.S. generally accepted accounting principles.

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 Toshiba
Corporation and subsidiaries at March 31, 2008 and 2007, and the consolidated results of their operations and their
cash flows for the years then ended in conformity with U.S. generally accepted accounting principles.

As discussed in Note 2 to the consolidated financial statements, effective April 1, 2007, Toshiba Corporation and its
domestic subsidiaries changed their method of accounting for depreciation.

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.

June 25, 2008

This report was printed on recycled paper with soy-based ink.
Printed in Japan