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Annual Report 2011 Operational Review
Toshiba is a diversifi ed electric/electronic manufacturer and provides a wide range of products and
services on a global basis in four business domains: Digital Products, Electronic Devices, Social
Infrastructure and Home Appliances. In addition to this, Toshiba Group also focuses on new business
areas and business expansion.
This report looks at the recent progress Toshiba has made and at the initiatives we will take
going forward, with a primary focus on business achievements in the fi scal year ended March 31, 2011.
Digital Products Segment
Electronic Devices Segment
Social Infrastructure Segment
Home Appliances Segment
(Elevator) *
* The Tokyo Sky Tree® image provided by: Tobu Railway Co., Ltd. and Tobu Tower Sky
Tree Co., Ltd.
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TOSHIBA Annual Report 2011
Contents
To Our Shareholders• • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • 02
Financial Highlights • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • 04
An Interview with the President • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • 06
Toshiba Group’s response to the Great East Japan Earthquake • • • • • • • • • •14
Mid-term Business Plan • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • 16
Accelerate Transformation of the Business Structure Through a New
Organization that Reinforces Overall Strengths • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • 18
Business Review • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • 20
Digital Products Segment • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • 22
Electronic Devices Segment • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • 25
Social Infrastructure Segment • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • 28
Home Appliances Segment • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • 32
Research & Development and Intellectual Property • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • 34
CSR Management • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • 36
Environmental Management • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • 38
Corporate Governance • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • 40
Directors and Executive Officers • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • 46
Organization Chart • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • 48
Consolidated Subsidiaries and Affiliated Companies Accounted for
by the Equity Method • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • 50
Corporate History • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • 51
Basic Commitment of the Toshiba Group • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • 52
Data Section • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • 53
01
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To Our Shareholders
In FY2010, consolidated net sales increased to ¥6,398.5 billion, a rise of 1.7% over that of the previous
fi scal year. In addition, consolidated operating income surged ¥115.1 billion over that of the previous
fi scal year to ¥240.3 billion, and net income was ¥137.8 billion, a sharp turnaround of ¥157.5 billion
compared with the previous fi scal year. Our profi t level recovered to that of FY2007, the year prior to
the global fi nancial crisis, as each of our business segments generated profi t.
In the Digital Products business segment, the operating income generated by LCD TVs was in
the black for the seventh consecutive fiscal half-year term on increased sales. Compared with the
previous fi scal year, the operating income engendered by notebook PCs improved greatly, as their
sales also grew. In the Electronic Devices business segment, our memories business achieved a
record-high profit of ¥108.7 billion. The operating income of our LCD panels business greatly
improved and moved into the black, as we restructured the business. In the Social Infrastructure
business segment, sales of power generation systems, including to the emerging economies,
remained solid and the segment continued to maintain a high level of profi t. The Home Appliances
business segment turned in a healthy performance and moved into the black. The strengthening of
our fi nancial base has progressed steadily. Our debt-to-equity ratio improved to 125% at the end of
March 2011 from 153% at the end of March 2010. The annual dividend for FY2010 was ¥5 per share.
Going forward, we are determined to contribute to the recovery of Japan by supporting the
restoration of Japan’s social infrastructure. At the same time, we will continue to strive to make
Toshiba an even stronger global contender, one with unrivalled global competitiveness in our major
business fi elds and with a robust fi nancial foundation. Towards this end, we will continue our efforts
to restructure certain of our businesses and strengthen the profit basis of underperforming
businesses. We will speed up the transformation of Toshiba’s business structure by prioritizing
investment to new and growing focus business areas so as to create new profi t bases. We will also
strive to greatly increase Toshiba Group’s ability to respond to the challenges to society posed by the
need for global environmental change. As we carry out these strategic management policies, we will
further endeavor to enhance the corporate value of Toshiba Group.
We would like to ask our shareholders for their continued strong support.
Atsutoshi Nishida
Director, Chairman of the Board
Norio Sasaki
Director, President and CEO
02
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TOSHIBA Annual Report 2011
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03
Financial Highlights • Toshiba Corporation and its
Subsidiaries
For the years ended March 31, 2011, 2010, 2009, 2008 and 2007
Financial performance
Net sales—Japan
—Overseas
Net sales (Total)
Operating income (loss) (Note 2)
Income (loss) from continuing operations,
before income taxes and noncontrolling interests
Net income (loss) (Note 3)
Financial position and indicators
Total assets
Equity attributable to shareholders
of Toshiba Corporation (Note 4)
Interest-bearing debt
Shareholders’ equity ratio (%)
Debt/equity ratio (Times)
Investment
R&D expenditures
Capital expenditures (Property, plant and equipment)
Return indicators
Return on investment (ROI) (%) (Note 5)
Return on equity (ROE) (%)
Free cash fl ow
Net cash provided by (used in) operating activities
Net cash used in investing activities
Free cash fl ow
Per share of common stock (yen)
Net income (loss) (Note 6)
—basic
—diluted
Cash dividends
Number of employees
2011
2010
2009
2008
2007
(Billions of yen)
¥2,851.8
¥2,791.3
¥3,093.7
¥3,445.4
¥3,349.4
3,546.7
6,398.5
240.3
195.5
137.8
5,379.3
868.1
1,081.3
16.1
1.2
319.7
231.0
10.4
16.6
374.1
(214.7)
159.4
32.55
31.25
5.00
3,499.9
6,291.2
125.2
34.4
(19.7)
5,451.2
797.4
1,218.3
14.6
1.5
311.8
209.4
5.1
(3.2)
451.4
(252.9)
198.5
(4.93)
(4.93)
0.00
3,419.0
6,512.7
(233.4)
(261.5)
(343.6)
5,453.2
447.3
1,810.7
8.2
4.0
357.5
355.5
(8.9)
(46.8)
(16.0)
(335.3)
(351.3)
(106.18)
(106.18)
5.00
3,958.9
7,404.3
240.4
258.1
127.4
5,935.6
1,022.3
1,261.0
17.2
1.2
370.3
464.5
9.2
12.0
247.1
(322.7)
(75.6)
39.46
36.59
12.00
3,510.3
6,859.7
247.2
315.9
137.4
5,932.0
1,108.3
1,158.5
18.7
1.0
365.3
373.8
10.6
13.0
561.5
(712.8)
(151.3)
42.76
39.45
11.00
Number of employees (Thousands)
203
204
199
198
191
Notes:1. U.S. GAAP was codifi ed by the Financial Accounting Standards Board. Beginning with the fi scal year ended March 31, 2010, the codifi ed standards are described in “Accounting Standards
Codifi cation (ASC).”
2. Operating income (loss) is derived by deducting the cost of sales and selling, general and administrative expenses from net sales.
3. Net income (loss) attributable to shareholders of Toshiba Corporation is described as Net income (loss).
4. Equity attributable to shareholders of Toshiba Corporation is based on U.S. GAAP.
5. ROI = Operating income (loss) / (Average equity attributable to shareholders of Toshiba Corporation + Average equity attributable to noncontrolling interests + Average interest-bearing
debt) × 100
6. Basic earnings (losses) per share attributable to shareholders of Toshiba Corporation (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.
7. On June 17, 2010, Toshiba Corporation and Fujitsu Limited (“Fujitsu”) signed a Memorandum of Understanding to merge their mobile phone businesses, followed by a defi nitive
contract on July 29, 2010. On October 1, 2010, Toshiba Corporation transferred its mobile phone business to a newly established company called Fujitsu Toshiba Mobile
Communications Limited, and sold 80.1% of the shares of the new company to Fujitsu. The results of the mobile phone business are not incorporated into consolidated net
sales, operating income (loss), or income (loss) from continuing operations, before income taxes and noncontrolling interests in the consolidated results. Prior-period data
relating to the discontinued operations has been reclassifi ed in accordance with ASC No.205-20, “Presentation of Financial Statements —Discontinued Operations.”
8. The Mobile Broadcasting business ceased operation at the end of the fi scal year ended March 31, 2009. Prior-period data from the fi scal year ended March 31,
2008 has been reclassifi ed to conform with the current classifi cation.
04
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TOSHIBA Annual Report 2011
Net sales (Billions of yen)
Ratio of overseas sales (%)
Operating income (loss) (Billions of yen)
Operating income ratio (%)
Net income (loss) (Billions of yen)
Return on sales (%)
7,404.3
6,859.7
6,512.7
6,291.2 6,398.5
247.2
240.4
240.3
53.5
52.5
51.2
55.6
55.4
3.6
3.2
3.8
125.2
2.0
137.4
2.0
127.4
1.7
137.8
2.2
-3.6
-233.4
-0.3
-19.7
-5.3
-343.6
07
08
09
10
11
07
08
09
10
11
07
08
09
10
11
Total equity attributable to shareholders
of Toshiba Corporation (Billions of yen)
Debt/equity ratio (Times)
R&D expenditures (Billions of yen)
R&D/sales ratio (%)
Free cash flow (Billions of yen)
1,108.3
1,022.3
365.3
370.3
357.5
868.1
797.4
447.3
4.0
1.0
1.2
1.5
1.2
311.8
319.7
561.5
5.3
5.5
5.0
5.0
5.0
451.4
374.1
198.5
159.4
247.1
-16.0
-75.6
-214.7
-252.9
-322.7
3,227
-335.3
3,353
-351.3
-151.3
-712.8
07
08
09
10
11
07
08
09
10
11
07
08
09
10
11
Net cash provided by (used in)
operating activities
Net cash used in investing activities
Free cash flow
05
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An Interview with the President
“Going forward, I intend to further accelerate the transformation of Toshiba’s business
structure and achieve vigorous sustained growth that surpasses that of the market as
well as a more highly profi table business structure. I will advance our basic management
policies of accelerating global business development, further speeding up the pace of
innovation and assiduously promoting CSR management. I intend to make Toshiba an
even stronger global contender, one with unrivalled global competitiveness in our major
business fi elds and with a robust fi nancial foundation.”
Q
A
How do you evaluate the business
performance of Toshiba Group over
the past two years since you became
the president of Toshiba in 2009?
Since assuming the presidency, I have taken a
number of steps to restructure businesses
with the result being that underperforming
businesses have been improved and our
profit-making structure is steadily being
strengthened. I have also implemented
several decisive measures to establish a
robust financial foundation that provides
both the resources for growth and financial
soundness. At the same time, to transform
Toshiba’s business structure, I worked on
focusing on growth businesses, expanding
the scope of key businesses and accelerating
the development of new business areas, and
a i m e d f o r f u r t h e r g r o w t h a n d t h e
improvement of profi tability.
In restruc turing our LCD panels
business, we moved ahead with our strategic
management policies of focusing on high-
value-added produc ts by tak ing such
measures as transferring the LCD panels
business for PCs to Taiwan’s AU Optronics
C o r p o r a t i o n a n d r e o r g a n i z i n g LC D
p r o d u c t i o n b a s e s i n J a p a n . We w i l l
Norio Sasaki Director, President and CEO
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TOSHIBA Annual Report 2011
concentrate on the manufacturing of LCDs for mobile devices, such as smartphones and car
navigation systems. As a result, we were able to improve the earnings of this business. In our industrial
lighting business, we consolidated overseas manufacturing bases and carried out a review of our
business system in Japan. In addition, we transferred our mobile phone business to a new company
through a business merger with Fujitsu Limited.
In the system LSI business, we dissolved our joint venture with Sony Corporation – Nagasaki
Semiconductor Manufacturing Corporation – transferring its semiconductor fabrication equipment
to Sony, and we consolidated our production bases. We also have been aggressively carrying out
fi xed-cost reductions. In FY2009, we reduced these costs by about ¥430 billion, compared with the
previous fi scal year, and in FY2010, we further reduced fi xed costs by about ¥100 billion. During the
past two years, we have become a much leaner company that can more quickly respond to changes
in the business environment.
We will continue to resolutely carry out the restructuring of underperforming businesses.
However, because these efforts are now on a firm footing, I am thinking of focusing more on
achieving the transformation of Toshiba’s business structure. To ensure the growth of our NAND fl ash
memory business, in August 2010 we began construction of Fab No. 5 at our Yokkaichi Operations,
our mass production base for NAND fl ash memories. Construction was completed in March 2011, and
we will soon be ready with manufacturing capabilities that can meet the expanding global demand
for these memories. By accelerating process migration, we intend to strengthen and extend our
leadership in the NAND flash memory market. To accomplish this goal, while expanding product
applications, we have begun mass production of cutting-edge high-density NAND fl ash memories
using 24nm process technology.
In Smart Community-related businesses, we are focusing on such new business opportunities
as participating in a number of verifi cation projects both in Japan and overseas as well as in possible
commercial projects. In addition, we began mass production of rechargeable lithium-ion SCiB™
batteries in Japan at a new plant in Kashiwazaki City in Niigata Prefecture. Our unique SCiB™ batteries
have a wide range of applications such as for EVs (electric vehicles), PHEVs (plug-in hybrid electric
vehicles) and energy storage for Smart Grids.
Going forward, I intend to further accelerate the transformation of Toshiba’s business structure
and achieve vigorous sustained growth that surpasses that of the market as well as a more highly
profitable business structure. I will advance our basic management policies of accelerating global
business development, further speeding up the pace of innovation and assiduously promoting CSR
management. I intend to make Toshiba an even stronger global contender, one with unrivalled global
competitiveness in our major business fi elds and with a robust fi nancial foundation.
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07
An Interview with the President
Q
The business environment has changed due to the Great East Japan Earthquake.
Has this led to any changes in your business strategies?
A
First, I wish to express my heartfelt sympathies to all those people and families who were affected
by the disaster.
A few Toshiba Group manufacturing facilities located in East Japan experienced some
damage from the Great East Japan Earthquake, but its impact was limited and operations have
already been restored. Presently, through our business activities, we are doing our utmost to help
in the restoration and recovery of the disaster-stricken areas.
There has been no change in the direction of our strategic management policies. The
essential importance of such crucial matters as meeting the growing demand for electric power,
more effectively dealing with environmental issues, advancing digitalization and networking and
handling the hugely-increasing volume of information fl ows remain as key trends affecting the
business environment.
As a result of the steps that have been taken to cope with the effects of the earthquake
disaster, I realized once again that there is a need to further improve Toshiba Group’s supply chains
and components and parts procurement systems from the point-of-view of our business
continuity plan. We are carrying out the further strengthening of our BCP through such measures
as minimizing procurement risks by forming a multi-vendor system that includes the use of
dispersed regional bases of procurement and reconfi guring a part of our production systems so as
to meet our supply responsibilities as a maker.
In the coming years, as we globally expand our businesses, there will be no change in the
reality that development is important to the newly emerging economies such as China and India.
In order to respond speedily to changes in the global market environment, we will move forward
by further improving our response capability to
fluc t uations in foreig n exchang e rate s,
strengthening our cost competitiveness and
refi ning our BCP readiness, as we aim to realize
the most appropriate balance for optimizing
p r o d u c t i o n , p r o c u r e m e n t a n d s a l e s by
expanding businesses in emerging economy
markets, maximizing the effectiveness of
Japanese and overseas production bases and
expanding overseas procurement.
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TOSHIBA Annual Report 2011
Q
NAND fl ash memory is one of main businesses Toshiba is focusing on. What are
your thoughts about the future of this business?
A
Our NAND fl ash memory business, which has a global top-level market share, achieved a record-
high operating income of ¥108.7 billion in FY2010.
At present, the storage market is progressing toward an era of “information explosion” in
which the volume of data being processed will increase exponentially, and the memory market is
also expected to greatly expand in the future. Accordingly, we are strengthening our advanced
process generation memory products that are market leaders and are accelerating the
development of future generations of post-NAND products. In parallel, we will make efficient
investments to support the growth of this business that are in line with market trends.
Looking toward future growth, Toshiba, ahead of other companies, made sample shipments
in April 2011 of the world’s smallest and highest density 2-bit-per-cell 64-gigabit chips using 19nm
process technology, the fi nest level yet achieved. We began to mass-produce advanced process
generation NAND fl ash memories at the newly constructed Fab No. 5 at our Yokkaichi Operations
in July 2011, and shipments started in August. We are continuing to press forward with further
shrinking chip size, and at the same time, we are in the process of basic development of post-
NAND memory chips such as BiCS (bit-cost-scalable) and next-next generation 3D memories. We
have recently agreed with Hynix Semiconductor Inc. to jointly develop Magnetoresistance
Random Access Memory (MRAM), a next-generation memory device which, when used together
with NAND flash devices, can provide optimum storage solutions for future mobile devices.
Furthermore, we will strive to expand our storage business by developing new high-performance
application products that have high-added value. We will enhance the competitiveness of our SSD
(solid state drive) storage devices by introducing a series of innovative new enterprise SSDs for
servers. We will advance our capabilities in the storage business through integrated development
and marketing of SSDs and HDDs. To further maximize synergies in these businesses, we merged
our Semiconductor Company and Storage Products Company into a new in-house company in
July 2011. By means of all these efforts, we are aiming to achieve net sales of ¥1.1 trillion in NAND
fl ash memories in FY2015.
Q
You are determined to make Smart Community-related businesses a new profi t
base. How do you expect this new business to develop in the coming years?
A
We will nurture Smart Community-related businesses into a new profi t base by vertically integrating
our power generation, power transmission, power distribution and Smart Grid businesses in which
Toshiba already has a wealth of accumulated experience. For the creation of a Smart Community
that offers a total solution for making the urban environment and social infrastructure “smarter and
greener,” including energy, water and transportation systems, it is necessary to have such
technologies as those for Smart Meters that are key devices for Smart Grids and communication
09
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An Interview with the President
technologies that collect and control data. For this purpose, we recently acquired Landis + Gyr AG, a
company that has the leading global position in energy management solutions for utilities.
Innovation Network Corporation of Japan, a public-private partnership funded by the Japanese
government and private corporations, has become a strategic partner by taking a 40% equity stake
in that company. Landis + Gyr has developed its AMI (Advanced Metering Infrastructure) business
that is essential for Smart Grids in more than 30 countries around the world and is proud of its
world’s No. 1 share in Smart Meters. By utilizing the extensive customer network that this company
has developed, we will accelerate the global development of Smart Communities. In addition, by
utilizing the abundant social infrastructure business applications Toshiba possesses, we will also
promote development into new application fields. Furthermore, I think that for the Smart
Community to function organically the integration of our strength in power control technologies
with data processing and computing cloud services is essential, and we will go forward with our
strategic policy of establishing alliances with leading-edge IT partners. For example, in June, we
announced plans to work together with Hewlett-Packard on integrating Smart Community
technologies and exploring global business projects in this fi eld.
By creating comprehensive energy-management systems and maximizing the synergistic
effects of integrating technologies, products and services to create new business opportunities,
we will further accelerate the global development of Smart Community-related businesses and
become a leading global company in this business field. By aggressively promoting our Smart
Community business strategies, we are aiming for net sales of ¥900 billion in FY2015.
With regard to Toshiba’s energy-related businesses you are following a strategic
policy of strengthening Toshiba’s renewable energy businesses. What is your
vision about the future of Toshiba’s energy-related businesses?
With regard to renewable energy, which we have long been concentrating on, our strategic policy
is to further accelerate our capabilities and market position in this business field. In addition to
providing renewable energy in power generation fields in which Toshiba already possesses an
extensive record of experience such as our solar photovoltaic systems with their world-leading
effi ciency, our top share in mega-solar power generation in Japan, hydroelectric power, in which
we have the world’s leading high-head, adjustable-speed pumped-storage technology, and
geothermal power generation equipment, in which we have the world’s top market share, we will
expand into new energy fi elds such as solar power and wind power. In the future, by means of our
global business development strategies, including the establishment of strategic business
alliances, we will further expand and actively move more extensively into wider areas in the
renewable energy market. For example, with regard to wind power, we have entered into a
strategic business alliance based on our taking a stake in Unison Co., Ltd., a long-established
innovative Korean wind power equipment manufacturer. This alliance will help us expand into this
business through the co-development and marketing of high-effi ciency wind power generators.
Q
A
10
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TOSHIBA Annual Report 2011
I believe that the importance to society of mainstay power generation systems such as
thermal power will not change, and we will continue to work to accelerate the global
development of these systems. We have a long record of experience in the thermal power fi eld,
both in Japan and overseas, starting with achieving eight consecutive years in the No. 1 position in
the share of orders received for steam turbine generators from the North American market.
Furthermore, in order to expand this business, we will collaborate with The Babcock & Wilcox
Company, which is proud of having the top market share for boilers in North America, and we will
work to increase the number of package-supply BTG (boiler, turbine and generator) orders we
receive in such countries as India. In combined-cycle power generation as well, together with the
U.S. company General Electric, we will supply the world’s leading high-effi ciency thermal plants to
the global market.
Furthermore, as worldwide energy demand is still continuing to grow, our nuclear energy
business has a target of receiving orders for 39 units by FY2015 and we have set a goal of
achieving net sales of ¥1 trillion. However, depending on our customers’ situations and each
country’s energy policy trends, there is a possibility that the achievement of this goal may come a
couple of years later. We are planning to carry out measures to enhance safety at existing nuclear
plants in accordance with the safety standards that will be revised based on the results of analyses
currently being conducted by each-related organization. At the same time, we are also developing
next-generation nuclear reactors that will be extremely safe.
Q
A
With regard to the Digital Products and Home Appliances business segments,
going forward, how will you achieve robust growth and higher profi tability?
By offering new enhanced fusion products and services, maximizing synergies through integrating
technologies, sharing sales networks and developing products that match regional needs, we are
aiming to achieve stronger growth and higher profi tability in these segments.
In the Digital Products business segment, in addition to strong sales of both notebook PCs,
11
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An Interview with the President
which have continuously held the No. 1 market share in Japan, and LCD TVs, which greatly
increased in sales mainly in Japan and the ASEAN region, as a result of the continuous
strengthening of the profi t structure of this segment, particularly through the reduction in fi xed
costs, this segment continued to be in the black. The boundaries of products such as TVs, PCs and
mobile devices are disappearing, and the integration of technologies, components, and products
and services that cross over the borders of each category is very desirable.
To respond to these changes in the business environment, in April 2011, we integrated our
visual products and PC businesses by incorporating them into a new in-house company organized
on a regional basis with respective business units for Japan, Europe/U.S., emerging economies and
China. We will carry out speedy and timely business strategies by developing regionally-matched
products, strengthening regional area sales and marketing organizations through maximizing
organizational synergies, and delivering to the market innovative products such as battery–backup
“Power TVs” as we strive to further improve the profi tability of these businesses in the future. We
intend to accelerate and streamline our businesses in emerging economy markets through these
regionally based organizations and closer collaboration between the Digital Products and Home
Appliances business segments.
Toshiba’s financial structure has been strengthened. How do you view the
relationship between fi nancial soundness and pursuing growth strategies for the
future?
Our free cash flow at the end of FY2010 continued at a high level of ¥159.4 billion and the
strengthening of our fi nancial base was refl ected by the improvement of our debt-to-equity ratio
(D/E ratio) to 125%.
While striving to further strengthen Toshiba Group’s fi nancial base in the coming years, we
will aggressively move forward with allocating strategic resources to the businesses we have
selected to focus upon so as to achieve stronger growth and higher profi tability. With regard to
the reserves that stem from the improvement of our D/E ratio, by the end of FY2013 (March 2014),
we will secure the funds to accelerate growth by further improving our D/E ratio to 50%, among
other measures. I am thinking of utilizing these capital funds for facility investments and M&A in
new and growth businesses, as compelling future business opportunities arise. During the next
three years, we are planning to invest a total of ¥1,450 billion in capital expenditures and
investment & loans, and we will allocate ¥1,100 billion for R&D expenditures. Our strengthened
fi nancial structure will enable to us to use a portion of our capital funds to make additional bold
future investments. We will further accelerate growth by strategically utilizing ¥700 billion of
shiftable funds and our improved assets to make appropriate new investments. In addition, we are
targeting a return on investment (ROI) of 20% by the end of FY2013, double that of FY2010.
With regard to return to shareholders, we seek to continuously increase the annual dividend
in line with a consolidated dividend payout ratio of about 30%.
Q
A
12
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TOSHIBA Annual Report 2011
Q
A
Q
A
What is your thinking about Toshiba Group’s CSR and environmental
management policies?
By acting with unwavering integrity and continuing to promote strong environmental
management, we will strive to become a company that is trusted and admired all over the world
and that will greatly contribute to society. Since assuming the presidency, I have emphasized the
essential importance for CSR management of always acting with complete integrity in every
aspect of our activities. When I use the word “integrity,” I have two business-related connotations of
the word in mind: First, to proactively carry out our corporate social responsibilities in all of our
business activities by sincerely dealing with various issues in society, and second, to pursue
soundness in management and financial structure. Values such as integrity are a primary
consideration for Toshiba Group, and our strong backbone of shared corporate values was again
demonstrated by our speedy and comprehensive measures taken in response to the Great East
Japan Earthquake.
In addition, we are striving to contribute toward the realization of a sustainable future world
by reducing our impact on the environment. We are expanding our environment-related
businesses and tackling the environmental burden in all of our business activities through strong
environmental management aimed at contributing to society by such means as the strength of
Toshiba’s low-carbon technologies.
Lastly, what are your aspirations for FY2011?
I consider FY2011 is the year for Toshiba Group to aggressively accelerate the global growth of the
businesses we are focusing upon and move further forward with the transformation of our
business structure in order to create new profit bases. I am confident that our strategic
management policies will lead to the creation of strong
new markets through the introduction of innovative “fi rst
in the world” products and services, ahead of other
companies, and at the same time, we will provide global
markets with products and services that can continue to
maintain the No. 1 market share in the world. I aim to
make Toshiba an even stronger global contender, one
with unrivalled global competitiveness. In Japan we will
also make it our company’s mission to contribute to the
recovery of Japan through our business activities.
We will strive hard to further increase the value of
Toshiba Group so as to meet the expectations of all of
our shareholders. I ask for your continued strong support.
13
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Toshiba Group’s response to the Great East Japan
Earthquake
We offer our deepest condolences to the victims of the Great East Japan Earthquake.
At 14:46 on March 11, 2011, northeast Japan was
struck by a magnitude 9.0 ear thquake. The
immensely powerful tsunami that it triggered
devastated the northeastern Tohoku coast and
caused widespread damage along the Pacifi c coast
down to the central region of Kanto.
Toshiba responded by setting up a special
task force, led by the president and CEO, that
oversees Toshiba Group’s activities to restart
operations and support reconstruction in the
disaster-hit region. These are as detailed below, as
of May 23, 2011.
Toshiba Group’s main mission is to contribute
to Japan’s recovery through our business activities.
We will devote our resources to that end.
Production Facilities
The following major production facilities were
carrying out business as usual at the end of March.
Semiconductor facilities: Yokkaichi Operations and
Toshiba production sites
Oita Operations. Social infrastructure facilities:
Keihin Produc t Operations, Hamak awasak i
Operations, Fuchu Complex and Komuk ai
Operations. Digital products: Fukaya Operations
and Ome Complex.
Two facilities needed time to secure recovery.
Production at Iwate Toshiba Electronics Co., Ltd., a
semiconductor manufacturer in Kitakami City,
Iwate Prefecture, restarted on April 18. The LCD
production line at Toshiba Mobile Display Co., Ltd.
in Fukaya City, Saitama Prefecture, resumed full
operation at the end of April.
Providing Support toward Securing the
Safety of the Nuclear Power Plants
Special teams at Toshiba’s Tokyo headquarters and
its Isogo Nuclear Engineering Center in Yokohama
is helping to secure the safety of Fukushima Daiichi
Nuclear Power Station. The team works 24 hours a
day to gather and analyze data and develop
solutions.
Iwate Toshiba Electronics
Production restarted
on April 18.
Toshiba Mobile Display
Production restarted
on March 28.
14
Earthquake epicenter
Production site
No impact
Impact
W e r e s p o n d e d t o
requests from the Japanese
g o v e r n m e n t a n d To k y o
E l e c t r i c Po we r Co m p a ny
( T E P CO ) b y d i s p a t c h i n g
nuclear engineers to TEPCO’s
h e a d o f f i c e a n d t o t h e
Fukushima plants, where they
a r e p r o v i d i n g t e c h n i c a l
support and consultation. As
of May 23, including personnel
f r o m o u r k e y b u s i n e s s
partners, approximately 1,900
people are supporting this
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TOSHIBA Annual Report 2011
effort, most of them engineers, and more than
1,200 have worked on site. We have about 400
people on site every day on a rotating basis.
Beyond this, at TEPCO’s request, we are
developing solutions with Westinghouse Electric
Company, a Toshiba group company; The Shaw
Group, our partner in advanced boiling water
reactors; The Babcock & Wilcox Company (B&W), a
leading U.S. provider of power technologies; and
Exelon Nuclear Partners, a major U.S. utility.
We are treating irradiated water on the site
by carrying out overall system design, supervising
monitoring and control of the water treatment
plant and supporting water treatment equipment
supplied by overseas corporations.
Overcoming Power Shortages
Toshiba Group is supporting the government and
electric utilities’ battle against power supply
shortages in central and northeast Japan with over
200 people, and giving top priority to restoring
infrastructure.
Activities center on supporting TEPCO and
Tohoku Electric Power Co., Inc. in restoring
damaged thermal power plants and devastated
power transmission and distribution systems,
including substations and switchyards; the early
return to operation of thermal plants undergoing
periodic maintenance; and recommissioning
mothballed thermal plants. We aim to help recover
about 10,000MW of generating capacity in the
TEPCO and Tohoku Electric Power service areas.
Moving forward, Toshiba Group will continue
to provide all required support.
Saving Energy
In Tohoku and Kanto, we are reducing electricity
usage at peak times and expanding in-house use
of power generation equipment.
Support Activities
Group efforts to assist victims of the disaster
include donating the equivalent to 1-billion yen
for evacuation shelters, meeting points and
temporary government buildings, and the
provision of essential goods. We also established
a 500-million-yen Toshiba Great East Japan
Earthquake Scholarship in July.
Our contributions to job creation in the
disaster area include providing fi shing boats to
support the tsunami-devastated fi shing industry,
and providing retail space, vehicles and support
staff to help revive electronics stores hit by the
disaster.
Delivering aid for Soma City, Fukushima Prefecture
Our employees
Of 74,104 Toshiba Group employees residing in
Tohoku and Kanto, 74,103 are safe. We greatly
regret the loss of one employee.
15
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Mid-term Business Plan
Toshiba Group’s mid-term business plan to FY2013 was issued on May 24, 2011. While
aggressively accelerating the global growth of our core businesses and establishing new
profi t bases, we are aiming to become an even stronger global contender.
Basic Management Policies
Becoming an even stronger global contender
Allocate resources to strategic business areas
Continue to accelerate globalization
Set up ambitious goals for innovation and speed its pace
Push forward with CSR management
Mid- to Long-term Vision
Transforming Business Structure
Transform Toshiba Group into a top-level
diversified electric/electronics manufacturer
with strong global competitive power
Restructuring of Businesses
Assure that Toshiba Group has a steady, strong, and highly profitable
business structure and sound financial foundation that can withstand
rapidly changing economic conditions and market changes
Measures
• NAND Flash Memories
Enhance products and accelerate next-generation development
• Smart Community
Become a world leader by vertically integrating our
power generation, T&D and Smart Grid businesses
• Power Electronics, EV Applications
Realize an environmentally friendly society by use of our
core technologies for reducing the environmental load
• Renewable Energy
Contribute to global environment with low-carbon
power generation technology
• Healthcare
Accelerate expansion of business areas
• Fusion Products and Services for Digital Products
Enhance fusion products and services by maximizing
synergy
• System LSI
Restructure System LSI business in response to market changes
• Responding to Changes in the Market Environment
Improve coping with exchange rate fluctuations, cost
competitiveness and Business Continuity Plan (BCP) readiness
Environmental and CSR Management
Establish a position as one of the world’s
foremost eco-companies and contribute to
the future of a sustainable planet Earth
• CSR Management
Act with unwavering integrity
• Expanding Business by Strong Environmental Management
Contributing to society through strength of our low-carbon technologies
16
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TOSHIBA Annual Report 2011
Numerical Targets
Strengthen sales outside Japan to achieve double-digit growth
Establishing a financial base that makes for both growth and soundness
Increase ratio of sales
outside Japan
55% 65%
(FY2010 to FY2013)
(Billions of yen)
Net Sales
Operating Income
N e t S a l e s C A G R : 1 0 %
GDP CAGR 7%*2
7,000.0
6,398.5
300.0
240.3
24%
31%
45%
7,700.0
500.0
400.0
FY2010 FY2013
CAGR*1
Toshiba
Market
8,500.0
Emerging
economies
32%
20.1%
10.4%
U.S., Europe
33%
12.4%
4.5%
Japan
35%
1.4%
1.2%
March 31, 2011
Restarted sustained
growth with steadily
higher profit
March 31, 2012
Transformation
to a robust
financial structure
March 31, 2014
Secure funds to
accelerate
growth
Operating Income
¥240.3 billion
Shareholders’ equity ratio
16 %
D/E ratio*3
125 %
ROI*4
10 %
¥300 billion
18 %
100 %
13 %
Secure capital funds for achieving high growth of strategic businesses
¥500 billion
22 %
50 %
Expand resources for growth
by securing enough capital
20 %
FY10
FY11
FY12
FY13
* 1 : Compound Annual Growth Rate
*2: Source: IMF World Economic Outlook April 2011
*3: Debt/Equity ratio
*4: Return on Investment : operating income (loss) divided by total debt plus total equity
(Billions of yen)
FY2010 Result FY2011 Forecast
FY2013 Plan
CAGR FY2011-FY2013
Digital Products Segment
Electronic Devices Segment
Social Infrastructure Segment
Home Appliances Segment
Net Sales
Operating income
Net Sales
Operating income
Net Sales
Operating income
Net Sales
Operating income
2,328.6
13.2
1,347.7
86.8
2,267.7
137.1
599.8
8.8
2,550.0
20.0
1,450.0
140.0
2,500.0
150.0
650.0
10.0
3,100.0
40.0
1,850.0
270.0
3,000.0
200.0
700.0
15.0
10%
13%
10%
4%
Investment and R&D Expenditure
Accelerating business structure transformation by prioritizing investment in new and growing business areas
(Billions of yen)
Capex, investments & loans
R&D expenditures
1,450
Digital Products
Increase production of enterprise-use
SSD and HDD storage
1,300
1,300
1,070
1,070
1,100
1,100
Electronic Devices
Promote finer lithography
for NAND flash memory
Social Infrastructure
Increase production of super-rechargeable
batteries to meet demand
for EVs, Smart-Grid applications
Home Appliances
Increase production of models
for emerging economies
Accumulated
FY10-12
FY11-13
FY10-12
FY11-13
Shiftable corporate funds
Improved assets*
Total assets of ¥700 billion for
making appropriate new investments
Enhance global competitiveness
by transforming business structure
* Additional assets which can be created through
improving the D/E ratio to 50% (end of FY2013)
17
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Accelerate Transformation of the Business Structure
Through a New Organization that Reinforces Overall
Strengths
To strengthen global business development, we implemented a structural reorganization
of the Digital Products and the Social Infrastructure segments on April 1, 2011
Digital Products
Merging the Visual Products and PC businesses
into the Digital Products & Services Company
This new in-house company will make management
more responsive, accelerate penetration of fast-
growing emerging markets and create fusion
products and services for the global market in TVs,
PCs and tablet PCs.
Toward faster, more timely development and
marketing of products that meet specifi c needs in
regional markets, we have ended development
and marketing of separated, category-based
products, such as LCD TVs and PCs, for a system
under which teams develop multiple cross-
Digital Products Segment
category digital products.
In FY2010, Toshiba ranked fourth in global
combined unit sales of LCD TVs and notebook PCs
(Toshiba research). Taking advantage of this scale
merit, we will improve cost effi ciency in production
and procurement and realize the full potential of
our development resources. We expect this
approach to stimulate growth and profi tability.
In Japan, we will take into account the impact
of the earthquake and introduce products that
reflect the need to manage power consumption,
such as TVs equipped with batteries and PCs
providing “peak shift control.”
FY2010 Organization
FY2011 Organization
Digital Products Segment
Digital Products Segment
Visual Products Company
Digital Products and Services Company
Storage Products Company
Network & Solution Control Center
Digital Products & Network Company
Storage Products Company*
Toshiba TEC Corporation
Toshiba TEC Corporation
Corporate
Network Services Division
* The Storage Products Company and Semiconductor Company were
reorganized into a new in-house company, Semiconductor & Storage
Products Company, on July 1, 2011.
18
Announcing new products that will create new digital markets,
such as the “glasses-free 3D PC” and the “REGZA Tablet”
A01_東芝様AR2011_前半.indd 18
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TOSHIBA Annual Report 2011
Social Infrastructure
Integrating the Smart Community-related businesses
into the new Social Infrastructure Systems Company
The Social Infrastructure Systems Company
merges two in-house companies and one
strategic business unit, providing a base for
proactive global development of the Smart
Community-related business.
The company integrates the power-related
systems and industrial electrical systems
businesses, including the power transmission &
distribution (T&D) business essential for Smart
Communities, railways systems, automotive
systems and industrial motors. Previously
Social Infrastructure Segment
decentralized resources are now concentrated
into a future growth business area.
By making full and effective use of current
overseas sites for the T&D and industrial motor
businesses in the United States, Brazil and
Vietnam, we expect to accelerate globalization
of the overall Smar t Community-related
business.
The new company's integration of T&D
business serving both utilities and users will
offer enhanced total solutions.
Finally, projects related to recovery from
the earthquake now have top priority, an
approach that survives the organizational
change.
FY2010 Organization
FY2011 Organization
Social Infrastructure Segment
Social Infrastructure Segment
Power Systems Company
Power Systems Company
Transmission Distribution & Industrial Systems Company
Social Infrastructure Systems Company
Social Infrastructure Systems Company
Toshiba Elevator and Building Systems Corporation
Toshiba Solutions Corporation
Toshiba Medical Systems Corporation
Toshiba Elevator and Building Systems Corporation
Toshiba Solutions Corporation
Toshiba Medical Systems Corporation
Corporate
Resources
Recycling Plant
Seawater
Desalination Plant
Energy
Solutions
Sewage
Treatment Plant
Transport
Solutions
Urban
Demand Path
Train
Station
Inter-city
Expressways
Office Zone
City Hall
University
Commercial
Zone
Digital Signage
Hospital
Automotive Systems Division
Residential Zone
Apartment Block
EV Recharging Stand
Medical
Solutions
Transformer
station
Co-generation
Power
transmission
equipment
Electricity
Storage Center
Factory Zone
Photovoltaic Power Generation
High-speed
Vehicle Lane ITS System
Water
Solutions
Mega Solar
Goods Distribution
Terminal
Eco-track transportation
Waterworks
Container Data Center
Commercial
Zone
Residential
Zone
Information
and Security
Solutions
Transmission Distribution & Industrial Systems Company: T&D, railway traffic systems, solar photovoltaic systems, rechargeable, industrial motors and
Social Infrastructure Systems Company: water solutions, highway systems, and so on.
Automotive Systems Division: reports directly to CEO, oversees company-wide activities related to vehicle products and services.
inverters, and so on.
Smart Community Image
19
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Business Review
Toshiba’s consolidated net sales for FY2010 were 6,398.5 billion yen, a year-on-year
increase of 107.3 billion yen. This mainly refl ects higher sales in the Visual Products and
Semiconductor businesses, and was achieved despite a high yen and the impact of the
Great East Japan Earthquake. Consolidated operating income rose 115.1 billion yen to
240.3 billion yen on signifi cant improvements in the Semiconductor and LCD businesses,
a healthy performance by the Home Appliance segment and continued high profi t in the
Social Infrastructure segment. All four of our business segments secured profit. The
March 11 earthquake had negative impacts of 70.0 billion yen on net sales and 20.0
billion yen on operating income. Overseas sales were 3,546.7 billion yen, a year-on-year
increase of 46.8 billion yen, and accounted for 55% of sales.
Digital Products Segment
Digital Products and Services Company
Network and Solution Division
Storage Products Company
Toshiba TEC Corporation
President and CEO
Corporate Divisions
Electronic Devices Segment
Semiconductor Company
Toshiba Mobile Display Co., Ltd.
Social Infrastructure Segment
Power Systems Company
Social Infrastructure Systems Company
Toshiba Elevator and Building Systems Corporation
Toshiba Solutions Corporation
Toshiba Medical Systems Corporation
Home Appliances Segment
Toshiba Consumer Electronics Holdings Corporation
(As of April 1, 2011)
20
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TOSHIBA Annual Report 2011
Sales by segment (Billions of yen)
Operating income (loss) by segment (Billions of yen)
7,404.3
6,859.7
2
2,674.2
1,679.0
1,679.0
2
2,536.1
1,601.7
1,601.7
6,512.7
6,291.2
6,398.5
2
2,311.4
1,276.4
1,276.4
,
2
2,263.2
2
2,328.6
1,270.0
1,270.0
1,270 0
1
1,347.7
1
2,079.0
2,079.0
2,431.9
2,431.9
2,405.3
2,405.3
2,319.0
2,319.0
2
2,267.7
247.2
4.6
121.9
240.4
8.8
74.0
96.2
9.7
17.8
130.5
3.9
22.6
Digital Products Segment
Electronic Devices Segment
Social Infrastructure Segment
Home Appliances Segment
Others
748.9
748 9
748.9
4
446.2
446.2
FY06
774 3
774.3
774.3
44
439.9
439.9
FY07
674.3
674 3
674.3
33
384.3
384.3
FY08
579.8
579 8
579.8
33
345.6
345.6
FY09
599.8
5
5
33
352.9
FY10
FY06
FY07
240.3
13.2
86.8
137.1
8.8
-7.6
125.2
21.3
137.2
-
-20.4
-5.4
-7.7
FY09
FY10
-233.4
2.4
113.9
-320.0
-
-27.1
-
-3.6
FY08
Eliminations of sales among segments were -552.2 billion yen in
FY2006, -595.0 billion yen in FY2007, -539.0 billion yen in FY2008,
-486.4 billion yen in FY2009 and -498.2 billion yen in FY2010.
Eliminations of operating income (loss) among segments were -3.0
billion yen in FY2006, +0.6 billion yen in FY2007, +1.0 billion yen in
FY2008, +0.2 billion yen in FY2009 and +2.0 billion yen in FY2010.
Digital Products Segment: Higher Sales and Lower Operating Income
The Digital Products segment saw sales increase by 65.4 billion yen to
2,328.6 billion yen. The Visual Products business benefited from the
approaching end of analog broadcasting in Japan, eco-point (the
Japanese government’s stimulus program) and higher overseas sales,
primarily in Asia’s emerging economies. The PC business saw higher sales
in Japan and overseas, mainly due to the launch of 25th anniversary
models and higher shipments in the U.S. and Asia. The Storage Products
business saw lower sales due to price erosion.
Segment operating income declined 8.1 billion yen to 13.2
billion yen. The PC business operating income reflected higher sales and
cost reductions and the Retail Information Systems and the Office
Equipment businesses reported healthy performances. The Visual
Products business maintained profit on higher sales in emerging
markets, but at a lower level year on year due to a higher yen and the
impact of the March 11 earthquake. The Storage Products business
reported a significantly worsened operating loss.
Electronic Devices Segment: Higher Sales and Significant Improvement in Operating Income (Loss)
The Electronic Devices segment saw sales increase by 77.7 billion yen to
1,347.7 billion yen. The Semiconductor business recorded higher sales on
higher sales in Memories, reflecting expanded demand for mobile
products, such as smartphones, and solid state drives (SSD)–data storage
devices based on NAND flash memories–and price stability in NAND
Flash memories. The LCD business also reported a healthy performance.
Overall segment operating income (loss) improved significantly
by 107.2 billion yen to 86.8 billion yen. Memories recorded a healthy
performance, primarily as a result of higher sales and cost reductions,
and the LCD business improved on cost reductions and progress in
business restructuring.
Social Infrastructure Segment: Lower Sales and Flat Operating Income
The Social Infrastructure segment saw overall sales decline by 51.3 billion
yen to 2,267.7 billion yen. The Power Systems and Industrial Systems
businesses recorded higher sales thanks to a healthy performance by the
Industrial Systems business in overseas markets. However, the
Infrastructure Systems business, the IT Solutions business and the
Medical Systems business all felt the influences of downturns in market
demand and price erosion and reported weak performances.
Segment operating income stood at 137.1 billion yen, close to
the same level as a year earlier, and the profit level remained high. The
Power Systems and Industrial Systems businesses recorded higher
operating income on a healthy performance in the Power Systems
business. Both the Infrastructure Systems business and the Medical
Systems business saw lower operating income on decreased sales.
Home Appliances Segment: Higher Sales and Improvement in Operating Income (Loss)
The Home Appliances segment saw sales increase by 20.0 billion yen to
599.8 billion yen. White Goods including Air-conditioning reported a
healthy performance and a positive result that mainly stemmed from the
continued effect of the eco-points program and a hot summer in Japan.
Lighting Systems also reported a healthy performance mainly due to
increased sales of LED lighting and a recovery in domestic housing and
building starts.
The segment as a whole recorded operating income (loss) of 8.8
billion yen, an improvement of 14.2 billion yen against the previous year,
mainly on a healthy performance in Air-conditioning in a hot summer in
Japan, a solid performance in refrigerators and progress in restructuring,
including reorganizing facilities and reshaping businesses.
21
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Business Review
Digital Products Segment
Sales
Operating income (loss)
2,328.6billion yen
(+65.4 billion yen, +3% vs. FY2009)
Overall segment sales increased on growth in
the visual products business such as for LCD
TVs, and PCs.
13.2billion yen
(-8.1 billion yen vs. FY2009)
Although PCs and Retail Information Systems
improved, market declines in Storage Devices
(HDD, ODD) resulted in lower segment
operating income.
Percentage of sales
Sales (Billions of yen)
2,674.2
2,536.1
2,311.4 2,263.2 2,328.6
FY2010
33.8%
FY2006
34.2%
Note: Ratio of net sales total prior to
exclusion of inter-segment sales
Operating income (loss) (Billions of yen)
Operating income ratio (%)
21.3
13.2
0.6
8.8
0.9
4.6
0.2
0.3
2.4
0.1
FY06
FY07
FY08
FY09
FY10
FY06
FY07
FY08
FY09
FY10
Capital expenditures
(order basis) (Billions of yen)
45.4
46.2
38.3
R&D expenditures (Billions of yen)
95.3
89.8
81.4
72.2
69.3
23.8
18.7
FY06
FY07
FY08
FY09
FY10
FY06
FY07
FY08
FY09
FY10
22
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On April 1, 2011, the Visual Products Company,
(main product: LCD TVs), and the Digital Products
and Network Company (main product: notebook
PCs), combined to form the Digital Products &
Services Company.
In the mobile phone business, we merged
our operations with those of Fujitsu Ltd. in October
2010. We are now strengthening development
capabilities and improving business efficiency.
Visual Products Company
(now the Digital Products & Services Co.)
In FY2010 the Visual Products business, particularly
LCD T Vs, benefited from Japan’s transition to
terrestrial digital TV broadcasts and the eco-point
campaign, and from higher unit sales overseas,
notably in Asia’s emerging markets. The T V
business recorded its seventh consecutive
profitable fiscal half.
In Japan, Toshiba LCD TVs retained second
place in the market with a 24% share*1, their
highest share ever. Globally, including Japan, we
recorded sales of 14 million LCD TVs.
We developed 20V and 12V “Glasses-free 3D
REGZA” LCD TVs, the world’s first consumer-use
digital TVs for 3D viewing without special glasses.
Prototype 56V and 65V models met very favorable
reviews at the January 2011 Computer Electronics
New LCD TV factory in Egypt
As part of our strategy to strengthen the TV business in Africa and the
Near and Middle East, where we anticipate demand growth in the LCD
TV market, in January we established a new joint venture in Egypt to
manufacture LCD TVs with El Araby Co., Egypt’s leading domestic
manufacturer of home electronic appliances.
TOSHIBA Annual Report 2011
Show, the leading U.S. trade show for digital
products.
The visual products brand identity was
strengthened by bringing digital video recorders
and players under the “REGZA” brand of our LCD
TVs, and we enhanced the link with our LCD TVs.
Emerging markets hold great promise, and
we are responding by refining our operations and
products.
We are building flexible, efficient supply
systems, a global produc tion system, and
enhancing regional sales structures. We have
established a production joint venture in Egypt
and a sales and marketing joint venture in China.
To meet the special demand of emerging
markets we developed the “Power TV Series,”
including models for regions with irregular power
supply and poor reception. Sales have surpassed
our original targets.
Going forward, we will draw on our imaging
technologies and capabilities in semiconductors
and storage to expand a line-up ranging from
high added value products to products with
d i s t i n c t c h a r a c t e r i s t i c s m a t c h i n g l o c a l
market needs. We will strive to further expand
unit sales in the global
mark et, par ticularly
in emerging markets,
b y u t i l i z i n g l o c a l
production facilities
and sales networks.
Glasses-free 3D REGZA 20GL1 Model
Toshiba launched the world’s first*2 LCD TVs that
allow 3D images to be viewed with no need for
special glasses in December 2010.
*1: Unit share of LCD TVs for 10-inch
models and above (data from
April 2010 to March 2011), based
on research by GfK Japan.
*2: Digital LCD TVs for consumer use. As
of October 2010, based on Toshiba
research.
23
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Business Review
Digital Products Segment
Digital Products and Network Company
(now the Digital Products and Services Co.)
Storage Products Company
Since releasing the world’s first laptop PC in 1985,
we have sold over 100 million notebook PCs
around the world.
The quality, functionality and reliability of Toshiba
hard disk drives (HDD) and optical disk drives
(ODD) add significant value to end products.
Growth slowed in the global PC market in
FY2010, but we increased unit sales, most notably
in the United States, Asia and Japan, and recorded
higher net sales. This, plus continuing decreases in
costs and raw material prices, secured much
improved operating income and a return to profit.
We marked the 25th anniversary of our
notebook PC business with innovative models:
“dynabook RX3,” the world’s lightest*1 notebook
with a 13.3-inch LCD, and the “libretto W100,”
which featured dual touch-panel displays. They
helped us to win the largest share* 2 of the
Japanese notebook PC market.
In addition to notebook PCs, where demand
continues to grow, we offer products that meet
diverse needs and create value, including tablet PCs,
glasses-free 3D PCs and all-in-one LCD model PCs.
We are seeking profit in areas beyond
hardware by expanding our service business. As part
of this, we have started e-book services in the United
States (September 2010) and Japan (April 2011).
*1: As of June 2010. Source: Toshiba
*2: Share of retail store sales. Source: GfK Japan
In FY2010 the global notebook PC market
saw growth slow. The arrival of tablet PCs sapped
demand for notebook PCs, especially netbooks,
and cut into sales of storage products, resulting in
lower revenue and profit.
The October 2009 acquisition of Fujitsu
Limited’s HDD business strengthened our focus on
enterprise solutions. By aligning high performance
solid state drives (SSD: based on high speed NAND
flash memory) with enterprise-focused HDD
technology, we have commercialized enterprise
SSD that offer higher speed and reliability. We
have also commercialized a high capacity 3.5-inch
HDD for the enterprise market.
Our strategy of promoting SSD, high capacity
3.5-inch HDDs and high rotation speed 2.5-inch
HDDs for enterprise applications assures that we
a r e s i n g l e h a n d e d l y a b l e t o d e l i v e r t h e
comprehensive storage devices essential for
layered storage systems for data centers, server
farms and the development of cloud computing.
Note: The Storage Products Company and Semiconductor Company
were reorganized into a new in-house company, Semiconductor &
Storage Products Company, on July 1, 2011.
REGZA Tablet
Our tablets embody technological depth and know-how cultivated over
many years in the LCD TV and notebook PC businesses.
Storage solutions for the enterprise market
A comprehensive line-up embracing SSD and HDD
24
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Business Review
Electronic Devices Segment
TOSHIBA Annual Report 2011
Sales
Operating income (loss)
1,347.7billion yen
(+77.7 billion yen, +6%, vs. FY2009)
Despite impacts from yen appreciation, the
Memory and LCD businesses were strong on
increased demand for mobile products,
resulting in improved segment sales.
86.8billion yen
(+107.2 billion yen vs. FY2009)
Significant operating income reflected strong
performances in Semiconductors and LCDs
and positive results from cost cutting.
Percentage of sales
Sales (Billions of yen)
Operating income (loss) (Billions of yen)
Operating income ratio (%)
FY2010
19.5%
FY2006
21.6%
1,679.0
1,601.7
121.9
1,276.4 1,270.0
1,347.7
74.0
7.6
4.4
86.8
6.4
-1.6
-20.4
-25.1
Note: Ratio of net sales total prior to
exclusion of inter-segment sales
FY06
FY07
FY08
FY09
FY10
FY06
FY07
-320.0
FY08
FY09
FY10
Capital expenditures*
(order basis) (Billions of yen)
429.6
436.5
R&D expenditures (Billions of yen)
174.2
166.2
168.8
144.2
135.7
248.5
210.7
85.6
FY06
FY07
FY08
FY09
FY10
FY06
FY07
FY08
FY09
FY10
* Capital expenditure includes par t of the
investment made by companies accounted for
by the equity method, such as Flash Alliance, Ltd.
25
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Business Review
Electronic Devices Segment
Electronic Devices Segment
Semiconductor Company
Our activities cover four key areas: memories, logic
L S I s , a n a l o g / i m a g i n g I C s a n d d i s c r e t e
semiconductors. Business is driven by strategic
growth products: NAND flash memory (memory
business) and power devices (discrete business).
In FY2010, the semiconductor market grew
over 20% year-on-year, on expanded demand for
new mobile devices, such as smartphones and
tablet PCs, and high growth in emerging markets.
The memory business overcame a strong
yen, and notably higher net sales reflected rising
demand for mobile devices and solid state drives
(SSD), plus continued price stability in NAND flash
memories.
Th e l o g i c L S I a n d a n a l o g / i m a g i n g I C
businesses saw lower demand and net sales due
to the strong yen and the reaction following the
end of economic stimulus packages.
In the discrete business, strong first half
demand ebbed in the second half and net sales
were slightly higher than last year.
As a result, overall sales increased in FY2010,
and this, plus benefits from advances in process
migration and cost reductions, produced a
significant increase in operating income.
The March 11 earthquake temporarily shut
down Iwate Toshiba Electronics Co., Ltd. in
northeast Japan. Production resumed on April 18.
The memory business, number two in global
market share (April 2011; Source: Toshiba), in
August 2010 led the industry in starting mass
produc tion of NAND flash memories with
24-nanometer process technology, and in doing so
achieved the world’s smallest commercialized
64GB memory chip (August 2010; Source: Toshiba).
We star ted to ship embedded NAND flash
memories fabricated with the same process
technology in April 2011.
In April 2011 we pioneered application of
19nm process technology and started to ship
samples.
Anticipating increased demand for high-
density products and long-term market expansion,
we reinforced NAND flash memory capacity at
Yokkaichi Operations with a new wafer production
facility, Fab No.5. Construction finished in March 2011.
Designed with earthquake-proof structures
and maximum consideration for the environment,
Fab 5 features LED lighting, the latest energy saving
production equipment, and uses only pumps with
inverter control. The target is for 12% less CO2
emissions than from its predecessor, Fab No. 4.
Yokkaichi Operations has completed construction of its Fab No.5 wafer production facility.
Production started in July 2011.
SSD for mobile notebooks
As considerable market expansion is forecast, we
are expanding our SSD line-up.
26
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We doubled production capacity for power
devices in FY2010 by investing in the 8-inch
production facility at Kaga Toshiba Electronics Co.,
Ltd. a manufacturing subsidiary.
In December 2010 we reorganized the
System LSI Division into the Logic LSI Division,
focused on cutting-edge LSI, and the Analog and
Imaging IC Division. This reorganization will
support quick decision making and efficient use of
management resources and improve profit.
The Logic LSI Division continues an asset-lite
strategy. In April 2011, we transferred equipment
f ro m a m a n u f a c t u r i n g s u b s i d i a r y to S o ny
Semiconductor Kyushu Corp. For cutting-edge
p r o d u c t s , w e n o w f o c u s o n d e s i g n a n d
development and are expanding the use of
foundries.
The Analog and Imaging IC Division will
make the most of the existing fabrication facilities.
By boosting production efficiency, we will improve
profitability.
Moving forward, we will continue to lead in
t e c h n o l o g y d e v e l o p m e n t , t o d e v e l o p
d i f f e r e n t i a t e d p r o d u c t s a n d t o f o c u s o n
maximizing investment efficiency.
Note: The Semiconductor Company and Storage Products Company
were reorganized into a new in-house company, Semiconductor &
Storage Products Company, on July 1, 2011.
Toshiba Mobile Display Co., Ltd.
We bring the performance and energy-saving
advantages of low temperature polysilicon TFT
(thin film transistor) technology to small- and
medium-sized displays for applications ranging
from smartphones and other portable products to
car navigation systems and industrial uses.
In FY2010 our markets shifted into an
expansionary phase, centered on demand for
mobile devices for overseas markets. In this
TOSHIBA Annual Report 2011
e n v i r o n m e n t , w e c o n t i n u e d s y s t e m a t i c
restructuring and in-house reforms focused on
cutting fixed costs. Measures included the July
2010 transfer of ownership of Advanced Flat Panel
Display Co., a Singapore facility for PC displays, to a
Taiwanese company.
Looking to the future, we broke ground for a
new LCD production facility in Ishikawa Prefecture
in March 2011. This will help us to channel
management resources into growth areas, such as
displays for mobile devices and vehicles.
The result of these and other factors was that
in FY2010 we secured significantly increased sales
and brought operating income back into the black.
Damage from the March 11 earthquake did
temporarily halt production at our plant in Fukaya
City, north of Tokyo, but full operations were
resumed by the end of April.
G o i n g f o r w a r d w e w i l l c o n t i n u e t o
strengthen our competitiveness in growth areas,
use cost-cutting measures to establish a stable
earnings base and direct our leading-edge
technical expertise to the development of LCDs for
a wide range of equipment.
Development of a glasses-free 21-inch high resolution 3D display
In response to strong demand from the market, we have developed a
21-inch high-resolution 3D display that allows 3D images to be seen and
enjoyed anywhere without glasses.
27
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Business Review
Social Infrastructure Segment
Sales
2,267.7billion yen
Operating income (loss)
137.1billion yen
(-51.3 billion yen, -2% vs. FY2009)
(-0.1 billion yen vs. FY2009)
The Power Systems and Industrial Systems were
solid but slow markets in Social Infrastructure,
Solutions and Medical Systems, plus the impact of
the earthquake, left year on year largely unchanged.
Social Infrastructure and Medical Systems saw
lower sales and operating income, but the Power
Systems business kept operating income close
to last year’s, and total profit remained high.
Percentage of sales
Sales (Billions of yen)
Operating income (loss) (Billions of yen)
Operating income ratio (%)
2,431.9
2,405.3
2,319.0 2,267.7
130.5
137.2
137.1
2,079.0
FY2010
32.9%
FY2006
28.1%
113.9
96.2
4.6
5.4
4.7
5.9
6.0
Note: Ratio of net sales total prior to
exclusion of inter-segment sales
FY06
FY07
FY08
FY09
FY10
FY06
FY07
FY08
FY09
FY10
Capital expenditures
(order basis) (Billions of yen)
90.4
86.6
82.0
75.4
67.1
R&D expenditures (Billions of yen)
95.9
88.3
88.7
84.8
82.2
FY06
FY07
FY08
FY09
FY10
FY06
FY07
FY08
FY09
FY10
28
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The ability to propose comprehensive smart
community solutions was reinforced by the April
2011 integration of the Transmission, Distribution &
Industrial Systems Company, the Social Systems
Company and the Automotive Systems Division in
the Social Infrastructure Systems Company. The
new company’s scope includes transmission and
distribution (T&D), railway traffic and automotive
systems, solar power generation systems,
rechargeable batteries, industrial motors, water and
environmental systems.
Power Systems Company
Our comprehensive power generation solutions
including nuclear, thermal and hydro power and
fuel cells, support stable electricity supply. We
contribute to worldwide development of power
infrastructure through advances in cutting-edge
technologies, such as CO2 capture and highly
efficient power generation systems.
In FY2010, a strong yen impacted negatively
on overseas projects, but overall sales remained
favorable and operating income improved.
I n t h e n u c l e a r p o w e r b u s i n e s s , t h e
construction of four pressurized water reactor
power plants in China made smooth progress, and
we entered into a technical development
agreement with Fennovoima, a Finnish power
company.
Toshiba Group is prioritizing cooperation
with the Japanese government and Tokyo Electric
Power Co. to stabilize the situation at the
Fukushima nuclear power plant. We fully recognize
Steam turbine generator
like that to be installed at
Salaya power sta tion in
India
TOSHIBA Annual Report 2011
the seriousness of the current situation and are
determined to do all we can to contribute to
improved safety at nuclear power plants.
Demand for thermal and hydroelectric
power is growing in emerging markets. We won
an order for two steam turbine generators at the
Salaya coal-fired power station in India—a super-
critical generation system combines higher
efficient with a lower environmental impact. In
China we won contracts for two high-capacity
generators for Guanyinyang Hydro Power Station
and four pumped storage systems for the
Qingyuan Pumped Storage Power Station. In the
United States, a contract for the major overhaul of
hydroelectric power equipment of the Ludington
Pumped Storage Plant includes the world’s largest
hydro turbine*. We also made progress in
geothermal power winning a contract for Contact
Energy Ltd’s Te Mihi geothermal power plant in
New Zealand. Going forward we will continue to
develop highly efficient, high quality systems. We
will use our overseas bases to expand business at
the global level, with a focus on emerging markets,
such as China, India and Southeast Asia.
*As at February 2011, based on in-house research
Transmission Distribution & Industrial Systems Company
(now Social Infrastructure Systems Company)
O u r b u s i n e s s e s e n c o m p a s s e s e l e c t r i c i t y
transmission and distribution ( T&D) systems,
photovoltaic power generation systems and SCiB™
rechargeable batteries, railway transportation
systems and industrial inverters and motors.
Outside Japan, the railway transportation
systems business posted higher sales and the
industrial systems market headed for recovery.
However lower prices on stronger competition in
electricity distribution systems brought down
overall net sales and operating income fell.
29
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Business Review
Social Infrastructure Segment
I n p r o m o t i n g g l o b a l e x p a n s i o n , a n d
following our investment in Ansaldo T&D SpA, an
Italian engineering company, we expect to make
progress in the European and North African
markets for T&D and solar power generation
systems.
Moves to develop mass transit systems are
advancing worldwide. In FY2010 the railway
transportation systems business won orders of
electrical components for rolling stock, totaling
over 1,000 cars in countries as diverse as the
United States, Egypt and South Africa. We are
seeking to boost global sales of inverters and high
Right: Subway train cars for the
Washington Metropolitan Area
Transit Authority (order won
for electrical components)
Toshiba Industrial Products Asia Co., Ltd in Vietnam
efficiency motors, both of which consume less
energy and release less CO2. In Vietnam, newly
established Toshiba Industrial Products Asia Co.,
Ltd. started to manufacture motors in fall 2010.
In Japan, we won orders for photovoltaic
power generation systems for four mega solar
power plants (seven projects in all). Our market
share on a capacity basis to domestic power utilities
– due to come on line in FY2011 – reached 36% .
The SCiB™ rechargeable battery was chosen
by Honda Motor Co., Ltd. for its commercial electric
bikes, and by Shimano Inc. for battery-assisted
bicycles. We are advancing joint development of
batter y systems for elec tric vehicles with
30
M i t s u b i s h i M o t o r C o r p o r a t i o n a n d o t h e r
companies. A new SCiB™ facility, Kashiwazaki
Operations (Niigata), star ted production in
February 2011.
Social Infrastructure Systems Company
(now Social Infrastructure Systems Company)
We provide systems and services that sustain
society. These include systems for buildings,
airports, highways and river facilities; water and
sewage treatment and environmental systems;
broadcast and transmission network systems; radio
systems; and security and automated systems.
In FY2010, lower public sector investment
and a slow recovery in private sector demand
resulted in lower sales and operating income.
In the water solutions business in Japan, we
aim to win contracts for the renewal of water and
sewage treatment systems and to make progress
in the general industrial water treatment business.
O verseas, we look for expansion in China,
Southeast Asia and the Middle East, primarily in the
seawater desalination and water and sewage
treatment businesses. Our broadcast systems
technology has a reputation for reliability, and we
won an order for a digital transmitter to be
installed on Tokyo Sky Tree.
Looking to the future, our track record in
Japan and our highly trusted systems and services
provide foundations for cooperation with overseas
business partners and accelerated business
development at the global level.
Toshiba Elevator and Building Systems
Corporation
Comprehensive capabilities make us a one-stop
solution for safe, fully featured elevators and
escalators.
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TOSHIBA Annual Report 2011
their business environments and meet their needs.
We will establish a basis for cloud-based business,
a market expected to enjoy considerable growth.
Toshiba Medical Systems Corporation
We deliver health care solutions on a global basis,
including medical IT systems and diagnostic
imaging equipment, such as CT, MRI, ultrasound
and X-ray systems.
In FY2010, continued rapid growth in the
Chinese market resulted in good sales in CT
systems. However, a slowdown in the wider global
market and stronger price competition due to the
strong yen brought down sales and operating
income.
In the United States, we were able to increase
orders for X-ray angiography systems and other
products. In Japan, we supplied a large-bore CT
system for the new treatment room for heavy-ion
cancer therapy at the National Institute of
Radiological Sciences, which Toshiba Corporation
provided with a next generation irradiation system
for heavy-ion cancer therapy. The CT secures the
pinpoint location determination essential for
effective treatment.
In future, we will improve growth by
strengthening our presence in emerging markets
and new businesses. Our tri-polar research and
development structure, based in Japan, the United
States and Europe, will support us in contributing
to global advances in medicine by providing the
high quality, highly reliability medical systems and
services.
Demand for new construction remained slow
in Japan in FY2010 but stable demand overseas,
particularly in China, allowed us to secure higher
net sales. We maintained operating income at
almost the same level as in the year earlier period.
In Japan we took proactive steps in the high
growth renewal market by introducing products
with added safety and anti-earthquake features.
Overseas, we focused on China and Southeast Asia.
In China, we won an order for 22 elevators and 19
escalators for the Hongqiao Development Zone’s
“L’Avenue Shanghai” in Shanghai, plus orders for 21
elevators, including high speed elevators for
“Shenzhen Kerry Plaza Phase II,” in Shenzhen.
Drawing on over
130 years of developing
world-class technology
s t a n d a r d s , w e w i l l
continue to provide safe,
c o m f o r t a b l e m o v i n g
spaces.
An a r t i s t ’s i m p re s s i o n o f Ave n u e
Shanghai, which we will supply with 22
elevators and 19 escalators. Scheduled
for starting operation in January 2012
Toshiba Solutions Corporation
From planning and consultation to application
and maintenance, our know-how in IT provides
clients in many industries with total solutions to
increasingly complex management issues.
In Japan, economic slowdown and stagnant
corporate results in FY2010 held back recovery in
IT investment in many areas. As the business
environment remained severe, measures including
cuts in fixed costs allows us to overcome lower net
sales and to increase operating profit.
In future, we will provide customers with
services, including “cloud integration,” that suit
Next generation irradiation system (right) and large-bore CT (left) in the new treatment room
for heavy-ion cancer therapy at the National Institute of Radiological Sciences
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Business Review
Home Appliances Segment
Sales
Operating income (loss)
599.8billion yen
(+20.0 billion yen +3%, vs. FY2009)
8.8billion yen
(+14.2 billion yen vs. FY2009)
Overall sales improved due to strong sales of
White Goods and Room Air-conditioners,
driven by the eco-points program and a hot
summer in Japan.
The White Goods, Lighting Systems and Air-
conditioning businesses recorded a surplus as
a result of increased sales and of restructuring
to improve profitability.
Percentage of sales
Sales (Billions of yen)
Operating income (loss) (Billions of yen)
Operating income ratio (%)
748.9
774.3
9.7
8.8
FY2010
8.7%
FY2006
10.1%
674.3
579.8
599.8
3.9
1.3
0.5
Note: Ratio of net sales total prior to
exclusion of inter-segment sales
FY06
FY07
FY08
FY09
FY10
FY06
FY07
1.5
-0.9
-4.0
-5.4
-27.1
FY08
FY09
FY10
Capital expenditures
(order basis) (Billions of yen)
32.0
30.7
R&D expenditures (Billions of yen)
18.7
19.2
18.2
21.4
13.9
10.2
13.9
13.2
FY06
FY07
FY08
FY09
FY10
FY06
FY07
FY08
FY09
FY10
32
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TOSHIBA Annual Report 2011
Toshiba Consumer Electronics Holdings
Corporation
To s h i b a C o n s u m e r E l e c t r o n i c s H o l d i n g s
Corporation oversees group companies in the
home appliances business, including white goods,
lighting fixtures and air-conditioning.
Our consumer electronics business has
supported daily life with the latest technologies for
80 years, since we produced Japan’s first electric
washing machine in 1930. By developing products
in harmony with the environment, we now aim to
realize comfortable, environmentally friendly
lifestyles.
We continue to restructure for business
expansion and improved management efficiency.
White Goods Business
In Japan, the eco-point system, a stimulus program
that ran until the end of March 2011, drove
demand for large capacity refrigerators and room
air-conditioners, and both maintained good sales.
Continued development of products meeting
customer needs assured we retained leadership in
unit sales of washing machines in Japan for the
seventh consecutive year (Source: GfK Japan, for
record of sales by retail stores).
Overseas, forecasts indicate high growth in
Asia. By strengthening local development and
marketing capabilities, we will improve our line-up
a n d c o n t i n u e t o
introduce “local-fit”
products, including
refrigerators and
washing machines.
T h e V E G E TA ™ S e r i e s G R – D 5 5 F
refrigerator cuts energy consumption
while keeping food fresh for longer.
Lighting Systems Business
In general purpose lighting we are pushing
forward with the “E-CORE” series of highly efficient,
energy-saving LED lighting. Our expanded LED
line-up now includes the Mini-krypton type 5.4W –
the world’s brightest LED light bulb – straight tube
type base lights, home-use ceiling lights, and the
Light Engine, developed with Germany’s BJB
GmbH & Co. KG. Overseas, we will supply LED
lighting to France’s Louvre Museum under a
par tnership agreement signed by Toshiba
Corporation and the Museum in June 2010,
following a positive evaluation of our technology.
In industrial lighting, we ceased production of
b a c k l i g h t s i n K o r e a , d u e t o p r o g r e s s i n
commercializing LED backlights for LCD TVs. We
will expand this business by developing backlights
for automotive,
OA equipment
a n d o t h e r
i n d u s t r i a l
applications.
Contributing to “Light culture” that brings harmony to people and the
environment at the Louvre Museum, which conserves mankind’s cultural
heritage.
Air-conditioning Business
We now provide air-conditioners and water
heating systems based on highly efficient,
environmentally friendly heat pump technology.
In October 2010 we launched the “Universal
Smart X” air-source heat pump system in the large-
size air-conditioner market. This can efficiently
deliver both cool and warm air.
Moving ahead, we will expand from home air-
conditioning into industrial air-conditioners for
data centers and industrial processes and solutions
for buildings and facilities. We will also position
ourselves as the heat pump solutions company in
the transition of heat sources from boilers to heat
pumps.
33
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Research & Development and Intellectual Property
The objective of our research and development is the creation of
innovative products that meet customer needs.
Current research and development is channeling our technologies to support recovery from
the March 11 disaster. Our mid-term target is to fully respond to customer needs, through world
first and world No. 1 products and services. Our Corporate Research & Development Center
investigates today’s transformative technologies as the basis for future innovation. Our
business groups and their development centers work on technologies for current and coming
products. Under an approach that unifi es business, R&D and intellectual property strategies, we
are developing and acquiring technologies that accentuate differentiation of our businesses.
Research & Development
Activities in FY2010
We are supporting an early recovery from the
disaster by strengthening R&D in low power and
environmentally friendly technologies: smart grids,
carbon dioxide capture, renewable energy—
notably geothermal and solar power—LED
lighting and high efficiency power devices.
I n t h e m i d - t e r m , w e w i l l s u p p o r t
management by developing technologies that
sustain major businesses, including post-NAND
memories and even safer nuclear power systems,
and by cultivating promising new businesses in
areas such as smart communities, health care and
rechargeable batteries.
However tough the economic climate, we
will continue to strive to become an even stronger
global contender. In this sprit, we promote R&D
that advances innovation, meets customer needs
and creates world first and world No. 1 products
and services.
Our business groups and their development
centers develop core technologies that secure
product innovation and differentiation. We have
enhanced efficienc y by utilizing common
platforms and overseas group companies to
develop software and by focusing on growth
markets.
Centering on the Corporate Research and
34
Development Center, we have invested in business
reinforcement and growth through R&D in
technologies for innovative products that meet
forthcoming megatrends.
Major Achievements in Research & Development
- Commercialization of the world’s first LCD TVs allowing 3D
images to be viewed without any need for special 3D glasses.
- Commercialization of the world’s first twin-screen touch panel
Windows® mini notebook PC, to mark the 25th anniversary of
Toshiba’s notebook PCs.
- Development of the world’s smallest class of NAND fl ash memory
chip with state-of-the-art 24-nanometer process technology
- Development of new high capacity 60Ah SCiB™ rechargeable
battery that boosts stored energy density by approximately
1.3 times.
- Development of the ZABOON drum-type washer-dryer machine,
which uses newly-developed active suspension to absorb drum
vibration. Commercialization of the world’s first* drum-style
washing and drying machine loaded with a variable magnetic
motor.
- Commercialization of an LED light engine that uses a new socket
type with an external heat dissipation structure.
* As of September 21, 2010. Practical use of active suspension in a
washing machine (Source: Toshiba).
Research & development
costs (Billions of yen)
365.3
365.3
370.3
89.8
89.8
95.3
95.3
357.5
357.5
81.4
81.4
Digital Products
Electronic Devices
Social Infrastructure
Home Appliances/Others
311.8
311.8
69.3
69.3
319
319.7
7
72.2
174.2
174.2
166.2
166.2
168.8
168.8
144.2
144.2
1
135.7
82.2
82.2
19.1
19.1
88.3
88.3
20.5
20.5
88.7
88.7
18.6
18.6
84.8
84.8
13.5
13.5
FY06
FY07
FY08
FY09
9
95.9
1
15.9
FY10
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TOSHIBA Annual Report 2011
Intellectual Property
Intellectual Property Strategy
Our intellectual property strategy is unified in a
triune with Toshiba’s strategies for growth and R&D,
and this is the starting point for IP management
that seeks to maximize the value of our intellectual
property.
We advance innovation and creation
through patent applications that support our
overall business plan. We are also increasing
overseas applications, including those in emerging
Toshiba Group’s Intellectual Property Strategy
markets.
In using and managing IP, our business
model is based on differentiation and licensing,
and targeted on making a larger contribution to
increasing operating profit.
Toshiba’s breakthroughs win high praise. The
Japan Institute of Invention and Innovation
recognized our contributions to technology and
industry at the 2010 National Commendation for
Invention with two major awards.
Research & development
- Product & technology road map (differentiated
technology and leadership in development)
- Standardization strategy
- Industrial, governmental and academic
collaboration
Innovation and Creation
- Establish a patent network
- Concentrate application in key areas
- Strengthen overseas applications in
line with business plans
Patent enforcement
- Strategic licenses to clarify and
achieve targets
Ensure ability to operate freely
Maintain predominance
Royalties contribute to income
Increase
portfolio value
IP management
Business
- World fi rst and world No. 1 products and services
- Income earning licenses
- JVs and Alliances
- Development and expansion overseas
IP Policy
- Group-wide management of IP
- Risk management
Handling litigation
Measures against counterfeit products
- Handling copyright
- Developing rules related to IP
- Cultivation of IP human
resources
2010 National Commendation for Invention
“The 21st century Invention Prize” patent No. 3892808 for “Natural and easily viewable 3D display”
“The Invention Prize” design No. 1325882 for “Computed Tomography X-ray System”*
*Shared with Toshiba Medical Systems Corporation
Number of registered patents
Japan
U.S.
Note: Toshiba’s ranking shown in parenthesis
(2nd)
3,425
(2nd)
3,255
(4th)
3,219
(2nd)
2,910
(9th)
1,717
(7th)
1,549
(7th)
1,609
(6th)
1,696
(5th)
3,780
(6th)
2,246
Number of patents registered in Japan (2010)
Number of patents registered in United States (2010)
Ranking
Company name
1 Panasonic
2 Sony
3 Toyota Motors
4 Canon
5 Toshiba
6 Honda Motors
7 Denso
8 Mitsubishi
Electric
9 Seiko Epson
10 Sharp
Number of Japan
registered patents
5,558
4,768
3,959
3,902
3,780
3,280
3,169
3,060
3,014
2,852
Ranking
Company name
1 IBM
2 Samsung
Electronics
3 Microsoft
4 Canon
5 Panasonic
6 Toshiba
7 Sony
8 Intel
9 LG Electronics
10 Hewlett-Packard
Number of U.S.
registered patents
5,896
4,551
3,094
2,552
2,482
2,246
2,150
1,653
1,490
1,480
CY06
CY07
CY08
CY09
CY10
Survey results generated using Patolis
Source: IFI Co. (US) data
35
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CSR Management
Striving for unshakable integrity and meeting the expectations of all
of our stakeholders
Toshiba Group positions the promotion of CSR (corporate social responsibility) as a main
pillar of management policy and strives to act with unswerving integrity.
Toshiba Group’s concept of integrity
1. To meet our responsibilities to society
2. To secure sound management and fi nances
Promoting CSR management as one of
Toshiba Group’s management policies
Toshiba Group management policies include
“pushing forward with CSR management” in
addition to “continuing to accelerate globalization”
and “setting ambitious goals for innovation and
speeding its pace” in order to “make Toshiba an
even stronger global contender.” CSR is embedded
in management and an integral part of our
management policies.
In promoting CSR management in line with
global standards, in 2004 Toshiba became a
signatory to the United Nations Global Compact,
which defines universal principles regarding
human rights, labor standards, the environment
and anti-corruption.
We also strive to align our CSR practices with
ISO 26000, the international guidance on social
responsibility issued in 2010.
Pursuing the two meanings of integrity
In advancing CSR management, Toshiba Group
strives for unshakable integrity in all we do.
One way of acting with integrity is to meet
36
our responsibilities to society.
In other words, this means addressing global
issues, such as energy security and environmental
problems through our business activities.
In particular, with regard to environmental
challenges, Toshiba has introduced the concept of
“three greens” in order to become one of the
world’s foremost eco-companies, contributing to
richer lifestyles in harmony with the Earth. (Please
refer to “Environmental Management” on P. 38.)
The second meaning of integrity is to form a
stable revenue base and maintain a robust
financial footing in order to continue to be trusted
by society.
In all business activities, Toshiba Group
accords the highest priority to human life, safety
and compliance as an operating principle. We
make sure that all our employees also share this
understanding . In addition to the “Toshiba Group
Standards of Conduct,” now translated into 15
languages, we carry out comprehensive training in
laws and regulations related to anti-trust and
protection of personal data.
In cultivating an integrity-oriented corporate
culture, we initiated “integrity workplace meetings”
in Japan for all our employees in FY2010.
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TOSHIBA Annual Report 2011
Meeting the expectations of our
stakeholders is CSR Management
Alongside shareholders and investors, Toshiba
Group’s stakeholders include our customers,
employees and suppliers. We strive to fully
understand and respond to their concerns, and
toward this we communicate with them in a
number of ways.
Toshiba Group’s primary responsibilities
toward shareholders and investors are to provide
timely, appropriate information and a reasonable
share of profit. We seek to supply customers with
safe, reliable and wor thwhile products and
services, and provide prompt information in the
event of product accidents or other problems.
In this spirit, we are also channeling our
strengths into supporting recovery from the Great
East Japan Earthquake. (Please refer to P. 14-15.)
We will continue to endeavor to live up to
our stakeholder expectations and advance CSR
management so as to continue to be a company
trusted by society.
Main Toshiba Group Stakeholders
Customers
Shareholders and
Investors
Toshiba Group
Employees
Suppliers
Local communities
Government and
Authorities
NPOs and NGOs
Evaluation of Toshiba’s CSR in FY2010
Name
Evaluating body
Evaluation
DJSI (Dow Jones Sustainability Indexes)
SAM (a Swiss SRI company) and Dow Jones
Indexes (U.S.)
Selected as one of approximately 300
constituent companies (for 11 years in a row)
Corporate Sustainability Assessment
SAM
SAM Silver Class
Corporate Social Performance Survey
Public Resource Center (Japan)
A (highest rank)
Survey of Corporate Integrity and Transparency
Integrex (Japan)
Survey of Japan’s Worker-Friendly Companies
Nihon Keizai Shimbun Inc.
2nd place
2nd place
Quality Management Level Research
Union of Japanese Scientists and Engineers (JUSE)
(in cooperation with Nihon Keizai Shimbun Inc.)
4th place
Survey of Environmental Management Level
Nihon Keizai Shimbun Inc.
3rd place
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Environmental Management
We aim to be one of the world’s foremost eco-companies, contributing to the
future of a sustainable planet Earth through all of our business activities.
Environmental Management
Main activities in FY2010
In order to evolve as one of the world’s foremost
eco-companies, Toshiba Group’s Environmental
Vision 2050 aims to realize a world where people
can lead affluent lives in harmony with the Earth.
The Group uses an indicator to measure
overall environmental efficiency by taking into
consideration harmony with the Earth as well as
value creation, and aims to increase overall eco-
efficiency tenfold by 2050 compared to the 2000
level.
To achieve this goal, we are strategically
promoting initiatives aimed at reducing the
environmental impact of all our products and
business activities, from the perspective of the
mitigation of climate change, the efficient use of
resources, and the management of chemicals,
based on the concept of the three “Greens”:
Greening of Process, Greening of Products, and
Greening by Technology.
- Strengthen environmental management
(cid:129) Conducted assessments of bio-diversity at production
sites using the Biodiversity Guidelines
- Creation of environmentally conscious products (ECPs)
(cid:129) Expanded ECPs to 70% of net sales
(cid:129) Launched 16 excellent ECPs (Products with outstanding
environmental performance) *1
- Business processes that consider the environment
(cid:129) Energy-derived CO2 emissions reduced by 48%*2 vs.
FY1990, through strategic energy saving measures
(cid:129) Water intake reduced by 29% vs. FY2000, by deploying
equipment to collect and treat drainage water and
moving ahead with water reuse
- Promoting communications on the environment
(cid:129) Participated at domestic and overseas exhibitions,
including Eco-Products 2010, Eco-Products International
Fair 2011 (India), The 20th Toshiba Group Environmental
Exhibition and Interactive Fair for Biodiversity
* 1 : Products certified by Toshiba, on release, as meeting the
highest level of environmental design
*2: Manufacturing and non-manufacturing sites worldwide
Reduction in real output of primary units, by volume. Rate to
net production output
Main evaluations by external parties
Award Title
7th-Eco Products Awards, Chairperson’s Award
Awarded to
Diagnostics Ultrasonic System Aplio™ MX (SSA-780A)
Organization
Eco-Products Awards Steering Committee
Eco-Efficiency Award 2010, Eco-Efficiency Award Special Award
Development of long-life, environmental load-reducing rechargeable
battery SCiB™
J a p a n E nv i r o n m e n t a l M a n a g e m e n t
Association for Industry (JEMAI)
59th Nikkei Advertising Awards (Grand Prix)
Advertisement on Toshiba’s decision to cease production of incandescent bulbs Nihon Keizai Shimbun Inc.
The 14th Environmental Communication Awards, Environment
Minister’s Award for Environmental Reporting of Mitigation
Measures for Global Warming
Green Company, Henan Province
Toshiba Group Environmental Report 2010 (along with the CSR Report
2010, Social Contributions Activities Report 2010 and Annual Report 2010)
Ministry of the Environment (Japan) and
others
General environmental conservation activities (Henan Pinggao Toshiba
High-Voltage Switchgear Co., Ltd. (China))
Department of Environmental Protection
a n d D e p a r t m e n t o f I n d u s t r y a n d
Information Technology (Henan Province)
Good Governance Project 2010
Environmental Community Activities (Toshiba Semiconductor (Thailand) Co., Ltd.) Ministry of Industry (Thailand)
Philippine Environment Partnership Program (PEPP) Seal of
Approval
Environmental conservation activities (Toshiba Information Equipment
(Philippines), Inc.)
Department of Environment and Natural
Resources (Philippines)
Don Emilio Abello Energy Efficiency Award and Outstanding
Energy Manager
Energy-saving activities (Toshiba Storage Device (Philippines) Inc.)
Department of Energy (Philippines)
38
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Disclosure of information through
comprehensive reporting
TOSHIBA Annual Report 2011
We disclose information through the Annual Report, CSR Report,
Environmental Report and Social Contribution Activities Report.
Toshiba Group reports financial information to
stakeholders in the Annual Report and non-
financial information in the CSR Report.
As we believe we have a duty to supply
detailed information on environmental activities,
we issue an Environmental Report separately from
the CSR Report.
Whatever the nature of the information, we
make every effort to provide news and timely
updates on our websites.
CSR Report/CSR Website
The CSR Report provides information on Toshiba Group’s major CSR
management activities.
The CSR website provides detailed and timely CSR-related
information.
Key reporting items (CSR website)
(cid:129) Topics
(cid:129) Philosophy and
Policy
(cid:129) Highlights
(cid:129) CSR performance
Organizational Governance, Human Rights, Labor Practices,
Environment, Fair Operating Practices, Consumer Issues,
Community Involvement and Development
(cid:129) Engagement
(cid:129) Other information
CSR Report
(Issued in August 2011)
CSR website
http://www.toshiba.co.jp/csr/en/index.htm
Environmental Report/Environmental Management Website
In the Environmental Report, we provide a detailed description of the global
environmental management of Toshiba Group as a whole. On the
environmental management website, we provide not only information on the
Group’s environmental activities in a timely manner, but also environmental
reports on our business sites and group companies. Furthermore, we have
established a special website called “TOSHIBA eco style.”
Key reporting items (Environmental
management website)
(cid:129) Topics
(cid:129) Environmental Vision 2050
(cid:129) Green Management
(cid:129) Greening of Process
(cid:129) Greening of Products
(cid:129) Greening by Technology
eco style website
ecostyle.toshiba.com
Environmental Report
( Scheduled to be issued in
October 2011)
Environmental management website
http://www.toshiba.co.jp/env/en/index.htm
* Website update scheduled to be performed in
conjunction with the issuance of the Report
Social Contributions Activities Report/Corporate Citizenship Activities Website
Social Contributions
Activities Report
( Scheduled to be issued in
December 2011)
Corporate citizenship activities website
http://www.toshiba.co.jp/social/en/index.htm
In the Social Contributions Activities Report, we report on Toshiba
Group’s global corporate citizenship activities.
On the corporate citizenship activities website, we provide
detailed, timely information that is not covered by the Social
Contributions Activities Report.
Key reporting items (Corporate citizenship activities website)
(cid:129) Protection of the Environment
(cid:129) Scientific and Technical Education
(cid:129) International Exchanges
(cid:129) Sports and Culture
(cid:129) Social Welfare
(cid:129) Employee Voluntary Activities
(cid:129) Social Contribution Activities
(cid:129) Toshiba “ASHITA” Award
39
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Corporate Governance
Toshiba Group promotes corporate governance based on the fundamental policies of
enhancing management effi ciency, increasing transparency and maximizing corporate
value from the shareholders’ perspective.
Toshiba’s Governance System
Toshiba’s corporate governance follows the
fundamental policies of maximizing corporate
value from the shareholders’ perspective and
i m p r o v i n g m a n a g e m e n t e f f i c i e n c y a n d
transparency.
Guided by this, we revitalized the Board of
Directors and reduced its membership with the
1998 introduction of the executive officer system.
Other management initiatives followed. In 2000,
we vo l u n t a r i l y e s t a b l i s h e d a N o m i n a t i o n
Committee and the Compensation Committee. In
2001, we introduced a system of appointing three
outside directors and reducing the term of office
for directors to one year. And in 2003, following a
change in the commercial code, in another move
toward reinforcing management efficiency and
transparency, we introduced the Company with
Committees system, pursuant to a resolution
a p p r o v e d b y t h e a n n u a l m e e t i n g o f t h e
shareholders.
As a Company with Committees we separate
functions: basic policy making and supervision of
management are undertaken by the board of
directors and the committees, while executive
officers are responsible for business operations.
This approach has strengthened management
supervision while increasing transparency, and
brought greater flexibility to management.
The Nomination Committee makes proposals
on appointments and dismissals members of the
board that are subject to approval by the meeting
of shareholders. The Compensation Committee
decides the individual remuneration of executive
officers and board members.
Corporate Governance Structure
(cid:62)(cid:92)(cid:101)(cid:92)(cid:105)(cid:88)(cid:99)(cid:23)(cid:68)(cid:92)(cid:92)(cid:107)(cid:96)(cid:101)(cid:94)(cid:23)(cid:102)(cid:93)(cid:23)(cid:74)(cid:95)(cid:88)(cid:105)(cid:92)(cid:95)(cid:102)(cid:99)(cid:91)(cid:92)(cid:105)(cid:106)
(cid:71)(cid:105)(cid:102)(cid:103)(cid:102)(cid:106)(cid:88)(cid:99)
(cid:56)(cid:103)(cid:103)(cid:102)(cid:96)(cid:101)(cid:107)(cid:100)(cid:92)(cid:101)(cid:107)(cid:23)
(cid:88)(cid:101)(cid:91)(cid:23)(cid:59)(cid:96)(cid:106)(cid:100)(cid:96)(cid:106)(cid:106)(cid:88)(cid:99)
(cid:73)(cid:92)(cid:103)(cid:102)(cid:105)(cid:107)
(cid:69)(cid:102)(cid:100)(cid:96)(cid:101)(cid:88)(cid:107)(cid:96)(cid:102)(cid:101)(cid:106)(cid:23)(cid:102)(cid:93)(cid:23)
(cid:58)(cid:88)(cid:101)(cid:91)(cid:96)(cid:91)(cid:88)(cid:107)(cid:92)(cid:106)(cid:23)(cid:93)(cid:102)(cid:105)
(cid:59)(cid:96)(cid:105)(cid:92)(cid:90)(cid:107)(cid:102)(cid:105)(cid:106)(cid:95)(cid:96)(cid:103)(cid:106)
(cid:57)(cid:102)(cid:88)(cid:105)(cid:91)(cid:23)(cid:102)(cid:93)(cid:23)(cid:59)(cid:96)(cid:105)(cid:92)(cid:90)(cid:107)(cid:102)(cid:105)(cid:106)(cid:38)
(cid:59)(cid:96)(cid:105)(cid:92)(cid:90)(cid:107)(cid:102)(cid:105)(cid:106)
(cid:56)(cid:103)(cid:103)(cid:102)(cid:96)(cid:101)(cid:107)(cid:100)(cid:92)(cid:101)(cid:107)(cid:23)(cid:88)(cid:101)(cid:91)(cid:23)(cid:59)(cid:96)(cid:106)(cid:100)(cid:96)(cid:106)(cid:106)(cid:88)(cid:99)
(cid:73)(cid:92)(cid:103)(cid:102)(cid:105)(cid:107)
(cid:74)(cid:108)(cid:103)(cid:92)(cid:105)(cid:109)(cid:96)(cid:106)(cid:96)(cid:102)(cid:101)
(cid:56)(cid:108)(cid:91)(cid:96)(cid:107)
(cid:69)(cid:102)(cid:100)(cid:96)(cid:101)(cid:88)(cid:107)(cid:96)(cid:102)(cid:101)(cid:23)
(cid:58)(cid:102)(cid:100)(cid:100)(cid:96)(cid:107)(cid:107)(cid:92)(cid:92)
(cid:56)(cid:108)(cid:91)(cid:96)(cid:107)(cid:23)
(cid:58)(cid:102)(cid:100)(cid:100)(cid:96)(cid:107)(cid:107)(cid:92)(cid:92)
(cid:58)(cid:102)(cid:100)(cid:103)(cid:92)(cid:101)(cid:106)(cid:88)(cid:107)(cid:96)(cid:102)(cid:101)(cid:23)
(cid:58)(cid:102)(cid:100)(cid:100)(cid:96)(cid:107)(cid:107)(cid:92)(cid:92)
(cid:59)(cid:92)(cid:90)(cid:96)(cid:106)(cid:96)(cid:102)(cid:101)(cid:106)(cid:23)(cid:102)(cid:101)(cid:23)(cid:58)(cid:102)(cid:100)(cid:103)(cid:92)(cid:101)(cid:106)(cid:88)(cid:107)(cid:96)(cid:102)(cid:101)(cid:23)(cid:102)(cid:93)(cid:23)
(cid:59)(cid:96)(cid:105)(cid:92)(cid:90)(cid:107)(cid:102)(cid:105)(cid:106)(cid:23)(cid:88)(cid:101)(cid:91)(cid:23)(cid:60)(cid:111)(cid:92)(cid:90)(cid:108)(cid:107)(cid:96)(cid:109)(cid:92)(cid:23)(cid:70)(cid:93)(cid:93)(cid:96)(cid:90)(cid:92)(cid:105)(cid:106)
(cid:58)(cid:102)(cid:102)(cid:103)(cid:92)(cid:105)(cid:88)(cid:107)(cid:96)(cid:102)(cid:101)
(cid:73)(cid:92)(cid:103)(cid:102)(cid:105)(cid:107)
(cid:71)(cid:105)(cid:92)(cid:106)(cid:96)(cid:91)(cid:92)(cid:101)(cid:107)(cid:23)(cid:29)(cid:23)(cid:58)(cid:60)(cid:70)
(cid:60)(cid:111)(cid:92)(cid:90)(cid:108)(cid:107)(cid:96)(cid:109)(cid:92)(cid:23)
(cid:70)(cid:93)(cid:93)(cid:96)(cid:90)(cid:92)(cid:105)(cid:106)
(cid:59)(cid:96)(cid:109)(cid:96)(cid:106)(cid:96)(cid:102)(cid:101)(cid:106)
(cid:56)(cid:108)(cid:91)(cid:96)(cid:107)
(cid:56)(cid:108)(cid:91)(cid:96)(cid:107)
(cid:58)(cid:102)(cid:105)(cid:103)(cid:102)(cid:105)(cid:88)(cid:107)(cid:92)(cid:23)
(cid:56)(cid:108)(cid:91)(cid:96)(cid:107)(cid:23)(cid:59)(cid:96)(cid:109)(cid:96)(cid:106)(cid:96)(cid:102)(cid:101)
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Perspectives of Outside Directors
TOSHIBA Annual Report 2011
Toshiba is expanding globally through business structural reform and promoting its focus on
“strategic allocation of business resources.”
It is very important for a global corporation such as Toshiba to make its top leaders as visible
as possible. I think successive generations of top management have demonstrated leadership and
done a good job of sending the Company’s message including its ideas and principles to a wide
audience in and out of Japan.
To become a truly global company, in addition to its renowned technology and innovation,
Toshiba must cultivate human resources capable of operating internationally. People in global HR
must be able to work anywhere in the world and have a flexible attitude that allows them to adapt
to national environments and cultural characteristics, in the emerging markets, for example.
Time waits for no one, and from top management to the youngest employees, Toshiba’s
people must quickly polish their international perspective, and strengthen adaptability and ability to
communicate. Toshiba must also increase overseas recruitment for both local and global operations.
I will continue to make proposals from my perspective as a former diplomat, and hope that
they may be of some use.
Today’s Toshiba is moving towards true globalization. This raises many issues and is bound
to result in some difficulties. How to progress toward globalization is one concern and a
challenge that Toshiba now faces in its corporate organization.
A company’s corporate organization needs to change as its environmental changes.
Timing is important. After having observed the measures being taken by Toshiba, I am
convinced that the Company’s top management is moving in the right direction and
improving the organizational structure.
Globalization will require employees to change their way of thinking. And as
business reaches into many parts of the world, it will be important to ensure that the
system of governance meets the requirements of a global corporation.
There are times in business when “strategic allocation of resources” can conflict with
risk control. The way that those are balanced will be important. I hope to help achieve
that balance by offering my opinion.
I have served as an outside director for two years now, and my unchanged impression is of
an open company with a high level of transparency. That includes the board of directors,
which encourages frank expressions of opinions.
I believe that top management has a good understanding of corporate governance
and compliance and that they are soundly implemented.
As Toshiba develops globally, all kinds of risks must be considered before they occur,
and efforts made to minimize potential risk areas. Risk management must be further
enhanced to function globally.
In terms of responding to society’s demands, it is not enough to simply observe
already established rules. What is needed is to focus on potential future events and to
create rules for responding to them. Penetrating this kind of thinking throughout the
company will, I think, secure improvement.
I will continue to make proposals from a legal perspective on issues that
need attention.
Outside Director
Hiroshi Hirabayashi
Outside Director
Takeshi Sasaki
Outside Director
Takeo Kosugi
41
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Corporate Governance
Furthermore, the Toshiba’s Nomination
Committee is also responsible for mak ing
proposals on the appointment and removal of the
president and chief executive officer and the
members of the other committees.
T h e b o a r d o f d i r e c t o r s n o w h a s s i x
nonexecutive directors: three outside directors, the
chairman of the board, two members of the Audit
Committee appointed from in-house.
The three committees—the Nomination
Committee, the Audit Committee and the
Compensation Committee—all have a majority of
outside directors.
The three outside directors who serve on the
A u d i t C o m m i t t e e a r e s u p p o r t e d b y t h e
committee’s dedicated, full-time staff, and the
outside directors on the Nomination Committee
and Compensation Committee are also provided
with staff support.
As a company with Committees, Toshiba
delegates operational decision-mak ing to
executive officers. The board plays a supervisory
role in respect of operations, retaining the right of
final decision only in such matters that might have
a considerable impact on shareholder value.
In respect of operations, decisions on key
matters are made by the chief executive officer
mainly at the corporate management meeting,
which meets weekly as a general rule. Other
matters are determined by in-house company
presidents at individual in-house company
management meetings.
Toshiba’s Internal Control Systems
level legal compliance and risk management.
We also ensure that domestic Group
companies, regardless of the scale of their
operations, establish internal control systems
based on those of the parent company.
The following website provides detailed
information on the structure of our internal control
systems.
http://www.toshiba.co.jp/about/ir/en/policy/
governance_system.htm
Risk Management
At Toshiba, throughout our worldwide operations,
we strive to ensure compliance with laws and
regulations, social and ethical norms, and internal
rules. According top priority to human life and
safety and to compliance in everything we do
underpins our commitment to promoting
business activities through fair competition and
serving the interests of customers to the best of
our ability.
We consider thorough adherence to the
Toshiba Group Standards of Conduct (SOC), which
embodies the Basic Commitment of the Toshiba
Group, to be the foundation of our compliance.
Thus we are working toward the SOC becoming
an integral part of the entire Toshiba Group. Every
year, priority themes regarding compliance are
established and promoted in light of business
circumstances. By implementing a Plan-Do-Check-
Action (PDCA) cycle of self-assessment, not only at
each in-house company but also at group
companies worldwide, we are stepping up our
efforts to ensure compliance.
Toshiba Group constantly refines its system of
internal controls, towards ensuring management
effectiveness and efficiency and reliable reporting
on operations and finances and to secure high
The Risk Compliance Committee, headed by
the CRO*, manages serious risk and compliance
issues and works with each relevant division to
strengthen the risk management system by
42
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TOSHIBA Annual Report 2011
developing countermeasures to specific risks, plus
measures to prevent their spread and recurrence.
*Chief Risk Compliance Management Officer
The Status of Internal Audits and
Audits by the Audit Committee
The Corporate Audit Division, now staffed by 52
people, reports directly to the president. It is
r e s p o n s i b l e f o r i n t e r n a l a u d i t s f r o m t h e
p e r s p e c t i v e s o f a p p r o p r i a t e o p e r a t i o n a l
procedures, accountability of results and legal
compliance.
The Division holds advance discussions with
the Audit Committee on each year’s audit policy
and plans. It also holds semimonthly liaison
meetings with the Audit Committee for pre-audit
discussions and to share information on the
divisions subject to audit.
The Corporate Audit Division carries out
on-site inspections and reports its results to the
Audit Committee. However, if it deems it necessary,
the Audit Committee has the right to carry out its
own on-site inspections.
At the Furthermore, in addition to receiving
explanations from independent auditors (CPA) on
their audit plans at the beginning of each fiscal
year, the Audit Committee can also request reports
on the status of audits during the course of each
term, and explanations and reports on end-of-year
audits, as necessary.
Outside Directors
1) Names and other details.
Name
Reasons for selection
Significant concurrent positions
Hiroshi
Hirabayashi
Mr. Hirabayashi currently properly supervises the
Company ’s management based on his rich
experience and knowledge as a diplomat,
including ambassador in charge of inspection.
Outside director, Mitsui & Co., Ltd.; outside director, Daiichi Sankyo
Company, Limited; outside director, NHK Promotions Inc.;
president, The Japan-India Association.
Mr. Sasaki currently properly supervises the
Company ’s management based on his rich
experience and knowledge as a political scientist
and University administrator.
Takeshi
Sasaki
Professor in the Department of Political Studies in the Faculty of
Law, Gakushuin University; president of the Association For
Promoting Fair Elections; outside director of Orix Corp; president
of National Land Afforestation Promotion Organization; outside
director of East Japan Railway Company, chairman of Labo
International Exchange Foundation.
Takeo
Kosugi
Mr. Kosugi currently properly supervises the
Company ’s management based on his rich
experience and knowledge as a specialist in law.
Partner & attorney-at-law, Matsuo & Kosugi; outside auditor of
Nihon Servier Co. Ltd.; outside director of Fujifilm Holdings Corp.;
supervisory director of Mori Hills REIT Investment Corp.
All three outside directors are independent directors as provided for in Article 436-2 of the Security Listing Regulations of the Tokyo Stock
Exchange, etc.
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43
Corporate Governance
2) Relationship between the Company and entities
at which outside directors hold impor tant
concurrent posts
Toshiba has an ongoing business relationship with
Fujifilm Group which consists of Fujifilm Holdings
Corporation and its subsidiaries, Mitsui & Co., Ltd.
and East Japan Railway Company.
In addition, Mitsui & Co., Ltd. holds Toshiba’s
shares in a trust for its corporate pension plan.
There is no relationship to be disclosed
between the Company and other entities at which
outside directors concurrently hold important
posts.
3) Main activities
In FY2010, the Board of Directors met 13 times, and
the Audit Committee 11 times, where the outside
directors commented as necessary. The outside
directors received explanations about the matters
to be resolved at the board meetings from the
staff in charge, etc., in advance. They also attended
the monthly liaison conferences of executive
officers in an effort to communicate and share
information with the executive officers. The outside
direc tors who were members of the Audit
Committee were supported by the full-time staff
of the Audit Committee Office. The outside
directors who were members of the Nomination
Committee or the Compensation Committee were
supported by the staff in charge, etc.
4) Limited liability contracts
The Company has signed a limited liability
contract with each of the three outside directors,
Messrs. Hiroshi Hirabayashi, Takeshi Sasaki, and
Takeo Kosugi, to limit their liabilities as provided in
Article 423, Paragraph 1 of the Companies Act to
31.2 million yen or the minimum liability amount
stated in Article 425, Paragraph 1 of the Companies
Act, whichever is larger.
Name
Attendance record at meetings of Board of Directors and Audit Committee
Hiroshi Hirabayashi
Attended meetings of the Board of Directors 11 times and of the Audit Committee 9 times.
Takeshi Sasaki
Attended meetings of the Board of Directors 13 times.
Takeo Kosugi
Attended meetings of the Board of Directors 13 times and of the Audit Committee 11 times.
Compensation Policy and the
Amount of Compensation
1) Compensation policy
The Compensation Committee establishes
compensation policy regarding compensation of
each director and/or executive officer as follows.
Since the main responsibility of directors is to
supervise the execution of the overall Group’s
business, compensation for directors is determined
at an adequate level to secure highly competent
personnel and to ensure effective work of the
supervisory function.
Since the responsibility of executive officers
is to increase corporate value in their capacity as
executives responsible for companies or divisions
within the Group, compensation for executive
officers is divided into fixed compensation and
p e r f o r m a n c e - b a s e d c o m p e n s a t i o n , a n d
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TOSHIBA Annual Report 2011
determined at an adequate level to secure highly
c o m p e t e n t p e r s o n n e l a n d e n s u r e t h e i r
compensation package functions as an effective
incentive to improve business performance.
(1) Director’s compensation
Fixed compensation is paid to directors who do
not concurrently hold office as an executive officer,
and is based on status as a full-time or part-time
director and on the duties performed.
The fixed compensation is paid to directors
who concurrently hold office as an executive
officer, in addition to the executive officer
compensation specified in (2) below.
(2) Executive officer’s compensation
Executive officer compensation is comprised of
the basic compensation based on executive officer
rank (eg. representative executive officer, president
and chief executive officer, representative
executive officer, corporate senior executive vice
president) and the ser vice compensation
calculated according to the duties of the executive
officer. Some 40-45% of the service compensation
will fluctuate from zero (no compensation) to 2
times according to the year-end performance of
the Company or of the division for which the
executive officer is responsible.
(3) Compensation standards
Compensation standards are determined at
suitable levels for a global company, with the aim
of securing highly competent management
personnel. The compensation standards of other
listed companies and payroll and benefits of
employees are considered when determining the
C o m p a n y ’s c o m p e n s a t i o n s t a n d a r d s o f
management.
2) Amounts of compensation for FY2010
Amounts of compensation of directors and executive officers for FY2010 are as follows:
Position
Total Amount
(Millions of yen)
Fixed Compensation
(Millions of yen)
Performance based
Compensation
(Millions of yen)
Number of
Persons
Directors
(excluding outside
directors)
Outside directors
222
61
222
61
Executive officers
1,208
1,046
−
−
163
10
4
38
Directors and executive officers whose total compensation exceeded 100 million yen for FY2010
Name
Position
Company
Fixed Compensation
(Millions of yen)
Performance Based
Compensation
(Millions of yen)
Total Amount
(Millions of yen)
Atsutoshi Nishida
Director
Toshiba
Corporation
116
−
116
45
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Directors and Executive Officers
Directors
Atsutoshi Nishida
Chairman of the Board and Director
Nomination Committee Member
Compensation Committee Member
Norio Sasaki
Director
Compensation Committee Member
Masashi Muromachi
Director
Hidejiro Shimomitsu
Director
Hisao Tanaka
Director
Hideo Kitamura
Director
Executive
Officers
Representative Executive Officer
President and Chief
Executive Officer
Representative Executive Officer
Corporate Executive Vice President
Makoto Kubo
Executive Officers
Corporate Senior Vice
Presidents
Norio Sasaki
Representative Executive Officers
Corporate Senior Executive
Vice Presidents
Masashi Muromachi
Hidejiro Shimomitsu
Hisao Tanaka
Hideo Kitamura
Executive Officers
Corporate Executive Vice
Presidents
Yoshihide Fujii
Shozo Saito
Toshiharu Watanabe
Yasuharu Igarashi
Akira Sudo
Kazuyoshi Yamamori
Kiyoshi Kobayashi
Toshio Masaki
Masaaki Oosumi
Shoji Yoshioka
Hiroshi Saito
Shigenori Shiga
Masayasu Toyohara
46
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TOSHIBA Annual Report 2011
Makoto Kubo
Director
Toshiharu Watanabe
Director
Fumio Muraoka
Director
Chairman of Audit Committee
Hiroshi Horioka
Director
Audit Committee Member
Hiroshi Hirabayashi
Outside Director
Chairman of Compensation
Committee
Audit Committee Member
Takeshi Sasaki
Outside Director
Chairman of Nomination
Committee
Audit Committee Member
Compensation Committee Member
Takeo Kosugi
Outside Director
Nomination Committee Member
Audit Committee Member
Compensation Committee Member
Executive Officers
Corporate Vice Presidents
Koji Iwama
Masakazu Kakumu
Yasuhiro Shimura
Munehiko Tsuchiya
Masazumi Yoshioka
Hiroshi Igashira
Hironobu Nishikori
Makoto Hideshima
Teruo Kiriyama
Osamu Maekawa
Yasuo Naruke
Shigenori Tokumitsu
Naoki Takenaka
Kiyoshi Okamura
Takeshi Yokota
Fumiaki Ushio
(As of June 22, 2011)
47
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Organization Chart (As of July 1, 2011)
Audit Committee Offi ce
Audit Committee
Compensation Committee
Nomination Committee
Board of Directors
President &
Chief Executive
Offi cer
Corporate Audit Div.
Information
& Security
Group
•Information
Systems Center
•Information
Security Center
Innovation Div.
•Innovation
Promotion Div.
Quality Div.
•Quality Promotion
Offi ce
Corporate Social
Responsibility Div.
•CSR Implementation
Offi ce
•Corporate Government
& External Relations
Div.
Digital Products Group
Legal Affairs
Group
Export Control
Group
Human
Resources
Group
Finance
& Accounting
Group
•Export Control Div.
•Legal Affairs
Div.
•Corporate
Alliances &
Legal Div.
•Finance &
Accounting
Div.
•Global
Financial
System Div.
•Human
Resources and
Administration
Div.
•Employee
Wellness Div.
•Diversity
Development Div.
•Toshiba General
Hospital
Electronic Devices & Components Group
Digital Products & Services Company
Network & Solution Control Center
Semiconductor & Storage Products Company
•Digital Products & Services Div. 1
•Digital Products & Services Div. 2
•Digital Products & Services Div. 3
•Digital Products & Services Div. 4
•Ome Complex
•Fukaya Complex
48
•Discrete Semiconductor Div.
•Himeji Operations – Semiconductor
•Kitakyushu Operations
•Analog & Imaging IC Div.
•Oita Operations
•Microelectronics Center
•Logic LSI Div.
•Memory Div.
•Yokkaichi Operations
•Storage Products Div.
•Ome Operations – Storage Products
•Center For Semiconductor Research &
Development
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TOSHIBA Annual Report 2011
Strategic Planning &
Communications
Group
•Corporate Strategic Planning Div.
•Corporate Communications Offi ce
Corporate Representatives
—America, Europe, Asia, China
Procurement
& Logistics
Group
Productivity
& Environment
Group
Technology &
Intellectual
Property Group
Marketing
Group
•Procurement Div.
•Logistics
Planning Offi ce
•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 Planning Div.
(Overseas Offi ces)
• Moscow
• Johannesburg
• Baghdad
•Customer Satisfaction Div.
•Corporate Sales & Marketing Div.
•Advertising Div.
•Design Center
New Lighting
Systems Div.
Smart
Community Div.
Materials &
Devices Div.
Infrastructure Systems Group
Power Systems Company
Social Infrastructure Systems Company
ODD Div.
•Nuclear Energy Systems & Services Div.
• Isogo Nuclear Engineering Center
•WEC Div.
•Thermal & Hydro Power Systems &
Services Div.
•Power and Industrial Systems
Research and Development Center
•Keihin Product Operations
•Transmission & Distribution Systems Div.
•Railway & Automotive Systems Div.
•Railway Systems Div.
•Automotive Systems Div.
•Motor & Drive Systems Div.
•Automation Products & Facility Solution Div.
•Defense & Electronic Systems Div.
•Environmental Systems Div.
•Fuchu Complex
•Saku Operations
•Kashiwazaki Operations
•Hamakawasaki Operations
•Komukai Operations
•Mie Operations
49
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Consolidated Subsidiaries and Affiliated Companies
Accounted for by the Equity Method
Consolidated Subsidiaries
Domestic
(cid:129) Harison Toshiba Lighting Corporation
(cid:129) Iwate Toshiba Electronics Co., Ltd.
(cid:129) Kaga Toshiba Electronics Corporation
(cid:129) Nishishiba Electric Co., Ltd.*
(cid:129) Nuclear Fuel Industries Ltd.
(cid:129) Toshiba Carrier Corporation
(cid:129) Toshiba Consumer Electronics Holdings
Corporation
(cid:129) Toshiba Consumer Marketing Corporation
(cid:129) Toshiba Device Corporation
(cid:129) Toshiba Elevator and Building Systems
Corporation
(cid:129) Toshiba Home Appliances Corporation
(cid:129) Toshiba Industrial Products Sales Corporation
(cid:129) Toshiba Information Equipments Co., Ltd.
(cid:129) Toshiba Lighting & Technology Corporation
(cid:129) Toshiba Logistics Corporation
(cid:129) Toshiba Medical Systems Corporation
(cid:129) Toshiba Mobile Display Technology Co., Ltd.
(cid:129) Toshiba Plant Systems & Services Corporation*
(cid:129) Toshiba Solutions Corporation
(cid:129) Toshiba Storage Device Corporation
(cid:129) Toshiba TEC Corporation*
(cid:129) Toshiba Trading Inc.
200 companies in total including the above 22.
* Company listed on stock market
Overseas
(cid:129) Chevalier (HK) Ltd.
(cid:129) Dalian Toshiba Television Co., Ltd.
(cid:129) Northern Virginia Semiconductor L.L.C.
(cid:129) TAI Receivables Corporation
(cid:129) Taiwan Toshiba International Procurement
Corporation
(cid:129) Toshiba America Business Solutions, Inc.
(cid:129) Toshiba America Capital Corporation
(cid:129) Toshiba America Electronic Components, Inc.
(cid:129) Toshiba America Information Systems, Inc.
(cid:129) Toshiba America Medical Systems, Inc.
(cid:129) Toshiba America MRI, Inc.
(cid:129) Toshiba America Nuclear Energy Corporation
(cid:129) Toshiba America, Inc.
(cid:129) Toshiba Capital (Asia) Ltd.
(cid:129) Toshiba Dalian Co., Ltd.
(cid:129) Toshiba Electronics Asia, Ltd.
(cid:129) Toshiba Europe GmbH
(cid:129) Toshiba Information Equipment (Hangzhou) Co., Ltd.
(cid:129) Toshiba Information Equipment (Philippines), Inc.
(cid:129) Toshiba Information, Industrial and Power Systems
Taiwan Corporation
(cid:129) Toshiba International Corporation
(cid:129) Toshiba International Finance (UK) Plc.
(cid:129) Toshiba International Procurement Hong Kong, Ltd.
(cid:129) Toshiba Medical Systems Europe B.V.
(cid:129) Toshiba Nuclear Energy Holdings (UK) Ltd.
(cid:129) Toshiba Nuclear Energy Holdings (US) Inc.
(cid:129) Toshiba Samsung Storage Technology Korea
Corporation
(cid:129) Toshiba Singapore Pte., Ltd.
(cid:129) Toshiba Storage Device (Philippines), Inc.
(cid:129) Toshiba TEC France Imaging Systems S.A.
(cid:129) Toshiba Transmission and Distribution Brazil Ltd.
(cid:129) Toshiba Transmission and Distribution Systems Brazil Ltd.
(cid:129) TSB Nuclear Energy Investment UK Ltd.
(cid:129) TSB Nuclear Energy Investment US Inc.
(cid:129) Westinghouse Electric Company L.L.C.
Affi liated Companies Accounted
for by the Equity Method
Domestic
(cid:129) Flash Alliance, Ltd.
(cid:129) Flash Partners, Ltd.
(cid:129) Ikegami Tsushinki Co., Ltd.*
(cid:129) NEC Toshiba Space Systems, Ltd.
(cid:129) NREG Toshiba Building Co., Ltd.
(cid:129) NuFlare Technology Incorporated*
(cid:129) Shibaura Mechatronics Corporation*
(cid:129) Topcon Corporation*
(cid:129) Toshiba Finance Corporation
(cid:129) Toshiba Housing Loan Service Corporation
(cid:129) Toshiba Machine Co., Ltd.*
(cid:129) Toshiba Medical Finance Co., Ltd.
(cid:129) Toshiba Mitsubishi-Electric Industrial Systems
Corporation
82 companies in total including the above 13.
*Listed company in stock markets
Overseas
(cid:129) Dalian Toshiba Locomotive Electric Equipment
Co., Ltd.
(cid:129) Energy Asia Holdings, Ltd.
(cid:129) GD Midea Air-Conditioning Equipment Co., Ltd.
(cid:129) GD Midea Commercial Air-Conditioning
Equipment Co., Ltd.
(cid:129) GD Midea Group Wuhan Air-Conditioning
Equipment Co., Ltd.
(cid:129) GD Midea Group Wuhu Air-Conditioning
Epuipment Co., Ltd.
(cid:129) Guangdong Meizhi Compressor Ltd.
(cid:129) Henan Pinggao Toshiba High-Voltage Switchgear
Co., Ltd.
(cid:129) Japan Uranium Management Inc.
(cid:129) Semp Toshiba Amazonas S.A.
(cid:129) TM GE Automation Systems L.L.C.
120 companies in total including the above 11.
298 companies in total including the above 35.
(As of March 31, 2011)
50
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Corporate History
TOSHIBA Annual Report 2011
July 1875
Telegraph equipment factory (called Tanaka Seizo-sho from 1882; later Shibaura Engineering Works Co.,
Ltd.) opened in Tokyo.
Apr. 1890 Hakunetsu-sha & Co., Ltd. (from 1899 Tokyo Electric Company) founded.
June 1904 Shibaura Engineering Works Co., Ltd. established.
Sep. 1939 Shibaura Engineering Works Co., Ltd. merged with Tokyo Electric Company to become Tokyo Shibaura Electric Co., Ltd.
Oct. 1942 Absorbed Shibaura Mazda Industry Co., Ltd. and Nippon Medical Electric Co., Ltd., expanding home appliance line-up.
July 1943 Absorbed Tokyo Electric Co., Ltd. and Toyo Fire Brick Co., Ltd., expanding line-up of communications equipment.
Apr. 1950 Absorbed Toshiba Rolling Stock Co., Ltd., expanding rolling stock products.
Nov. 1955 Absorbed Dengyo-sha Prime Mover Works Ltd.
Nov. 1961 Absorbed Ishikawajima-Shibaura Turbine Co., Ltd, expanding line-up of turbines.
Oct. 1974 Transferred plastic and insulating materials business to Toshiba Chemical Corp. (now KYOCERA Chemical Corp.)
July 1978 English official trade name of the company became “Toshiba Corporation.”
Apr. 1984 Japanese official trade name of the company became “Toshiba Corporation.”
Dec. 1989 Absorbed Nippon Atomic Industry Group Co., Ltd.
June 1998 Introduced corporate executive officer system.
Apr. 1999 Introduced in-house company system.
July 2001 Changed registered headquarters from Kawasaki City, Kanagawa, to Minato Ward, Tokyo.
Aug.
Announced “01 Action Plan.”
Oct. 2002 Trans ferred transmission & distribution system business to TM T&D Corp.
Mar. 2003 Transferred CRT business to MT Picture Display Co., Ltd.
Jun.
Oct.
Adopted the Company with Committees system.
Transferred electric equipment for manufacturing plants business to TMA Electric Corp. (now Toshiba
Mitsubishi-Electric Industrial Systems Corp.)
Jan. 2004 Joined the United Nations Global Compact.
Apr. 2005 Acquired T&D business from TM T&D Corp.
Oct. 2006 Acquired Westinghouse Group.
Jan. 2009 Announced “Action Programs to Improve Profitability.”
June
Oct.
Raised funds by public offering for the first time since 1981.
Acquired HDD business from Fujitsu Ltd.
Oct. 2010
Merged mobile phone business with that of Fujitsu Ltd. and transferred the business to Fujitsu Toshiba
Mobile Communications Ltd.
51
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Basic Commitment of the Toshiba Group
The management principles of Toshiba Group. In order to “show respect for people,”
“create abundant value” and “contribute to the lives and cultures of the global citizens.”
Beyond that, to express and sum up these management principles, we have adopted the
Group slogan, “Committed to People, Committed to the Future.”
BASIC COMMITMENT
OF THE
TOSHIBA GROUP
COMMITMENT TO PEOPLE
COMMITMENT TO THE FUTURE
y
Framework of Toshiba Group’s Management Philosophy
Basic Commitment of
the Toshiba Group
Toshiba Group’s mission
Toshiba Group
Management Vision
A set of values and targets shared
throughout Toshiba Group
Toshiba Group
Standards of Conduct
Standards of conduct to which
everyone in Toshiba Group is
required to adhere
Toshiba Brand Statement
United Nations Global Compact*
Responsibilities as a global enterprise
* UN Global Compact: A voluntary corporate
citizenship initiative concerning human rights,
labor, the environment, and anti-corruption
proposed by the former UN Secretary-General
Kofi Annan in 1999 at the World Economic Forum.
Toshiba joined the UN Global Compact in 2004.
Toshiba Group's Corporate Philosophy emphasizes respect for people,
creation of new value, and contribution to society.
The Group slogan - “Committed to People, Committed to the Future. TOSHIBA.” -
expresses the essence of our corporate philosophy.
We recognize that it is our corporate social responsibility (CSR) to put our
philosophy and slogan into practice in our day-to-day business activities. In doing so,
we accord the highest priority to human life and safety and to compliance.
52
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TOSHIBA Annual Report 2011
Data Section
Consolidated Financial Summary
Consolidated Balance Sheets
Consolidated Statements of Operations
Quarterly Performance Highlights
Consolidated Statements of Cash Flows
Industry Segment Performance
Long-term Debt
Stock/Shareholder Information
54
56
58
58
59
60
61
62
Major indices of the Data Section have been compiled chronologically based on the fi scal years. For the details of
fi nancial information for the year ended March 31, 2011, please refer to the “Financial Review 2011.”
53
A01_東芝様AR2011_Fact.indd 53
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Consolidated Financial Summary
Year ended March 31
2001
2002
2003
2004
Net Sales, Operating Income (Loss) and Net Income (Loss) Attributable to Shareholders of Toshiba Corporation
Net sales
Cost of sales
Selling, general and administrative expenses
Operating income (loss)
Income (loss) from continuing operations, before income taxes and noncontrolling interests
Income taxes
Net income (loss) attributable to shareholders of Toshiba Corporation
EBITDA*1
Profi tability Ratios
Operating income ratio (%)
Return on sales (%)
Cost of sales ratio (%)
Selling, general and administrative expenses ratio (%)
Total Assets, Equity Attributable to Shareholders of Toshiba Corporation and Interest-bearing Debt
Total assets
Equity Attributable to Shareholders of Toshiba Corporation
Interest-bearing debt
Long-term debt
Short-term debt
Shareholders’ equity ratio (%)*2
Debt/equity ratio (Times)*3
R&D, Capital Expenditures and Depreciation
R&D expenditures
Capital expenditures (Property, plant and equipment)
Depreciation (Property, plant and equipment)
Return Indicators
Return on investment (ROI) (%)*4
Return on equity (ROE) (%)*5
Return on total assets (ROA) (%)*6
Effi ciency Indicators
Inventory turnover (Times)*7
Total assets turnover (Times)*8
Inventory turnover (Days)*9
Cash Flows
Net cash provided by (used in) operating activities
Net cash used in investing activities
Net cash provided by (used in) fi nancing 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 fl ow ratio (%)*10
Interest coverage ratio (Times)*11
Corporate Value
Free cash fl ow*12
Market capitalization*13
Other Data
Number of employees (Consolidated) (Thousands)
Number of employees (Non-Consolidated) (Thousands)
Ratios of Consolidated to Non-Consolidated Performance (Times) (Net sales)
(cid:129) U.S.GAAP was codifi ed by the Financial Accounting Standards Board. Beginning with the fi scal
year ended March 31, 2010, the codified standards are described in “Accounting Standards
Codifi cation (ASC).”
(cid:129) ¥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.
(cid:129) 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.
(cid:129) Beginning with the fi scal year ended March 31, 2006, equity in earnings (losses) of affi liates has
been included in income (loss) from continuing operations, before income taxes and
noncontrolling interests. Prior-period data for the fi scal years ended March 31, 2000 through 2005
has been reclassifi ed to conform with the current classifi cation.
54
¥5,746.4
4,154.5
1,368.2
223.7
189.7
93.0
96.2
568.5
3.9
1.7
72.3
23.8
5,724.6
1,047.9
1,787.6
990.3
797.3
18.3
1.7
318.7
267.3
306.4
7.3
9.1
1.7
6.94
1.00
52.62
453.6
(176.7)
(285.6)
31.1
22.4
487.6
23.22
5.9
276.9
2,356.3
188
53
1.6
¥5,191.7
3,913.9
1,393.8
(116.0)
(370.9)
(113.0)
(254.0)
(17.3)
(2.2)
(4.9)
75.4
26.8
5,407.8
705.3
1,818.5
888.7
929.8
13.0
2.6
304.1
344.7
308.9
(4.1)
(29.0)
(4.6)
6.86
0.93
53.18
149.2
(325.6)
53.5
5.8
(117.2)
370.4
4.01
(3.4)
(176.4)
1,815.5
176
46
1.6
¥5,441.5
3,970.2
1,354.6
116.7
59.6
49.0
18.5
341.5
2.1
0.3
73.0
24.9
5,238.9
571.1
1,653.4
882.0
771.4
10.9
2.9
306.3
227.8
235.3
4.6
2.9
0.3
8.23
1.02
44.37
271.6
(148.0)
(159.8)
(7.2)
(43.3)
327.1
16.09
5.4
123.6
1,007.6
166
40
1.6
¥5,389.7
3,913.7
1,293.9
182.1
147.6
105.6
28.8
414.1
3.4
0.5
72.6
24.0
4,462.2
755.0
1,199.5
701.9
497.6
16.9
1.6
315.6
224.7
221.3
8.1
4.3
0.6
8.56
1.11
42.62
322.7
(189.5)
(132.7)
(8.3)
(7.8)
319.3
19.47
9.3
133.2
1,519.4
161
32
1.8
(cid:129) The Mobile Broadcasting business ceased operation at the end of the fi scal year ended March
31,2009. Prior-period data from the fiscal year ended March 31, 2008 has been reclassified to
conform with the current classifi cation.
(cid:129) Beginning with the fi scal year ended March 31,2010, Toshiba Corporation adopted ASC No.810
“Consolidation.” Prior-period data for the fi scal years up to March 31, 2009 has been reclassifi ed to
conform with the current classifi cation.
(cid:129) On June 17, 2010, Toshiba Corporation and Fujitsu Limited (“Fujitsu”) signed a Memorandum of
Understanding to merge their mobile phone businesses, followed by a defi nitive contract on July
29, 2010. On October 1, 2010, Toshiba Corporation transferred its mobile phone business to a
newly established company called Fujitsu Toshiba Mobile Communications Limited, and sold
80.1% of the shares of the new company to Fujitsu. The results of the mobile phone business are
not incorporated into consolidated net sales, operating income (loss), or income (loss) from
continuing operations, before income taxes and noncontrolling interests in the consolidated
A01_東芝様AR2011_Fact.indd 54
11.8.15 5:12:59 PM
2005
2006
2007
2008
2009
2010
TOSHIBA Annual Report 2011
(Billions of yen)
2011
¥5,647.2
4,149.3
1,346.1
151.8
112.0
54.8
46.0
372.5
2.7
0.8
73.5
23.8
4,571.4
815.5
1,111.4
683.4
428.0
17.8
1.4
323.0
316.8
213.7
7.3
5.9
1.0
8.83
1.25
41.33
305.5
(243.1)
(92.3)
5.6
(24.2)
295.0
24.87
7.5
62.4
1,442.1
165
31
2.0
¥6,061.9
4,450.4
1,394.0
217.5
159.7
82.6
78.2
436.8
3.6
1.3
73.4
23.0
4,727.1
1,002.2
917.5
611.4
306.1
21.2
0.9
345.2
337.3
227.4
10.5
8.6
1.7
9.22
1.30
39.59
501.4
(303.4)
(235.3)
13.2
(24.1)
270.9
32.77
9.4
198.0
2,201.8
172
32
1.9
¥6,859.7
5,115.3
1,497.2
247.2
315.9
152.5
137.4
639.2
3.6
2.0
74.6
21.8
5,932.0
1,108.3
1,158.5
956.2
202.3
18.7
1.0
365.3
373.8
258.8
10.6
13.0
2.6
9.36
1.29
39.01
561.5
(712.8)
154.8
34.9
38.4
309.3
41.46
8.5
(151.3)
2,533.4
191
32
1.9
¥7,404.3
5,548.7
1,615.2
240.4
258.1
110.5
127.4
676.0
3.2
1.7
74.9
21.8
5,935.6
1,022.3
1,261.0
740.7
520.3
17.2
1.2
370.3
464.5
339.4
9.2
12.0
2.1
8.96
1.25
40.74
247.1
(322.7)
46.6
(31.7)
(60.7)
248.6
41.96
6.7
(75.6)
2,155.9
198
33
2.0
¥6,512.7
5,242.5
1,503.6
(233.4)
(261.5)
61.6
(343.6)
119.6
(3.6)
(5.3)
80.5
23.1
5,453.2
447.3
1,810.7
776.8
1,033.9
8.2
4.0
357.5
355.5
306.9
(8.9)
(46.8)
(6.0)
8.09
1.14
45.11
(16.0)
(335.3)
478.5
(32.0)
95.2
343.8
0.40
(6.4)
(351.3)
822.4
199
34
2.0
¥6,291.2
4,852.0
1,314.0
125.2
34.4
33.5
(19.7)
367.1
2.0
(0.3)
77.1
20.9
5,451.2
797.4
1,218.3
960.9
257.4
14.6
1.5
311.8
209.4
252.5
5.1
(3.2)
(0.4)
8.10
1.15
45.08
451.4
(252.9)
(277.9)
3.0
(76.4)
267.4
18.44
3.7
198.5
2,046.8
204
35
1.9
¥6,398.5
4,897.5
1,260.7
240.3
195.5
40.7
137.8
486.6
3.8
2.2
76.5
19.7
5,379.3
868.1
1,081.3
769.5
311.8
16.1
1.2
319.7
231.0
215.7
10.4
16.6
2.5
7.71
1.18
47.35
374.1
(214.7)
(154.7)
(13.3)
(8.6)
258.8
34.57
7.7
159.4
1,724.7
203
35
1.8
results. Prior-period data relating to the discontinued operations has been reclassifi ed in accordance
with ASC No.205-20, “Presentation of Financial Statements - Discontinued Operations.”
*1
*2
*3
*4
*5
EBITDA = Income (loss) from continuing operations, before income taxes and noncontrolling
interests + Interest + Depreciation
Shareholders’ equity ratio (%) = Equity attributable to shareholders of Toshiba Corporation / Total
assets × 100
Debt / equity ratio (Times) = Interest-bearing debt / Equity attributable to shareholders of Toshiba
Corporation
Return on investment (ROI) (%) = Operating income (loss) / (Average equity attributable to
shareholders of Toshiba Corporation + Average equity attributable to noncontrolling interests +
Average interest-bearing debt) × 100
Return on equity (ROE) (%) = Net income (loss) attributable to shareholders of Toshiba
Corporation / Average equity attributable to shareholders of Toshiba Corporation × 100
*6
*7
*8
*9
*10
*11
*12
*13
Return on total assets (ROA) (%) = Net income (loss) attributable to shareholders of
Toshiba Corporation / Average total assets × 100
Inventory turnover (Times) = Net sales / Average inventory
Total assets turnover (Times) = Net sales / Average total assets
Inventory turnover (Days) = 365 / Inventory turnover
Debt / cash fl ow ratio (%) = (Net income (loss) attributable to shareholders of Toshiba
Corporation + Depreciation and amortization) / Average interest-bearing debt × 100
Interest coverage ratio (Times) = (Operating income (loss) + Interest and dividends) /
Interest expense
Free cash flow = Net cash provided by operating activities + Net cash used in
investing activities
Market capitalization = Common stock price [Year-end / Yen / Close] × Total issued shares
55
A01_東芝様AR2011_Fact.indd 55
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Consolidated Balance Sheets
March 31
ASSETS
Current Assets:
2007
2008
2009
2010
(Millions of yen)
2011
Cash and cash equivalents
¥ 309,312
¥ 248,649
¥ 343,793
¥ 267,449
¥ 258,840
Notes and accounts receivable, trade
Notes
Accounts
Allowance for doubtful notes and accounts
Inventories
Deferred tax assets
Prepaid expenses and other current assets
Long-term Receivables and Investments:
Long-term receivables
Investments in and advances to affi liates
Marketable securities and other investments
Property, Plant and Equipment:
Land
Buildings
Machinery and equipment
Construction in progress
106,395
1,295,808
(30,599)
801,513
138,714
370,064
80,312
64,260
44,122
1,253,108
1,038,396
1,160,389
(21,417)
851,452
148,531
368,747
(19,270)
758,305
141,008
394,139
(20,112)
795,601
134,950
379,207
2,991,207
2,929,382
2,720,631
2,761,606
47,311
1,093,948
(17,079)
864,382
161,197
391,069
2,799,668
19,329
240,249
250,536
510,114
156,445
1,146,350
2,594,284
104,612
4,001,691
7,423
321,166
264,149
592,738
128,210
1,160,549
2,598,042
215,937
4,102,738
3,987
340,756
190,110
534,853
3,337
366,250
253,267
622,854
2,540
416,431
241,409
660,380
98,116
996,709
2,698,626
114,617
105,663
1,016,520
2,508,934
97,309
3,908,068
3,728,426
99,834
996,409
2,330,565
113,132
3,539,940
(2,639,735)
900,205
Less—Accumulated depreciation
(2,681,489)
(2,770,560)
(2,818,489)
(2,749,700)
1,320,202
1,332,178
1,089,579
978,726
Other Assets:
Deferred tax assets
Other
211,336
899,103
285,757
795,582
352,948
755,214
355,687
732,300
1,110,439
1,081,339
1,108,162
1,087,987
¥5,931,962
¥5,935,637
¥5,453,225
¥5,451,173
356,592
662,474
1,019,066
¥5,379,319
For more information, please visit our IR website at http://www.toshiba.co.jp/about/ir/en/fi nance/index.htm
56
A01_東芝様AR2011_Fact.indd 56
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TOSHIBA Annual Report 2011
March 31
LIABILITIES AND EQUITY
Current Liabilities:
2007
2008
2009
2010
Short-term borrowings
¥ 71,626
¥ 257,831
¥ 747,971
¥ 51,347
Current portion of long-term debt
Notes and accounts payable, trade
Accounts payable, other and accrued expenses
Accrued income and other taxes
Advance payments received
Other current liabilities
130,703
1,365,231
508,888
77,625
229,635
427,583
262,422
1,224,259
516,046
89,763
248,280
387,386
285,913
1,003,864
366,219
38,418
268,083
357,305
206,017
1,191,885
375,902
42,384
317,044
303,866
2,811,291
2,985,987
3,067,773
2,488,445
(Millions of yen)
2011
¥ 152,348
159,414
1,194,229
380,360
38,197
271,066
302,695
2,498,309
Long-Term Liabilities:
Long-term debt
Accrued pension and severance costs
Other liabilities
Equity attributable to shareholders of Toshiba Corporation
956,156
540,216
191,263
740,710
634,589
182,175
776,768
719,396
130,007
960,938
725,620
148,548
1,687,635
1,557,474
1,626,171
1,835,106
769,544
734,309
197,541
1,701,394
Common stock
Additional paid-in capital
Retained earnings
274,926
285,765
681,795
280,126
290,936
774,461
Accumulated other comprehensive loss
(131,228)
(322,214)
Treasury stock, at cost
(2,937)
(1,044)
1,108,321
1,022,265
280,281
291,137
395,134
(517,996)
(1,210)
447,346
439,901
447,733
375,376
(464,250)
(1,305)
797,455
439,901
399,552
551,523
(521,396)
(1,461)
868,119
Equity attributable to noncontrolling interests
324,715
369,911
311,935
330,167
311,497
Commitments and contingent liabilities
¥5,931,962
¥5,935,637
¥5,453,225
¥5,451,173
¥5,379,319
March 31
2007
2008
2009
2010
Accumulated Other Comprehensive Loss:
Unrealized gains on securities
¥ 80,801
¥ 53,461
¥ 21,639
¥ 73,226
Foreign currency translation adjustments
Pension liability adjustment
Unrealized gains (losses) on derivative instruments
(21,938)
(190,118)
27
(117,552)
(256,839)
(1,284)
(222,773)
(314,578)
(2,284)
(231,467)
(303,348)
(2,661)
(Millions of yen)
2011
¥ 62,455
(275,108)
(308,681)
(62)
57
A01_東芝様AR2011_Fact.indd 57
11.8.15 5:13:01 PM
Consolidated Statements of Operations
Year ended March 31
Sales and Other Income:
Net sales
Interest and dividends
Equity in earnings of affi liates
Other income
Costs and Expenses:
Cost of sales
Selling, general and administrative
Interest
Other expense
2007
2008
2009
2010
(Millions of yen)
2011
¥6,859,729
¥7,404,284
¥6,512,656
¥6,291,208
¥6,398,505
24,162
39,300
154,873
26,482
28,023
212,621
19,305
9,596
146,778
7,965
22,385
62,793
8,704
18,478
67,811
7,078,064
7,671,410
6,688,335
6,384,351
6,493,498
5,115,315
1,497,204
31,917
117,758
5,548,757
1,615,171
39,778
209,648
5,242,465
1,503,599
33,646
170,092
4,852,002
1,313,958
35,650
148,328
6,762,194
7,413,354
6,949,802
6,349,938
4,897,547
1,260,685
32,331
107,386
6,297,949
Income (loss) from continuing operations,
before income taxes and noncontrolling interests
315,870
258,056
(261,467)
34,413
195,549
Income Taxes:
Current
Deferred
Income (loss) from continuing operations, before noncontrolling interests
Loss from discontinued operations, before noncontrolling interests
Net income (loss) before noncontrolling interests
Less: Net income (loss) attributable to noncontrolling interests
88,911
63,530
163,429
(10,324)
153,105
15,676
102,740
7,789
147,527
(5,349)
142,178
14,765
52,308
9,254
(323,029)
(24,325)
(347,354)
(3,795)
52,108
(18,574)
879
(6,172)
(5,293)
14,450
57,517
(16,797)
154,829
(8,183)
146,646
8,801
Net income (loss) attributable to shareholders of Toshiba Corporation
¥ 137,429
¥ 127,413
¥ (343,559)
¥ (19,743)
¥ 137,845
Quarterly Performance Highlights
(Millions of yen)
1st quarter
2nd quarter
3rd quarter
4th quarter
Year ended March 31
Net sales
Operating income (loss)
2011
2010
¥1,313,718 ¥1,451,366
33,791
(34,354)
2011
2010
¥1,582,975 ¥1,629,775
71,022
36,463
2011
2010
¥1,563,279 ¥1,588,474
37,457
14,494
2011
2010
¥1,831,236 ¥1,728,890
98,003
108,645
Net income (loss) attributable to
(57,800)
shareholders of Toshiba Corporation
Basic earnings (loss) per share
attributable to shareholders of
Toshiba Corporation (¥)
(16.58)
466
0.11
94
0.02
27,350
(10,634)
12,371
48,597
97,658
6.46
(2.51)
2.92
11.47
23.06
For more information, please visit our IR website at http://www.toshiba.co.jp/about/ir/en/fi nance/index.htm
58
A01_東芝様AR2011_Fact.indd 58
11.8.15 5:13:01 PM
Consolidated Statements of Cash Flows
TOSHIBA Annual Report 2011
Year ended March 31
2007
2008
2009
2010
Cash Flows from Operating Activities:
Net income (loss) before noncontrolling interests
¥153,105
¥142,178
¥(347,354)
¥ (5,293)
(Millions of yen)
2011
¥146,646
259,604
8,611
(22,771)
(6,406)
3,870
96
(100,945)
59,176
(3,204)
(22,363)
51,770
374,084
56,055
5,427
(229,229)
(6,201)
(38,424)
(2,328)
(214,700)
159,807
(406,846)
109,895
(17,601)
(159)
188
(154,716)
(13,277)
(8,609)
267,449
¥258,840
292,875
380,160
349,764
298,998
(22,720)
56,444
(12,579)
(79,416)
(51,620)
(82,926)
220,619
23,353
29,459
34,880
561,474
112,015
9,586
(376,707)
(13,508)
51,044
(495,212)
(712,782)
*1
467,717
(199,570)
(81,305)
(30,431)
(841)
(774)
154,796
34,903
38,391
270,921
¥309,312
(19,035)
10,635
(13,340)
(146,369)
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)
(1,138)
(715)
46,573
(31,662)
(60,663)
309,312
¥248,649
(13,733)
(7,843)
1,215
(34,587)
186,676
60,517
(182,501)
(51,647)
27,018
(3,536)
(16,011)
210,653
4,035
(477,720)
(29,609)
(43,399)
732
(335,308)
337,415
(275,976)
469,026
(50,350)
(345)
(1,318)
478,452
(31,989)
95,144
248,649
¥343,793
10,985
(22,809)
(11,566)
32,236
(98,347)
(35,554)
176,443
3,899
58,592
43,861
451,445
36,119
6,931
(215,876)
(14,316)
8,288
(74,068)
(252,922)
397,181
(303,748)
(680,346)
(5,728)
(109)
314,889
(277,861)
2,994
(76,344)
343,793
¥267,449
*2
Adjustments to reconcile net income (loss)
before noncontrolling interests to net cash
provided by (used in) operating activities
Depreciation and amortization
Provisions for pension and
severance costs, less payments
Deferred income taxes
Equity in (earnings) losses of affi liates, net of dividends
(Gain) loss from sales, disposal and impairment of property,
plant and equipment, intangible assets and securities, net
(Increase) decrease in notes and accounts receivable, trade
(Increase) decrease in inventories
Increase (decrease) in notes and accounts payable, trade
Increase (decrease) in accrued income and other taxes
Increase (decrease) in advance payments received
Other
Net cash provided by (used in) 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 affi liates
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
Purchase of treasury stock, net
Other
Net cash provided by (used in) fi nancing 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
¥ 30,892
¥ 59,272
¥ 40,356
¥107,431
¥ 35,004
¥140,923
¥ 31,036
¥ 4,487
¥ 33,478
¥ 61,342
*1:
*2:
Includes the acquisition of Westinghouse Group in the amount of ¥461,338 million.
Includes the proceeds from stock offering of ¥317,541 million.
A01_東芝様AR2011_Fact.indd 59
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59
Industry Segment Performance
Year ended March 31
2007 Change (%)
2008 Change (%)
2009 Change (%)
2010 Change (%)
(Billions of yen)
2011 Change (%)
Digital Products
Net sales
Share of net sales (%)
Operating income
Operating income ratio (%)
Number of employees (Thousands)
R&D expenditures
Depreciation
Capital expenditures
Total assets
Electronic Devices
Net sales
Share of net sales (%)
Operating income (loss)
Operating income ratio (%)
Number of employees (Thousands)
R&D expenditures
Depreciation
Capital expenditures
Total assets
Social Infrastructure
Net sales
Share of net sales (%)
Operating income
Operating income ratio (%)
Number of employees (Thousands)
R&D expenditures
Depreciation
Capital expenditures
Total assets
Home Appliances
Net sales
Share of net sales (%)
Operating income (loss)
Operating income ratio (%)
Number of employees (Thousands)
R&D expenditures
Depreciation
Capital expenditures
Total assets
Others
Net sales
Share of net sales (%)
Operating income (loss)
Operating income ratio (%)
Number of employees (Thousands)
R&D expenditures
Depreciation
Capital expenditures
Total assets
60
¥2,536.1
34.2
4.6
0.2
46
89.8
41.0
39.0
1,134.9
1,601.7
21.6
121.9
7.6
35
174.2
164.7
269.7
1,410.1
2,079.0
28.1
96.2
4.6
67
82.2
42.0
58.8
2,396.3
748.9
10.1
9.7
1.3
27
18.7
18.3
24.7
438.8
446.2
6.0
17.8
4.0
16
0.4
25.4
16.1
615.5
12.5
—
—
—
2.2
10.7
35.2
(8.6)
13.8
20.6
—
(3.3)
—
6.1
(0.2)
14.0
12.6
10.6
10.3
—
35.6
—
17.5
16.0
18.5
33.4
51.1
8.9
—
257.0
—
8.0
5.5
9.9
(9.8)
9.5
1.5
—
(21.8)
—
33.3
(66.1)
(1.0)
108.5
6.5
¥2,674.2
33.4
8.8
0.3
49
95.3
36.4
36.9
1,183.3
1,679.0
21.0
74.0
4.4
35
166.2
227.2
367.4
1,496.7
2,431.9
30.4
130.5
5.4
70
88.3
60.2
67.7
2,347.8
774.3
9.7
3.9
0.5
28
19.2
22.7
20.0
439.0
439.9
5.5
22.6
5.1
16
1.3
31.6
9.4
532.7
5.4
—
90.0
—
6.5
6.1
(11.1)
(5.5)
4.3
4.8
—
(39.3)
—
0.0
(4.6)
37.9
36.2
6.1
17.0
—
35.6
—
4.5
7.4
43.3
15.2
(2.0)
3.4
—
(59.6)
—
3.7
2.7
24.1
(19.1)
0.0
(1.4)
—
27.0
—
0.0
270.1
24.5
(41.5)
(13.4)
¥2,311.4
32.8
2.4
0.1
48
81.4
31.0
37.5
912.1
(13.6)
—
(73.1)
—
(2.0)
(14.5)
(15.0)
1.8
(22.9)
¥2,263.2
33.4
21.3
0.9
54
69.3
34.3
21.1
1,085.3
(2.9)
(2.1) ¥2,328.6
—
33.8
—
13.2 (38.1)
798.9
—
—
(4.1)
12.6
4.2
(14.9)
(9.6)
10.8
26.3
(43.9)
(6.9)
19.0
0.6
52
72.2
31.0
26.6
1,010.7
1,276.4
18.1
(24.0)
—
(320.0) —
(25.1) —
0.0
1.6
(9.2)
(27.3)
(6.8)
35
168.8
206.3
266.9
1,394.3
2,405.3
34.1
113.9
4.7
74
88.7
63.3
105.8
2,436.4
(1.1)
—
(12.7)
—
5.7
0.4
5.1
56.3
3.8
674.3
9.6
(12.9)
—
(27.1) —
(4.0) —
(3.6)
27
(5.4)
18.2
26.5
28.7
(7.6)
18.5
(12.2)
385.2
(12.6)
384.3
5.4
—
(3.6) —
(0.9) —
(6.3)
15
(70.2)
0.4
(42.4)
18.2
135.0
22.2
(25.1)
399.0
(0.5)
1,270.0
18.7
—
(20.4) —
(1.6) —
(9.1)
32
(14.6)
144.2
(18.6)
167.9
(59.3)
108.6
(7.7)
1,286.5
2,319.0
34.2
137.2
5.9
78
84.8
67.4
99.8
2,458.8
(3.6)
—
20.5
—
5.4
(4.4)
6.6
(5.7)
0.9
(14.0)
579.8
—
8.6
(5.4) —
(0.9) —
(12.4)
24
(27.4)
13.2
(32.3)
19.5
(5.3)
17.5
(6.0)
362.2
(10.1)
345.6
5.1
—
(7.7) —
(2.2) —
6.3
16
(22.5)
0.3
(56.4)
7.9
(59.9)
8.9
(5.3)
377.8
6.1
1,347.7
—
19.5
—
86.8
6.4
—
29 (11.0)
135.7
(5.9)
134.6 (19.8)
4.1
113.1
(2.7)
1,251.9
2,267.7
32.9
137.1
6.0
81
95.9
68.6
94.4
2,537.3
(2.2)
—
(0.1)
—
3.6
13.1
1.7
(5.4)
3.2
3.4
599.8
—
8.7
—
8.8
—
1.5
(4.9)
23
5.4
13.9
16.8 (13.5)
13.9 (20.5)
(5.8)
341.1
2.1
352.9
5.1
—
(7.6) —
(2.2) —
17.0
19
2.0 586.2
(1.7)
7.8
(9.3)
8.1
(9.2)
343.1
A01_東芝様AR2011_Fact.indd 60
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Long-term Debt
TOSHIBA Annual Report 2011
March 31
Loans, principally from banks and insurance companies,
due 2010 to 2029 with weighted-average interest rate of 1.34% at March 31, 2010 and
due 2011 to 2029 with weighted-average interest rate of 1.52% at March 31, 2011
Unsecured yen bonds, due 2010 to 2016 with interest ranging
from 1.05% to 2.20% at March 31, 2010 and due 2013 to 2020
with interest ranging from 0.89% to 2.20% at March 31, 2011
Interest deferrable and early redeemable subordinated bonds:
Due 2069 with interest rate of 7.50% at March 31, 2011
Zero coupon convertible bonds with stock acquisition rights:
Due 2011 convertible at ¥542 per share at March 31, 2011
Euro yen medium-term notes of subsidiaries, due 2011 to 2014 with interest
ranging from 1.31% to 1.67% at March 31, 2010 and due 2011 with interest
rate of 1.31% at March 31, 2011
Capital lease obligations
Less—Portion due within one year
Secured
Unsecured
2010
¥ —
¥ 595,581
Secured
Unsecured
(Millions of yen)
2011
¥ —
¥ 293,885
240,000
310,000
180,000
95,010
992
55,372
1,166,955
(206,017)
¥ 960,938
180,000
95,010
502
49,561
928,958
(159,414)
¥ 769,544
The aggregate annual maturities of long-term debt, excluding those of capital lease obligations, are as follows:
Year ending March 31
2011
2012
2013
2014
2015
2016 and thereafter
2016
2017 and thereafter
Total
2010
¥ 190,085
207,255
182,072
226,826
34,498
270,847
—
—
¥1,111,583
(Millions of yen)
2011
¥ —
137,941
182,229
178,884
34,000
—
81,004
265,339
¥879,397
For more information on corporate bonds and ratings, please visit our IR website at
http://www.toshiba.co.jp/about/ir/en/stock/bond.htm
A01_東芝様AR2011_Fact.indd 61
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61
Stock/Shareholder Information
Common Stock Price Trends
Year ended March 31
2007
2008
2009
2010
2011
Common stock price (Yen, fi scal year)
High
Low
842
652
1,185
649
953
204
572
258
Nikkei average (Yen)
17,287.65
12,525.54
8,109.53
11,089.94
Number of shares issued (Millions of shares)
Market capitalization (Billions of yen)
Earnings per share attributable to shareholders of Toshiba Corporation (Yen)
—Basic (EPS)
—Diluted (EPS)
Annual dividends per share (Yen)
Payout ratio (%) (Consolidated)
Number of shareholders
Price-to-earnings ratio (PER) (Times)
Price-to-cash fl ows ratio (PCFR) (Times)
Price-to-book value ratio (PBR) (Times)
3,219
2,533.4
42.76
39.45
11
25.7
411,723
18.41
5.9
2.3
3,237
2,155.9
39.46
36.59
12
30.4
375,115
16.88
4.2
2.1
3,238
822.4
4,238
2,046.8
(106.18)
(106.18)
5
—
(4.93)
(4.93)
0
—
462,649
473,230
—
132.5
1.8
—
6.9
2.6
Note: Common stock price is based on the Tokyo Stock Exchange, Inc. market quotation.
556
309
9,755.10
4,238
1,724.7
32.55
31.25
5
15.4
459,114
12.51
4.3
2.0
Distribution of Shareholders
(Percentage of total voting rights)
March 31
2007
2008
2009
2010*
Individuals and others in Japan
31.2
%
27.3
%
39.4
%
31.3
%
Overseas investors
Companies in Japan
Securities companies in Japan
25.0
24.6
14.9
24.7
2.7
1.7
4.1
1.0
4.9
1.2
3.9
2.0
Financial institutions in Japan
39.4
43.0
39.6
38.1
2011*
30.8
%
27.3
3.8
1.5
36.6
* March 2010 and 2011 apply percentage of shareholding ratio by shareholder.
(%)
100
80
60
40
20
0
31.2
3
2
27.3
25.0
2
2.7
222
1.7
111
39.4
3
24.6
2
4.1
444
11
1.0
4
43.0
39.4
3
14.9
1
4.9
444
1.2
11
1
3
39.6
31.3
3
30.8
24.7
2
3.9
3
3333
2.0
22
2
2
27.3
3.8
1.5
38.1
3
36.6
2007
2008
2009
2010
2011
Major Shareholders
The Master Trust Bank of Japan, Limited (trust accounts)
Japan Trustee Service Bank, Limited (trust accounts)
The Dai-ichi Life Insurance Company, Limited
Nippon Life Insurance Company
SSBT OD05 OMNIBUS ACCOUNT-TREATY CLIENTS
Toshiba Stock Purchase Plan
Japan Trustee Services Bank, Limited (trust accounts 9)
Japan Trustee Services Bank, Limited (trust accounts 4)
NIPPONKOA Insurance Company, Limited
Sumitomo Mitsui Banking Corporation
62
(As of March 31, 2011)
Percentage of shareholding ratio
(Rounded to one decimal place)
5.7%
5.2
2.7
2.6
2.0
1.9
1.7
1.5
1.2
1.2
A01_東芝様AR2011_Fact.indd 62
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Corporate Data
TOSHIBA Annual Report 2011
As of March 31, 2011
Headquarters:
Founded:
Number of Employees:
Fiscal Year:
Authorized Number of Shares:
Number of Shares Issued:
Number of Shareholders:
Stock Exchange Listings:
ISIN:
1-1, Shibaura 1-chome, Minato-ku, Tokyo, Japan
July 1875
Approx. 203,000 (consolidated)
April 1 to March 31
10 billion
4,237,602,026
459,114
Tokyo, Osaka, Nagoya, London
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:
Investor Relations Group
Corporate Communications Office
Toshiba Corporation
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
IR WEBSITE
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, fi nancial and competitive data currently available. Furthermore, they are subject
to a number of risks and uncertainties that, without limitation, relate to economic conditions, worldwide mega-competition in the electronics business, customer
demand, foreign currency exchange rates, tax rules, regulations and other factors. Toshiba therefore wishes to caution readers that actual results may differ
materially from our expectations.
Regarding items reported in this Annual Report
Any corrections made to this Annual Report will be published on our website, as referenced above.
Product names may be trademarks of their respective companies.
A01_東芝様AR2011_表紙.indd 63
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63
A01_東芝様AR2011_表紙.indd 1
11.8.15 5:15:51 PM
TOSHIBA CORPORATION
2011
FINANCIAL REVIEW
Annual Report 2011 (cid:129) 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
Operating income (loss) (Note 1)
Income (loss) from continuing operations, before income
taxes and noncontrolling interests
Income taxes
Net income (loss) attributable to shareholders of the
Company
Per share of common stock:
Earnings (loss) attributable to shareholders of the
Company (Note 2)
–Basic
–Diluted
Cash dividends
Total assets
Equity attributable to shareholders of the Company
Capital expenditures (Property, plant and equipment)
Depreciation (Property, plant and equipment)
R&D expenditures
Number of employees
2010
2011
Millions of yen,
except per share amounts
2009
¥ 6,398,505 ¥ 6,291,208 ¥ 6,512,656 ¥ 7,404,284 ¥ 6,859,729
5,115,315
1,497,204
247,210
4,897,547
1,260,685
240,273
5,242,465
1,503,599
(233,408)
4,852,002
1,313,958
125,248
5,548,757
1,615,171
240,356
2007
2008
195,549
40,720
34,413
33,534
(261,467)
61,562
258,056
110,529
315,870
152,441
137,845
(19,743)
(343,559)
127,413
137,429
¥
32.55 ¥
31.25
5.00
(4.93) ¥
(4.93)
—
(106.18) ¥
(106.18)
5.00
39.46 ¥
36.59
12.00
42.76
39.45
11.00
¥ 5,379,319 ¥ 5,451,173 ¥ 5,453,225 ¥ 5,935,637 ¥ 5,931,962
1,108,321
373,841
258,835
365,260
191,000
1,022,265
464,497
339,363
370,273
198,000
868,119
231,001
215,699
319,693
203,000
797,455
209,380
252,523
311,751
204,000
447,346
355,516
306,895
357,520
199,000
Notes: 1) Operating income (loss) is derived by deducting the cost of sales and selling, general and administrative expenses from net sales, and reported as a measurement of segment profit or loss.
This result is regularly reviewed to support decision-making in allocation of resources and to assess performance. Certain operating expenses such as restructuring charges and gains (losses)
from the sale or disposition of fixed assets are not included in it.
2) Basic earnings (loss) per share attributable to shareholders of the Company (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.
3) On June 17, 2010, the Company and Fujitsu Limited (“Fujitsu”) signed a Memorandum of Understanding to merge their mobile phone businesses, followed by a definitive contract on July 29,
2010. On October 1, 2010, the Company transferred its mobile phone business to a newly established company called Fujitsu Toshiba Mobile Communications Limited, and sold 80.1% of the
shares of the new company to Fujitsu. The results of the mobile phone business are not incorporated into consolidated net sales, operating income (loss), or income (loss) from continuing
operations, before income taxes and noncontrolling interests in the consolidated results. Prior-period data relating to the discontinued operations has been reclassified in accordance with
Accounting Standards Codification (“ASC”) No.205-20, “Presentation of Financial Statements – Discontinued Operations”.
4) Beginning with the fiscal year ended March 31, 2010, the Company adopted ASC No.810 “Consolidation”. Prior-period data for the fiscal years ended from March 31, 2007 through 2009 has
been reclassified to conform with the current classification.
5) The Mobile Broadcasting business ceased operation at the end of the fiscal year ended March 31, 2009. Prior-period data for the fiscal years ended from March 31, 2007 through 2008 has been
reclassified to conform with the current classification.
2. Management’s Discussion and Analysis 18. Consolidated Balance Sheets 20. Consolidated Statements of Income
21. Consolidated Statements of Equity 22. Consolidated Statements of Cash Flows
23. Notes to Consolidated Financial Statements 63. Report of Independent Auditors
2
SCOPE OF CONSOLIDATION
As of the end of March 2011, Toshiba Group (“the Group”) comprised Toshiba Corporation (“the Company”) and 498
consolidated subsidiaries and its principal operations were in the Digital Products, Electronic Devices, Social
Infrastructure and Home Appliances business domains.
Of the consolidated subsidiaries, 106 were involved in Digital Products, 39 in Electronic Devices, 221 in Social
Infrastructure, 58 in Home Appliances and 74 in Others.
The number of consolidated subsidiaries was 44 less than at the end of March 2010. 202 affiliates were accounted for by
the equity method as of the end of March 2011.
RESULTS OF OPERATIONS
NET SALES AND INCOME (LOSS)
Despite uncertainties stemming from fiscal austerity and financial conditions in parts of Europe, the global economy
continued to recover, supported by economic stimulus packages in a number of countries. Most notably, the Chinese and
other Asian economies continued their expansion, driven by domestic demand. The economies of the United States and
Europe also saw gradual recovery. While there are still concerns stemming from the recent rise in crude oil prices and the
state of government financial positions in some countries of Europe, the global economy is expected to continue to
recover.
In Japan, the economy showed signs of an upturn, reflecting the improvement in the global economy and the effect of
economic stimulus packages, but unprecedented human suffering and property damage were wrought by the Great East
Japan Earthquake of March 11, 2011. People’s lives and economic activities were affected significantly by rolling blackouts
due to power shortages, problems in the supply chain resulting from damage to materials manufacturing facilities and
disrupted logistics systems, and the outlook still remains uncertain.
In these circumstances, the Group promoted measures to secure a return to the path of sustained growth with steadily
higher profit and implemented a thoroughgoing business structure transformation in order to enhance high growth with
profitability. The Group also steadily advanced business structure reforms, further promoting strategic allocation of
managerial resources and improving operational capabilities, in order to put in place a profit-making system that will
enable the Group to generate profit regardless of the market situation. While some subsidiaries halted production for a
time following the earthquake, its impact on the overall business performance of the Group companies was relatively
limited. With respect to procurement, every effort is being made to secure materials and parts, including promoting
adoption of substitutes, to minimize impacts on production.
The Company’s consolidated net sales for FY2010 were 6,398.5 billion yen, an increase of 107.3 billion yen against the
previous year. This result mainly reflected higher sales in the Visual Products business, including TVs, and in the
Semiconductor business, including Memories, and was achieved despite yen appreciation and the impact of the Great East
Japan Earthquake. Consolidated operating income increased by 115.1 billon yen to 240.3 billion yen. This result reflected
significant improvements in the Semiconductor business and the LCD business, a healthy performance by the Home
Appliance segment and the continued high profit level of the Social Infrastructure segment. The Digital Products
segment, the Electric Devices segment, the Social Infrastructure segment and the Home Appliance segment all secured
profit.
Income from continuing operations before income taxes and noncontrolling interests improved by 161.1 billion yen to
195.5 billion yen, net income (loss) attributable to shareholders of the Company improved by 157.5 billion yen to 137.8
billion yen.
Consolidated operating income and net income (loss) attributable to shareholders of the Company returned to the
levels recovered in fiscal year 2007, prior to the financial crisis.
KEY PERFORMANCE INDICATORS
Following are the key performance indicators (“KPIs“) that the Management of the Group uses in managing its business.
Net sales and operating income are basic indicators to measure the business results of the Group. Operating income is
regularly reviewed to support decision-making in allocations of resources and to assess performance. Operating income
ratio (ratio of operating income to net sales) is also KPIs. To assess financial position of the Group, the Management
emphasizes shareholders’ equity ratio (ratio of equity attributable to shareholders of the Company to total assets) and
debt-to-equity ratio. Active capital investment and R&D activity is indispensable for growth of the Group and accordingly
capital expenditure and R&D expenditure are KPIs. To measure efficiency of investments and business results, the
Management uses ROI (return on investment) and ROE (return on equity), respectively.
3
Management’s Discussion and Analysis
Year ended March 31
Net sales
Operating income (Note 1)
Operating income ratio (%)
Return on equity (ROE) (%) (Note 2)
Shareholders’ equity ratio (%)
Debt/equity ratio (%)
Capital expenditures (Note 3)
R&D expenditures
Return on investment (ROI) (%) (Note 4)
Billions of yen
2011
6,398.5
240.3
3.8
16.6
16.1
125
334.0
319.7
10.4
2010
6,291.2
125.2
2.0
(3.2)
14.6
153
209.9
311.8
5.1
Notes: 1) Operating income is derived by deducting the cost of sales and selling, general and administrative expenses from net sales. This result is regularly reviewed to support decision-making in
allocations of resources and to assess performance. Certain operating expenses such as restructuring charges and gains (losses) from the sale or disposition of fixed assets are not
included in it.
2) ROE is net income attributable to shareholders of the Company divided by equity attributable to shareholders of the Company.
3) Capital expenditure is on an ordering amount basis. The capital expenditure amount includes the Group’s portion in the investments made by Flash Alliance, Ltd. etc., which are
companies accounted for by the equity method.
4) ROI is operating income divided by total equity plus total debts.
5) On June 17, 2010, the Company and Fujitsu Limited (“Fujitsu”) signed a Memorandum of Understanding to merge their mobile phone businesses, followed by a definitive contract on
July 29, 2010. On October 1, 2010, the Company transferred its mobile phone business to a newly established company called Fujitsu Toshiba Mobile Communications Limited, and sold
80.1% of the shares of the new company to Fujitsu. The results of the mobile phone business are not incorporated into consolidated net sales, operating income (loss), or income (loss)
from continuing operations, before income taxes and noncontrolling interests in the consolidated results. Prior-period data relating to the discontinued operations has been reclassified
in accordance with Accounting Standards Codification (“ASC”) No.205-20, “Presentation of Financial Statements – Discontinued Operations”.
The Company’s consolidated net sales for FY2010 were 6,398.5 billion yen, an increase of 107.3 billion yen against the
previous year. This result mainly reflected higher sales in the Visual Products business, including TVs, and in the
Semiconductor business, including Memories, and was achieved despite yen appreciation and the impact of the Great East
Japan Earthquake. Consolidated operating income increased by 115.1 billion yen to 240.3 billion yen. This result reflected
significant improvements in the Semiconductor business and the LCD business, a healthy performance by the Home
Appliance segment and the continued high profit level of the Social Infrastructure segment. The Digital Products
segment, the Electric Devices segment, the Social Infrastructure segment and the Home Appliance segment all secured
profit. This resulted in an improved operating income ratio and ROE, 3.8% and 16.6%, respectively. Also, ROI increased
by 5.3 points to 10.4%.
Equity attributable to the shareholders of the Company, increased to 868.1 billion yen, an increase of 70.7 billion yen
against the end of March 2010, despite a deterioration in accumulated other comprehensive loss of 57.1 billion yen, due to
impacts from fluctuations in foreign exchange rates and a downturn in stock market prices. This reflects a net income
attributable to shareholders of the Company of 137.8 billion yen.
Total debt decreased by 137.0 billion yen from the end of March 2010 to 1,081.3 billion yen. As a result of the
foregoing, the shareholders’ equity ratio at the end of March 2011 was 16.1%, a 1.5-point improvement from the end of
March 2010, and the debt-to-equity ratio at the end of March 2011 was 125%, a 28-point improvement from the end of
March 2010.
Placing importance on efficiency of investment, the Group took a very active approach during the term in its capital
investment in fields in which growth is expected. As a result, capital expenditure on ordering amount basis amounted to
334.0 billion yen, which was 14.0 billion yen above the initial capital investment plan of 320.0 billion yen. Compared with
the 209.9 billion yen invested last year, this amounts to a considerable increase of 124.1 billion yen.
4
DIVIDEND
While giving full consideration to such factors as the strategic investments necessary to secure medium- to long-term
growth, the Company 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 has secured a reasonable level of profit in this fiscal year
(fiscal year 2010). Accordingly, following full consideration of the Company’s future business plans, financial position and
shareholders’ expectations, the Company has decided to pay both an interim dividend and a year-end dividend. The
Company paid 2.0 yen per share as the interim dividend and the year-end dividend has been set at 3.0 yen per share. As a
result, the annual dividend for FY2010 will be a 5.0 yen per share.
The Company will carefully examine and decide on the dividend plan for the next term, FY2011, in light of the Group’s
financial position and strategic investment plans, and other factors will announce the dividend for FY2011 as soon as it is
determined.
RESULTS BY INDUSTRY SEGMENT
Year ended March 31
Digital Products
Electronic Devices
Social Infrastructure
Home Appliances
Others
Eliminations
Total
Net Sales
Operating Income (loss)
Billions of yen
—
2,328.6
1,347.7
2,267.7
599.8
352.9
(498.2)
6,398.5
Change (%)
3%
6%
(2%)
3%
2%
—
2%
—
13.2
86.8
137.1
8.8
(7.6)
2.0
240.3
Change
(8.1)
107.2
(0.1)
14.2
0.1
—
115.1
DIGITAL PRODUCTS
The Digital Products segment saw overall sales increase by 65.4 billion yen to 2,328.6 billion yen. The Visual Products
business saw sales rise, reflecting the approaching end of analog broadcasting in Japan, positive results from eco-point-the
Japanese government’s program to stimulate domestic demand-and higher overseas sales, primarily in emerging countries,
including those of Asia. The PC business also saw higher sales in both the domestic and overseas markets, mainly due to
higher shipment in the U.S. and Asia and the launch of 25th anniversary models. The Storage Products business saw
lower sales, reflecting the impact of price erosion.
Overall segment operating income decreased by 8.1 billion yen to 13.2 billion yen. The PC business recorded higher
operating income on higher sales and cost reductions and the Retail Information Systems and the Office Equipment
businesses also reported healthy performances. The Visual Products business maintained profit due to higher sales in
emerging counties, but at a lower level than in the previous year, due to changes in foreign exchange rates and the impact
of the Great East Japan Earthquake. The Storage Products business reported a significantly worsened operating loss on
lower sales.
ELECTRONIC DEVICES
The Electronic Devices segment saw sales increase by 77.7 billion yen to 1,347.7 billion yen. The Semiconductor business
recorded higher sales on higher sales in Memories, reflecting expanded demand for mobile products, such as smartphones,
and solid state drives (SSD)-data storage devices based on NAND flash memories-and price stability in NAND flash
memories. The LCD business also reported a healthy performance.
Overall segment operating income (loss) improved significantly by 107.2 billion yen to 86.8 billion yen. Memories
recorded a healthy performance, primarily as a result of higher sales and cost reductions, and the LCD business improved
on cost reductions and progress in business restructuring.
5
Management’s Discussion and Analysis
SOCIAL INFRASTRUCTURE
The Social Infrastructure segment saw overall sales decline by 51.3 billion yen to 2,267.7 billion yen. The Power Systems
and Industrial Systems businesses recorded higher sales thanks to a healthy performance by the Industrial Systems
business in overseas markets. However, the Infrastructure Systems business, the IT Solutions business and the Medical
Systems business all felt the influences of downturns in market demand and price erosion and reported weak
performances.
Segment operating income stood at 137.1 billion yen, close to the same level as a year earlier, and the profit level
remained high. The Power Systems and Industrial Systems businesses recorded higher operating income on a healthy
performance in the Power Systems business. Both the Infrastructure Systems business and the Medical Systems business
saw lower operating income on decreased sales.
HOME APPLIANCES
The Home Appliances segment saw sales increase by 20.0 billion yen to 599.8 billion yen. White Goods including Air-
conditioners reported a healthy performance and a positive result that mainly stemmed from the continued effect of the
eco-points program and a hot summer in Japan. Lighting Systems also reported a healthy performance mainly due to
increased sales of LED lighting and a recovery in domestic housing and building starts.
The segment as a whole recorded an operating income of 8.8 billion yen, an improvement of 14.2 billion yen against the
previous year, mainly on a healthy performance in Air-conditioners in a hot summer in Japan, a solid performance in
refrigerators and progress in restructuring, including reorganizing facilities and reshaping business.
OTHERS
Others saw sales increase by 7.3 billion yen to 352.9 billion yen, with the result that its operating loss improved by 0.1
billion yen to 7.6 billion yen.
The Company’s Consolidated Financial Statements are based on U.S. GAAP.
Operating income (loss) is derived by deducting the cost of sales and selling, general and administrative expenses from
net sales, and reported as a measurement of segment profit or loss. This result is regularly reviewed to support decision-
making in allocations of resources and to assess performance. Certain operating expenses such as restructuring charges
and gains (losses) from the sale or disposition of fixed assets are not included in it.
The Mobile Broadcasting business ceased its operation at the end of FY2008. On June 17, 2010, the Company and
Fujitsu Limited (“Fujitsu”) signed a Memorandum of Understanding to merge their mobile phone businesses, followed by
a definitive contract on July 29, 2010. On October 1, 2010, the Company transferred its mobile phone business to a newly
established company called Fujitsu Toshiba Mobile Communications Limited (“FT MOBILE”), and sold 80.1% of the
shares of the new company to Fujitsu. The results of the Mobile Broadcasting business and FT MOBILE are not
incorporated into consolidated net sales, operating income (loss), or income (loss) from continuing operations, before
income taxes and noncontrolling interests in the consolidated results. The businesses are classified as discontinued in the
consolidated accounts in accordance with ASC No.205-20, “Presentation of Financial Statements – Discontinued Operations”.
Consolidated net income (loss) (consolidated net income (loss) attributable to shareholders of the Company), however,
includes the operating results of the Mobile Broadcasting business and the Mobile Phone business. Prior-period data
relating to the discontinued operations has been reclassified to conform with the current classification.
RESEARCH AND DEVELOPMENT
In response to the Great East Japan Earthquake, the Group has been promoting R&D of the products which contribute
to the restoration of the earthquake damage and electricity saving. Also, the Group has re-examined its R&D with a view
of constructing safer and more secured communities. In the medium term, the Group plans to accelerate overseas
operations, aiming to evolve into a world-leading diversified electric/electronics manufacturer. The Group takes
customers’ needs in advance and promotes R&D to create the world’s first products and services with astonishment and
impression.
The Group has Strengthened Competitiveness and implemented investment for further growth:
1) Company-wide staff division for R&D has researched on the technologies which would become a basis of innovative
products focusing on Mega-Trends (expected business chances in the field of vital and healthcare service, such as the
demands for energy and environment in emerging countries, the demands for medical care and education, and in the
field of ICT (Information and Communication Technology) accompanied by world-wide digitalization, networking,
and large-volume information transfer);
2) R&D facilities of the in-house companies and other operating companies have focused on developing basic
6
technologies leading to brand-new products ahead of other competitors; and have enhanced the efficiency of R&D
activities by promoting common platforms, using overseas software developing subsidiaries, and focusing on growing
markets.
The Group’s overall R&D expenditure reached 319.7 billion yen in the fiscal year ended March 31, 2011. Expenditures
for each business segment were as follows:
Digital Products
Electronic Devices
Social Infrastructure
Home Appliances
Others
CAPITAL EXPENDITURES
Billions of yen
72.2
135.7
95.9
13.9
2.0
CAPITAL EXPENDITURE OVERVIEW
Placing importance on efficiency of investment, the Group took a very active approach during the term in its capital
investment in fields in which growth is expected. As a result, capital expenditure on an ordering basis amounted to 334.0
billion yen, which was 14.0 billion yen above the initial capital investment plan of 320.0 billion yen. Compared with the
209.9 billion yen invested last fiscal year, this amounts to a considerable increase of 124.1 billion yen.
In the Electronic Devices segment, while the Group continued its focus on investment for NAND flash memories for
which increased demand is expected, it also implemented investment to ramp up production of power devices and other
investments such as a building for manufacturing medium and small sized LCDs. In the Social Infrastructure segment,
the Group invested to improve manufacturing systems for the electric power distribution system businesses of emerging
countries and also invested in the automobile related business.
This capital expenditure includes the Group’s portion in the investments made by Flash Alliance, Ltd. and other
affiliates accounted for by the equity method.
In the Digital Products segment, capital investments amounted to 23.8 billion yen for development and manufacturing
for PCs, TVs and HDDs. Major projects completed by the Group in this fiscal year included building of manufacturing
facilities for HDDs (located in Philippines and in Thailand).
In the Electronic Devices segment, capital investments amounted to 210.7 billion yen (including the Group’s portion for
investments made by Flash Alliance, Ltd. etc.) for production increase of NAND flash memories and power devices and
building for manufacturing medium and small sized LCDs. Major projects completed by the Group in this fiscal year
included Manufacturing facilities for NAND flash memory (at Yokkaichi Operations).
In the Social Infrastructure segment, capital investments amounted to 67.1 billion yen, Major projects completed by the
Group in this fiscal year included building and manufacturing facilities for rechargeable batteries (at the Kashiwazaki
Operations) and manufacturing facilities for industrial motors (in Vietnam).
In the Home Appliances segment, 13.9 billion yen were invested for development of new models and manufacturing.
Capital expenditures in the Others segment totaled 18.5 billion yen.
In addition, the Company signed a memorandum of understanding with Sony Corporation (“Sony”) in December 2010,
expressing the intent to dissolve Nagasaki Semiconductor Manufacturing Corporation (“NSM”, 60% of the shares held
by the Company), a joint venture among the Company, Sony and Sony Computer Entertainment Inc., and to transfer
300mm wafer fabrication lines there from the Company to Sony. The Company, Sony and Sony Semiconductor Kyushu
Corporation (“SCK”) executed definitive agreements for the transfer from the Company to SCK of certain semiconductor
fabrication equipment and other assets (purchase price: 53 billion yen) in February 2011. In accordance with this
agreement, the Company transferred the equipment and other assets on April 2011.
PLANS FOR CONSTRUCTING NEW FACILITIES AND RETIRING EXISTING FACILITIES
At the end of this fiscal year ending March 31, 2011, investment for newly-established facilities and upgrades of
equipment is planned to be amounted as 375.0 billion yen in FY2011 (based on the value of orders placed and including
intangible assets; hereinafter the same).
This figure includes the Group’s portion of the investment made by Flash Alliance, Ltd. and Flash Forward, LLC.
and others, which are companies accounted for by the equity method. The funds for capital expenditures will be financed
by the internal funds.
7
Management’s Discussion and Analysis
Business Segment
Digital Products
Electronic Devices
Social
Infrastructures
Home Appliances
Others
Total
billions of yen
Planned Capital
Investments for
FY2011
35.0
165.0
100.0
15.0
60.0
375.0
Major Contents and Purposes
As of March 31, 2011
Manufacturing facilities for HDDs, etc.
Manufacturing facilities for NAND fl ash memories, power devices, etc.
Manufacturing facilities of rechargeable battery and enhancement of
Power systems businesses
Manufacturing facilities for Home appliances, etc.
—
—
Notes: 1) Consumption taxes are not included in these capital investment plans.
2) Retiring material facilities is not planned except for routine renewal of facilities and the transfer of manufacturing facilities for semiconductors used by NSM as written in “CAPITAL
EXPENDITURE OVERVIEW”.
3) The major planned new facilities and equipment upgrades in FY2011 are as follows:
Name of
Company and
Office
Place
Flash Forward
LLC., and others
Yokkaichi, Mie
FINANCIAL POSITION
Business
Segment
Electronic
Devices
Type of Facility
Manufacturing
facilities for
semiconductors
Planned
Beginning
May 2011
As of March 31, 2011
Capacity
Improvement
after Completion
of Construction
Enhancement of
manufacturing
facilities, etc.
Total assets decreased by 71.9 billion yen from the end of March 2010 to 5,379.3 billion yen.
Equity attributable to the shareholders of the Company, increased to 868.1 billion yen, an increase of 70.7 billion yen
against the end of March 2010, despite a deterioration in accumulated other comprehensive loss of 57.1 billion yen, due to
impacts from fluctuations in foreign exchange rates and a downturn in stock market prices. This reflects a net income
attributable to shareholders of the Company of 137.8 billion yen.
Total debt decreased by 137.0 billion yen from the end of March 2010 to 1,081.3 billion yen.
As a result of the foregoing, the shareholders’ equity ratio at the end of March 2011 was 16.1%, a 1.5-point
improvement from the end of March 2010, and the debt-to-equity ratio at the end of March 2011 was 125%, a 28-point
improvement from the end of March 2010.
CASH FLOWS
In the fiscal year under review, net cash provided by operating activities amounted to 374.1 billion yen, a decrease of 77.3
billion yen from net cash provided by operating activities of 451.4 billion yen in the previous fiscal year, due to an decrease
of working capital compared with the previous fiscal year despite the improved net income attributable to shareholders of
the Company.
Net cash used in investing activities amounted to 214.7 billion yen, a decrease of 38.2 billion yen from 252.9 billion yen
in the previous fiscal year.
As a result of the foregoing, free cash flow amounted to 159.4 billion yen, an decrease of 39.1 billion yen from 198.5
billion yen in the previous fiscal year.
Net cash used in financing activities amounted to 154.7 billion yen, a decrease of 123.2 billion yen from 277.9 billion
yen of net cash used in financing activities in the previous fiscal year. This was mainly due to a decrease of repayment
of borrowings compared with the previous fiscal year.
The effect of exchange rate changes was to decrease cash by 13.3 billion yen. Cash and cash equivalents at the end of the
fiscal year declined by 8.6 billion yen, from 267.4 billion yen of the end of the previous fiscal year to 258.8 billion yen.
8
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
Demand for purchase of shares
by shareholders dissenting from
Absorption-type Merger
Shares disposed during the
period:
Demand for sale of shares less
than one unit from shareholders
Shares held as of the closing
date of this period:
MAJOR SUBSIDIARIES AND AFFILIATED COMPANIES
Name of Company
Toshiba TEC Corporation
Toshiba America Information Systems, Inc.
Toshiba Mobile Display Co., 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 Consumer Electronics Holdings Corporation
Toshiba Consumer Marketing Corporation
Toshiba America, Inc.
Toshiba Capital (Asia) Ltd.
Taiwan Toshiba International Procurement Corporation
Aggregate amount of acquisition
costs:
Aggregate amount of acquisition
costs:
Aggregate amount of sales value:
2,160,986
(common stock)
332,680
(common stock)
151
(million yen)
51,850
(common stock)
21
(million yen)
25,646
(common stock)
11
(million yen)
2,519,870
(common stock)
As of March 31, 2011
Voting Rights Ratio
(Percentage)
53.0
100.0
100.0
61.6
80.0
100.0
100.0
67.0
67.0
100.0
100.0
100.0
100.0
100.0
Location
Shinagawa-ku, Tokyo
U.S.
Fukaya
Yokohama
Shinagawa-ku, Tokyo
Minato-ku, Tokyo
Otawara
U.S.
U.K.
Chiyoda-ku, Tokyo
Chiyoda-ku, Tokyo
U.S.
Singapore
Taiwan
Notes: 1) The Company has 498 consolidated subsidiaries (including the 14 companies above) in accordance with Generally Accepted Accounting Standards in the U.S., and 202 affiliated
companies 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 L.L.C.
9
Management’s Discussion and Analysis
Main Places of Business and Facilities of the Company
Segment
Major Distribution
As of March 31, 2011
Offices
Principal Offi ce (Minato-ku, Tokyo), Hokkaido Branch Offi ce (Sapporo),
Tohoku Branch Offi ce (Sendai), Shutoken Branch Offi ce (Saitama),
South-Shutoken Branch Offi ce (Yokohama), Hokuriku Branch Offi ce
(Toyama), Chubu Branch Offi ce (Nagoya), Kansai Branch Offi ce (Osaka),
Chugoku Branch Offi ce (Hiroshima), Shikoku Branch Offi ce
(Takamatsu), Kyushu Branch Offi ce (Fukuoka)
Laboratories and others Corporate Research & Development Center (Kawasaki), Software
Company-wide
Digital Products
Electronic Devices
Laboratories
Production Facilities
Laboratories
Production Facilities
Laboratories
Social Infrastructure
Production Facilities
Engineering Center (Kawasaki), Corporate Manufacturing Engineering
Center (Yokohama), Yokohama Complex (Yokohama), Himeji
Operations (Himeji)
Core Technology Center (Ome), Digital Products Development Center
(Ome)
Fukaya Operations (Fukaya), Ome Complex (Ome)
Center For Semiconductor Research & Development (Kawasaki)
Microelectronics Center (Kawasaki), Yokkaichi Operations (Yokkaichi),
Himeji Operations-Semiconductor (Taishi, Hyogo), Kitakyushu
Operations (Kitakyushu), Oita Operations (Oita)
Power and Industrial Systems Research and Development Center
(Yokohama), Isogo Nuclear Engineering Center (Yokohama)
Kashiwazaki Operations (Kashiwazaki), Saku Operations (Saku), Fuchu
Complex (Fuchu, Tokyo), Komukai Operations (Kawasaki),
Hamakawasaki Operations (Kawasaki), Keihin Product Operations
(Yokohama), Mie Operations (Asahi Cho, Mie)
RISK FACTORS RELATING THE GROUP AND ITS BUSINESS
The business areas of energy and electronics, the Group’s main business areas, require highly advanced technology for
their operation. At the same time, the Group faces fierce global competition. Therefore, appropriate risk management is
indispensable. Major risk factors related to the Group recognized by the Company are described below. The actual
occurrence of any of those risk factors may adversely affect the Group’s operating results and financial condition.
The risks described below are identified by the Group based on information available to the Group as of June 22, 2011
(the date of the filing of the Annual Securities Report) and involve inherent uncertainties, and, therefore, the actual results
may differ. The Group recognizes these risks and makes every effort to avoid the occurrence of these risks and minimize
any impact from them when they occur, by maintaining the proper risk management.
1. Risks related to management policy
(1) Strategic concentrated investment
The Group makes strategic, concentrated investments in the expansion of hybrid products and services in the areas of
NAND flash memories, smart communities, power electronics and EVs, recyclable energy, healthcare and digital
products, with the aim of accelerating the growth in focused business areas and establishing a new business base to
generate profits. The Group is also promoting selective allocations of resources with respect to such areas as System LSIs.
While it is essential to allocate limited management resources to high growth areas or areas in which the Group enjoys
competitiveness, in order to secure and maintain the Group’s advantages, the areas in which the Group makes
concentrated investments may not grow as anticipated, the Group may not maintain or strengthen its competitive power
in such areas, or the relevant investments may not fully generate the anticipated level of profit. In order to avoid such risks,
the Group is conscious of capital costs and of the need to conduct careful selection of investment items and to enhance
progress management. Alongside these efforts, the Group also aims to achieve growth through allocation of strategic
resources and to reinforce its financial base, by means of thorough implementation of comprehensive management of all
relevant investments that reflect the nature of each individual business. Further to this, the Group also makes every effort
to utilize external resources through strategic business alliances where necessary.
10
(2) Success of strategic business alliances and acquisitions
The Group actively promotes business alliances with other companies, including the formation of joint ventures and
acquisitions, in order to grow new businesses in research and development, production, marketing and various other areas.
If the Group has any disagreement with its partner in a business alliance or an acquisition in respect of financing,
technological management, product development, management strategies or otherwise, such business alliance may be
terminated or such acquisition may not have the expected effects. In addition, the Group’s operating results and financial
condition may be adversely affected by additional capital expenditures and provision of guaranties to meet the obligations
for such partnership business that may be incurred due to the deterioration of the financial condition of the partner, as
well as for other reasons. Based on these assumptions, the Group pays careful attention to optimizing business formation
to secure correspondence to the nature of the relevant business.
(3) Business structure reformation
The Group as a whole is taking measures to reform its business structure, mainly focusing on strategic allocation of
resources in its businesses in order to convert its structure into one that enables the Group to generate profit regardless of
the market situation. In connection with these measures, there is a possibility that the Group will incur expenses for
business structure reform. Although there is a possibility that the Group’s operating results or financial condition may be
affected in the event of the failure of such program to produce the expected results, the Group, including its management,
has continuously followed-up on the progress of such programs, and, as a result, the number of businesses subject to such
programs has been steadily decreased.
(4) Measure for defense against hostile takeover
The Company has introduced a plan outlining countermeasures that may be taken against any large-scale acquisitions of
the Company’s shares (the “Takeover Defense Measures”). If an entity making a large-scale acquisition of the Company’s
shares does not comply with the procedures under the Takeover Defense Measures, the Company will counteract by
making a gratis allotment of stock acquisition rights (shinkabu yoyakuken) under the Takeover Defense Measures. Although
such Takeover Defense Measures were introduced for the purpose of protecting and enhancing the corporate value of the
Company and the common interests of its shareholders, they may limit the opportunities for the shareholders of the
Company to sell their shares to hostile acquirers.
2. Risks related to financial condition, results of operations and cash flow
(1) Business environment of the Digital Products business
The market for the Digital Products business is intensely competitive, with many companies manufacturing and selling
products similar to those offered by the Group. Additionally, this business may be heavily affected by economic
fluctuations and consumer spending trends, and decreases in demand may cause declines in product prices. On the other
hand, in times of rapid increases in demand, the Group’s profit may be reduced due to the need to purchase costly parts
and components, and a shortage of these parts and components may hinder the Group’s ability to supply products to the
market in a timely manner. The Group makes every effort to implement this business, monitoring the latest trends in
market demands in order to flexibly meet changes in supply and demand conditions and to thoroughly control production,
procurement, sales and inventory (PSI). At the same time, the Group makes every effort to avoid risks and reduce costs in
connection with the procurement of parts and components by promoting package procurement and comprehensive
procurement on a Group-wide basis. The Group also makes every effort to minimize any impact from changes in the
market by undertaking regional strategies for the promotion of business expansion and similar purposes in developing
nations, including China, where its growth rate remains comparatively high in a fast changing market, and by
appropriately revising the composition of products, such as introducing commoditized products streamlined for the
required functionality and having strong cost competitiveness. However, any rapid fluctuation in demand may result in
price erosion or increases in prices of components, which may adversely affect the Group’s financial results with respect to
this business.
In storage products business, merger and acquisition transactions among competitors are ongoing, and, thus, the
business environment has been changing. The Group, however, aims in the future to strengthen its storage products
business that integrated HDD, SSD, and NAND flash memories, to be consolidated with semiconductor businesses,
utilizing the strength of having high-spec SSD and high-capacity HDD.
(2) Business environment of the Electronic Devices business
The market for the Electronic Devices business is highly cyclical, depending on demand, and intensely competitive, with
many companies, mainly in overseas markets, manufacturing and selling products similar to those offered by the Group. The
results of this business tend to change with economic fluctuations and, in particular, to be heavily affected by exchange rate
fluctuations. Although the performance of the semiconductor business was strong and positive for FY2010, unforeseen
market changes and corresponding changes in demand at the time of production may result in a mismatch between the
11
Management’s Discussion and Analysis
production of particular products based on the sales volume initially expected and the actual demand for such products, or
cause the business to be adversely affected by a decrease in product unit prices due to oversupply. In particular, the price for
NAND flash memories, the Group’s major product in this business, may undergo rapid change, while such price had been
stable during FY2010, and System LSIs and other semiconductor products also face uncertain future market trends, in spite
of gradual recovery in the consumer market for digital products that use semiconductors. The movement of the consumer
market may influence demand for semiconductors. Fluctuations in the results of this business may materially affect the
Group’s overall business performance. In addition, the market may face a downturn, the Group may fail to market new
products in a timely manner, or a rapid introduction of new technology may make the Group’s current products obsolete.
Economies of scale with respect to the manufacture of the many products produced by this business are significant and there
is intense competition to develop and market new products. Therefore, significant levels of capital expenditures are required
to maintain and improve competitiveness in both the price and quality of products.
The Group makes every effort to implement the business by focusing its attention on these factors and promoting strategic
allocation of resources. At the same time, the Group makes every effort to increase profits by enhancing cost competitiveness,
which is to be achieved by maintaining a technological advantage, and expanding the product line-up.
Additionally, the Group undertakes rigorous selection in its investments and makes every effort to carefully monitor the
latest market trends and to make capital investments in a timely manner, while thoroughly controlling flexible production
that corresponds to fluctuations in market demand, adjustment of supplies and investment management. The Group
promotes procurement of components from overseas in US dollars in order to mitigate the impact of exchange rate
fluctuations.
In response to the severe business environment in the System LSI business, the Group accelerates the Fabless policy by
transfer of semiconductor manufacturing facilities which were used by Nagasaki Semiconductor Manufacturing Inc. and
aims to improve its profitability through the expansion of manufacturing outsourcing. Also the Group has reorganized the
System LSI business by dividing it into (i) the Logic LSI Business Department, which focuses on high-end System on Chip
(SoC), and (ii) the Analog-Imaging IC Department, which focuses on general purpose discrete semiconductors.
In addition, Toshiba Mobile Display Co., Ltd. (“Toshiba Mobile Display”), which engages in the LCD business, remains in
a situation in which its liabilities exceed its assets, and operates in a tight business environment in which it must deal with
shifting exchange rates and price declines. The Group has been implementing business structure reformation programs, with
a primary emphasis on LCD displays for mobile equipment that requires leading-edge technologies, and Toshiba Mobile
Display achieved operating income and recorded net income in FY2010.
(3) Business environment of the Social Infrastructure business
A significant portion of net sales in the Social Infrastructure business is attributable to national and local government
expenditures on public works and to capital expenditures by the private sector. The Group monitors trends in such capital
expenditures in conducting its business and also makes best efforts to cultivate new business and customers. However,
reductions and delays in spending on public works, low levels of private capital expenditures due to economic recession, and
exchange rate fluctuations may have a negative impact on this business.
Furthermore, this business involves the supply of products and services for large-scale projects on a worldwide basis. Post-
order changes in the specifications or other terms, delays, appreciation of material costs, changes to and stoppages of plans for
various reasons, including policy changes, natural and other disasters and other factors, may adversely and substantially affect
the progress of such projects. In addition, when the percentage of completion method is applied to revenue recognition for long
term construction contracts, the Group may reassess profits previously recorded as accrued and record them as a loss, in the
event that the expected profits from such projects do not meet original expectations or projects are delayed or cancelled for
some reason. Furthermore, it may not be possible to pass on to the customer or others any additional costs incurred due to
delays in the work process, and such costs may not be collected. In order to deal with such cases, the Group makes every effort
to grasp trends in markets and projects and to ensure thorough risk management before and after accepting orders. In addition,
whenever possible, the Group makes every effort to appropriately avoid risk by making agreements with customers for advance
payment or performance payments, as well as other agreements on supplemental payments in the event of changes in
specifications and delays in work. Although difficulties may arise for the continuance of certain currently ongoing projects due
to a change in the policies of fund providers and other factors, the Group is making every effort to obtain other fund providers
for such pending projects.
With respect to the nuclear power business, since the incident that occurred at the Fukushima Nuclear Power Plant, there is
a possibility that, to some extent, the project plans and orders obtained by the Group may be reconsidered. With respect to the
existing power plants, we will implement emergency safety measures for the purpose of resuming operations and respond with
permanent improvements in accordance with safety standards to be revised based on the analysis of the incident above.
Further, the Group plans to develop a next-generation nuclear power reactor with higher safety standards. With respect to the
new construction of power plants, it is necessary to incorporate revised future safety standards, and the Group will determine
its future development while confirming the status of customers in various countries and regions.
12
(4) Business environment of the Home Appliances business
The Home Appliances business faces intense competition from many companies manufacturing and selling products
similar to those offered by the Group. In addition, the results of this business tend to be strongly affected by consumer
spending, the emergence of new technologies and price declines in existing products for industrial light sources, and
trends in building and housing construction starts relative to the lighting and air-conditioning businesses. Accordingly, the
impact of the recession and price declines in recent years may lead to a deterioration in the results of this business. Given
this, the Group is making every effort to expand this business by developing it at the global level, including in developing
nations that have a high growth rate, as well as developing new products that are environmentally friendly and that
contribute to energy saving, such as new lighting systems.
(5) The Great East Japan Earthquake
The impact of the Great East Japan Earthquake on the manufacturing operations of the Group has been limited in scope,
as the manufacturing operations at certain sites, including Iwate Toshiba Electronics Co., Ltd. and Toshiba Mobile
Display, have already resumed their operations, although they were temporarily suspended upon the occurrence of the
said earthquake. The future impact of the Great East Japan Earthquake on the economy is not clear, and the businesses of
the Group may be affected due to change in domestic demands. In addition, the shortage of electric power supply and the
damage to suppliers may affect the manufacturing operations of the Group.
On the other hand, the Group plans to contribute to the recovery from the said disaster through its businesses.
Regarding the power shortage, the Group expects to cooperate with the efforts to reduce power consumption by
reallocating working days and office hours and establishing in-house power generation, as well as examining measures to
supply electric power through the introduction of co-generation systems, as necessary. At the same time, the Group has
strived to minimize the impact of component shortages on its manufacturing operations, exerting all possible measures to
secure component supplies by, among other things, collecting information on inventories, such as distributors’ inventories,
raw materials and semi-finished goods, reallocating manufacturing operations at certain sites, including the sites of
business partners, and implementing emergency procurement processes for alternative goods.
(6) Financial covenants
Loan agreements entered into between the Company and several financial institutions provide for financial covenants.
Therefore, if the Company’s consolidated net assets, consolidated operating income or credit rating falls below the
respective levels provided for in the financial covenants, the Company’s obligations with respect to relevant loan repayments
may be accelerated upon demand by the relevant lending financial institutions. Furthermore, any breach by the Company of
such financial covenants may trigger acceleration of the bonds or other borrowings of the Company.
The Company aims to improve business performance by promoting, among other things, restructuring programs and
business structure conversions, while making all possible efforts to obtain the the lending financial institutions’
understanding of this, in order to avoid breaching financial covenants and consequent acceleration of repayments. However,
if any acceleration of the Company’s loan repayments occurs, it may materially affect the Company’s business operations.
(7) Financial risk
Apart from being affected by the business operations of the Company or the Group, the Company’s consolidated and non-
consolidated results and financial condition may be affected by the following major financial factors:
(i) Deferred tax assets
The Company accounted for a substantial amount of deferred tax assets. The Group reduces deferred tax assets by a
valuation allowance if, based on the weight of available evidence, some portion or all of the deferred tax assets are unlikely
to be realized. Recording of valuation allowances includes estimates and therefore involves inherent uncertainty.
The Group may also be required hereafter to record further valuation allowances, and the Group’s future results and
financial condition may be adversely affected thereby.
The Group may be affected by future tax regulatory changes as the recordation of deferred tax assets and valuation
allowances have been made based on the currently-effective tax regulations.
(ii) Exchange rate fluctuations
The Group conducts business in various regions worldwide using a variety of foreign currencies and is therefore exposed
to exchange rate fluctuations. Foreign currency denominated assets and liabilities held by the Group are translated into
yen as the currency for reporting consolidated financial results. The effects of currency translation adjustments are
included in “accumulated other comprehensive income (loss)” reported as a component of equity attributable to
shareholders of the Company (“shareholders’ equity”). As a result, the Group’s shareholders’ equity may be affected by
exchange rate fluctuations.
(iii) Accrued pension and severance costs
The Group recognizes the funded status (i.e., the difference between the fair value of plan assets and the benefit
13
Management’s Discussion and Analysis
obligations) of its pension plan in the consolidated balance sheets, with a corresponding adjustment, net of tax, included
in “accumulated other comprehensive loss” reported as a component of shareholders’ equity. Such adjustment to
“accumulated other comprehensive loss” represents the result of adjustment for the net unrecognized actuarial losses,
unrecognized prior service costs, and unrecognized transition obligations. These amounts will be subsequently recognized
as net periodic pension and severance costs calculated pursuant to the applicable accounting standards. The funded status
of the Group’s pension plan may deteriorate due to declines in the fair value of plan assets caused by lower returns,
increases of severance benefit obligations caused by changes in the discount rate, salary increase rates or other actuarial
assumptions. As a result, the Group’s shareholders’ equity may be adversely affected, and the net periodic pension and
severance costs to be recorded in “cost of sales” or “selling, general and administrative expenses” may increase.
(iv) Impairment of long-lived assets and goodwill
If there is an indication of impairment for a long-lived asset and the carrying amount of such asset will not be recovered
by the future undiscounted cash flow, the carrying amount may be reduced to its fair value and a loss may be recognized as
an impairment with respect to such difference. A substantial amount of goodwill has been recorded in the Company’s
consolidated balance sheets in accordance with U.S. generally accepted accounting principles. Goodwill is required to be
tested for impairment annually. If an impairment test shows that the total of the carrying amounts, including goodwill, in
relation to the business related to such goodwill exceeds its fair value, the relevant goodwill must be recalculated, and the
difference between the current amount and the recalculated amount will be recognized as an impairment. Therefore,
additional impairments may be recorded, depending on the valuation of long-lived assets and the estimate of future cash
flow from business related to goodwill.
(8) Changes in financing environment and others
The Group has substantial amounts of interest-bearing debt for financing that is highly susceptible to market
environments, including interest rate movements and fund supply and demand. Thus, changes in these factors may have
an adverse effect on the Group’s funding activities. The Group has also been raising funds by issuing bonds or taking loans
from financial institutions. There can be no assurance that the Group will obtain refinancing loans or new loans in the
future on similar terms. If the Group is unable to obtain loans for the amount needed by the Group in a timely manner,
the Group’s financing may be adversely affected.
3. Risks related to business partners and others
(1) 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
appropriate manner. However, such materials, components and goods may only be obtainable from a limited number of
suppliers due to the particularity of such materials, components and goods, and, therefore, such suppliers may not be
easily replaced [if the need to do so arises]. In cases of delay or other problems in receiving supply of such materials,
components and other goods, shortages may occur or procurement costs may rise. It is necessary to procure materials,
components and other goods 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 procure such materials, components and
other goods from key suppliers may impact the Group’s competitiveness. Furthermore, any case of defective materials,
components or other goods, or any failure to meet required specifications with respect to such materials, components or
other goods, may also have an adverse effect on the reliability and reputation of the Group and Toshiba brand products.
In order to deal with such situations, the Group makes every effort to avoid risks by developing and cultivating new
suppliers, promoting multi-vendor procurement by means of adopting standard products, and engaging in comprehensive
procurement on a Group-wide basis, in addition to ensuring acquisition of materials, components and other goods
through enhanced cooperation with key suppliers.
(2) Securing human resources
A large part of the success of the Group’s businesses depends on securing excellent human resources in every business area
and process, including product development, production, marketing and business management. In particular, securing the
necessary human resources is essential in respect of achieving globalization of the Group’s businesses. However,
competition to secure human resources is intensifying, as the number of qualified personnel in each area and process is
limited, while demand for such personnel is increasing. As a result, the Group may fail to retain existing employees or to
obtain new human resources. The Group will further reinforce educational programs for employees, toward developing
human resources, including nurturing personnel able to support and promote business globalization.
In order to reduce fixed costs, the Group is implementing personnel measures, including the reallocation of human
resources to focus on strong and promising businesses, reclaiming jobs that are outsourced to third parties or conducted
by limited-term employees, reducing the number of limited-term employees implementing a leave system, and reducing
overtime through a review of working systems. However, fixed costs may not be reduced as anticipated or the
14
implementation of such personnel measures may adversely affect the Group’s employee morale, production efficiency or
the ability to secure capable human resources.
4. Risks related to products and technologies
(1) Investments in new businesses
The Group invests in companies involved in new businesses, enters into alliances with other companies with respect to
new businesses, and actively develops its own new businesses. The Group is now accelerating expansion of new growth
businesses that can take advantage of a synergy of the Group’s strengths in areas that include next generation devices,
smart communities, power electronics and EV, recyclable energy, and healthcare businesses.
Cultivation of new businesses entails substantial uncertainty, and if any new business in which the Group invests or
which the Group attempts to develop does not progress as planned, the Group may be adversely affected by incurring
investment expenses that do not lead to the anticipated results. In order to avoid these risks, the Group makes every effort
to resolve various technological issues and to develop and capture potential demand effectively in the new business
development process.
5. Risks related to trade practices
(1) Parent company’s guarantees
When a subsidiary of the Company accepts an order for a large project, such as a plant, the Company, as the parent
company, may, at the request of the customer, provide guarantees with respect to the subsidiary’s performance under the
contract. Such parent guarantees are made pursuant to standard business practices and in the ordinary course of business.
If the subsidiary subsequently fails to fulfill its obligations, the Company may be obligated to bear the resulting loss. The
Company makes every effort to conduct appropriate management by periodically monitoring the subsidiaries’ fulfillment
of the contract requirements and by cooperating with such subsidiaries where necessary.
6. Risks related to new products and new technology
(1) Development of new products
It is critically important for the Group to offer innovative and attractive new products and services. The Group has
exerted its efforts to create “World-First” and “World No.1” products that deliver surprise and inspiration to customers,
ahead of the needs of customers. However, due to the rapid pace of technological innovation, the emergence of alternative
technologies and products and changes in technological standards, the optimum introduction of new products to the
market may not be accomplished, or new products may be accepted by the market for a shorter period than anticipated. In
addition, any failure on the part of the Group to continuously obtain sufficient funding and resources for development of
technologies may affect the Group’s ability to develop new products and services and to introduce them to market.
From the viewpoint of enhancing concentration and selection of managerial resources, the Group now selects research
and development themes more rigorously, with a primary focus on developing original and advanced technologies, with
close consideration for the timing of market introduction. More rigorous selection of research and development items may
impair the Group’s technological superiority in certain products and technological fields. In order to avoid these risks, the
Group intends to enhance the efficiency of research and development activities by sharing intellectual property through
the promotion of common platforms and using overseas resources more efficiently in system development.
7. Risks related to laws and regulations
(1) Information security
The Group maintains and manages personal information obtained through business operations, as well as trade secrets
regarding the Group’s technology, marketing and other business operations. Even though the Group makes every effort to
manage this information appropriately, the Group’s business performance and financial situation may be subject to negative
influences in the event of an unanticipated leak of such information and such information is obtained and used illegally by a
third party.
Additionally, the role of information systems in the Group is critical to carrying out business activities. While the Group
makes every effort to ensure the stable operation of its information systems, there is no assurance that their functionality would
not be impaired or destroyed by computer viruses, software or hardware failures, disaster, terrorism, or other causes.
(2) Compliance and internal control
The Group is active in various businesses in regions worldwide, and its business activities are subject to the laws and
regulations of each region. The Group has implemented and operates necessary and appropriate internal control systems
for a number of purposes, including compliance with laws and regulations and strict reporting of business and financial
matters. However, there can be no assurance that the Group will always be able to structure and operate effective internal
control systems. Furthermore, such internal control systems may themselves, by their nature, have limitations, and it is not
possible to guarantee that they will fully achieve their objectives. Therefore, there is no assurance that the Group will not
unknowingly and unintentionally violate laws and regulations in future. Changes in laws and regulations or changes in
15
Management’s Discussion and Analysis
interpretations of laws and regulations by the relevant authorities may also cause difficulty in achieving compliance with
laws and regulations or may result in increased compliance costs. On these grounds, the Group makes every effort to
minimize these risks by making periodic revisions to the internal control systems, continuously monitoring operations,
and so forth.
(3) The environment
The Group is subject to various environmental laws, including laws on air pollution, water pollution, toxic substances,
waste disposal, product recycling, prevention of global warming and energy policies, in its global business activities. While
the Group pays careful attention to these laws and regulations, it is possible that the Group may encounter legal or social
liability for environmental matters, such as liability for the clean up of land at manufacturing bases throughout the world,
regardless of whether the Group is at fault or not, with respect to its business activities, including its past activities. It is
also possible that, in future, the Group will face more stringent requirements on the removal of environmental hazards,
including toxic substances, or on further reducing emissions of greenhouse gases, as a result of the introduction of more
demanding environmental regulations or in accordance with societal requirements.
The Group’s operations require the use of various chemical compounds, radioactive materials, nuclear materials and
other toxic materials. The Group takes maximum care of such materials, giving first priority to human life and safety.
However, the Group may incur damage, or the Group’s reputation may be adversely affected, as a result of a natural
disaster, the threat or occurrence of a terrorist incident, or of an accident or other contingency (including those beyond
the Group’s control) that leads to environmental pollution or the potential for such pollution.
(4) Product quality claims
While the Group makes every effort to implement quality control measures and to manufacture its products in accordance
with appropriate quality-control standards, there can be no assurance that all products are free of defects that may result
in a recall, lawsuits or other claims relating to product quality due to unforeseen reasons or circumstances.
8. Risks related to material legal proceedings
(1) Legal proceedings
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. It is possible that such cases may arise in the future.
Due to the differences in judicial systems and the uncertainties inherent in such proceedings, the Group may be subject to
a ruling requiring payment of amounts far exceeding its expectations. Any judgment or decision unfavorable to the Group
could also have a material adverse effect on the Group’s business, operating results or financial condition. In addition, due
to various circumstances, there can be no assurance that lawsuits involving claims for large sums will not be brought, even
if the possibility of receiving orders for such payment is quite low.
In January 2007, the European Commission (the “Commission”) adopted a decision imposing fines on 19 companies,
including the Company, for violating EU competition laws in the gas insulated switchgear market. The Company was
individually fined €86.25 million and was also fined €4.65 million jointly and severally with Mitsubishi Electric
Corporation. The Company contends that it did not violate EU competition laws and appealed the decision to the
European Court of First Instance in April 2007.
Furthermore, the Group is under investigation by the U.S. Department of Justice, the Commission, and other
competition regulatory authorities, for alleged violations of competition laws with respect to products that include
semiconductors, LCD products, cathode ray tubes (CRT), heavy electrical equipment, and optical disc devices, while class
action lawsuits with respect to alleged anti-competitive behavior brought against the Group are currently pending in the
United States.
9. Risks related to directors, employees, major shareholders and affiliates
(1) Alliance in NAND flash memories
The Group has a strategic alliance with a U.S. company, SanDisk Corporation (“SanDisk”), for the production of NAND
flash memories, which includes production joint ventures (equity method affiliates). Under the joint venture agreement,
the Group may purchase SanDisk’s ownership interests in the production joint ventures. In addition, the Company and
SanDisk each provide a 50% guaranty in respect of the lease agreements of production facilities held by the production
joint ventures. In the event that SanDisk’s operating results and financial condition deteriorate, the Company may succeed
to SanDisk’s guaranty obligations or purchase SanDisk’s ownership interests in the relevant production joint ventures, in
which case the production joint ventures will thereafter be treated as consolidated subsidiaries of the Company.
(2) Alliance in nuclear power systems business
The Group acquired Westinghouse group in October 2006. The Company’s ownership interest in Westinghouse group
(including the holding companies) is currently 67%. The remainder is held by three companies in Japan and overseas (the
“Minority Shareholders”).
16
While the shareholders’ agreements restrict the Minority Shareholders from transferring their respective ownership
interests in companies of Westinghouse group to a third party until October 1, 2012, the Minority Shareholders have
been given an option to sell all or part of their ownership interests to the Company (“Put Options”). However, since
exercising the Put Options held by some of the Minority Shareholders requires consent from a third party, such Minority
Shareholders are not able to exercise their Put Options at their own discretion.
The Group also has an option to purchase from the Minority Shareholders all or part of their respective ownership
interest in companies of Westinghouse group under certain conditions. These options are in place for the purpose of
protecting the interests of the Minority Shareholders, while preventing equity participation by a third party which may
put the Group at disadvantage. The Company makes every effort to maintain a favorable relationship with the Minority
Shareholders in connection with Westinghouse group’s business. However in the event that the Minority Shareholders
exercise their respective Put Options, or the Group exercises its purchase option, the Group will seek investment from a
new strategic partner. Prior to such an investment, the Group may need to procure substantial funds in connection with
the exercise of Put Options or purchase options.
10. Others
(1) Measures against counterfeit products
While the Group protects and seeks to enhance the value of the Toshiba brand, counterfeit products created by third
parties are found worldwide. While the Group makes every effort to prevent counterfeit products, the heavy circulation of
counterfeit products may dilute the value of the Toshiba brand, and the Group’s net sales may be adversely affected.
(2) 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.
The Group also uses the intellectual property of third parties pursuant to licenses. It is possible that the Group may fail
to receive the necessary third-party licenses for new technology or is unable to obtain the renewal of existing licenses or
receives them on unfavorable terms.
In addition, it is also possible that a suit or such similar action or proceeding may be brought against the Group in
respect of intellectual property rights or that the Group may itself have to file a suit in order to protect its intellectual
property rights. Such lawsuits may require time, costs and other management resources, and depending on the outcome of
these lawsuits, the Group may not be able to use important technology, or the Group may be found to be liable for
damages.
(3) Political, economic and social conditions
The Group undertakes global business operations. Any changes in political, economic, and social conditions and policies,
legal or regulatory changes and exchange rate fluctuations, in Japan or overseas, may impact market demand and the
Group’s business operations. The Group makes every effort to avoid these risks and to reduce any impact when such risks
emerge by continuously monitoring changes in the situation in each region where the Group operates, including legal and
regulatory changes, and by promptly initiating countermeasures.
(4) Natural disasters
Most of the Group’s Japanese production facilities are located in the Keihin region of Japan, which includes Tokyo,
Kawasaki City, Yokohama City and the surrounding area, while key semiconductor production facilities are located in
Kyushu, Tokai, Hanshin and Tohoku. The Group is currently expanding its production facilities in Asia. As a result, any
occurrence of a wide-scale disaster, terrorism or epidemic illness, such as a new type of flu, particularly in any of these
areas could have a more significant adverse effect on the Group’s results.
Additionally, large-scale disasters, such as earthquakes or typhoons, in regions where production or distribution sites
are located may damage or destroy production capabilities, suspend procurement of raw materials or components, and
cause transportation and sales interruptions or other similar disruptions, which could affect production capabilities
significantly.
In order to manage these risks, the Group established the “Business Continuity Plan (BCP)” as part of its continuing
effort to avoid or minimize any impact from such disasters in addition to establishing the precautionary measures, such as
construction of earthquake-resistant buildings and emergency procedures responsive to large-scale earthquakes.
17
Millions of yen
2011
2010
Thousands of
U.S. dollars
(Note 3)
2011
¥
258,840
¥
267,449
$ 3,118,554
47,311
1,093,948
(17,079)
864,382
161,197
189,028
202,041
2,799,668
2,540
416,431
241,409
660,380
99,834
996,409
2,330,565
113,132
3,539,940
(2,639,735)
900,205
559,246
356,592
103,228
1,019,066
44,122
1,160,389
(20,112)
795,601
134,950
187,164
192,043
2,761,606
3,337
366,250
253,267
622,854
105,663
1,016,520
2,508,934
97,309
3,728,426
(2,749,700)
978,726
618,731
355,687
113,569
1,087,987
570,012
13,180,097
(205,771)
10,414,241
1,942,132
2,277,446
2,434,229
33,730,940
30,602
5,017,241
2,908,542
7,956,385
1,202,819
12,004,928
28,079,096
1,363,036
42,649,879
(31,804,036)
10,845,843
6,737,904
4,296,289
1,243,711
12,277,904
¥ 5,379,319
¥
5,451,173
$ 64,811,072
Consolidated Balance Sheets
Toshiba Corporation and Subsidiaries
As of March 31, 2011 and 2010
Assets
Current assets:
Cash and cash equivalents
Notes and accounts receivable, trade:
Notes (Note 7)
Accounts (Note 7)
Allowance for doubtful notes and accounts
Inventories (Note 8)
Deferred tax assets (Note 18)
Other receivables
Prepaid expenses and other current assets (Note 21)
Total current assets
Long-term receivables and investments:
Long-term receivables (Note 7)
Investments in and advances to affiliates (Note 9)
Marketable securities and other investments (Note 6)
Total long-term receivables and investments
Property, plant and equipment (Notes 17 and 22):
Land
Buildings
Machinery and equipment
Construction in progress
Less—Accumulated depreciation
Total property, plant and equipment
Other assets:
Goodwill and other intangible assets (Note 10)
Deferred tax assets (Note 18)
Other assets
Total other assets
Total assets
The accompanying notes are an integral part of these statements.
18
Liabilities and equity
Current liabilities:
Short-term borrowings (Note 11)
Current portion of long-term debt (Notes 11, 12 and 21)
Notes and accounts payable, trade
Accounts payable, other and accrued expenses (Note 26)
Accrued income and other taxes
Advance payments received
Other current liabilities (Notes 18, 21 and 24)
Total current liabilities
Long-term liabilities:
Long-term debt (Notes 11 and 21)
Accrued pension and severance costs (Note 13)
Other liabilities (Notes 18, 21, 26 and 27)
Total long-term liabilities
Millions of yen
2011
2010
¥
152,348
159,414
1,194,229
380,360
38,197
271,066
302,695
2,498,309
769,544
734,309
197,541
1,701,394
¥
51,347
206,017
1,191,885
375,902
42,384
317,044
303,866
2,488,445
960,938
725,620
148,548
1,835,106
Thousands of
U.S. dollars
(Note 3)
2011
$ 1,835,518
1,920,651
14,388,301
4,582,651
460,205
3,265,854
3,646,928
30,100,108
9,271,615
8,847,096
2,380,012
20,498,723
Total liabilities
¥ 4,199,703
¥
4,323,551
$ 50,598,831
Equity attributable to shareholders of the Company (Notes 12 and 19):
Common stock:
Authorized—10,000,000,000 shares
Issued:
2011 and 2010—4,237,602,026 shares
Additional paid-in capital
Retained earnings
Accumulated other comprehensive loss
Treasury stock, at cost:
2011—2,519,870 shares
2010—2,160,986 shares
Total equity attributable to shareholders of the Company
Equity attributable to noncontrolling interests
Total equity
Commitments and contingent liabilities (Notes 23, 24 and 25)
Total liabilities and equity
¥
439,901
399,552
551,523
(521,396)
(1,461)
—
868,119
311,497
¥ 1,179,616
¥
¥
439,901
447,733
375,376
(464,250)
—
(1,305)
797,455
330,167
1,127,622
$ 5,300,012
4,813,880
6,644,855
(6,281,880)
(17,602)
—
10,459,265
3,752,976
$ 14,212,241
¥ 5,379,319
¥
5,451,173
$ 64,811,072
19
Consolidated Statements of Income
Toshiba Corporation and Subsidiaries
For the years ended March 31, 2011 and 2010
Sales and other income:
Net sales
Interest and dividends
Equity in earnings of affiliates (Note 9)
Other income (Notes 6, 16 and 21)
Costs and expenses:
Cost of sales (Notes 10, 14, 17, 22 and 26)
Selling, general and administrative (Notes 10, 14, 15 and 22)
Interest
Other expense (Notes 6, 7, 16, 17 and 21)
Millions of yen
2011
2010
¥ 6,398,505
8,704
¥
18,478
67,811
6,493,498
4,897,547
1,260,685
32,331
107,386
6,297,949
6,291,208
7,965
22,385
62,793
6,384,351
4,852,002
1,313,958
35,650
148,328
6,349,938
Thousands of
U.S. dollars
(Note 3)
2011
$ 77,090,422
104,867
222,627
817,000
78,234,916
59,006,591
15,188,976
389,530
1,293,807
75,878,904
Income from continuing operations,
before income taxes and noncontrolling interests
195,549
34,413
2,356,012
Income taxes (Note 18):
Current
Deferred
Income from continuing operations, before noncontrolling interests
Loss from discontinued operations,
before noncontrolling interests (Note 4)
Net income (loss) before noncontrolling interests
Less: Net income attributable to noncontrolling interests
57,517
(16,797)
40,720
154,829
(8,183)
146,646
8,801
52,108
(18,574)
33,534
692,976
(202,374)
490,602
879
1,865,410
(6,172)
(5,293)
14,450
(98,591)
1,766,819
106,036
Net income (loss) attributable to shareholders of the Company
¥
137,845
¥
(19,743)
$ 1,660,783
Basic net earnings (loss) per share attributable
to shareholders of the Company (Note 20)
Earnings (loss) from continuing operations
Loss from discontinued operations
Net earnings (loss)
Diluted net earnings (loss) per share attributable
to shareholders of the Company (Note 20)
Earnings (loss) from continuing operations
Loss from discontinued operations
Net earnings (loss)
Cash dividends per share (Note 19)
The accompanying notes are an integral part of these statements.
20
Yen
U.S. dollars
(Note 3)
¥
¥
¥
¥
¥
¥
¥
34.47
(1.92)
32.55
33.10
(1.92)
31.25
5.00
¥
¥
¥
¥
¥
¥
¥
(3.42)
(1.51)
(4.93)
(3.42)
(1.51)
(4.93)
—
$
$
$
$
$
$
$
0.41
(0.02)
0.39
0.40
(0.02)
0.38
0.06
Consolidated Statements of Equity
Toshiba Corporation and Subsidiaries
For the years ended March 31, 2011 and 2010
Balance at March 31, 2009
¥
Issuance of shares (Note 19)
Change in ownership for noncontrolling
interests and others
Dividends attributable to noncontrolling interests
Comprehensive income (loss):
Net income (loss)
Other comprehensive income (loss), net of tax (Note 19):
Net unrealized gains and losses on securities (Note 6)
Foreign currency translation adjustments
Pension liability adjustments (Note 13)
Net unrealized gains and losses on derivative instruments (Note 21)
Total comprehensive income (loss)
Purchase of treasury stock, net, at cost
Balance at March 31, 2010
Transfer to retained earnings from
additional paid-in capital (Note 19)
Change in ownership for noncontrolling
interests and others
Dividend attributable to shareholders of the Company
Dividends attributable to noncontrolling interests
Comprehensive income (loss):
Net income (loss)
Other comprehensive income (loss), net of tax (Note 19):
Net unrealized gains and losses on securities (Note 6)
Foreign currency translation adjustments
Pension liability adjustments (Note 13)
Net unrealized gains and losses on derivative instruments (Note 21)
Total comprehensive income (loss)
Purchase of treasury stock, net, at cost
Balance at March 31, 2011
Millions of yen
Retained
earnings
Accumulated
other
comprehensive
income (loss)
Treasury
stock
Equity
attributable to
shareholders of
the Company
Equity attributable
to noncontrolling
interests
Additional paid-
in capital
Common
stock
280,281 ¥
159,620
395,134 ¥
(517,996) ¥
(1,210) ¥
291,137 ¥
157,921
(1,325)
447,346 ¥
317,541
(1,325)
311,935 ¥
Total
equity
759,281
317,541
15,884
(7,094)
14,559
(7,094)
(19,743)
(19,743)
14,450
(5,293)
51,587
(8,694)
11,230
(377)
439,901
447,733
(15)
375,376
(464,250)
(95)
(1,305)
(46,772)
46,772
(1,406)
(8,470)
137,845
(10,771)
(43,641)
(5,333)
2,599
¥
439,901 ¥
(3)
399,552 ¥
551,523 ¥ (521,396) ¥
(156)
(1,461) ¥
Thousands of U.S. dollars (Note 3)
51,587
(8,694)
11,230
(377)
34,003
(110)
797,455
(1,406)
(8,470)
3,810
(8,410)
(500)
92
9,442
330,167
55,397
(17,104)
10,730
(285)
43,445
(110)
1,127,622
(8,841)
(8,278)
(10,247)
(8,470)
(8,278)
137,845
8,801
146,646
(10,771)
(43,641)
(5,333)
2,599
80,699
(159)
868,119 ¥
1,714
(13,408)
654
688
(1,551)
(9,057)
(57,049)
(4,679)
3,287
79,148
(159)
311,497 ¥ 1,179,616
Balance at March 31, 2010
$ 5,300,012 $ 5,394,374 $ 4,522,602 $ (5,593,374) $
Common
stock
Additional paid-
in capital
Retained
earnings
Accumulated
other
comprehensive
income (loss)
Equity
attributable to
shareholders of
the Company
Treasury
stock
(15,722) $ 9,607,892 $ 3,977,915 $ 13,585,807
Total
equity
Equity attributable
to noncontrolling
interests
Transfer to retained earnings from
additional paid-in capital (Note 19)
Change in ownership for noncontrolling
interests and others
Dividend attributable to shareholders of the Company
Dividends attributable to noncontrolling interests
Comprehensive income (loss):
Net income (loss)
Other comprehensive income (loss), net of tax (Note 19):
Net unrealized gains and losses on securities (Note 6)
Foreign currency translation adjustments
Pension liability adjustments (Note 13)
Net unrealized gains and losses on derivative instruments (Note 21)
Total comprehensive income (loss)
Purchase of treasury stock, net, at cost
Balance at March 31, 2011
The accompanying notes are an integral part of these statements.
(563,518)
563,518
(16,940)
(102,048)
(16,940)
(102,048)
(106,518)
(99,735)
(123,458)
(102,048)
(99,735)
1,660,783
1,660,783
106,036
1,766,819
(129,771)
(525,795)
(64,253)
31,313
(36)
$ 5,300,012 $ 4,813,880 $ 6,644,855 $ (6,281,880) $
(129,771)
(525,795)
(64,253)
31,313
972,277
(1,916)
(109,120)
(687,337)
(56,373)
39,602
953,591
(1,880)
(1,916)
(17,602) $ 10,459,265 $ 3,752,976 $ 14,212,241
20,651
(161,542)
7,880
8,289
(18,686)
21
Consolidated Statements of Cash Flows
Toshiba Corporation and Subsidiaries
For the years ended March 31, 2011 and 2010
Cash flows from operating activities
Net income (loss) before noncontrolling interests
Adjustments to reconcile net income (loss) before noncontrolling
interests to net cash provided by operating activities—
Depreciation and amortization
Provisions for pension and severance costs, less payments
Deferred income taxes
Equity in earnings of affi liates, net of dividends
Loss from sales, disposal and impairment of property, plant and
equipment and intangible assets, net
Loss from sales and impairment of securities and other investments, net
(Increase) decrease in notes and accounts receivable, trade
Increase in inventories
Increase in notes and accounts payable, trade
Increase (decrease) in accrued income and other taxes
Increase (decrease) in advance payments received
Other
Net cash provided by operating activities
Cash flows from investing activities
Proceeds from sale of property, plant and equipment and intangible assets
Proceeds from sale of securities
Acquisition of property, plant and equipment
Acquisition of intangible assets
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
Proceeds from stock offering
Dividends paid
Purchase of treasury stock, net
Other
Net cash used in financing activities
Effect of exchange rate changes on cash and cash equivalents
Net decrease in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year
Supplemental disclosure of cash fl ow information
Cash paid during the year for—
Interest
Income taxes
The accompanying notes are an integral part of these statements.
¥
¥
22
Millions of yen
2011
2010
Thousands of
U.S. dollars
(Note 3)
2011
¥
146,646
¥
(5,293)
$ 1,766,819
259,604
8,611
(22,771)
(6,406)
276
3,594
96
(100,945)
59,176
(3,204)
(22,363)
51,770
374,084
58,391
5,427
(229,229)
(30,851)
(6,201)
(38,424)
26,187
(214,700)
159,807
(406,846)
109,895
—
(17,601)
(159)
188
(154,716)
(13,277)
(8,609)
267,449
258,840
33,478
61,342
298,998
10,985
(22,809)
(11,566)
25,055
7,181
(98,347)
(35,554)
176,443
3,899
58,592
43,861
451,445
40,071
6,931
(215,876)
(47,053)
(14,316)
8,288
(30,967)
(252,922)
397,181
(303,748)
(680,346)
317,541
(5,728)
(109)
(2,652)
(277,861)
2,994
(76,344)
343,793
267,449
3,127,759
103,747
(274,349)
(77,181)
3,325
43,301
1,157
(1,216,205)
712,964
(38,602)
(269,434)
623,735
4,507,036
703,506
65,386
(2,761,795)
(371,699)
(74,711)
(462,940)
315,506
(2,586,747)
1,925,386
(4,901,759)
1,324,036
—
(212,060)
(1,916)
2,265
(1,864,048)
(159,964)
(103,723)
3,222,277
$ 3,118,554
31,036
4,487
$
403,349
739,060
¥
¥
Notes to Consolidated Financial Statements
Toshiba Corporation and Subsidiaries
March 31, 2011
1. DESCRIPTION OF BUSINESS
Toshiba Corporation (“the Company”) and its subsidiaries (hereinafter collectively, “the Group”) are engaged in research
and development, manufacturing and sales of high-technology electronic and energy products, which range (1)Digital
Products, (2)Electronic Devices, (3)Social Infrastructure, (4)Home Appliances, and (5)Others. For the year ended March
31, 2011, sales of Digital Products represented the most significant portion of the Group’s total sales or approximately 33
percent. Social Infrastructure, second to Digital Products, represented approximately 33 percent, Electronic Devices
approximately 20 percent and Home Appliances approximately 9 percent of the Group’s total sales. For the year ended
March 31, 2010, sales of Social Infrastructure represented the most significant portion of the Group’s total sales or
approximately 34 percent. Digital Products represented approximately 33 percent, Electronic Devices approximately 19
percent and Home Appliances approximately 9 percent of the Group’s total sales. The Group’s products are manufactured
and marketed throughout the world with approximately 45 percent and 44 percent of its sales in Japan for the years ended
March 31, 2011 and 2010, respectively and the remainder in Asia, North America, Europe and other parts of the world.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
PREPARATION OF FINANCIAL STATEMENTS
The Company and its domestic subsidiaries maintain their records and prepare their financial statements in accordance
with accounting principles generally accepted in Japan, and its foreign subsidiaries in conformity with those of the
countries of their domicile.
Certain adjustments and reclassifications have been incorporated in the accompanying consolidated financial statements
to conform with accounting principles generally accepted in the United States. These adjustments were not recorded in
the statutory books of account.
In June 2009, the Financial Accounting Standards Board (“FASB”) issued the Accounting Standards Codification
(“ASC”). The ASC has become the source of authoritative U.S. generally accepted accounting principles (“GAAP”). The
codified standards are described as “ASC”.
BASIS OF CONSOLIDATION AND INVESTMENTS IN AFFILIATES
The consolidated financial statements of the Group include the accounts of the Company, its majority-owned subsidiaries and
variable interest entities (“VIEs”) for which the Group is the primary beneficiary in accordance with ASC No.810 “Consolidation”
(“ASC No.810”). All significant intra-entity transactions and accounts are eliminated in consolidation.
Investments in affiliates over which the Group has the ability to exercise significant influence are accounted for under the
equity method of accounting. Net income (loss) attributable to shareholders of the Company includes its equity in the current
net earnings (loss) of such companies after elimination of unrealized intra-entity gains. The proportionate share of the income or
loss of some companies accounted for under the equity method is recognized from the most recent available financial statements.
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
liabilities, 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 Group 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, recoverability of receivables,
realization of deferred tax assets, uncertain tax positions, pension accounting assumptions, revenue recognition and other
valuation allowances and reserves including contingencies for litigations. 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
average 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 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.
23
Notes to Consolidated Financial Statements
Toshiba Corporation and Subsidiaries
March 31, 2011
ALLOWANCE FOR DOUBTFUL RECEIVABLES
An allowance for doubtful 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 efforts 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 Group classifies all of its marketable securities as available-for-sale which are reported at fair value, with unrealized gains
and losses included in accumulated other comprehensive income (loss), net of tax. 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 impairments 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 Group’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 Group 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
determined principally by the average method. Finished products and work in process for contract items are stated at the
lower of cost or estimated realizable value, cost being determined by accumulated production costs.
In accordance with general industry practice, items with long manufacturing periods are included among inventories
even when not realizable within one year.
PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment, including significant renewals and additions, are carried at cost. Depreciation for property,
plant and equipment associated with the Company and domestic subsidiaries is computed generally by the 250%
declining-balance method with estimated residual value recorded at a nominal value. Depreciation for property, plant and
equipment for foreign subsidiaries is generally computed using the straight line method.
The estimated useful lives of buildings are 3 to 50 years, and those of 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
impairment loss is recorded based on the fair value of the asset. Fair value is determined primarily by using the anticipated
cash flows discounted at a rate commensurate with the risk involved. For assets held for sale, an impairment loss is further
increased by costs to sell. Long-lived assets to be disposed of other than by sale are considered held and used until disposed
of.
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. Goodwill is allocated among and tested for impairment at the reporting unit level. Intangible assets with finite
useful lives, consisting primarily of core and current technology and software, are amortized 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
adjusted 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 income (loss) from continuing operations, before income taxes and
noncontrolling interests 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
24
deferred tax assets when it is more likely than not that a tax benefit will not be realized.
The Group 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 and certain subsidiaries have various retirement benefit plans covering substantially all employees. The
unrecognized net obligation existing at initial application of ASC No.715 “Compensation–Retirement Benefits”, and prior
service costs resulting from amendments to the plans are amortized over the average remaining service period of
employees expected to receive benefits. Unrecognized actuarial 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 EARNINGS (LOSS) PER SHARE ATTRIBUTABLE TO SHAREHOLDERS OF THE COMPANY
Basic net earnings (loss) per share attributable to shareholders of the Company (“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
anti-dilutive 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
collectibility is reasonably assured. Mass-produced standard products are considered delivered to customers once they have
been shipped, and the title and risk of loss have transferred.
Revenue 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 Group.
Revenue from services, such as maintenance service for plant and other systems, that are priced and sold separately from
the equipment is recognized ratably over the contract term or as the services are provided.
Revenue on long-term contracts is recorded under the percentage of completion method. To measure the extent of progress
toward completion, the Group generally compares the costs incurred to date to the estimated total costs to complete based
upon the most recent available information. When estimates of the extent of progress toward completion and contract costs
are reasonably dependable, revenue from the contract is recognized based on the percentage of completion. 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,
installment and maintenance, is allocated to each element based on its relative fair value if such element meets the criteria for
treatment as a separate unit of accounting as prescribed in ASC No.605 “Revenue Recognition” (“ASC No.605”). 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
arrangement, 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 Group includes shipping and handling costs which totaled ¥80,316 million ($967,663 thousand) and ¥78,869 million
for the years ended March 31, 2011 and 2010, respectively in selling, general and administrative expenses.
DERIVATIVE FINANCIAL INSTRUMENTS
The Group 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 21 for descriptions of these financial instruments.
The Group recognizes all derivative financial instruments, such as forward exchange contracts, interest rate swap agreements,
currency swap agreements and currency options in the consolidated financial statements at fair value regardless of the purpose or
intent for holding the derivative financial instruments. Changes in the fair value of derivative financial instruments are either
recognized periodically in income or in equity as a component of accumulated other comprehensive income (loss) depending on
whether the derivative financial instruments qualify for hedge accounting, and if so, whether they qualify as a fair value hedge or a
cash flow hedge. Changes in fair value of derivative financial instruments accounted for as fair value hedges are recorded in income
25
Notes to Consolidated Financial Statements
Toshiba Corporation and Subsidiaries
March 31, 2011
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 Group has transferred certain trade notes and accounts receivable under several securitization programs. When a
transfer of financial assets is eligible to be accounted for as a sale under ASC No.860 “Transfers and Servicing” (“ASC
No.860”), these securitization transactions are accounted for as a sale and the receivables sold under these facilities are
excluded from the accompanying consolidated balance sheets.
ASSET RETIREMENT OBLIGATIONS
The Group 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 amount of the retirement
obligation, and for accretion of the liability due to the passage of time.
RECENT PRONOUNCEMENTS
In October 2009, the FASB issued Accounting Standards Updates (“ASU”) No.2009-13. ASU No.2009-13 amends ASC
No.605, and establishes the requirements for treating multiple elements of revenue arrangements as separate units of
accounting, and permits using a best estimate of the selling price when vendor-specific objective evidence or third-party
evidence of selling price is not available. At the same time, the use of the residual method, which was previously permitted
to use to allocate arrangement consideration, is prohibited. Moreover, additional disclosure such as effects by this
amendment is required. ASU No.2009-13 is effective for fiscal years beginning on or after June 15, 2010, and the
Company will adopt ASU No.2009-13 effective April 1, 2011. The Company is currently evaluating the impact of
adoption of ASU No.2009-13 on the Company’s financial position and results of operations but does not expect it to have
a material impact.
In October 2009, the FASB issued ASU No.2009-14. ASU No.2009-14 amends ASC No.985 “Software” (“ASC
No.985”), and clarifies the scope of ASC No.985 in certain revenue arrangement that include software elements. ASU
No.2009-14 is effective for fiscal years beginning on or after June 15, 2010, and the Company will adopt ASU No.2009-14
effective April 1, 2011. The Company is currently evaluating the impact of adoption of ASU No.2009-14 on the
Company’s financial position and results of operations but does not expect it to have a material impact.
SUBSEQUENT EVENTS
The Group has evaluated subsequent events up to June 22, 2011 in accordance with ASC No.855 “Subsequent Events”.
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 ¥83=U.S.$1, the approximate current rate of exchange at March 31,
2011, has been used throughout for the purpose of presentation of the U.S. dollar amounts in the accompanying consolidated
financial statements.
4. DISCONTINUED OPERATION
On June 17, 2010, the Company and Fujitsu Limited (“Fujitsu”) signed a Memorandum of Understanding (MOU) to
merge their mobile phone businesses, followed by a definitive contract on July 29, 2010. The purpose of this business
merger was to enhance their handset development capabilities and at the same time to improve business efficiency by
combining their mobile phone development know-how and technological strengths, in the domestic and overseas mobile
phone market in which competition is intensifying. On October 1, 2010, the Company transferred its mobile phone
business to a newly established company (Fujitsu Toshiba Mobile Communications Limited), and sold 80.1% of the
26
shares of the new company to Fujitsu. In accordance with this contract, the Company will continue manufacturing and
selling of the existing models of mobile phones until the first half of FY2011.
In accordance with ASC No.205-20 “Presentation of Financial Statements–Discontinued Operations” (“ASC No.205-20”),
operating results relating to the mobile phone business are separately presented as discontinued operations in the
consolidated statements of income.
Operating results relating to the mobile phone business, which are reclassified as discontinued operations, are as
follows:
Year ended March 31
Sales and other income
Costs and expenses
Loss from discontinued operations,
before income taxes and noncontrolling interests
Income taxes
Loss from discontinued operations, before noncontrolling interests
Less: Net income from discontinued operations
attributable to noncontrolling interests
Net loss from discontinued operations
attributable to shareholders of the Company
Millions of yen
¥
2011
84,167
98,004
¥
2010
90,995
100,446
Thousands of U.S. dollars
2011
$ 1,014,060
1,180,771
(13,837)
(5,631)
(8,206)
—
(9,451)
(3,846)
(5,605)
—
(166,711)
(67,843)
(98,868)
—
(8,206)
(5,605)
(98,868)
Mobile Broadcasting Corporation (“MBCO”), a consolidated subsidiary of the Company, ended all its broadcasting services
by the end of March 2009, and is in the course of going through the procedures for dissolution. In accordance with ASC
No.205-20, operating results relating to MBCO in consolidated statements of income are separately presented as
discontinued operations. These amounts were not significant.
27
Notes to Consolidated Financial Statements
Toshiba Corporation and Subsidiaries
March 31, 2011
5. FAIR VALUE MEASUREMENTS
ASC No.820 “Fair Value Measurements and Disclosures” defines fair value as the price that would be received to sell an asset
or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair
value hierarchy prioritizes the inputs to valuation techniques used to measure fair value into three broad levels below;
Level 1 - Quoted prices for identical assets or liabilities in active markets.
Level 2 - Quoted prices for similar assets or liabilities in active markets.
Quoted prices for identical or similar instruments in markets that are not active.
Inputs other than quoted prices that are observable.
Inputs that are derived principally from or corroborated by observable market data by correlation or other
means.
Level 3 - Instruments whose significant inputs are unobservable.
Assets and liabilities measured at fair value on a recurring basis
Assets and liabilities that are measured at fair value on a recurring basis at March 31, 2011 and 2010 are as follows:
March 31, 2011
Assets:
Marketable securities:
Equity securities
Debt securities
Derivative assets:
Forward exchange contracts
Interest rate swap agreements
Currency swap agreements
Total assets
Liabilities:
Derivative liabilities:
Forward exchange contracts
Interest rate swap agreements
Currency swap agreements
Total liabilities
Level 1
Level 2
Level 3
Total
Millions of yen
¥
201,138
—
—
—
—
201,138
—
—
—
—
¥
¥
¥
¥
¥
¥
¥
673
—
6,325
2
1,716
8,716
2,993
2,407
1,241
6,641
¥
¥
¥
¥
—
5
—
—
—
5
—
—
—
—
¥
201,811
5
6,325
2
1,716
209,859
2,993
2,407
1,241
6,641
¥
¥
¥
28
March 31, 2010
Assets:
Cash equivalents:
MMF
Marketable securities:
Equity securities
Debt securities
Derivative assets:
Forward exchange contracts
Interest rate swap agreements
Currency swap agreements
Subordinated retained interests
Total assets
Liabilities:
Derivative liabilities:
Forward exchange contracts
Interest rate swap agreements
Currency swap agreements
Currency options
Total liabilities
March 31, 2011
Assets:
Marketable securities:
Equity securities
Debt securities
Derivative assets:
Forward exchange contracts
Interest rate swap agreements
Currency swap agreements
Total assets
Liabilities:
Derivative liabilities:
Forward exchange contracts
Interest rate swap agreements
Currency swap agreements
Total liabilities
Level 1
Level 2
Level 3
Total
Millions of yen
¥
15,615
¥
—
¥
—
¥
15,615
209,628
—
—
—
—
—
225,243
—
—
—
—
—
¥
¥
¥
¥
¥
¥
2,466
—
1,486
9
255
—
4,216
1,313
5,168
422
162
7,065
¥
¥
¥
—
2,393
—
—
—
5,942
8,335
—
—
—
—
—
212,094
2,393
1,486
9
255
5,942
237,794
1,313
5,168
422
162
7,065
¥
¥
¥
Level 1
Level 2
Level 3
Total
Thousands of U.S. dollars
$ 2,423,350
—
$
8,108
—
—
—
—
$ 2,423,350
$
$
—
—
—
—
76,205
24
20,675
105,012
36,060
29,000
14,952
80,012
$
$
$
$
$
$
$
—
60
—
—
—
60
—
—
—
—
$ 2,431,458
60
76,205
24
20,675
$ 2,528,422
$
$
36,060
29,000
14,952
80,012
Cash equivalents
Cash equivalents whose fair values are valued based on quoted market prices in active markets are classified within Level 1.
Marketable securities
Level 1 securities represent marketable equity securities listed in active markets, which are valued based on quoted market
prices in active markets with sufficient volume and frequency of transactions. Level 2 securities represent marketable
equity securities listed in less active markets, which are valued based on quoted market prices for identical assets in
inactive markets. Level 3 securities represent corporate debt securities and valued based on unobservable inputs as the
markets for the assets are not active at the measurement date.
29
Notes to Consolidated Financial Statements
Toshiba Corporation and Subsidiaries
March 31, 2011
Derivative instruments
Derivative instruments principally represent forward currency exchange contracts and interest rate swap agreements,
which are classified within Level 2. They are valued based on inputs that can be corroborated with the observable inputs
such as foreign currency exchange rate, LIBOR and others.
Subordinated retained interests
Subordinated retained interests are valued based on unobservable inputs and classified within Level 3. They are valued
based on the internal valuation models and the Group’s own assumptions.
Analyses of the changes in Level 3 assets measured at fair value on a recurring basis for the years ended March 31, 2011
and 2010 are as follows:
Year ended March 31, 2011
Balance at beginning of year
Total gains or losses (realized or unrealized):
Included in gains (losses)
Included in other comprehensive income (loss)
Purchases
Issuances
Settlements
Balance at end of year
Year ended March 31, 2010
Balance at beginning of year
Total gains or losses (realized or unrealized):
Included in gains (losses)
Included in other comprehensive income (loss)
Purchases
Issuances
Settlements
Balance at end of year
Year ended March 31, 2011
Balance at beginning of year
Total gains or losses (realized or unrealized):
Included in gains (losses)
Included in other comprehensive income (loss)
Purchases
Issuances
Settlements
Balance at end of year
Marketable securities
2,393
¥
Millions of yen
Subordinated retained
interests
Total
¥
5,942
¥
8,335
(461)
—
—
—
(1,927)
5
¥
—
—
—
—
(5,942)
—
¥
(461)
—
—
—
(7,869)
5
¥
Marketable securities
3,045
¥
Millions of yen
Subordinated retained
interests
Total
¥
10,762
¥
13,807
—
(556)
—
—
(96)
2,393
¥
—
—
—
—
(4,820)
5,942
¥
—
(556)
—
—
(4,916)
8,335
¥
Marketable securities
28,831
$
Thousands of U.S. dollars
Subordinated retained
interests
$
71,590
$
(5,554)
—
—
—
(23,217)
60
$
—
—
—
—
(71,590)
—
$
$
Total
100,421
(5,554)
—
—
—
(94,807)
60
At March 31, 2011 and 2010, Level 3 assets measured at fair value on a recurring basis consisted of corporate debt
securities and subordinated retained interests.
30
Assets and liabilities measured at fair value on a non-recurring basis
Assets that are measured at fair value on a non-recurring basis at March 31, 2011 and 2010 are as follows:
March 31, 2011
Assets:
Equity securities
Investments in affiliates
Long-lived assets held for use
Total assets
March 31, 2010
Assets:
Equity securities
Investments in affiliates
Long-lived assets held for use
Long-lived assets held for sale
Total assets
March 31, 2011
Assets:
Equity securities
Investments in affiliates
Long-lived assets held for use
Total assets
Level 1
Level 2
Level 3
Total
Millions of yen
—
—
—
—
¥
¥
—
—
—
—
¥
¥
Millions of yen
85
9,379
0
9,464
¥
¥
85
9,379
0
9,464
Level 1
Level 2
Level 3
Total
—
11,921
—
—
11,921
¥
¥
—
—
—
—
—
¥
¥
620
8,582
42,403
10,618
62,223
¥
¥
620
20,503
42,403
10,618
74,144
Level 1
Level 2
Level 3
Total
Thousands of U.S. dollars
—
—
—
—
$
$
—
—
—
—
$
$
1,024
113,000
0
114,024
$
$
1,024
113,000
0
114,024
¥
¥
¥
¥
$
$
Certain non-marketable equity securities accounted for under the cost method were written down to their fair value,
resulting in other-than-temporary impairment. The impaired securities were classified within level 3 as they were valued
based on the specific valuation techniques and hypotheses of the Group with unobservable inputs.
Certain equity method investments were written down to their fair value, resulting in other-than-temporary
impairment. Some of the impaired investments were classified within Level 1 as they were valued based on quoted market
prices in active markets. The other impaired securities were classified within level 3 as they were valued based on the
specific valuation techniques and hypotheses of the Group with unobservable inputs.
Previous equity interests of newly controlled subsidiaries in step acquisitions and retained investment in the former
subsidiary were remeasured to their fair value, which were classified within level 3 as they were valued based on the
specific valuation techniques and hypotheses of the Group with unobservable inputs.
The impaired long-lived assets were classified within level 3 as they were valued based on discounted cash flows
expected to be generated by the related assets and on the transfer price of stocks with unobservable inputs.
As a result, the net impacts for the years ended March 31, 2011 and 2010 were ¥15,969 million ($192,398 thousand)
loss and ¥23,181 million loss, respectively.
31
Notes to Consolidated Financial Statements
Toshiba Corporation and Subsidiaries
March 31, 2011
6. 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, 2011 and 2010 are as follows:
March 31, 2011:
Equity securities
Debt securities
March 31, 2010:
Equity securities
Debt securities
March 31, 2011:
Equity securities
Debt securities
Cost
Gross unrealized
holding gains
Gross unrealized
holding losses
Fair value
Millions of yen
¥
¥
¥
¥
91,790
5
91,795
93,416
2,949
96,365
¥
¥
¥
¥
113,388
0
113,388
120,189
0
120,189
¥
¥
¥
¥
3,367
0
3,367
1,511
556
2,067
¥
¥
¥
¥
201,811
5
201,816
212,094
2,393
214,487
Thousands of U.S. dollars
Cost
Gross unrealized
holding gains
Gross unrealized
holding losses
Fair value
$ 1,105,904
60
$ 1,105,964
$ 1,366,120
0
$ 1,366,120
$
$
40,566
0
40,566
$ 2,431,458
60
$ 2,431,518
At March 31, 2011 and 2010, debt securities mainly consist of corporate debt securities.
Contractual maturities of debt securities classified as available-for-sale at March 31, 2011 are as follows:
March 31, 2011:
Due within one year
Due after one year within five years
Millions of yen
Thousands of U.S. dollars
Cost
Fair value
Cost
Fair value
¥
¥
0
5
5
¥
¥
0
5
5
$
$
0
60
60
$
$
0
60
60
The proceeds from sales of available-for-sale securities for the years ended March 31, 2011 and 2010 were ¥4,751 million
($57,241 thousand) and ¥2,667 million, respectively. The gross realized gains on those sales for the years ended March
31, 2011 and 2010 were ¥1,810 million ($21,807 thousand) and ¥1,321 million, respectively. The gross realized losses on
those sales for the years ended March 31, 2011 and 2010 were ¥19 million ($229 thousand) and ¥69 million, respectively.
At March 31, 2011, 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 ¥39,323 million
($473,771 thousand) and ¥38,058 million at March 31, 2011 and 2010, respectively. At March 31, 2011 and 2010,
investments with an aggregate cost of ¥39,237 million ($472,735 thousand) and ¥37,479 million were not evaluated for
impairment because (a)the Group did not estimate the fair values of those investments as it was not practicable to
estimate the fair value of the investments and (b)the Group did not identify any events or changes in circumstances that
might have had significant adverse effects on the fair values of those investments.
Included in other expense are charges of ¥6,505 million ($78,373 thousand) and ¥5,902 million related to other-than-
temporary declines in the marketable and non-marketable equity securities for the years ended March 31, 2011 and 2010,
respectively.
32
7. SECURITIZATIONS
The Group has transferred certain trade notes and accounts receivable under several securitization programs. These
securitization transactions are accounted for as a sale in accordance with ASC No.860, because the Group has
relinquished control of the receivables. Accordingly, the receivables transferred under these facilities are excluded from the
accompanying consolidated balance sheets.
Under the asset-backed securitization program entered into in Europe, the Group held subordinated retained interests
for certain trade notes and accounts receivable. As of March 31, 2010, the fair value of retained interests was ¥4,816
million.
The Group recognized losses of ¥1,043 million ($12,566 thousand) and ¥1,976 million on the transfers of receivables
for the years ended March 31, 2011 and 2010, respectively.
Subsequent to transfers, the Group retains collection and administrative responsibilities for the receivables. Servicing
fees received by the Group approximate the prevailing market rate. Related servicing assets or liabilities are immaterial to
the Group’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
Purchases of delinquent and foreclosed receivables
Millions of yen
¥
2011
462,295
318
¥
2010
1,018,458
1,218
Thousands of
U.S. dollars
2011
$ 5,569,819
3,831
Quantitative information about delinquencies, net credit losses, and components of securitized receivables as of and for
the years ended March 31, 2011 and 2010 are as follows:
Total principal amount
of receivables
March 31
Millions of yen
Amount 90 days
or more past due
Net credit losses
Year ended March 31
2011
2010
2011
2010
2011
2010
Accounts receivable
Notes receivable
Total managed portfolio
Securitized receivables
Total receivables
¥ 1,189,602 ¥ 1,273,517 ¥
98,482
1,288,084
(144,285)
96,035
1,369,552 ¥
(161,704)
¥ 1,143,799 ¥ 1,207,848
30,975 ¥
19
30,994 ¥
33,339 ¥
75
33,414 ¥
2,226 ¥
348
2,574 ¥
5,908
792
6,700
Accounts receivable
Notes receivable
Total managed portfolio
Securitized receivables
Total receivables
Total principal amount
of receivables
March 31, 2011
Thousands of U.S. dollars
Amount 90 days
or more past due
$ 14,332,554
1,186,530
15,519,084
(1,738,373)
$ 13,780,711
$
$
373,193
229
373,422
Net credit losses
Year ended March 31, 2011
$
26,819
4,193
31,012
$
33
Notes to Consolidated Financial Statements
Toshiba Corporation and Subsidiaries
March 31, 2011
8. INVENTORIES
Inventories at March 31, 2011 and 2010 consist of the following:
March 31
Finished products
Work in process:
Long-term contracts
Other
Raw materials
Millions of yen
Thousands of
U.S. dollars
2011
338,754
¥
2010
¥
303,860
2011
$ 4,081,373
92,285
269,439
163,904
864,382
¥
96,376
243,807
151,558
795,601
1,111,868
3,246,253
1,974,747
$ 10,414,241
¥
9. INVESTMENTS IN AND ADVANCES TO AFFILIATES
The Group’s significant investments in affiliated companies accounted for by the equity method together with the
percentage of the Group’s ownership of voting shares at March 31, 2011 were: Topcon Corporation (35.5%); Toshiba
Machine Co., Ltd. (22.1%); 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 (5 companies) were carried at ¥35,443 million ($427,024 thousand) and ¥36,097 million at March 31, 2011 and
2010, respectively. The Group’s investments in these companies had market values of ¥42,525 million ($512,349 thousand)
and ¥44,192 million at March 31, 2011 and 2010, 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
Equity
Total liabilities and equity
Year ended March 31
Sales
Net income
Millions of yen
2011
¥ 1,439,938
1,225,127
¥ 2,665,065
¥ 1,264,533
662,619
737,913
¥ 2,665,065
2010
1,263,890
1,111,965
2,375,855
998,135
701,219
676,501
2,375,855
¥
¥
¥
¥
Millions of yen
2011
¥ 2,037,365
62,318
¥
2010
1,876,055
59,403
Thousands of
U.S. dollars
2011
$ 17,348,651
14,760,566
$ 32,109,217
$ 15,235,337
7,983,362
8,890,518
$ 32,109,217
Thousands of
U.S. dollars
2011
$ 24,546,566
750,819
A summary of transactions and balances with the affiliates accounted for by the equity method is presented below:
Millions of yen
¥
2011
163,185
135,500
11,341
¥
2010
149,196
132,823
11,580
Thousands of
U.S. dollars
2011
$ 1,966,084
1,632,530
136,639
Year ended March 31
Sales
Purchases
Dividends
34
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
2011
2010
¥
47,533
11,644
131,275
89,315
31,179
25,714
¥
36,607
11,395
100,397
110,700
23,319
37,438
$
Thousands of
U.S. dollars
2011
572,687
140,289
1,581,627
1,076,084
375,651
309,807
10. GOODWILL AND OTHER INTANGIBLE ASSETS
The Group tested goodwill for impairment in accordance with ASC No.350 “Intangibles–Goodwill and Other”, applying a
fair value based test and has concluded that there was no impairment for the years ended March 31, 2011 and 2010.
The components of acquired intangible assets excluding goodwill at March 31, 2011 and 2010 are as follows:
March 31, 2011
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, 2010
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
Millions of yen
Accumulated
amortization
Net carrying amount
¥
¥
194,656
62,439
122,211
90,050
469,356
¥
¥
127,164
39,590
27,801
35,733
230,288
¥
¥
¥
67,492
22,849
94,410
54,317
239,068
34,047
2,678
36,725
275,793
Gross carrying amount
Millions of yen
Accumulated
amortization
Net carrying amount
¥
¥
195,063
62,440
142,617
81,096
481,216
¥
¥
124,162
32,457
23,696
28,356
208,671
¥
¥
¥
70,901
29,983
118,921
52,740
272,545
37,770
3,018
40,788
313,333
35
Notes to Consolidated Financial Statements
Toshiba Corporation and Subsidiaries
March 31, 2011
March 31, 2011
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
Thousands of U.S. dollars
Accumulated
amortization
Net carrying amount
$ 2,345,253
752,277
1,472,422
1,084,940
$ 5,654,892
$ 1,532,096
476,988
334,952
430,518
$ 2,774,554
$
813,157
275,289
1,137,470
654,422
$ 2,880,338
410,204
32,265
442,469
$ 3,322,807
Other intangible assets acquired during the year ended March 31, 2011 primarily consisted of software of ¥21,127 million
($254,542 thousand). The weighted-average amortization period of software for the year ended March 31, 2011 was
approximately 4.9 years.
The weighted-average amortization periods for other intangible assets were approximately 11.3 years and 11.5 years for
the years ended March 31, 2011 and 2010, respectively. Amortization expenses of other intangible assets subject to
amortization for the years ended March 31, 2011 and 2010 are ¥49,518 million ($596,602 thousand) and ¥42,410 million,
respectively. The future amortization expense for each of the next 5 years relating to other intangible assets currently
recorded in the consolidated balance sheets at March 31, 2011 is estimated as follows:
Year ending March 31
2012
2013
2014
2015
2016
Millions of yen
Thousands of
U.S. dollars
¥
44,092
37,923
29,290
19,009
12,628
$
531,229
456,904
352,892
229,024
152,145
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, 2011 and 2010 are as follows:
Year ended March 31
Balance at beginning of year
Goodwill acquired during the year
Other
Balance at end of year
Millions of yen
2011
305,398
2,653
(24,598)
283,453
¥
¥
2010
310,715
18,376
(23,693)
305,398
¥
¥
Thousands of
U.S. dollars
2011
$ 3,679,494
31,964
(296,361)
$ 3,415,097
Other includes foreign currency translation adjustments and purchase price allocation adjustments.
As of March 31, 2011 and 2010, goodwill allocated within Social Infrastructure is ¥255,459 million ($3,077,819 thousand)
and ¥276,321 million, respectively. The rest was mainly allocated within Digital Products.
36
11. SHORT-TERM BORROWINGS AND LONG-TERM DEBT
Short-term borrowings at March 31, 2011 and 2010 consist of the following:
March 31
Loans, principally from banks, including bank
overdrafts, with weighted-average interest rate of
1.99% at March 31, 2011 and 2.38% at March 31, 2010:
Secured
Unsecured
Commercial paper with weighted-average interest rate of
0.19% at March 31, 2011 and 0.12% at March 31, 2010
Euro yen medium-term notes of a subsidiary, with
weighted-average interest rate of 0.27% at March 31, 2010
Millions of yen
2011
2010
Thousands of
U.S. dollars
2011
¥
—
25,348
127,000
—
152,348
¥
¥
¥
708
31,259
$
—
305,398
15,000
1,530,120
4,380
51,347
—
$ 1,835,518
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, 2011, the Group had unused committed lines of credit from short-term financing arrangements
aggregating ¥352,495 million ($4,246,928 thousand), of which ¥2,495 million ($30,060 thousand) was in support of the
Group’s commercial paper. The lines of credit expire on various dates from April 2011 through March 2012. Under the
agreements, the Group is required to pay commitment fees ranging from 0.040 percent to 0.250 percent on the unused
portion of the lines of credit.
Long-term debt at March 31, 2011 and 2010 consist of the following:
March 31
Loans, principally from banks and insurance companies,
due 2011 to 2029 with weighted-average interest rate
of 1.52% at March 31, 2011 and due 2010 to 2029 with
weighted-average interest rate of 1.34% at March 31, 2010:
Secured
Unsecured
Unsecured yen bonds, due 2013 to 2020 with interest
ranging from 0.89% to 2.20% at March 31, 2011 and due
2010 to 2016 with interest ranging from 1.05% to
2.20% at March 31, 2010
Interest deferrable and early redeemable subordinated bonds:
Due 2069 with interest rate of 7.50% at March 31, 2011
Zero Coupon Convertible Bonds with stock acquisition rights:
Due 2011 convertible at ¥542 per share at March 31, 2011
Euro yen medium-term notes of subsidiaries, due 2011
with interest rate of 1.31% at March 31, 2011
and due 2011 to 2014 with interest
ranging from 1.31% to 1.67% at March 31, 2010
Capital lease obligations
Less-Portion due within one year
Millions of yen
2011
2010
Thousands of
U.S. dollars
2011
¥
—
293,885
¥
—
595,581
$
—
3,540,783
310,000
240,000
3,734,940
180,000
180,000
2,168,675
95,010
95,010
1,144,699
502
49,561
928,958
(159,414)
769,544
¥
992
55,372
1,166,955
(206,017)
960,938
6,048
597,121
11,192,266
(1,920,651)
$ 9,271,615
¥
37
Notes to Consolidated Financial Statements
Toshiba Corporation and Subsidiaries
March 31, 2011
Substantially all of the unsecured loan agreements permit the lenders to require collateral or guarantees for such loans.
Unsecured loan agreements may require prior approval by the banks and trustees before any distributions (including cash
dividends) may be made from current or retained earnings.
The aggregate annual maturities of long-term debt, excluding those of capital lease obligations, are as follows:
Year ending March 31
2012
2013
2014
2015
2016
Thereafter
Millions of yen
¥
¥
137,941
182,229
178,884
34,000
81,004
265,339
879,397
Thousands of
U.S. dollars
$
1,661,940
2,195,530
2,155,229
409,639
975,952
3,196,855
$ 10,595,145
12. ISSUANCE OF CONVERTIBLE BOND
In July, 2004, the Company 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
circumstances, 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).
About the 2009 Bonds, exercisable period of the stock acquisition rights ended, and the principal amount of Bonds was
redeemed at maturity.
The 2011 Bonds initial conversion prices are ¥542, 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 2011 Bonds were not converted into shares of common stock for the year ended March 31, 2011.
The 2009 Bonds and the 2011 Bonds were not converted into shares of common stock for the year ended March 31,
2010.
The additional 175,295,212 shares relating to the potential conversion of the 2011 Bonds are included in the calculation of
the diluted net income per share attributable to shareholders of the Company for the year ended March 31, 2011.
The additional 175,295,212 shares relating to the potential conversion of the 2011 Bonds are excluded from the
calculation of the diluted net loss per share attributable to shareholders of the Company for the year ended March 31,
2010 due to their anti-dilutive effect.
13. ACCRUED PENSION AND SEVERANCE COSTS
All employees who retire or are terminated are usually entitled to lump-sum severance indemnities or pension benefits
determined 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 benefit is provided for through accruals and funding of the defined benefit corporate pension plan.
38
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 Company and certain subsidiaries in Japan have amended their pension plan under the agreement between employees
and managements in January 2011, and introduced Cash Balance Plan from April 2011. This plan is designed that each
plan participant has a notional account, which is accumulated based on salary standards, interest rates in financial markets
and others.
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 changes in the benefit obligation and plan assets for the years ended March 31, 2011 and 2010 and the funded status
at March 31, 2011 and 2010 are as follows:
March 31
Change in benefit obligation:
Benefi t obligation at beginning of year
Service cost
Interest cost
Plan participants’ contributions
Plan amendments
Actuarial loss
Benefi ts paid
Acquisitions and divestitures
Foreign currency exchange impact
Benefi t 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
Benefi ts paid
Acquisitions and divestitures
Foreign currency exchange impact
Fair value of plan assets at end of year
Funded status
Millions of yen
2011
2010
¥ 1,523,910
52,120
38,687
4,114
(18,951)
28,533
(83,185)
(10,638)
(10,124)
¥ 1,524,466
¥
¥
¥
800,883
(7,926)
52,207
4,114
(51,773)
93
(7,199)
790,399
(734,067)
¥
¥
¥
¥
¥
1,380,791
47,904
44,282
3,889
108
117,277
(77,711)
11,273
(3,903)
1,523,910
660,699
117,554
60,896
3,889
(47,262)
7,586
(2,479)
800,883
(723,027)
Amounts recognized in the consolidated balance sheets at March 31, 2011 and 2010 are as follows:
March 31
Other assets
Other current liabilities
Accrued pension and severance costs
Millions of yen
2011
870
(628)
(734,309)
(734,067)
¥
¥
2010
3,312
(719)
(725,620)
(723,027)
¥
¥
Thousands of
U.S. dollars
2011
$ 18,360,361
627,952
466,109
49,566
(228,325)
343,771
(1,002,229)
(128,169)
(121,976)
$ 18,367,060
$ 9,649,193
(95,494)
629,000
49,566
(623,771)
1,121
(86,735)
$ 9,522,880
$ (8,844,180)
Thousands of
U.S. dollars
2011
$
10,482
(7,566)
(8,847,096)
$ (8,844,180)
39
Notes to Consolidated Financial Statements
Toshiba Corporation and Subsidiaries
March 31, 2011
Amounts recognized in accumulated other comprehensive loss at March 31, 2011 and 2010 are as follows:
March 31
Unrecognized actuarial loss
Unrecognized prior service cost
Millions of yen
2011
587,066
(40,922)
546,144
¥
¥
2010
562,602
(24,655)
537,947
¥
¥
Thousands of
U.S. dollars
2011
$ 7,073,084
(493,036)
$ 6,580,048
The accumulated benefit obligation at March 31, 2011 and 2010 are as follows:
March 31
Accumulated benefit obligation
Millions of yen
Thousands of
U.S. dollars
2011
¥ 1,436,210
2010
1,437,097
¥
2011
$ 17,303,735
The components of the net periodic pension and severance cost for the years ended March 31, 2011 and 2010 are as
follows:
Year ended March 31
Service cost
Interest cost on projected benefi t obligation
Expected return on plan assets
Amortization of prior service cost
Recognized actuarial loss
Settlement loss
Net periodic pension and severance cost
Millions of yen
2011
2010
¥
¥
52,120
38,687
(28,748)
(2,829)
30,944
8
90,182
¥
¥
47,904
44,282
(24,218)
(2,762)
32,426
114
97,746
Thousands of
U.S. dollars
$
2011
627,952
466,109
(346,362)
(34,084)
372,819
96
$ 1,086,530
Other changes in plan assets and benefit obligation recognized in the other comprehensive income (loss) for the years
ended March 31, 2011 and 2010 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
2011
2010
¥
¥
65,207
(30,944)
(18,959)
2,829
18,133
¥
¥
23,941
(32,426)
38
2,762
(5,685)
Thousands of
U.S. dollars
2011
785,627
(372,819)
(228,422)
34,084
218,470
$
$
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:
Millions of yen
2012
Thousands of
U.S. dollars
2012
¥
(4,084)
33,623
$
(49,205)
405,096
Year ending March 31
Prior service cost
Actuarial loss
40
The Group expects to contribute ¥55,569 million ($669,506 thousand) to its defined benefit plans, included Cash Balance
Plan, in the year ending March 31, 2012.
The following benefit payments are expected to be paid:
Year ending March 31
2012
2013
2014
2015
2016
2017 - 2021
Millions of yen
Thousands of
U.S. dollars
¥
88,391
86,337
83,099
89,395
92,334
484,314
$
1,064,952
1,040,205
1,001,193
1,077,048
1,112,458
5,835,108
Weighted-average assumptions used to determine benefit obligations as of March 31, 2011 and 2010 and net periodic
pension 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
2011
2.6%
3.2%
2011
2.7%
3.6%
3.1%
2010
2.7%
3.1%
2010
3.3%
3.5%
3.1%
The Group 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 Group’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 Group 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 Group 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 Group targets its investments in equity securities at 40 percent or more
of total investments, and investments in equity and debt securities at 75 percent or more of total investments.
The equity securities are selected primarily from stocks that are listed on the securities exchanges. Prior to investing,
the Group has investigated the business condition of the investee companies, and appropriately diversified investments by
type of industry and other relevant factors. The debt securities are selected primarily from government bonds, municipal
bonds and corporate bonds. Prior to investing, the Group has investigated the quality of the issue, including rating,
interest rate, and repayment dates and has appropriately diversified the investments. Pooled funds are selected using
strategies consistent with the equity securities and debt securities described above. Hedge funds are selected following a
variety of strategies and fund managers, and the Group has appropriately diversified the investments. Real estate is
selected for the eligibility of investment and expected return and other relevant factors, and the Group has appropriately
diversified the investments. As for investments in life insurance company general accounts, the contracts with the
insurance companies include a guaranteed interest and return of capital.
41
Notes to Consolidated Financial Statements
Toshiba Corporation and Subsidiaries
March 31, 2011
The three levels of input used to measure fair value are more fully described in Note 5. The plan assets that are measured
at fair value at March 31, 2011 and 2010 by asset category are as follows:
March 31, 2011
Cash and cash equivalents
Equity securities:
Japanese companies
Foreign companies
Pooled funds
Debt securities:
Government bonds
Municipal bonds
Corporate bonds
Pooled funds
Other assets:
Hedge funds
Real estate
Life insurance company general accounts
Other assets
Total
March 31, 2011
Cash and cash equivalents
Equity securities:
Japanese companies
Foreign companies
Pooled funds
Debt securities:
Government bonds
Municipal bonds
Corporate bonds
Pooled funds
Other assets:
Level 1
Level 2
Level 3
Total
Millions of yen
¥
23,711
¥
—
¥
93,142
27,674
29,457
75,670
—
—
11,737
—
—
—
—
261,391
Level 1
285,675
1,122,193
333,422
354,904
911,686
—
—
141,410
¥
$
¥
$
—
—
—
—
—
—
—
—
—
—
231,664
—
959
24,680
129,040
—
—
23,905
4,725
414,973
96,724
17,311
—
—
114,035
¥
Thousands of U.S. dollars
Level 2
Level 3
—
$
—
—
2,791,132
—
11,554
297,349
1,554,699
—
—
—
—
—
—
—
—
¥
23,711
93,142
27,674
261,121
75,670
959
24,680
140,777
96,724
17,311
23,905
4,725
790,399
Total
285,675
1,122,193
333,422
3,146,036
911,686
11,554
297,349
1,696,109
¥
$
Hedge funds
Real estate
Life insurance company general accounts
Other assets
Total
—
—
—
—
$ 3,149,290
—
—
288,012
56,928
$ 4,999,674
1,165,350
208,566
—
—
$ 1,373,916
1,165,350
208,566
288,012
56,928
$ 9,522,880
Notes: 1) Pooled funds in equity securities invest in listed equity securities consisting of approximately 40% Japanese companies and 60% foreign companies.
2) Government bonds include approximately 60% Japanese government bonds and 40% foreign government bonds.
3) Pooled funds in debt securities invest in approximately 25% Japanese government bonds, 45% foreign government bonds, 30% municipal bonds and corporate bonds.
42
March 31, 2010
Cash and cash equivalents
Equity securities:
Japanese companies
Foreign companies
Pooled funds
Debt securities:
Government bonds
Municipal bonds
Corporate bonds
Pooled funds
Other assets:
Level 1
Level 2
Level 3
Total
Millions of yen
¥
16,633
¥
—
¥
¥
16,633
111,412
42,033
—
82,272
—
—
—
—
—
—
—
252,350
—
—
249,493
—
955
19,001
148,924
—
—
10,781
4,978
434,132
¥
—
—
—
—
—
—
—
—
111,412
42,033
249,493
82,272
955
19,001
148,924
91,530
22,871
10,781
4,978
800,883
Hedge funds
Real estate
Life insurance company general accounts
Other assets
Total
¥
91,530
22,871
—
—
114,401
¥
¥
Notes: 1) Pooled funds in equity securities invest in listed equity securities consisting of approximately 40% Japanese companies and 60% foreign companies.
2) Government bonds include approximately 60% Japanese government bonds and 40% foreign government bonds.
3) Pooled funds in debt securities invest in approximately 30% Japanese government bonds, 30% foreign government bonds, 40% municipal bonds and corporate bonds.
Each level into which assets are categorized is based on inputs used to measure the fair value of the assets, and does not
necessarily indicate the risks or ratings of the assets.
Level 1 plan assets represent marketable equity securities, pooled funds and government bonds, which are valued based
on quoted market prices in active markets with sufficient volume and frequency of transactions. Level 2 plan assets
represent pooled funds that invest in equity securities and debt securities, corporate bonds and life insurance company
general accounts. Pooled funds, which are classified as Level 2 asset, are valued at their net asset values that are calculated
by the sponsor of the fund. Corporate bonds are valued based on quoted market prices for identical assets in inactive
markets. Life insurance company general accounts are valued based on contracts. Level 3 plan assets represent hedge funds
and real estate, which are valued based on unobservable inputs as the markets for the assets are not active at the
measurement date.
An analysis of the changes in Level 3 plan assets measured at fair value for the year ended March 31, 2011 and 2010 are as
follows:
Year ended March 31, 2011
Balance at beginning of year
Actual return:
Relating to assets sold
Relating to assets still held
Purchases, issuances and settlements
Balance at end of year
Year ended March 31, 2010
Balance at beginning of year
Actual return:
Relating to assets sold
Relating to assets still held
Purchases, issuances and settlements
Balance at end of year
Hedge funds
Millions of yen
Real estate
¥
91,530
¥
22,871
¥
51
5,944
(801)
96,724
¥
(1,810)
(703)
(3,047)
17,311
¥
¥
Hedge funds
Millions of yen
Real estate
¥
84,898
¥
22,928
¥
(2,191)
10,877
(2,054)
91,530
¥
—
(1,588)
1,531
22,871
¥
¥
Total
114,401
(1,759)
5,241
(3,848)
114,035
Total
107,826
(2,191)
9,289
(523)
114,401
43
Notes to Consolidated Financial Statements
Toshiba Corporation and Subsidiaries
March 31, 2011
Year ended March 31, 2011
Balance at beginning of year
Actual return:
Relating to assets sold
Relating to assets still held
Purchases, issuances and settlements
Balance at end of year
Hedge funds
$ 1,102,771
Thousands of U.S. dollars
Real estate
$
275,554
Total
$ 1,378,325
615
71,615
(9,651)
$ 1,165,350
(21,807)
(8,470)
(36,711)
208,566
(21,192)
63,145
(46,362)
$ 1,373,916
$
Certain of the Group’s subsidiaries provide certain health care and life insurance benefits to retired employees. Such
benefits were not material for the years ended March 31, 2011 and 2010.
14. RESEARCH AND DEVELOPMENT COSTS
Research and development costs are expensed as incurred and amounted to ¥319,693 million ($3,851,723 thousand) and
¥311,751 million for the years ended March 31, 2011 and 2010, respectively.
15. ADVERTISING COSTS
Advertising costs are expensed as incurred. Advertising costs amounted to ¥32,299 million ($389,145 thousand) and
¥29,354 million for the years ended March 31, 2011 and 2010, respectively.
16. OTHER INCOME AND OTHER EXPENSE
FOREIGN EXCHANGE GAINS AND LOSSES
For the years ended March 31, 2011 and 2010, the net foreign exchange impacts were ¥3,113 million ($37,506
thousand) loss and ¥6,574 million gain, respectively.
GAINS AND LOSSES ON SALES OR DISPOSAL OF FIXED ASSETS
For the years ended March 31, 2011 and 2010, the sale and disposal of fixed assets resulted in net impacts of ¥19,001
million ($228,928 thousand) gain and ¥21,794 million loss, respectively. Gains on sales of fixed assets were ¥33,098 million
($398,771 thousand), and losses on disposal of fixed assets were ¥14,097 million ($169,843 thousand) for the year ended
March 31, 2011. Gains on sales of fixed assets were ¥7,968 million, and losses on disposal of fixed assets were ¥29,762
million for the year ended March 31, 2010.
For the year ended March 31, 2011, the amount of losses related to the Great East Japan Earthquake of March 11, 2011
was not significant.
17. IMPAIRMENT OF LONG-LIVED ASSETS
Due to general price erosion and severe market competition, the Group recorded impairment losses of ¥19,023 million
($229,193 thousand) related primarily to the manufacturing facilities of the System LSI for the year ended March 31,
2011, and ¥3,203 million related primarily to the property, plant and equipment of the LCD business for the year ended
March 31, 2010. The impairment loss is included in cost of sales in the accompanying consolidated statements of income.
For the year ended March 31, 2010, the Group recorded impairment loss of ¥15,817 million related to the stock transfer
agreement of AFPD PTE., LTD. (“AFPD”), a manufacturing subsidiary in Singapore. The Group reduced book value of
property, plant and equipment of AFPD in accordance with the transfer price of AFPD stock. This impairment loss is
included in other expense in the accompanying consolidated statements of income. As of March 31, 2010, the carrying
amount of property, plant and equipment in AFPD is ¥10,618 million. The Group transferred AFPD stock on July 1,
2010.
These impairment losses are both related to Electronic Devices.
44
18. INCOME TAXES
The Group 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, 2011 and 2010.
A reconciliation table between the reported income tax expense and the amount computed by multiplying the income
from continuing operations, before income taxes and noncontrolling interests 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
Net changes in valuation allowance
Tax rate difference relating to foreign subsidiaries
Deferred tax liabilities on undistributed earnings of foreign
subsidiaries and affi liates
Other
Income tax expense
¥
Millions of yen
2011
2010
¥
79,588
¥
14,006
$
(1,765)
3,271
(6,984)
(11,624)
(20,267)
(1,499)
40,720
¥
(2,106)
3,565
25,255
(11,613)
4,044
383
33,534
Thousands of
U.S. dollars
2011
958,891
(21,265)
39,410
(84,145)
(140,048)
(244,181)
(18,060)
490,602
$
The significant components of deferred tax assets and deferred tax liabilities as of March 31, 2011 and 2010 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
Gross deferred tax liabilities:
Inventories
Property, plant and equipment
Unrealized gains on securities
Gain on securities contributed to employee retirement benefi t trusts
Undistributed earnings of foreign subsidiaries and affi liates
Goodwill and other intangible assets
Other
Deferred tax liabilities
Net deferred tax assets
Millions of yen
2011
2010
¥
¥
¥
¥
20,297
119,503
262,127
215,914
105,932
46,023
128,940
898,736
(269,639)
629,097
(4,236)
(10,125)
(37,698)
(17,381)
(38,043)
(60,767)
(18,573)
(186,823)
442,274
¥
¥
¥
¥
20,418
116,687
288,567
213,856
108,128
49,329
139,965
936,950
(284,227)
652,723
(6,119)
(19,755)
(39,550)
(17,381)
(56,122)
(68,596)
(12,365)
(219,888)
432,835
Thousands of
U.S. dollars
2011
$
244,542
1,439,795
3,158,157
2,601,373
1,276,289
554,494
1,553,494
10,828,144
(3,248,662)
$ 7,579,482
$
(51,036)
(121,988)
(454,193)
(209,410)
(458,349)
(732,133)
(223,771)
(2,250,880)
$ 5,328,602
Deferred tax liabilities included in other current liabilities and other liabilities at March 31, 2011 and 2010 were ¥75,515
million ($909,819 thousand) and ¥57,802 million, respectively.
The net changes in the total valuation allowance for the years ended March 31, 2011 and 2010 were a decrease of
¥14,588 million ($175,759 thousand) and an increase of ¥8,800 million, respectively.
45
Notes to Consolidated Financial Statements
Toshiba Corporation and Subsidiaries
March 31, 2011
The amount of adjustments of the beginning-of-the-year balance of the valuation allowance because of a change in
judgement about the realizability of the related deferred tax assets in future years for the year ended March 31, 2011 were
¥11,389 million ($137,217 thousand). The amounts of adjustments for the year ended March 31, 2010 were not
significant.
The Group’s tax loss carryforwards for each of the corporate and local taxes at March 31, 2011 amounted to ¥603,131
million ($7,266,639 thousand) and ¥715,231 million ($8,617,241 thousand), respectively, the majority of which will expire
during the period from 2012 through 2017. The Group utilized tax loss carryforwards of ¥119,953 million ($1,445,217
thousand) and ¥24,240 million to reduce current corporate taxes and ¥68,530 million ($825,663 thousand) and ¥10,829
million to reduce current local taxes, respectively, during the years ended March 31, 2011 and 2010.
Realization of tax loss carryforwards and other deferred tax assets is dependent on the Group generating sufficient
taxable income prior to their expiration or the Group exercising certain available tax strategies. Although realization is not
assured, management believes it is more likely than not that all of the deferred tax assets, less the valuation allowance, will
be realized. The amount of such net deferred tax assets considered realizable, however, could be reduced in the near term
if estimates of future taxable income during the carryforward period are reduced.
A reconciliation table of the beginning and ending amount of unrecognized tax benefits is as follows:
Year ended March 31
Balance at beginning of year
Additions for tax positions of the current year
Additions for tax positions of prior years
Reductions for tax positions of prior years
Lapse of statute of limitations or closed audits
Foreign currency translation adjustments
Balance at end of year
Millions of yen
2011
2010
¥
¥
4,493
598
683
(72)
(1,772)
(457)
3,473
¥
¥
4,360
804
40
(464)
(29)
(218)
4,493
Thousands of
U.S. dollars
2011
$
$
54,132
7,205
8,229
(868)
(21,349)
(5,506)
41,843
The total amounts of unrecognized tax benefits that would reduce the effective tax rate, if recognized, are ¥2,274 million
($27,398 thousand) and ¥3,838 million at March 31, 2011 and 2010, respectively.
The Group recognizes interest and penalties accrued related to unrecognized tax benefits in income taxes in the
consolidated statements of income. Both interest and penalties accrued as of March 31, 2011 and 2010, and interest and
penalties included in income taxes for the years ended March 31, 2011 and 2010 are not material.
The Group believes its estimates and assumptions of unrecognized tax benefits are reasonable and based on each of the
items of which the Group is aware at March 31, 2011, no significant changes to the unrecognized tax benefits are expected
within the next twelve months.
The Group files income tax returns in Japan and various foreign tax jurisdictions. In Japan, the Group is no longer
subject to regular income tax examinations by the tax authority for years before the fiscal year ended March 31, 2008 with
few exceptions. In other major foreign tax jurisdictions, the Group is no longer subject to regular income tax examinations
by tax authorities for years before the fiscal year ended March 31, 2006 with few exceptions.
19. EQUITY
COMMON STOCK
The total number of authorized shares of the Company is 10,000,000,000.
The change in the total number of shares issued for the years ended March 31, 2011 and 2010 are as follows:
Year ended March 31
Shares issued at beginning of year
Increase due to issuance of new shares
Shares at end of year
Shares
2011
4,237,602,026
—
4,237,602,026
2010
3,237,602,026
1,000,000,000
4,237,602,026
The Company issued 897,000,000 shares by way of public offering on June 3, 2009 and 103,000,000 shares by way of
third-party allotment on June 23, 2009, respectively. As a result, stated capital and additional paid-in capital of the
46
Company’s consolidated balance sheets increased by ¥159,620 million and ¥157,921 million from both issuances,
respectively, for the year ended March 31, 2010.
RETAINED EARNINGS
Retained earnings at March 31, 2011 and 2010 included a legal reserve of ¥24,129 million ($290,711 thousand) and
¥25,103 million, respectively. The Corporation Law of Japan provides that an amount equal to 10% of distributions from
retained earnings paid by the Company and its Japanese subsidiaries be appropriated as a legal reserve. No further
distributions 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 distributions by the resolution of the stockholders.
The amount of retained earnings available for distributions is based on the Company’s retained earnings determined in
accordance with generally accepted accounting principles in Japan and the Corporation Law of Japan. Retained earnings at
March 31, 2011 do not reflect current year-end distributions of ¥12,705 million ($153,072 thousand) which started to be
paid from June 1, 2011.
Retained earnings at March 31, 2011 included the Group’s equity in undistributed earnings of equity method investees
in the amount of ¥97,258 million ($1,171,783 thousand).
The Company resolved, at the board of directors meeting held on May 7, 2010, the submission of the disposition of the
Company’s other capital surplus based on Article 452 of the Corporation Law of Japan. As a result, the additional paid-in
capital was reduced by ¥46,772 million ($563,518 thousand), and the retained earnings was increased by the same amount
effective June 30, 2010 on the Company’s consolidated balance sheets.
ACCUMULATED OTHER COMPREHENSIVE LOSS
Analyses of the changes in accumulated other comprehensive loss, net of tax, for the years ended March 31, 2011 and 2010
are shown below:
Year ended 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
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
Balance at end of year
Millions of yen
2011
2010
Thousands of
U.S. dollars
2011
¥
¥
¥
¥
¥
¥
¥
¥
¥
¥
73,226
(10,771)
62,455
(231,467)
(43,641)
(275,108)
(303,348)
(5,333)
(308,681)
(2,661)
2,599
(62)
(464,250)
(57,146)
(521,396)
¥
¥
¥
¥
¥
¥
¥
¥
¥
¥
21,639
51,587
73,226
$
$
882,241
(129,771)
752,470
(222,773)
(8,694)
(231,467)
(314,578)
11,230
(303,348)
$ (2,788,760)
(525,795)
$ (3,314,555)
$ (3,654,795)
(64,253)
$ (3,719,048)
(2,284)
(377)
(2,661)
$
$
(32,060)
31,313
(747)
(517,996)
53,746
(464,250)
$ (5,593,374)
(688,506)
$ (6,281,880)
47
Notes to Consolidated Financial Statements
Toshiba Corporation and Subsidiaries
March 31, 2011
Tax effects allocated to each component of other comprehensive income (loss) for the years ended March 31, 2011 and
2010 are shown below:
For the year ended March 31, 2011:
Net unrealized gains and losses on securities:
Unrealized holding losses arising during year
Less: reclassifi cation adjustment for losses included in net income
attributable to shareholders of the Company
Foreign currency translation adjustments:
Currency translation adjustments arising during year
Less: reclassifi cation adjustment for losses included in net income
attributable to shareholders of the Company
Pension liability adjustments:
Pension liability adjustments arising during year
Less: reclassifi cation adjustment for losses included in net income
attributable to shareholders of the Company
Net unrealized gains and losses on derivative instruments:
Unrealized gains arising during year
Less: reclassifi cation adjustment for losses included in net income
attributable to shareholders of the Company
Other comprehensive loss
For the year ended March 31, 2010:
Net unrealized gains and losses on securities:
Unrealized holding gains arising during year
Less: reclassifi cation adjustment for losses included in net loss
attributable to shareholders of the Company
Foreign currency translation adjustments:
Currency translation adjustments arising during year
Less: reclassifi cation adjustment for losses included in net loss
attributable to shareholders of the Company
Pension liability adjustments:
Pension liability adjustments arising during year
Less: reclassifi cation adjustment for losses included in net loss
attributable to shareholders of the Company
Net unrealized gains and losses on derivative instruments:
Unrealized losses arising during year
Less: reclassifi cation adjustment for losses included in net loss
attributable to shareholders of the Company
Other comprehensive income
Pre-tax amount
Millions of yen
Tax benefit
(expense)
Net-of-tax
amount
¥
(16,708)
¥
4,077
¥
(12,631)
3,132
(1,272)
1,860
(51,637)
(2,764)
(54,401)
10,760
—
10,760
(36,034)
14,819
(21,215)
26,785
(10,903)
15,882
3,043
(1,519)
1,524
1,727
(58,932)
¥
¥
(652)
1,786
1,075
(57,146)
¥
¥
71,573
¥
(21,747)
¥
49,826
2,972
(1,211)
1,761
(7,241)
(1,707)
(8,948)
254
(9,030)
—
3,429
254
(5,601)
28,383
(11,552)
16,831
(660)
225
(435)
64
86,315
(6)
(32,569)
¥
58
53,746
¥
¥
48
For the year ended March 31, 2011:
Net unrealized gains and losses on securities:
Unrealized holding losses arising during year
Less: reclassifi cation adjustment for losses included in net income
attributable to shareholders of the Company
Foreign currency translation adjustments:
Currency translation adjustments arising during year
Less: reclassifi cation adjustment for losses included in net income
attributable to shareholders of the Company
Pension liability adjustments:
Pension liability adjustments arising during year
Less: reclassifi cation adjustment for losses included in net income
attributable to shareholders of the Company
Net unrealized gains and losses on derivative instruments:
Unrealized gains arising during year
Less: reclassifi cation adjustment for losses included in net income
attributable to shareholders of the Company
Other comprehensive loss
Thousands of U.S. dollars
Pre-tax amount
Tax benefit
(expense)
Net-of-tax
amount
$
(201,301)
$
49,120
$
(152,181)
37,735
(15,325)
22,410
(622,133)
(33,301)
(655,434)
129,639
—
129,639
(434,144)
178,542
(255,602)
322,710
(131,361)
191,349
36,663
(18,302)
18,361
20,807
(710,024)
$
$
(7,855)
21,518
12,952
(688,506)
$
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 Plan for the purpose of protection and enhancement of the corporate value of
the Company and the common interests of shareholders.
Specifically, if an acquirer commences or plans to commence an acquisition or a tender offer that would result in the
acquirer holding 20% or more of the shares issued by the Company, the Company will require the acquirer to provide the
necessary information in advance to its board of directors. The Special Committee that solely consists of outside directors
who are independent from the Company’s management will, at its discretion, obtain advice from outside experts, evaluate
and consider the details of the acquisition, disclose to the Company’s shareholders the necessary information regarding the
acquisition, evaluate, consider and disclose any alternative proposal presented by the Company’s representative executive
officers, and negotiate with the acquirer. If the acquirer does not comply with the procedures under the Plan, or the
acquisition would damage the corporate value of the Company or the common interests of its shareholders, and if the
acquisition satisfies the triggering requirements set out in the Plan, the countermeasures (a gratis allotment of stock
acquisition rights (shinkabu yoyakuken no mushou wariate), with a condition of which will be that they cannot be
exercised by acquirers or the like and subject to call to the effect that the Company can acquire stock acquisition rights
from those other than such acquirers in exchange for shares of the Company) are to be implemented in accordance with
the recommendation by the Special Committee or the resolution passed at the general meeting for confirming
shareholders’ intention and the Company will ensure the corporate value of the Company and the common interests of
shareholders.
49
Notes to Consolidated Financial Statements
Toshiba Corporation and Subsidiaries
March 31, 2011
20. NET EARNINGS (LOSS) PER SHARE ATTRIBUTABLE TO SHAREHOLDERS OF THE COMPANY
The following reconciliation table of the numerators and denominators sets forth the computation of basic and diluted net
earnings (loss) per share attributable to shareholders of the Company for the years ended March 31, 2011 and 2010.
Year ended March 31
Income (loss) from continuing operations attributable to
shareholders of the Company
Loss from discontinued operations attributable to
shareholders of the Company
Net income (loss) attributable to shareholders of the Company
Millions of yen
2011
2010
Thousands of
U.S. dollars
2011
¥
145,975
¥
(13,712)
$ 1,758,735
(8,130)
137,845
¥
¥
(6,031)
(19,743)
(97,952)
$ 1,660,783
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
Thousands of shares
2011
2010
4,235,297
4,004,801
175,295
—
4,410,592
4,004,801
Year ended March 31
Earnings (loss) from continuing operations per share attributable to
shareholders of the Company:
—Basic
—Diluted
Loss from discontinued operations per share attributable to
shareholders of the Company:
—Basic
—Diluted
Net earnings (loss) per share attributable to shareholders of the
Company:
—Basic
—Diluted
Yen
2011
2010
U.S. dollars
2011
¥
¥
¥
34.47
33.10
(1.92)
(1.92)
32.55
31.25
¥
¥
¥
$
$
$
(3.42)
(3.42)
(1.51)
(1.51)
(4.93)
(4.93)
0.41
0.40
(0.02)
(0.02)
0.39
0.38
Due to their anti-dilutive effect, incremental shares from assumed conversions of dilutive convertible debentures are
excluded from the calculation of diluted net loss from discontinued operations per share attributable to shareholders
of the Company for the year ended March 31, 2011, and diluted net loss per share attributable to shareholders of the
Company for the year ended March 31, 2010.
Net earnings (loss) per share attributable to shareholders of the Company are computed independently for income
(loss) from continuing operations attributable to shareholders of the Company, loss from discontinued operations
attributable to shareholders of the Company, and net income (loss) attributable to shareholders of the Company.
Consequently, the sum of diluted per share amounts from continuing operations and discontinued operations for the year
ended March 31, 2011 may not equal diluted per share amounts for net earnings.
50
21. FINANCIAL INSTRUMENTS
(1) DERIVATIVE FINANCIAL INSTRUMENTS
The Group 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 Group employs a variety of derivative financial
instruments, which are consisted principally of forward exchange contracts, interest rate swap agreements, currency swap
agreements and currency options to reduce its exposures. The Group has policies and procedures for risk management and the
approval, reporting and monitoring of derivative financial instruments. The Group’s policies prohibit holding or issuing derivative
financial instruments for trading purposes.
The Group is exposed to credit-related losses in the event of nonperformance by counterparties to derivative financial
instruments, but the Group does not anticipate any credit-related loss from nonperformance by the counterparties because the
counterparties are financial institutions of high credit standing and contracts are diversified across a number of major financial
institutions.
The Group has entered into forward exchange contracts with financial institutions as hedges against fluctuations in foreign
currency exchange rates on monetary assets and liabilities denominated in foreign currencies. The forward exchange contracts
related to accounts receivable and payable, and commitments on future trade transactions denominated in foreign currencies,
mature primarily within a few years of the balance sheet date.
Interest rate swap agreements, currency swap agreements and currency options are used to limit the Group’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 2011 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, except for some contracts, depending on accounts receivable and payable
denominated in foreign currencies or commitments on future trade transactions and the interest rate characteristics of the
underlying debt as discussed below.
Fair Value Hedge Strategy
The forward exchange contracts and currency swap agreements utilized by the Group effectively reduce fluctuation in fair
value of accounts receivable and payable denominated in foreign currencies.
The interest rate swap agreements utilized by the Group effectively convert a portion of its fixed-rate debt to a floating-
rate basis.
The gain or loss on the derivative financial instruments designated as fair value hedges is offset by the loss or gain on the
hedged items in the same location of the consolidated statements of income.
Cash Flow Hedge Strategy
The forward exchange contracts utilized by the Group effectively reduce fluctuation in cash flow from commitments on
future trade transactions denominated in foreign currencies for the next 5 years.
The interest rate swap agreements utilized by the Group effectively convert a portion of its floating-rate debt to a fixed-
rate basis for the next 3 years.
The Group expects to reclassify ¥342 million ($4,120 thousand) of net income on derivative financial instruments from
accumulated other comprehensive loss to net income (loss) attributable to shareholders of the Company 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 interest associated with the floating-rate debts.
Derivatives Not Designated as Hedging Instruments Strategy
The Group has entered into certain forward exchange contracts, interest rate swap agreements, currency swap agreements
and currency options to offset the earnings impact related to fluctuations in foreign currency exchange rates on monetary
assets and liabilities denominated in foreign currencies and in interest rates on debt instruments. Although some of these
contracts have not been designated as hedges as required in order to apply hedge accounting, the contracts are effective
from an economic perspective. The changes in the fair value of those contracts are recorded in earnings immediately.
51
Notes to Consolidated Financial Statements
Toshiba Corporation and Subsidiaries
March 31, 2011
The Group’s forward exchange contract amounts, the aggregate notional principal amounts of interest rate swap
agreements, currency swap agreements and currency options outstanding at March 31, 2011 and 2010 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
2011
2010
Thousands of
U.S. dollars
2011
¥
147,035
173,175
120,982
230,461
—
¥
183,818
133,862
249,050
182,468
41,984
$ 1,771,506
2,086,446
1,457,614
2,776,639
—
(2) FAIR VALUE OF FINANCIAL INSTRUMENTS
The fair values of the Group’s financial instruments and the location in the consolidated balance sheets at March 31,
2011 and 2010 are summarized as follows:
March 31
Derivatives designated as hedging instruments:
Assets:
Location
Forward exchange contracts
Interest rate swap agreements
Currency swap agreements
Liabilities:
Forward exchange contracts
Interest rate swap agreements
Currency swap agreements
Prepaid expenses and
other current assets
Prepaid expenses and
other current assets
Prepaid expenses and
other current assets
Other current liabilities
Other liabilities
Other current liabilities
Other liabilities
Derivatives not designated as hedging instruments:
Assets:
Forward exchange contracts
Currency swap agreements
Liabilities:
Forward exchange contracts
Interest rate swap agreements
Currency swap agreements
Currency options
Prepaid expenses and
other current assets
Prepaid expenses and
other current assets
Other current liabilities
Other liabilities
Other current liabilities
Other current liabilities
Millions of yen
2011
2010
Thousands of
U.S. dollars
2011
¥
4,514
¥
323
$
54,386
2
—
(1,459)
(2,394)
(1,241)
—
1,811
1,716
(1,534)
(13)
—
—
9
255
(506)
(5,168)
—
(409)
1,163
—
(807)
—
(13)
(162)
24
—
(17,578)
(28,843)
(14,952)
—
21,819
20,675
(18,482)
(157)
—
—
52
March 31
Nonderivatives:
Liabilities:
Millions of yen
2011
2010
Carrying
amount
Fair value
Carrying
amount
Fair value
Long-term debt, including current portion
¥
(879,397)
¥
(882,341)
¥
(1,111,583)
¥
(1,121,241)
March 31
Nonderivatives:
Liabilities:
Thousands of U.S. dollars
2011
Carrying
amount
Fair value
Long-term debt, including current portion
$ (10,595,145)
$ (10,630,614)
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 6.
In assessing the fair value of these financial instruments, the Group 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 equivalents, notes and accounts receivable-trade, short-term borrowings, notes and 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
fair values are not necessarily indicative of the amounts that could be realized in a current market exchange.
The effect of derivative instruments on the consolidated statements of income for the year ended March 31, 2011 is as
follows:
Cash flow hedge:
Amount of gain (loss)
recognized in OCI
Amount
recognized
Forward exchange contracts
Interest rate swap agreements
¥
2,181
(657)
Derivatives not designated as hedging instruments:
Millions of yen
Amount of gain (loss)
reclassified from accumulated
OCI into income (loss)
Amount of gain (loss)
recognized in income (loss)
(Ineffective portion and
amount excluded
from effectiveness testing)
Location
Other income
Other expense
Amount
recognized
¥
1,355
(2,430)
Location
Other income
Other income
Amount
recognized
¥
284
8
Millions of yen
Amount of gain (loss)
recognized in income (loss)
Location
Other income
Other income
Amount
recognized
¥
1,611
162
Forward exchange contracts
Currency options
53
Notes to Consolidated Financial Statements
Toshiba Corporation and Subsidiaries
March 31, 2011
Cash flow hedge:
Amount of gain (loss)
recognized in OCI
Amount
recognized
Forward exchange contracts
Interest rate swap agreements
$
26,277
(7,916)
Derivatives not designated as hedging instruments:
Thousands of U.S. dollars
Amount of gain (loss)
reclassified from accumulated
OCI into income (loss)
Amount of gain (loss)
recognized in income (loss)
(Ineffective portion and
amount excluded
from effectiveness testing)
Location
Other income
Other expense
Amount
recognized
$
16,325
(29,277)
Location
Other income
Other income
Amount
recognized
$
3,422
96
Thousands of U.S. dollars
Amount of gain (loss)
recognized in income (loss)
Location
Other income
Other income
Amount
recognized
$
19,410
1,952
Forward exchange contracts
Currency options
The effect of derivative instruments on the consolidated statements of income for the year ended March 31, 2010 is as
follows:
Cash flow hedge:
Amount of gain (loss)
recognized in OCI
Amount
recognized
Forward exchange contracts
Interest rate swap agreements
¥
922
(1,357)
Derivatives not designated as hedging instruments:
Millions of yen
Amount of gain (loss)
reclassified from accumulated
OCI into income (loss)
Location
Other expense
Amount
recognized
¥
(58)
Amount of gain (loss)
recognized in income (loss)
(Ineffective portion and
amount excluded
from effectiveness testing)
Location
Other income
Other expense
Amount
recognized
¥
1,681
(2)
Millions of yen
Amount of gain (loss)
recognized in income (loss)
Location
Other income
Other expense
Amount
recognized
¥
1,676
(162)
Forward exchange contracts
Currency options
22. LEASES
The Group 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, 2011 and 2010 were ¥147,760 million ($1,780,241 thousand)
and ¥150,780 million, respectively.
The Group also leases certain machinery and equipment which are accounted for as capital leases. As of March 31, 2011
and 2010, the costs under capital leases were approximately ¥75,400 million ($908,434 thousand) and ¥90,300 million, and
the related accumulated amortization were approximately ¥31,700 million ($381,928 thousand) and ¥34,500 million,
respectively.
As of March 31, 2011 and 2010, the costs under capital leases from TFC and Toshiba Medical Finance Co., Ltd., affiliates
of the Company, were approximately ¥47,800 million ($575,904 thousand) and ¥61,100 million, and the related accumulated
amortization were approximately ¥22,100 million ($266,265 thousand) and ¥23,700 million, respectively.
Minimum lease payments for the Group’s capital and non-cancelable operating leases as of March 31, 2011 are as follows:
54
Year ending March 31
2012
2013
2014
2015
2016
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
Operating
leases
¥
¥
71,426
53,275
20,557
5,703
5,027
21,190
177,178
¥
¥
23,487
9,798
6,412
3,721
2,434
26,024
71,876
(2,405)
(19,910)
49,561
(21,473)
28,088
Capital
leases
282,976
118,048
77,253
44,831
29,325
313,543
865,976
(28,976)
(239,879)
597,121
(258,711)
338,410
$
$
Operating
leases
860,554
641,867
247,675
68,711
60,566
255,302
2,134,675
$
$
23. COMMITMENTS AND CONTINGENT LIABILITIES
Commitments for the purchase of property, plant and equipment, and unconditional purchase obligation for license fees
outstanding at March 31, 2011 totaled approximately ¥39,086 million ($470,916 thousand).
As of March 31, 2011, contingent liabilities, other than guarantees disclosed in Note 24, approximated ¥1,781 million
($21,458 thousand) mainly for recourse obligations related to notes receivable transferred.
24. GUARANTEES
GUARANTEES OF UNCONSOLIDATED AFFILIATES AND THIRD PARTY DEBT
The Group guarantees debt as well as certain financial obligations of unconsolidated affiliates and third parties to support
the sale of the Group’s products and services. Expiration dates vary from 2011 to 2020 as of March 31, 2011 or terminate
on payment and/or cancellation of the obligation. A payment by the Group 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 ¥68,224 million ($821,976 thousand) as of March 31, 2011.
GUARANTEES OF EMPLOYEES’ HOUSING LOANS
The Group 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
guarantee. The maximum potential payments under these guarantees were ¥8,006 million ($96,458 thousand) as of March 31,
2011. However, the Group expects that the majority of such payments would be reimbursed through the Group’s insurance policy.
RESIDUAL VALUE GUARANTEES UNDER SALE AND LEASEBACK TRANSACTIONS
The Group has entered into several sale and leaseback transactions in which certain manufacturing equipment was sold
and leased back. The Group may be required to make payments for residual value guarantees in connection with these
transactions. The operating leases will expire on various dates through February 2014. The maximum potential payments
by the Group for such residual value guarantees were ¥78,954 million ($951,253 thousand) as of March 31, 2011.
GUARANTEES OF DEFAULTED NOTES AND ACCOUNTS RECEIVABLE
The Group has transferred trade notes and accounts receivable under several securitization programs. Upon certain sales
of trade notes and accounts receivable, the Group holds a repurchase obligation, which the Group 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 ¥7,707 million ($92,855 thousand) as of
March 31, 2011.
The carrying amounts of the liabilities for the Group’s obligations under the guarantees described above as of March 31,
2011 were not significant.
55
Notes to Consolidated Financial Statements
Toshiba Corporation and Subsidiaries
March 31, 2011
WARRANTY
Estimated warranty costs are accrued for at the time a product is sold to a customer. Estimates for warranty costs are
made based primarily on historical warranty claim experience.
The following is a reconciliation table of the product warranty accrual for the years ended March 31, 2011 and 2010:
Thousands of
U.S. dollars
Millions of yen
Year ended March 31
Balance at beginning of year
Warranties issued
Settlements made
Foreign currency translation adjustments
Other
Balance at end of year
2011
2010
¥
¥
44,181
29,969
(34,875)
(2,314)
—
36,961
¥
¥
38,837
35,080
(33,948)
(975)
5,187
44,181
2011
532,301
361,072
(420,181)
(27,879)
—
445,313
$
$
Other includes the warranties assumed in the acquisition of hard disk drive (“HDD”) business from Fujitsu.
25. LEGAL PROCEEDINGS
In January 2007, the European Commission adopted a decision imposing fines on 19 companies, including the Company,
for violating EU competition laws in the gas insulated switchgear market. The Company was individually fined €86.25
million and was also fined €4.65 million jointly and severally with Mitsubishi Electric Corporation. Following its own
investigation, the Company contends that it has not found any infringement of EU competition laws, and it is bringing an
action to the European Court of First Instance seeking annulment of the European Commission’s decision.
The Group undertakes global business operations and is involved from time to time in disputes, including lawsuits and
other legal proceedings and investigations by relevant authorities. There is a possibility that such case may arise in the
future. Due to differences in judicial systems and the uncertainties inherent in such proceedings, the Group may be
subject to a ruling requiring payment of amounts far exceeding its expectations. Any judgement or decision unfavorable to
the Group could have a materially adverse effect on the Group’s business, results of operations or financial condition. The
possibility cannot be stated as nil that, under certain circumstances, an action is filed that has an extremely remote chance
of a ruling that requires payment but involves an appeal for a significant amount of money.
The Group’s Management believes that there are meritorious defenses to all of these legal procedures, including
lawsuits and investigations. Based on the information currently available to both the Group and its legal counsel,
Management believes that such legal procedures, if any, would not have a material adverse effect on the financial position
or the results of operations of the Group.
26. ENVIRONMENTAL LIABILITIES
The Japanese environmental regulation, “Law Concerning Special Measure against poly chlorinated biphenyl (“PCB”)
waste” requires PCB waste holders to dispose of all PCB waste by July 2016. The Group accrued ¥9,213 million ($111,000
thousand) and ¥9,030 million at March 31, 2011 and 2010, respectively, for environmental remediation and restoration
costs for products or equipment with PCB which some Group’s operations in Japan have retained.
The Westinghouse Group, consolidated subsidiaries of the Company, is subject to federal, state and local laws and
regulations relating to the discharge of pollutants into the environment, the disposal of hazardous wastes and other
related activities affecting the environment, and which have had and will continue to have an impact on the Group. It is
difficult to estimate the timing and ultimate costs to be incurred in the future due to uncertainties about the status of
laws, regulations and technology; the adequacy of information available for individual sites; the extended time periods
over which site remediation occurs; the availability of waste disposal capacity; and the identification of new sites.
The Group has, however, recognized an estimated liability of ¥6,569 million ($79,145 thousand) and ¥6,695 million as of
March 31, 2011 and 2010, respectively, measured in current dollars, for those sites where it is probable that a loss has been
incurred and the amount of the loss can be reasonably estimated.
The accrual will be adjusted as assessment and remediation efforts progress or as additional technical or legal
information become available. Management is of the opinion that the ultimate costs in excess of the amount accrued, if
any, would not have a material adverse effect on the financial position or the results of operations of the Group.
56
27. ASSET RETIREMENT OBLIGATIONS
The Group records asset retirement obligations in accordance with ASC No.410 “Asset Retirement and Environmental
Obligations” .
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 changes in the carrying amount of asset retirement obligations for the years ended March 31, 2011 and 2010 are as
follows:
Year ended March 31
Balance at beginning of year
Accretion expense
Liabilities settled
Liabilities incurred
Foreign currency translation adjustments
Balance at end of year
28. BUSINESS COMBINATIONS
Millions of yen
2011
2010
¥
¥
29,642
677
(5,605)
4,347
(2,423)
26,638
¥
¥
25,458
1,076
(1,419)
5,526
(999)
29,642
Thousands of
U.S. dollars
2011
357,133
8,157
(67,530)
52,373
(29,193)
320,940
$
$
On May 7, 2009, the Group acquired 52% of the outstanding shares of Nuclear Fuel Industries, Ltd. (“NFI”), from
Furukawa Electric Co., Ltd. and Sumitomo Electric Industries, Ltd. with the intention of expanding the Group’s Nuclear
Power Systems business by establishing a market presence in Japan and building a fuel production platform in Asia.
The Group allocated the purchase price to the assets acquired and liabilities assumed in accordance with ASC No.805
“Business Combinations” (“ASC No.805”). The total purchase price for the acquisition was ¥11,526 million in cash. Of the
total price, ¥13,680 million was allocated to property, plant and equipment, ¥10,070 million to noncontrolling interests,
¥8,054 million to amortizable intangible asset, ¥248 million to net liability assumed and ¥110 million to goodwill. The
acquired intangible assets primarily consisted of contracted customer relationships. The Group is amortizing the
intangible assets over a weighted-average estimated life of 16.5 years.
The operating results of NFI are included in the Company’s consolidated statements of income from May 2009
onward.
On April 30, 2009, the Group and Fujitsu concluded an agreement on the transfer of Fujitsu’s HDD business to
the Group. To effect the transfer, Fujitsu spun off its HDD business into a newly incorporated entity called Toshiba
Storage Device Corporation (“TSDC”), and on October 1, 2009, the Group acquired 80.1% of the shares of TSDC in
cash.
The Group expects to achieve great synergies from this acquisition by: (i) expanding market share in the comprehensive
area of data storage by leveraging its position as a leading vendor of small form factor HDDs and integrating Fujitsu’s
enterprise HDD business; and (ii) fulfilling a wide range of storage device demand by adding solid state drive products to
its product line, which will be newly developed by integrating its flash memory technology with Fujitsu’s enterprise HDD
technology.
57
Notes to Consolidated Financial Statements
Toshiba Corporation and Subsidiaries
March 31, 2011
The Group allocated the purchase price to the assets acquired and liabilities assumed in accordance with ASC No.805.
The following table summarizes the allocation of the purchase price and the fair values of noncontrolling interests to
the identifiable assets acquired and liabilities assumed as of the acquisition date:
As of the acquisition date
Purchase price
Noncontrolling interests
Total
Current assets
Non-current assets
Current liabilities
Non-current liabilities
Total identifi able net assets acquired
Millions of yen
Thousands of
U.S. dollars
¥
¥
¥
¥
21,206
4,214
25,420
42,340
13,067
25,989
4,085
25,333
$
$
$
$
255,494
50,771
306,265
510,120
157,434
313,120
49,217
305,217
The excess of the purchase price and fair value of noncontrolling interests over the fair value of the identifiable assets
acquired and liabilities assumed was recorded as goodwill.
Operating results of TSDC is included in the Company’s consolidated statements of income from the acquisition date.
The Group acquired all the remaining shares of TSDC held by Fujitsu on December 28, 2010. With the completion of
the transaction, TSDC has become a wholly owned subsidiary of the Company.
On December 15, 2009, the Group increased its ownership in its former affiliate Chevalier (HK) Limited and its
subsidiaries (“Chevalier (HK)”) by acquiring an additional 2% stake to 51% in cash and consequently acquired a
controlling financial interest of Chevalier (HK). The investment is intended to further strengthen the Group’s presence in
lifts and escalators industries of the global market, mainly in China and Southeast Asia.
The Group allocated the purchase price to the assets acquired and liabilities assumed in accordance with ASC No.805.
The following table summarizes the allocation of the purchase price and the fair values of noncontrolling interests to
the identifiable assets acquired and liabilities assumed as of the acquisition date:
As of the acquisition date
Purchase price
Noncontrolling interests
Total
Current assets
Non-current assets
Intangible assets subject to amortization
Current liabilities
Non-current liabilities
Total identifi able net assets acquired
Millions of yen
Thousands of
U.S. dollars
¥
¥
¥
¥
8,455
7,767
16,222
4,408
165
11,974
3,281
1,980
11,286
$
$
$
$
101,868
93,578
195,446
53,108
1,988
144,265
39,530
23,855
135,976
Identifiable intangible assets acquired mainly consist of customer relationships based on maintenance contracts.
The Group is amortizing the intangible assets over a weighted-average estimated life of 17.8 years.
The excess of the purchase price and fair value of noncontrolling interests over the fair value of the identifiable assets
acquired and liabilities assumed, amounted to ¥4,936 million ($59,470 thousand), which was recorded as goodwill and
allocated within Social Infrastructure. Among the factors that contributed to the recognition of goodwill was the
predominance of the Chevalier Group in Chinese and Southeast Asian market based on its trustful long-term
relationships with customers.
Operating results of Chevalier (HK) are included in the Company’s consolidated statements of income from the
acquisition date.
Pro-forma result of operation as a result of the above business combinations is immaterial for the year ended March 31,
2010.
58
29. Variable Interest Entities
The Company adopted ASU 2009-17 beginning with the fiscal year ended March 31, 2011. ASU 2009-
17, amends ASC No.810, thereby removing scope exemptions for a qualifying special-purpose entity (“QSPE”) as a result
of the elimination of the QSPE concept by ASU 2009-16. It requires that an entity determines the need for consolidating
a variable interest entity (“VIE”) based on qualitative analysis and for revising its evaluation on a continuous basis.
Moreover, additional disclosure of an enterprise’s involvement with a VIE is required.
The Group recognizes entities, in accordance with ASC No.810, as VIEs that have either (a) equity investors whose
voting right is limited and not having an ability to control it effectively or (b) insufficient equity to permit the entity to
finance its activities without additional subordinated financial support. The Group retains variable interests through
equity investments, loans and guarantees. In evaluating whether the Group is the primary beneficiary of the VIE and
consolidates it, the Group assesses if the Group has both (a) the power to direct the activities of the VIE that most
significantly impact the VIE’s economic performance and (b) the obligation to absorb losses or the right to receive benefits
that could potentially be significant to the VIE.
Consolidated Variable Interest Entities
VIEs, of which the Group is the primary beneficiary, are involved in Social Infrastructure, and most of those are entities
involved in the Power and Industrial Systems. The Group has both the power to direct the activities that most
significantly affect those VIEs’ economic performance and the obligation to absorb losses or the right to receive benefits
from the VIEs. The Group is also required to contribute capital to each VIE on an as needed basis based on percentage of
ownership interest.
As of March 31, 2011 and 2010, the total assets of VIEs on the consolidated balance sheets were ¥8,986 million
($108,265 thousand) and ¥3,710 million, and the total liabilities of VIEs on the consolidated balance sheets were ¥2,669
million ($32,157 thousand) and ¥1,090 million, respectively. The assets consisted primarily of accounts receivable, and
property, plant and equipment. The liabilities consisted primarily of accounts payable and long-term debt. The assets are
restricted for use only by those VIEs, and are not available for the Group’s general operations. In addition, the creditors or
beneficial interest holders of those VIEs do not have recourse to the general credit of the Group.
Unconsolidated Variable Interest Entities
VIEs, of which the Group is not the primary beneficiary but retains significant variable interests, are involved
in Electronic Devices and Social Infrastructure. Unconsolidated VIEs involved in Electronic Devices are joint ventures
established with SanDisk Corporation (“SanDisk”) for the purpose of strengthening the production of NAND flash
memories. For those joint ventures, the Group and SanDisk have an equally sharing power. Unconsolidated VIEs involved
in Social Infrastructure supply electric equipments to electric power operators. The Group is not the primary beneficiary
of those VIEs because the Group does not have the power to direct the activities that most significantly affect those VIEs’
economic performance. The Group accounts for those VIEs under the equity method.
As of March 31, 2011 and 2010, the total assets of those VIEs, carrying amounts of assets and liabilities that relate to
the Group’s variable interests in the VIEs and the Group’s maximum exposures to losses as a result of the Group’s
involvement with the VIEs are summarized as follows:
Millions of yen
March 31, 2011
Total assets of VIEs
Carrying amounts of assets that relate to the Group’s variable interests in the VIEs
Carrying amounts of liabilities that relate to the Group’s variable interests in the VIEs
Maximum exposures to losses
March 31, 2010
Total assets of VIEs
Carrying amounts of assets that relate to the Group’s variable interests in the VIEs
Carrying amounts of liabilities that relate to the Group’s variable interests in the VIEs
Maximum exposures to losses
VIEs involved in
Social Infrastructure
74,271
¥
48,704
—
48,704
¥
Millions of yen
VIEs involved in
Electronic Devices
¥
417,904
175,689
25,650
217,230
¥
¥
VIEs involved in
Electronic Devices
¥
345,741
157,964
13,489
232,519
VIEs involved in
Social Infrastructure
37,762
¥
15,716
—
15,716
¥
59
Notes to Consolidated Financial Statements
Toshiba Corporation and Subsidiaries
March 31, 2011
March 31, 2011
Total assets of VIEs
Carrying amounts of assets that relate to the Group’s variable interests in the VIEs
Carrying amounts of liabilities that relate to the Group’s variable interests in the VIEs
Maximum exposures to losses
Thousands of U.S. dollars
VIEs involved in
Electronic Devices
$ 5,034,988
2,116,735
309,036
$ 2,617,229
VIEs involved in
Social Infrastructure
894,831
$
586,795
—
586,795
$
Carrying amounts of assets that relate to the Group’s variable interests in the VIEs consisted primarily of investment in
and advances to affiliates. The Group’s maximum exposures to losses, which include primarily equity investments, loans
and guarantees, generally do not have any relations to the losses anticipated to be incurred from the Group’s involvement
with the VIEs and are considered to exceed the anticipated losses significantly.
30. SEGMENT INFORMATION
Beginning with the fiscal year ended March 31, 2010, the Company adopted ASC No.280 “Segment Reporting”. The
segments reported below are the components of the Group for which discrete financial information is available and whose
results are regularly reviewed by the management of the Group to make decisions about allocation on resources and assess
performance.
The Group evaluates the performance of its business segments based on segment operating income (loss). The Group’s
segment operating income (loss) is derived by deducting the segment’s cost of sales and selling, general and administrative
expenses from net sales. Certain operating expenses such as restructuring charges and gains (losses) from the sales or
disposal of fixed assets are not included in it.
The Group has 5 business segments, (1)Digital Products, (2)Electronic Devices, (3)Social Infrastructure, (4)Home
Appliances and (5)Others, identified in accordance with the similarities of the nature of the products, the production
processes and markets, etc.
The business segments information is disclosed in the current classification, following changes of the structure of the
Group’s internal organization at the beginning with the fiscal year ended March 31, 2011.
Principal products that belong to each segment are as follows.
(1) Digital Products:
(2) Electronic Devices:
(3) Social Infrastructure:
(4) Home Appliances:
(5) Others:
Personal computers, Visual products, Hard disk drives, Multi-function
peripherals, etc.
Semiconductors, Liquid crystal displays, etc.
Energy-related equipment, Medical equipment, IT solutions, Elevators, etc.
Refrigerators, Washing drying machines, Light fixtures, Air-conditioners, etc.
Logistics Service, etc.
BUSINESS SEGMENTS
Financial information by segments as of and for the years ended March 31, 2011 and 2010 are as follows:
As of and for the year ended March 31, 2011
Digital
Products
Electronic
Devices
Social
Infrastructure
Home
Appliances
Others
Total
Corporate and
Eliminations
Millions of yen
Consolidated
¥ 2,228,815
¥ 1,294,981
¥ 2,192,759
¥
578,211
¥
103,739
¥ 6,398,505
¥
— ¥ 6,398,505
¥
¥
¥
¥
¥
¥
21,574
599,785
8,751
341,103
16,831
13,928
249,160
498,171
(498,171)
—
352,899
¥ 6,896,676
¥ (498,171) ¥ 6,398,505
(7,612) ¥
238,285
¥
1,988
¥
240,273
343,086
¥ 5,484,068
¥ (104,749) ¥ 5,379,319
7,796
8,518
258,790
261,669
—
—
258,790
261,669
Net sales
(1) Unaffiliated customers
(2) Intersegment
Total
99,822
52,727
74,888
¥ 2,328,637
¥ 1,347,708
¥ 2,267,647
Segment operating income (loss) ¥
13,185
¥
86,841
¥
137,120
Identifiable assets
¥ 1,010,655
¥ 1,251,931
¥ 2,537,293
Depreciation and amortization
Capital expenditures
31,022
26,189
134,565
116,587
68,576
96,447
60
As of and for the year ended March 31, 2010
Digital
Products
Electronic
Devices
Social
Infrastructure
Home
Appliances
Others
Total
Corporate and
Eliminations
Millions of yen
Consolidated
Net sales
(1) Unaffiliated customers
¥ 2,163,713
¥ 1,226,228
¥ 2,253,638
¥
560,931
¥
86,698
¥ 6,291,208
¥
— ¥ 6,291,208
99,458
43,814
65,373
18,915
258,834
486,394
(486,394)
—
¥ 2,263,171
¥ 1,270,042
¥ 2,319,011
Segment operating income (loss) ¥
21,286
¥
(20,443) ¥
137,208
Identifiable assets
¥ 1,085,265
¥ 1,286,531
¥ 2,458,803
¥
¥
¥
579,846
¥
345,532
¥ 6,777,602
(5,386) ¥
(7,667) ¥
124,998
362,171
¥
377,759
¥ 5,570,529
¥
¥
¥
(486,394) ¥ 6,291,208
250
¥
125,248
(119,356) ¥ 5,451,173
(2) Intersegment
Total
Depreciation and amortization
Capital expenditures
34,306
21,066
167,881
107,223
67,427
100,211
19,455
17,523
7,928
9,845
296,997
255,868
—
—
296,997
255,868
As of and for the year ended March 31, 2011
Digital
Products
Electronic
Devices
Social
Infrastructure
Home
Appliances
Others
Total
Thousands of U.S. dollars
Corporate and
Eliminations
Consolidated
Net sales
(1) Unaffiliated customers
(2) Intersegment
Total
$ 26,853,194 $ 15,602,181 $ 26,418,783 $ 6,966,397 $ 1,249,867 $ 77,090,422 $
— $ 77,090,422
1,202,674
635,265
902,265
259,928
3,001,928
6,002,060
(6,002,060)
—
$ 28,055,868 $ 16,237,446 $ 27,321,048 $ 7,226,325 $ 4,251,795 $ 83,092,482 $ (6,002,060) $ 77,090,422
Segment operating income (loss) $
158,855
$ 1,046,277 $ 1,652,048 $
105,434
$
(91,711) $ 2,870,903 $
23,952
$ 2,894,855
Identifiable assets
$ 12,176,566 $ 15,083,506 $ 30,569,795 $ 4,109,675 $ 4,133,566 $ 66,073,108 $ (1,262,036) $ 64,811,072
Depreciation and amortization
373,759
1,621,265
826,217
Capital expenditures
315,530
1,404,663
1,162,012
202,783
167,807
93,928
3,117,952
102,627
3,152,639
—
—
3,117,952
3,152,639
Notes: 1) Transfers between segments are made at arm’s length prices.
2) Corporate assets, included in Corporate and Eliminations of Identifiable assets, are mainly marketable securities of the Company.
3) Prior-period data for the fiscal year ended March 31, 2010 has been reclassified to conform to the current classification, following changes of the structure of the Group’s internal
organization at the beginning of the fiscal year ended March 31, 2011.
4) As the mobile phone business was reclassified as discontinued operations during the year ended March 31, 2011, the figures of the business for the year ended March 31, 2010 was
reclassified.
A reconciliation table between the total of the segment operating income (loss) and the income from continuing
operations, before income taxes and noncontrolling interests for the years ended March 31, 2011 and 2010 are as follows:
Year ended March 31
The total of the segment operating income (loss)
Corporate and Eliminations
Sub Total
Interest and dividends
Equity in earnings of affi liates
Other income
Interest
Other expense
Income from continuing operations, before income taxes and
noncontrolling interests
Millions of yen
¥
¥
2011
238,285
1,988
240,273
8,704
18,478
67,811
(32,331)
(107,386)
¥
¥
2010
124,998
250
125,248
7,965
22,385
62,793
(35,650)
(148,328)
Thousands of
U.S. dollars
2011
$ 2,870,903
23,952
$ 2,894,855
104,867
222,627
817,000
(389,530)
(1,293,807)
¥
195,549
¥
34,413
$ 2,356,012
61
Notes to Consolidated Financial Statements
Toshiba Corporation and Subsidiaries
March 31, 2011
GEOGRAPHIC INFORMATION
Net Sales
Net sales by region based on the location of the customer for the years ended March 31, 2011 and 2010 are as follows:
Year ended March 31
Japan
Overseas
Asia
North America
Europe
Others
Total
Millions of yen
2011
¥ 2,851,769
¥ 3,546,736
1,280,718
1,157,934
817,043
291,041
¥ 6,398,505
2010
2,791,281
3,499,927
1,305,133
1,134,963
841,022
218,809
6,291,208
¥
¥
¥
Property, plant and equipment
Property, plant and equipment by region at March 31, 2011 and 2010 are as follows:
March 31
Japan
Overseas
Asia
North America
Europe
Others
Total
Notes: 1) There are no individually material countries which should be separately disclosed.
2) There are no material sales to a single unaffiliated customer.
31. SUBSEQUENT EVENT
Millions of yen
2011
692,752
207,453
108,653
58,079
33,609
7,112
900,205
¥
¥
¥
2010
760,595
218,131
119,867
63,127
28,699
6,438
978,726
¥
¥
¥
Thousands of
U.S. dollars
2011
$ 34,358,663
$ 42,731,759
15,430,337
13,951,012
9,843,892
3,506,518
$ 77,090,422
Thousands of
U.S. dollars
2011
$ 8,346,409
$ 2,499,434
1,309,072
699,747
404,928
85,687
$ 10,845,843
Acquisition of Landis+Gyr
On May 19, 2011 ( Japan Standard Time), the Company entered into a definitive agreement to acquire the entire equity of
Landis+Gyr AG (“Landis+Gyr”), a company incorporated in Switzerland and a global leader in the energy management
solutions for utilities, from shareholders and warrant owners of Landis+Gyr.
The acquisition, valued at $2.3 billion (approximately ¥186.3 billion) including net debt, is subject to regulatory
approvals and other customary closing conditions.
The Group positions the Smart Community business as a new focus area and is determined to maximize its presence
and capabilities in the business.
With over 8,000 utility customers globally, Landis+Gyr has pioneered the development of leading-edge smart metering,
networking and service products to meet the needs of the utilities industry and operated around the world.
Landis+Gyr provides a wide range of smart meter solutions, from advanced interactive communication technologies to
various applications and services based on data collected from the meters.
The combination of Landis+Gyr’s advanced smart metering technologies and services, plus its extensive customer base,
with the Company’s comprehensive expertise in energy management for utility companies and the corporate (buildings)
and consumer (homes) sectors, will allow the Company to provide customers with sophisticated one-stop solutions that
offer communities optimum power monitoring and management, plus effective applications and services based on cloud
computing technologies.
Upon completion of the acquisition, the Company will promote these synergies through alliances, centering on cloud
computing and solutions services, and aim to expand its global operations and to grow the Smart Community business.
62
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
“Group“) as of March 31, 2011 and 2010, and the related consolidated statements of income, equity, and cash flows
for the years then ended, all expressed in Japanese yen. These consolidated financial statements are the
responsibility of the Group’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
standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated
financial position of Toshiba Corporation and subsidiaries at March 31, 2011 and 2010, 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.
We also have reviewed the translation of the consolidated 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 22, 2011
63
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