Public Relations & Investor Relations Office
Corporate Communications Division
REASON FOR THE SUBMISSION OF AMENDMENT REPORT ON ANNUAL SECURITIES REPORT
Because the full text was amended, the text is not underlined
(1) Background
On February 12, 2015, Toshiba Corporation (the “Company”) received a report order from the Securities and Exchange
Surveillance Commission pursuant to Article 26 of the Financial Instruments and Exchange Act and was subject to a
disclosure inspection with respect to some projects in which the percentage-of-completion of accounting method was
used, among others. Following that, in the course of a self-investigation by the Company to deal with the issues identified
relating to those projects in the disclosure inspection, it was noted that some matters require investigation in respect of
accounting treatments for some infrastructure projects of the Company in which the percentage-of-completion method
was used during the fiscal year ended March 31, 2014. Based on this situation, it was decided that the Special Investigation
Committee consisting of the Company’s internal committee members as well as external attorneys-at-law and certified
public accountants would be established as of April 3, 2015, and the Company would of its own accord implement an
investigation of the relevant facts. Then the Special Investigation Committee found that, the total amount of the contract
cost was underestimated and Contract Losses (including provisions for contract losses) were not recorded in a timely
manner, and also, issues requiring further investigation were identified.
Consequently, the Company decided to shift to the framework of investigation to an Independent Investigation
Committee comprising independent and impartial external experts who did not have any interests in the Company as of
May 8, 2015. The scope of the investigation delegated to the Independent Investigation Committee covers four matters:
(1) accounting treatments in relation to projects in which the percentage-of-completion method was used; (2) accounting
treatments in relation to recording of operating expenses in the Visual Products Business; (3) accounting treatments in
relation to the valuation of inventory in the Semiconductor Business, mainly discrete and system LSIs; and (4) accounting
treatments in relation to parts transactions, etc. in the PC Business. The Company received an investigation report from
the Independent Investigation Committee on July 20, 2015.
In parallel with such efforts, the Company and all its consolidated subsidiaries as of March 31, 2015 underwent self-
checks with respect to whether or not there was any issue that was not compliant with the accounting standards, internal
regulations and other rules or any other inappropriate accounting treatment, and whether or not the Company and its
consolidated subsidiaries were aware of any such issue or inappropriate accounting treatment, etc. including minor
matters at each quarter-end in the period between the fiscal year ended March 31, 2010 and the fiscal year ended March
31, 2015 and during the period between April 1, 2015 and May 31, 2015.
The Company resolved at a meeting of the Board of Directors on September 7, 2015, to amend the annual securities
reports for fiscal years from the fiscal year ended March 31, 2010 to the fiscal year ended March 31, 2014 and quarterly
securities reports for quarters in the period from the fiscal year ended March 31, 2011 to the fiscal year ended March 31,
2015, to reflect the correction of the events identified in the investigation report of the Independent Investigation
Committee stated above and the internal self-checks and the correction of other issues that had not been corrected due
to a materiality viewpoint.
In line with the amendment, data in the consolidated financial statements were also reclassified for disclosure in
connection with discontinued operations. The overview of the corrections is stated below.
(2) Overview
Restatement for the accounting treatment under the percentage-of-completion method
As the result of the above investigations, it was found that in certain infrastructure projects in which the percentage-of-
completion of accounting method was used, there were cases where the estimated total cost was not calculated based
on the latest information on incurred expenses, where provisions for contract losses were not recorded at the time when
generation of losses became evident, and where the estimated total cost was calculated in anticipation of cost reductions
which remained unsubstantiated. The accounting treatments for these projects were corrected.
Restatement for the accounting treatment in relation to recording operating expenses in the Visual Products Business
As the result of the above investigations, it was found that in the Visual Products Business, there were cases where some
expenses were not recorded as expenses using the accrual-based method, where profits that should not be realized were
recognized by making use of transactions between consolidated group companies, and where discounts in the purchase
prices were recognized, for example by reflecting adjustment or increase of the procurement prices for the following
periods, even if cost was not actually reduced. The accounting treatments for these cases were corrected.
02 TOSHIBA Annual Report 2012
Restatement for the accounting treatment in the parts transactions in the PC Business
As the result of the above investigations, it was found that in the PC Business, there were cases where inappropriate
profits were recognized in each fiscal period for parts transactions with manufacturing subcontractors, as well as cases
where some expenses were not recorded as expenses using the accrual-based method and where profits that should not
be realized were recognized by making use of transactions between consolidated group companies. The accounting
treatments for these transactions were corrected.
Restatement for the accounting treatment in relation to valuation of inventory in the Semiconductor Business
As the result of the above investigations, it was found that in the Semiconductor Business, there were cases where
valuation losses for work-in-progress inventories, and others were not recognized until the time of actual disposal of the
inventories, and where the book values of term-end intermediate products and term-end completed products were
overstated due to the lack of consistency between the front-end and back-end for revision of the standard cost in the
standard cost accounting, and consequently cost of goods sold was understated. The accounting treatments for these
cases were corrected.
Restatement for the account treatment for events identified in self-check and others
The Company corrected the account treatments for events identified in the above self-check and other matters that had
not been corrected from the standpoint of materiality.
Additional recognition of impairment losses and resulting adjustment to depreciation
Incidental with the above correction of accounting treatments, the Company recognized impairment losses on fixed
assets and made a correction of the recognition timing thereof and the resulting adjustment to depreciation for the
Visual Products Business, PC Business, discrete and system LSIs businesses of the Semiconductor Business.
Adjustments to income taxes
Due to a change in temporary differences resulting from the above correction of accounting treatments for prior years,
the Company made adjustments to deferred tax assets and liabilities and reviewed valuation allowances.
Due to these corrections to financial results, the Company needed to make amendments to part of the annual securities
report for the 173rd Fiscal Period from April 1, 2011 to March 31, 2012, which was submitted as of June 22, 2012, and there
were also matters to be corrected in part of other information described therein. Therefore, the Company has submitted
the amendment report on the annual securities report pursuant to the provision of Article 24-2, paragraph 1 of the
Financial Instruments and Exchange Act.
The amended consolidated financial statements were audited by Ernst & Young ShinNihon LLC, and the audit report of
the independent auditors has been attached hereto.
The information provided is about the status as of the submission date of the original annual securities report in June 22,
2012 before correction for restatements in September 7, 2015.
TOSHIBA Annual Report 2012
03
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
¥
2012
¥ 5,996,414
4,628,451
1,253,061
114,902
61,427
48,440
2011
6,263,990
4,771,797
1,247,661
244,532
201,785
27,944
¥
Millions of yen,
except per share amounts
2010
6,137,689
4,760,217
1,305,684
71,788
¥
(14,342)
24,789
¥
2009
6,373,020
5,185,997
1,496,214
(309,191)
(336,059)
41,401
2008
7,208,835
5,369,452
1,601,156
238,227
254,542
108,979
3,194
158,326
(53,943)
(398,878)
127,413
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
¥
0.75
0.74
8.00
¥ 5,673,064
718,664
298,104
198,907
319,418
210,000
¥
¥
37.38
35.90
5.00
5,351,343
793,860
229,913
209,239
318,803
203,000
¥
¥
¥
¥
(13.47)
(13.47)
−
5,463,714
705,930
209,287
246,218
310,651
204,000
¥
¥
(123.27)
(123.27)
5.00
5,435,282
385,170
354,199
306,680
355,980
199,000
39.46
36.59
12.00
5,935,637
1,022,265
462,313
338,524
367,767
198,000
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) are 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) The Mobile Broadcasting business and the Mobile Phone business have been classified as discontinued operations in the consolidated accounts in accordance with Accounting Standards
Codification No.205-20, “Presentation of Financial Statements - Discontinued Operations”. Performance of these businesses is excluded from consolidated net sales, operating income (loss), and
income (loss) from continuing operations, before income taxes and noncontrolling interests.
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, 2008 through 2009 has been
reclassified to conform with the current classification.
5) Data for the fiscal year ended March 31, 2009 and subsequent years has been amended following corrections to the consolidated financial statements. In addition, some prior-period data relating
to the discontinued operations has been reclassified.
4. Management's Discussion and Analysis 22. Consolidated Balance Sheet 24. Consolidated Statement of Income
26. Consolidated Statement of Equity 28. Consolidated Statement of Cash Flows
47. Notes to Consolidated Financial Statements 91. Report of Independent Auditors
04 TOSHIBA Annual Report 2012
SCOPE OF CONSOLIDATION
As of the end of March 2012, Toshiba Group (“the Group”) comprised Toshiba Corporation (“the Company”) and 554
consolidated subsidiaries and its principal operations were in the Digital Products, Electronic Devices, Social Infrastructure
and Home Appliances business domains.
Of the consolidated subsidiaries, 96 were involved in Digital Products, 47 in Electronic Devices, 289 in Social
Infrastructure, 54 in Home Appliances and 68 in Others.
The number of consolidated subsidiaries was 56 more than at the end of March 2011. 196 affiliates were accounted for
by the equity method as of the end of March 2012.
RESULTS OF OPERATIONS
NET SALES AND INCOME (LOSS)
While the emerging economies, including China and India, continued to expand and the United States saw gradual
recovery, the global economy remained in severe circumstances due to financial uncertainties in some European
countries, fiscal austerity and concerns about the financial system. Although the global economy is expected to continue
to recover gradually, anxieties remain about the rise in crude oil prices and high levels of unemployment in the United
States and some European countries, and sovereign risk in some European countries.
The Japanese economy remained in a severe condition due to the impacts of the Great East Japan Earthquake,
exposure to sovereign risk in some European countries and the impact of sharp yen appreciation. There are also concerns
about crude oil prices and shortages of power generation capacity.
In these conditions, the Group, aiming to become an even stronger, a world-leading diversified electric and electronics
company by overcoming demanding business conditions, strongly promoted global business deployment and the
transformation of its business structure through strategic investments and acquisitions to build new business
foundations, with a close focus on growth businesses, including the integrated Storage Products business, the Smart
Community business and the Healthcare business. The Group also steadily advanced structural reforms, resulting in
improvement to its cost structure, the reorganization and consolidation of domestic and overseas facilities, expansion of
overseas procurement and production, in order to establish a business structure resistant to rapid business fluctuations
and exchange rate fluctuations.
The Company’s consolidated net sales for FY2011 were 5,996.4 billion yen ($73,127.0 million), a decrease of 267.6 billion
yen against the previous year. Although the Social Infrastructure segment saw higher sales, overall sales were lower,
mainly due to sales decreases in the Digital Products and Electronic Devices segments, reflecting the impacts of sharp
yen appreciation, the Great East Japan Earthquake, the floods in Thailand and market downturns. Consolidated operating
income (loss) was 114.9 billion yen ($1,401.2 million), a decrease of 129.6 billion yen. Both the Electronic Devices segment
and the Social Infrastructure segment saw decreases, and the Digital Products segment also saw deterioration. Income
(Loss) from continuing operations, before income taxes and noncontrolling interests decreased by 140.4 billion yen to
61.4 billion yen ($749.1 million). Net income (loss) attributable to shareholders of the Company decreased by 155.1 billion
yen to 3.2 billion yen ($39.0 million), mainly reflecting the impact of temporary increase of tax expenses due to a revision
of a section of the Corporation Tax Act in Japan.
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. Investments including capital expenditure and investments & loans for M&A and R&D activity are
indispensable for growth of the Group and accordingly total investments 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.
TOSHIBA Annual Report 2012
05
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 (%)
Total investments (Note 3)
R&D expenditures
Return on investment (ROI) (%) (Note 4)
Billions of yen
2012
5,996.4
114.9
1.9
0.4
12.7
172
271.9
319.4
5.1
2011
6,264.0
244.5
3.9
21.1
14.8
137
332.6
318.8
11.0
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) Total investments including capital expenditure and investments and loans for M&A are on an ordering amount basis. The amount of investments for PPE includes the Group's portion in the
investments made by Flash Forward, LLC etc., which are companies accounted for by the equity method.
4) ROI is operating income divided by total equity plus total debts.
The Company's consolidated net sales for FY2011 were 5,996.4 billion yen (US$73,127.0 million), a decrease of 267.6 billion
yen against the previous year. Although the Social Infrastructure segment saw higher sales, overall sales were lower,
mainly due to sales decreases in the Digital Products and Electronic Devices segments, reflecting the impacts of sharp
yen appreciation, the Great East Japan Earthquake, the floods in Thailand and market downturns. Consolidated operating
income (loss) was 114.9 billion yen (US$1,401.2 million), a decrease of 129.6 billion yen. Both the Electronic Devices
segment and the Social Infrastructure segment saw decreases, and the Digital Products segment saw deterioration. This
resulted in a decreased operating income ratio and ROE, 1.9% and 0.4%, respectively. Also, ROI decreased by 5.9 points to
5.1%.
Shareholders’ equity, or equity attributable to the shareholders of the Company, was 718.7 billion yen (US$8,764.2
million), a decrease of 75.2 billion yen from the end of March 2011. There was a decrease of 45.9 billion yen in accumulated
other comprehensive loss, reflecting impacts from fluctuations in foreign exchange rates and a downturn in stock market
prices and the payment of a dividend to shareholders, but net income (loss) attributable to shareholders of the Company
stood at a positive 3.2 billion yen.
Total interest-bearing debt increased by 152.0 billion yen from the end of March 2011 to 1,235.8 billion yen (US$15,070.3
million).
As a result of the total assets increase resulting from strategic investments, the shareholders’ equity ratio at the end of
March 2012 was 12.7%, a 2.1-point decline from the end of March 2011, and the debt-to-equity ratio at the end of March
2012 was 172%, a 35-point increase from the end of March 2011.
The Group strongly promotes capital expenditure and investments & loans. The Group sets “Shiftable funds”, which
enables the Company to make speedy and flexible decisions of investments in response to change of business
environment, and executes strategic investments. In FY 2011, the Group strongly promoted strategic investments
including acquisition of Landis+Gyr AG (“L+G”) for enhancement of global competitiveness and future growth. As a result,
the Group increased total investments, including capital expenditure and investments & loans for M&A, from previous
year to 271.9 billion yen.
06 TOSHIBA Annual Report 2012
DIVIDEND
The Company, while giving full consideration to such factors as the strategic investments necessary to secure medium- to
long-term growth, seeks to achieve continuous increases in its actual dividend payments, in line with a payout ratio in the
region of 30 percent, on a consolidated basis.
The Company has decided to pay both an interim dividend and a year-end dividend. The Company paid 4.0 yen per
share as the interim dividend and the year-end dividend has been set at 4.0 yen per share. As a result, the annual dividend
for FY 2011 will be 8.0 yen per share, 3 yen increase per share from the previous year.
The Company will carefully examine and decide on the dividend plan for the next term, FY2012, in light of the Group’s
financial position, strategic investment plans and other factors. The Company will announce the dividend for FY2012 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
−
1,666.6
1,510.3
2,412.4
576.8
326.9
(496.6)
5,996.4
Change
(%)
(13%)
(7%)
+6%
(4%)
(2%)
−
(4%)
−
(40.4)
29.0
116.3
5.7
2.8
1.5
114.9
Change
(75.3)
(39.9)
(12.5)
(3.2)
0.8
−
(129.6)
DIGITAL PRODUCTS
The Digital Products segment saw overall sales decrease by 251.6 billion yen to 1,666.6 billion yen ($20,323.8 million). The
Visual Products business, which includes TVs, saw sales decrease due to significant decrease in sales in Japan on lower
unit sales following the completion of the transition to terrestrial digital broadcasting and the expiration of the eco-point
stimulus program in Japan and on price declines. The PC business also recorded a decrease in sales.
Overall segment operating income (loss) deteriorated by 75.3 billion yen to -40.4 billion yen ($-493.2 million). The PC
business recorded deteriorated operating income. The Visual Products business also saw deterioration in operating
income (loss) on significantly lower unit sales and the impact of price declines in Japan.
ELECTRONIC DEVICES
The Electronic Devices segment saw overall sales decrease by 119.7 billion yen to 1,510.3 billion yen ($18,418.8 million).
The Storage Products business saw sales rise on a healthy performance centered on the HDDs, but the Semiconductor
business saw a decrease in sales due to sharp yen appreciation, the floods in Thailand, price declines in Memories and a
fall-off in demand for Discretes and System LSIs. The LCD business also saw lower sales, largely attributable to the FY2010
sale of AFPD Pte., Ltd., an overseas subsidiary that manufactured LCDs for PCs, as a part of business restructuring.
Overall segment operating income decreased by 39.9 billion yen to 29.0 billion yen ($354.0 million). The Storage
Products business recorded a healthy performance centered on the HDDs and the LCD business recorded higher
operating income reflecting progress in business restructuring. The Semiconductor business saw deterioration in
operating income on lower demand for Discretes and System LSIs, yen appreciation and the floods in Thailand, despite
the positive impact of restructuring and cost reductions and although Memories recorded a solid performance on
increased unit sales.
SOCIAL INFRASTRUCTURE
The Social Infrastructure segment saw overall sales increase by 141.9 billion yen to 2,412.4 billion yen ($29,419.0 million).
The Power Systems and Industrial Systems business recorded higher sales, mainly on a healthy performance in the
Thermal & Hydro Power Systems and the positive effect contributed by the acquisition of Landis+Gyr AG ("L+G"). The
Elevator and Building Systems business also saw higher sales.
Overall segment operating income decreased by 12.5 billion yen to 116.3 billion yen ($1,418.0 million). Although the IT
Solutions business saw higher operating income, the Power Systems and Industrial Systems business recorded a lower
operating income.
TOSHIBA Annual Report 2012
07
Management's Discussion and Analysis
HOME APPLIANCES
The Home Appliances segment saw overall sales decrease by 23.0 billion yen to 576.8 billion yen ($7,033.5 million). The
Lighting Systems business recorded a healthy performance, mainly on LEDs, stimulated by concerns to save power.
However, the White Goods business saw lower unit sales as a result of the floods in Thailand and the expiration of Japan’s
eco-point stimulus program.
Overall segment operating income decreased by 3.2 billion yen to 5.7 billion yen ($69.2 million). Even though the
Lighting Systems business recorded a strong performance centered on LEDs, the White Goods business felt the impact of
lower sales.
OTHERS
Others saw sales decrease by 8.2 billion yen to 326.9 billion yen ($3,987.5 million) while its operating income improved by
0.8 billion yen to 2.8 billion yen ($34.5 million).
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.
Mobile Broadcasting Corporation and the Mobile Phone business have been classified as discontinued operations in
the consolidated accounts in accordance with Accounting Standards Codification No.205-20, “Presentation of Financial
Statements - Discontinued Operations”. The performances of these businesses are excluded from consolidated net sales,
operating income (loss), and income (loss) from continuing operations, before income taxes and noncontrolling interests.
Toshiba Group's net income (loss) is calculated by reflecting these business results to income (loss) from continuing
operations, before income taxes and noncontrolling interests.
The hard disk drive (HDD) business was recognized as an electronic component business and reclassified from the
Digital Products segment to the Electronic Devices segment and incorporated into the Semiconductor and Storage
business in a July 1, 2011 reorganization. In the same reorganization, the optical disk drive (ODD) business was also
recognized as an electronic component business, reclassified from the Digital Products segment to the Electronic Devices
segment and transferred to a new division dedicated to the business. The breakdown of results for FY2011 has been
retroactively reclassified to reflect these changes, as have the numeric amounts for the previous year. In this release,
HDDs and SSDs are referred to as the Storage Products business.
08 TOSHIBA Annual Report 2012
RESEARCH AND DEVELOPMENT
Aiming at the global top as a compound electrical equipment manufacturer, the Group has been promoting its R&D
through the projects of creating World's First, World No.1 Products and services in order to nurture next generation
development, as well as business developments for the near future. With its technology for most effective use of energy,
the group is eager to promote the Total Energy Innovation, which secures highly-efficient use of energy and stable power
supply, together with the Total Storage Solution, which provide retail services, contents services, and application for
healthcare with integrated storage system corresponding to the shift to Big Data, Cloud, and the ensuring security.
The Group's overall R&D expenditure reached 319.4 billion yen in the fiscal year ended March 31, 2012. Expenditures for
each business segment were as follows:
Digital Products
Electronic Devices
Social Infrastructure
Home Appliances
Others
CAPITAL EXPENDITURES
Billions of yen
51.6
146.6
105.4
14.1
1.7
CAPITAL EXPENDITURE OVERVIEW
The Group strongly promotes capital expenditure and investments & loans to accelerate enhancement of its focus
businesses and to establish new profit basis. The Group sets “Shiftable funds”, which enables the Company to make
speedy and flexible decisions of investments in response to change of business environment, and executes strategic
investments.
In FY 2011, the Group strongly promoted strategic investments including acquisition of L+G for enhancement of global
competitiveness and future growth. As a result, the Group increased total investments, including capital expenditure and
investments & loans for M&A, from previous year to 436.4 billion yen. Among the total investments, in relation to capital
investment, the Group carefully select projects in fields in which growth are expected, forecasting changes in the market
while placing importance on efficiency of investment. As a result, capital expenditure on an ordering basis amounted to
271.9 billion yen.
The above capital expenditure includes the Group's portion in the investments made by Flash Forward, Ltd. and other
affiliates accounted for by the equity method.
Digital Products
Electronic Devices
Social Infrastructure
Home Appliances
Others
Total
Notes: Based on ordering basis and includes intangible assets.
Capital expenditure
(billion yen)
12.8
148.1
68.7
18.5
23.8
271.9
Investments & loans
(billion yen)
1.1
2.6
148.2
0.0
12.6
164.5
Total investments
(billion yen)
13.9
150.7
216.9
18.5
36.4
436.4
In the segment of digital products, the Group invested 12.8 billion yen for developing new products and manufacturing
facilities, etc.
In the segment of electronic devices, with the firm demand for NAND flash memories continuing, the Group invested
148.1 billion yen (including its portion for investments made by Flash Forward, Ltd. etc.) in manufacturing facilities for
finer lithography, as well as manufacturing facilities for HDD and others. The major projects completed by the Group in
FY2011 included manufacturing building and facilities, etc for NAND flash memory (at Yokkaichi Operations).
In the segment of social infrastructure, the Group invested 68.7 billion yen in strengthening manufacturing facilities,
etc. for steam turbine and generator for thermal power stations. One of the major projects completed in FY2011 is
manufacturing facilities of steam turbine and generator for thermal power station (in India).
In the segment of home appliances, the Group invested 18.5 billion yen in manufacturing building and facilities, etc for
home appliance products in response to the strong demand in emerging economies.
In the segment of others, the Group invested 23.8 billion yen.
TOSHIBA Annual Report 2012
09
Management's Discussion and Analysis
The Group also entered into an agreement with Western Digital Corporation on Toshiba's acquisition of certain of
Western Digital's 3.5-inch HDD manufacturing equipment and stock sales of Toshiba Storage Device (Thailand), Co., Ltd,
one of the Group's consolidated companies. The Group completed the transaction in May 2012.
In the segment of The Electronic Devices, impairment losses were recognized for fixed assets related to System LSIs
(such as Oita Operations).
PLANS FOR CONSTRUCTING NEW FACILITIES AND RETIRING EXISTING FACILITIES
The Group plans to increase the amount of capital expenditure and investments & loans to 1370.0 billion yen for the 3
years from FY2011. The Group also plans to set “Shiftable funds”, which enables the Company to make decisions of
investments speedily as well as flexibly in response to change of business environment, and executes strategic
nvestments.
At the end of this fiscal year ending March 31, 2012, investment for newly-established facilities and upgrades of
equipment is planned to be amounted as 300.0 billion yen in FY2012 (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.
In the segment of the Electronic Devices, in November 2011, the Company has decided to phase out three facilities
during the first half fiscal year of 2012: Kitakyushu Operations and Hamaoka Toshiba Electronics Corporation, which carry
out front-end production of optical semiconductors; and Toshiba Components Co., Ltd., an assembly facility for power
semiconductors.
Business Segment
Digital Products
Electronic Devices
Social Infrastructures
Home Appliances
Others
Total
billions of yen
Planned Capital
Investments for
FY2012
18.0
140.0
80.0
20.0
42.0
300.0
As of March 31, 2012
Major Contents and Purposes
−
Manufacturing facilities for NAND flash memories,
Manufacturing facilities for HDDs, etc.
Enhancement of Power systems businesses, etc.
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.
3) The major planned new facilities and equipment upgrades in FY2012 are as follows:
Name of
Company and
Office
Place
Business
Segment
Type of Facility
Planned
Beginning
Flash Forward
LLC., and others
Yokkaichi, Mie
Electronic
Devices
Manufacturing facilities
for semiconductors, etc.
July 2012
As of March 31, 2012
Capacity
Improvement
after
Completion
of
Construction
Enhancement of
manufacturing
facilities, etc.
FINANCIAL POSITION
Total assets increased by 321.8 billion yen from the end of March 2011 to 5,673.1 billion yen ($69,183.7 million), due to
strategic investments aimed at strengthening global competitiveness.
Shareholders’ equity, or equity attributable to the shareholders of the Company, was 718.7 billion yen ($8,764.2 million),
a decrease of 75.2 billion yen from the end of March 2011. There was a decrease of 45.9 billion yen in accumulated other
comprehensive loss, reflecting impacts from fluctuations in foreign exchange rates and a downturn in stock market prices
and the payment of a dividend to shareholders, but net income (loss) attributable to shareholders of the Company stood
at a positive 3.2 billion yen.
Total interest-bearing debt increased by 152.0 billion yen from the end of March 2011 to 1,235.8 billion yen ($15,070.3
million).
As a result of the total assets increase resulting from strategic investments, the shareholders’ equity ratio at the end of
March 2012 was 12.7%, a 2.1-point decline from the end of March 2011, and the debt-to-equity ratio at the end of March
2012 was 172%, a 35-point increase from the end of March 2011.
10 TOSHIBA Annual Report 2012
CASH FLOWS
In the fiscal year under review, net cash provided by operating activities amounted to 337.5 billion yen, a decrease of 34.1
billion yen from net cash provided by operating activities of 371.6 billion yen in the previous fiscal year, due to a decrease
of net income attributable to shareholders of the Company.
Net cash used in investing activities amounted to 377.2 billion yen, an increase of 162.5 billion yen from 214.7 billion yen
in the previous fiscal year. This was mainly due to an increase in expenditure for strategic investment aiming to
strengthen global competitiveness including the acquisition of L+G.
As a result of the foregoing, free cash flow amounted to -39.7 billion yen, a decrease of 196.6 billion yen from 156.9
billion yen in the previous fiscal year.
Net cash used in financing activities amounted to 2.7 billion yen, a decrease of 149.5 billion yen from 152.2 billion yen of
net cash used in financing activities in the previous fiscal year. This was mainly due to an increase of proceeds from debt
for acquisition of L+G.
The effect of exchange rate changes was to decrease cash by 2.1 billion yen. Cash and cash equivalents at the end of
the fiscal year declined by 44.5 billion yen, from 258.8 billion yen of the end of the previous fiscal year to 214.3 billion yen.
In December 2011, The Shaw Group Inc. announced that its put options to sell to the Group all or a part of its stake in the
holding companies of Westinghouse Electric (20% of the holding companies of Westinghouse Electric) which are
currently held by Nuclear Energy Holdings LLC, a wholly owned subsidiary of the Shaw Group Inc., the announcement of
which was made in September 2011, will be exercised automatically in October 2012 in accordance with the contractual
terms between Shaw Group and the Group because it did not receive the consent from the third party in order to exercise
its put options. In the case such put options are exercised, the Group will seek for the participation of new strategic
partner in investment in Westinghouse, however the Group may bear substantial amount of investment funds during the
period from January 2012 when the Group acquires the stakes to the time of such investment by new strategic partner.
Several companies have already expressed an interest in investing in Westinghouse and it remains open to the idea of
inviting the participation of new investors in Westinghouse, if the Company and such potential investors could share a
long-term vision and business strategy with respect to Westinghouse business.
TREASURY STOCK
Shares held as of the closing
date of last period:
Shares acquired during the
period:
Demand for purchase of shares
less than one unit from
shareholders
Shares disposed during the
period:
Demand for sale of shares less
than one unit from shareholders
Shares held as of the closing
date of this period:
Aggregate amount of
acquisition costs:
Aggregate amount of
sales value:
2,519,870
(common stock)
142,523
(common stock)
52
(million yen)
26,335
(common stock)
9
(million yen)
2,636,058
(common stock)
TOSHIBA Annual Report 2012
11
Management's Discussion and Analysis
MAJOR SUBSIDIARIES AND AFFILIATED COMPANIES
Name of Company
Toshiba TEC Corporation
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 America, Inc.
Taiwan Toshiba International Procurement Corporation
Voting Rights Ratio
(Percentage)
53.0
61.6
80.0
100.0
100.0
67.0
67.0
100.0
100.0
100.0
As of March 31, 2012
Location
Shinagawa-ku, Tokyo
Yokohama
Shinagawa-ku, Tokyo
Minato-ku, Tokyo
Otawara
U.S.
U.K.
Chiyoda-ku, Tokyo
U.S.
Taiwan
Notes: 1) The Company has 554 consolidated subsidiaries (including the 10 companies above) in accordance with Generally Accepted Accounting Standards in the U.S., and 196 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.
3) The Group transferred all issued shares of Toshiba Mobile Display Co., Ltd. to Japan Display Inc. as of March 2012. As a result, Toshiba Mobile Display Co., Ltd. is no longer a consolidated subsidiary
of the Group.
MAIN PLACES OF BUSINESS AND FACILITIES OF THE COMPANY
Segment
Company-wide
Offices
Major Distribution
As of March 31, 2012
Principal Office (Minato-ku, Tokyo), Hokkaido Branch Office (Sapporo), Tohoku Branch Office
(Sendai), Shutoken Branch Office (Saitama), South-Shutoken Branch Office (Yokohama),
Hokuriku Branch Office (Toyama), Chubu Branch Office (Nagoya), Kansai Branch Office
(Osaka), Chugoku Branch Office (Hiroshima), Shikoku Branch Office (Takamatsu), Kyushu
Branch Office (Fukuoka)
Laboratories
and others
Corporate Research & Development Center (Kawasaki), Software Engineering Center
(Kawasaki), Corporate Manufacturing Engineering Center (Yokohama), Yokohama Complex
(Yokohama), Himeji Operations (Himeji)
Digital Products
Laboratories
Design & Development Center(Ome), Core Technology Center (Ome)
Production
Facilities
Fukaya Complex (Fukaya), Ome Complex (Ome)
Electronic Devices
Laboratories
Center For Semiconductor Research & Development (Kawasaki)
Production
Facilities
Ome Operations - Storage Products(Ome), Microelectronics Center (Kawasaki), Yokkaichi
Operations (Yokkaichi), Himeji Operations-Semiconductor (Taishi, Hyogo), Kitakyushu
Operations (Kitakyushu), Oita Operations (Oita)
Social Infrastructure
Laboratories
Power and Social Systems Research and Development Center (Yokohama), Isogo Nuclear
Engineering Center (Yokohama)
Production
Facilities
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)
As of April 2012, Core Technology Center was reorganized to Platform & Solution Development Center. Also, Komukai Operations is
renamed to Komukai Complex and integrated Microelectronics Center.
12 TOSHIBA Annual Report 2012
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, 2012
(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
In response to the issues that the current global economy faces, such as the increase in demand for energy or the rise in
the price of resources, which are associated with the growth and expansion of emerging economies, and mass capacity
growth of the information transmission and/or storage and the ensuring of the information security, the Group proposes
a comprehensive solution through the construction of smart communities, by combining and integrating effectively the
respective technologies in which the Group has an advantage. In addition, the Group makes strategic concentrated
investment in the categories of total energy innovation, such as power generation systems, renewable and new energy,
power electronics/EV and home solutions, and total storage innovation, such as HDD/SSD, NAND flash memory, health
care solutions, retail solutions and digital products solutions. In areas such as System LSIs, the Group is also restructuring
and selectively allocating resources. 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.
(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, in order to continue and deepen the
establishment, through self-transformation, of the business quality by which it can ensure a stable profit, not susceptible
to a changing environment, and there is a possibility that the Group will incur expenses for business structure reform in
this connection. 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 has reduced the accumulated total
fixed costs for 3 years in the amount by 1,500 billion yen, and, in addition to developing resistance to exchange rate
fluctuations mainly by expansion of overseas production/overseas procurement, the Group has realized a substantial
reduction in costs by promoting the unification of design, manufacturing and procurement.
(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.
TOSHIBA Annual Report 2012
13
Management's Discussion and Analysis
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 is significantly affected by exchange rate
fluctuations, economic fluctuations and consumer spending trends, and decreases in demand across the market may
cause declines in product prices. 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 efforts to monitor the latest trends in
market demand in order to better respond to changes in supply and demand conditions, as well as to better manage its
production, procurement, sales and inventory. At the same time, the Group makes efforts to minimize risks and reduce
costs in connection with the procurement of parts and components by promoting package procurement measures
comprehensive procurement on a Group-wide basis. The Group also makes every effort to minimize the potential impact
of the market volatility by undertaking regional strategies (such as with respect to the emerging markets, including China,
that have relatively high economic growth rates) to promote business expansion. However, any rapid fluctuation in
demand may result in price erosion or increases in prices of parts and components, which may adversely affect the
Group's financial results with respect to this business.
The Visual Products business, including TVs, is under the influence of a decrease in sales volume in a larger amount
than expected after completion of the shift to digital terrestrial broadcasting in Japan and the drastic decline in sales
price. In response to these issues, the Group is addressing the reduced volume management, through the termination of
domestic production, expansion of outsourced production, reduction of model numbers and number of panels. Also, the
PC business is under the influence of the slowdown in demand centered around developed countries and competition
with other digital products.
However, because the growth in the emerging markets centered around Asia is supposed to remain strong, in addition
to continuous development of the local fit products based on consideration of characteristics of each region, centering
on the emerging markets, the Group plans to work on the sales of the high-value added products created by mobilized
technologies for visual products and PC, and in addition, the Group plans to work on commercialization of various
services including the digital book store called “BookPlace,” which was opened in April 2011, to aim at expansion of
domestic and international sales of both of hardware and services.
(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. Unforeseen market changes and corresponding changes in demand at the time of production
may result in a mismatch between the 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 memory, the
Group's major product in this business, may undergo rapid change, 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 or semiconductor heavy users 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, production may not go as planned, 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.
Also, while Discrete and System LSI businesses are under the influence of a decline in demand, in order to improve the
profitability and enhance the constitution of the business, the Group is promoting business structure reform, such as
restructuring and sales of manufacturing facilities, narrowing product type, becoming specialized in design by expansion
of outsourced production (fabless policy) and the effort to enlarge the size of disc in pre-process of semiconductor
production.
14 TOSHIBA Annual Report 2012
With respect to the storage products business, in order to establish the integrated storage business corresponding to the
change in business environment, the Group consolidated the HDD business with the semiconductor business in July 2011.
With the use of the advantage of having the high-spec SSD and the high-capacity HDD, the Group plans to strengthen
the storage products business under which the HDD, SSD, and NAND flash memory are integrated.
(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.
Postorder 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. In addition, taking into account the lessons learned from the incident above, upon
development of the nuclear power reactor with higher safety standards corresponding to the loss of all electric sources or
severe accident and next-generation small reactor, the Group is promoting the establishment of a low carbon mainstay
electric source. 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. In overseas countries, construction of a new nuclear power plant started in the United States for
the first time in 34 years, and construction proceeds smoothly in China, as well.
There is a possibility that the steep appreciation of the yen and Japanese electric power companies' reduction of
investment in the electricity distribution fields resulted from the Great East Japan Earthquake will affect the Company's
electric power distribution system business. In response to this, by accelerating the global expansion of the electric power
distribution system business, including production, the Group plans to expand the business centered around emerging
economies.
(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 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 emerging economies that have a high growth rate, as well as by developing new products that are
environmentally friendly and that contribute to energy saving, such as new lighting systems.
(5) The Great East Japan Earthquake
There remains an impact of the Great East Japan Earthquake on the economy, and the businesses of the Group may be
affected due to the change in domestic demand. In addition, the shortage of electric power supply resulted from the
suspension of the operation of nuclear power plants and the rise in electricity costs due to the rise of fuel costs may affect
the business activities, including manufacturing operations, of the Group.
Regarding the power shortage, the Group expects to cooperate with the efforts to reduce power consumption by way
of establishing in-house power generation, and, in addition to our effort to seek for the adjustment of production and the
shifting and streamlining of the functions, the Group will forward the enhancement of energy saving, the introduction of
highly effective devices and the promotion of the adoption of LED lighting.
TOSHIBA Annual Report 2012
15
Management's Discussion and Analysis
(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 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
nonconsolidated 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.
Although the Group makes efforts to minimize the effect of fluctuation in exchange rates by balancing sales in foreign
currencies and purchase in foreign currencies, there is a possibility that operating income/loss will be affected by
exchange rate fluctuations due to changes in the balance of the scale of business segments and other factors. Also, there
is a possibility that such foreign exchange losses will occur, as resulting from a difference between the exchange rates at
the time of recognizing and at the time of settlement of the credits and debts in foreign currencies, in case of steep
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
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, goodwill and listed shares.
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
16 TOSHIBA Annual Report 2012
flow from business related to goodwill.
Also, if the market price of listed shares held by the Group as the marketable securities declines, there is a possibility
that an impairment loss on the relevant shares will be recorded or that the net unrealized losses on securities will be
recognized.
(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 the European debt crisis, 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. In the case the financial markets fall into unstable turmoil, the
financial institutions' reduction in their lending in response to the change in capital adequacy requirements, or the
downgrading of the credit rating of the Company given by rating agencies, 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
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. Promotion of new business
is essential for implementation of the growth strategy, and as a part of this, in addition to the acquisition of Landis+Gyr
AG, a company incorporated in Switzerland and Vital Images, Inc., a company incorporated in the United States, the
Group decided to acquire the Retail Stores Solutions business from IBM Corporation, a company incorporated in the
United States.
Cultivation of new businesses entails substantial uncertainty, and if any new business in which the Group invests or
TOSHIBA Annual Report 2012
17
Management's Discussion and Analysis
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 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
18 TOSHIBA Annual Report 2012
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 General Court of the
European Union in April 2007. In July 2011, the General Court of the European Union annulled the fine imposed on the
Company entirely, while the Commission's decision claiming that EU competition laws were violated by the Company was
supported. However, because the content of such judgment is different from the Company's recognition of fact, the
Company appealed to the Court of Justice of the European Union in September 2011. The Company will assert its opinion
in the appellate instance.
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.
Because the contract with the Ministry of Defense regarding the business of development of a reconnaissance system
for the F-15 fighter was unilaterally cancelled by the other party, the Company filed a suit in the Tokyo District Court in
July 2011, claiming payment therefor. Because the Company believes that it properly conducted its business in accordance
with the contract and considers the relevant cancellation of contract to be unjust, the Company will assert its opinion in
the suit.
9. Risks related to directors, employees, major shareholders and affiliates
(1) Alliance in NAND flash memory
The Group has a strategic alliance with a U.S. company, SanDisk Corporation (“SanDisk”), for the production of NAND flash
memory, 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”).
While the shareholders' agreements restrict the Minority Shareholders from transferring their respective ownership
TOSHIBA Annual Report 2012
19
Management's Discussion and Analysis
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) Sovereign Risk
In an environment marked by anxiety over the future financial condition of some of the European countries, concern over
the financial system is increasing, the influence of which is not only the direct influence within Europe, but also the
indirect influence on other regions, such as the deterioration in emerging economies due to fluctuation in exchange rates
or withdrawal of funds by European banks or economic stagnation in the Chinese economy. If the financial condition of
some countries should collapse, there is a possibility that the financial and capital markets and global economy will be
significantly affected, and the Group, letting the financial crisis in 2008 be a lesson, has been advancing the measures
therefor since last year, upon implementing the stress test and setting the trigger event.
(5) 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 the past, the businesses of the Group were affected to a certain extent by the Great East Japan Earthquake
and the floods in Thailand.
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 disasters.
20 TOSHIBA Annual Report 2012
TOSHIBA Annual Report 2012
21
Consolidated Balance Sheet
Toshiba Corporation and Subsidiaries
As of March 31, 2012
Assets
Current assets:(Note 28)
Cash and cash equivalents
Notes and accounts receivable, trade:
Notes (Notes 7 and 11)
Accounts (Notes 7, 11 and 29)
Allowance for doubtful notes and accounts
Inventories (Note 8)
Deferred tax assets (Note 18)
Other receivables (Note 7)
Prepaid expenses and other current assets (Note 21)
Total current assets
Long-term receivables and investments:
Long-term receivables (Notes 7 and 11)
Investments in and advances to affiliates (Notes 5 and 9)
Marketable securities and other investments (Notes 5 and 6)
Total long-term receivables and investments
Property, plant and equipment (Notes 17, 22 and 28):
Land
Buildings
Machinery and equipment (Note 29)
Construction in progress
Less-Accumulated depreciation
Total property, plant and equipment
Other assets:(Note 17)
Goodwill and other intangible assets (Notes 10 and 28)
Deferred tax assets (Note 18)
Other assets
Total other assets
Total assets
The accompanying notes are an integral part of these statements.
Millions of yen
2012
2011
Thousands of
U.S. dollars
(Note 3)
2012
¥
214,305
¥
258,840
$ 2,613,476
43,800
1,272,727
(19,665)
854,297
176,044
201,238
252,318
2,995,064
49,164
413,506
237,519
700,189
94,747
906,619
2,093,983
67,236
3,162,585
(2,380,915)
781,670
709,607
402,033
84,501
1,196,141
47,311
1,082,104
(17,079)
851,265
190,222
187,483
200,991
2,801,137
2,540
416,431
241,409
660,380
97,528
979,795
2,314,219
112,080
3,503,622
(2,628,648)
874,974
547,612
365,015
102,225
1,014,852
534,146
15,521,061
(239,817)
10,418,256
2,146,878
2,454,122
3,077,049
36,525,171
599,561
5,042,756
2,896,573
8,538,890
1,155,451
11,056,330
25,536,378
819,951
38,568,110
(29,035,549)
9,532,561
8,653,744
4,902,841
1,030,500
14,587,085
¥ 5,673,064
¥
5,351,343
$ 69,183,707
22 TOSHIBA Annual Report 2012
Liabilities and equity
Current liabilities:(Note 28)
Short-term borrowings (Note 11)
Current portion of long-term debt (Notes 11, 12 and 21)
Notes and accounts payable, trade (Note 29)
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:(Note 28)
Long-term debt (Notes 11, 21 and 29)
Accrued pension and severance costs (Note 13)
Other liabilities (Notes 18, 21, 26 and 27)
Total long-term liabilities
Millions of yen
2012
2011
¥
119,515
206,626
1,290,902
397,449
46,536
271,869
405,538
2,738,435
909,620
779,414
161,737
1,850,771
¥
154,848
159,414
1,188,202
386,189
36,238
271,068
351,138
2,547,097
769,544
734,309
197,169
1,701,022
Thousands of
U.S. dollars
(Note 3)
2012
$ 1,457,500
2,519,829
15,742,708
4,846,939
567,512
3,315,476
4,945,585
33,395,549
11,092,927
9,505,049
1,972,402
22,570,378
Total liabilities
¥ 4,589,206
¥
4,248,119
$ 55,965,927
Equity attributable to shareholders of the Company (Notes 12 and 19):
Common stock:
Authorized−10,000,000,000 shares Issued:
2012 and 2011 −4,237,602,026 shares
Additional paid-in capital
Retained earnings
Accumulated other comprehensive loss
Treasury stock, at cost:
2012−2,636,058 shares
2011−2,519,870 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)
¥
439,901
396,789
449,023
(565,551)
(1,498)
−
718,664
365,194
¥ 1,083,858
¥
¥
439,901
399,551
475,474
(519,605)
−
(1,461)
793,860
309,364
1,103,224
$ 5,364,646
4,838,890
5,475,890
(6,896,963)
(18,268)
−
8,764,195
4,453,585
$ 13,217,780
Total liabilities and equity
¥ 5,673,064
¥
5,351,343
$ 69,183,707
TOSHIBA Annual Report 2012
23
Consolidated Statement of Income
Toshiba Corporation and Subsidiaries
For the years ended March 31, 2012
Sales and other income:
Net sales
Interest and dividends
Equity in earnings of affiliates (Note 9)
Other income (Notes 6, 16, 21 and 28)
Costs and expenses:
Cost of sales (Notes 5, 10, 14, 17, 22 and 26)
Selling, general and administrative (Notes 10, 14, 15 and 22)
Interest
Other expense (Notes 6, 7, 16 and 21)
Millions of yen
2012
2011
¥ 5,996,414
10,195
17,035
78,997
6,102,641
4,628,451
1,253,061
31,815
127,887
6,041,214
¥
6,263,990
8,168
18,478
67,926
6,358,562
4,771,797
1,247,661
32,328
104,991
6,156,777
Thousands of
U.S. dollars
(Note 3)
2012
$ 73,127,000
124,329
207,744
963,378
74,422,451
56,444,524
15,281,232
387,988
1,559,597
73,673,341
Income from continuing operations,
before income taxes and noncontrolling interests
61,427
201,785
749,110
Income taxes (Note 18):
Current
Deferred
Income from continuing operations,
before noncontrolling interests
Loss from discontinued operations,
before noncontrolling interests (Note 4)
Net income before noncontrolling interests
Less: Net income attributable
to noncontrolling interests
47,723
717
48,440
55,558
(27,614)
27,944
581,988
8,744
590,732
12,987
173,841
158,378
(1,161)
11,826
(7,356)
(14,158)
166,485
144,220
8,632
8,159
105,269
Net income attributable to shareholders of the Company
¥
3,194
¥
158,326
$
38,951
Basic net earnings (losses) per share attributable
to shareholders of the Company (Note 20)
Earnings from continuing operations
Losses from discontinued operations
Net earnings
Diluted net earnings (losses) per share attributable
to shareholders of the Company (Note 20)
Earnings from continuing operations
Losses from discontinued operations
Net earnings
Cash dividends per share (Note 19)
The accompanying notes are an integral part of these statements.
Yen
U.S. dollars
(Note 3)
¥
¥
¥
¥
¥
¥
¥
1.13
(0.37)
0.75
1.11
(0.37)
0.74
8.00
¥
¥
¥
¥
¥
¥
¥
39.24
(1.86)
37.38
37.68
(1.86)
35.90
5.00
$
$
$
$
$
$
$
0.01
(0.00)
0.01
0.01
(0.00)
0.01
0.10
24 TOSHIBA Annual Report 2012
Consolidated Statement of Comprehensive Income
Toshiba Corporation and Subsidiaries
For the years ended March 31, 2012
Net income before noncontrolling interests
Millions of yen
2012
¥
11,826
¥
2011
166,485
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 other comprehensive loss
(5,324)
(11,007)
(33,619)
(659)
(50,609)
(9,057)
(55,854)
(9,348)
3,287
(70,972)
Thousands of
U.S. dollars
(Note 3)
2012
144,220
$
(64,927)
(134,232)
(409,988)
(8,036)
(617,183)
Comprehensive income (loss) before noncontrolling interests
(38,783)
95,513
(472,963)
Less:Comprehensive income attributable
to noncontrolling interests
3,969
(2,452)
48,403
Comprehensive income (loss) attributable
to shareholders of the Company
The accompanying notes are an integral part of these statements.
¥
(42,752)
¥
97,965
$
(521,366)
TOSHIBA Annual Report 2012
25
Consolidated Statement of Equity
Toshiba Corporation and Subsidiaries
For the years ended March 31, 2012
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
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
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
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
Common
stock
Additional
paid-in capital
Retained
earnings
Millions of yen
Accumulated
other
comprehen-
sive
income(loss)
Treasury
stock
Equity
attributable
to
shareholders
of
the Company
Equity
attributable to
non-controlling
interests
Total
equity
¥ 439,901 ¥ 447,732 ¥ 278,846 ¥ (459,244) ¥
(1,305) ¥ 705,930 ¥ 328,935 ¥ 1,034,865
(46,772)
46,772
(1,406)
(1,406)
(8,841)
(10,247)
(8,470)
(8,470)
(8,470)
158,326
158,326
8,159
166,485
(8,278)
(8,278)
(10,771)
(42,187)
(10,002)
(10,771)
1,714
(9,057)
(42,187)
(13,667)
(55,854)
(10,002)
654
(9,348)
2,599
2,599
688
3,287
97,965
(2,452)
95,513
439,901
(3)
399,551
(2,759)
475,474
(519,605)
(156)
(1,461)
(159)
793,860
309,364
(159)
1,103,224
(29,645)
(29,645)
(29,645)
(2,759)
59,490
56,731
3,194
3,194
8,632
11,826
(7,629)
(7,629)
(5,362)
(10,517)
(29,667)
(5,362)
38
(5,324)
(10,517)
(490)
(11,007)
(29,667)
(3,952)
(33,619)
(400)
(400)
(259)
(659)
(42,752)
3,969
(38,783)
(3)
(37)
(40)
(1,498) ¥ 718,664 ¥ 365,194 ¥ 1,083,858
(40)
Balance at March 31, 2012
¥ 439,901 ¥ 396,789 ¥ 449,023 ¥ (565,551) ¥
26 TOSHIBA Annual Report 2012
Consolidated Statement of Equity
Toshiba Corporation and Subsidiaries
For the years ended March 31, 2012
Common
stock
Additional
paid-in capital
Retained
earnings
Thousands of U.S. dollars (Note 3)
Accumulated
other
compre-
hensive
income(loss)
Treasury
stock
Equity
attributable
to
shareholders
of
the Company
Equity
attributable to
non-controlling
interests
Total
equity
$ 5,364,647 $ 4,872,573 $ 5,798,463 $ (6,336,646) $
(17,817) $ 9,681,220 $ 3,772,731 $ 13,453,951
(33,646)
(33,646)
725,487
691,841
(361,524)
(361,524)
(361,524)
38,951
38,951
105,269
144,220
(93,036)
(93,036)
(65,390)
(128,256)
(361,793)
(65,390)
463
(64,927)
(128,256)
(5,976)
(134,232)
(361,793)
(48,195)
(409,988)
(4,878)
(4,878)
(3,158)
(8,036)
(521,366)
48,403
(472,963)
Balance at March 31, 2011
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
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, 2012
The accompanying notes are an integral part of these statements.
(37)
$ 5,364,647 $ 4,838,890 $ 5,475,890 $ (6,896,963) $
(451)
(488)
(18,268) $ 8,764,195 $ 4,453,585 $ 13,217,780
(488)
TOSHIBA Annual Report 2012
27
Consolidated Statement of Cash Flows
Toshiba Corporation and Subsidiaries
For the years ended March 31, 2012
Cash flows from operating activities
Net income before noncontrolling interests
Adjustments to reconcile net income 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 affiliates, net of dividends
(Gain) 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
Acquisition of Landis+Gyr AG
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 used in financing activities
Effect of exchange rate changes on cash and cash equivalents
Net decrease in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year
Supplemental disclosure of cash flow information
Cash paid during the year for−
Interest
Income taxes
Sale of Toshiba Mobile Display Co., Ltd. stock (Note 16)−
Assets transferred (net of cash and cash equivalents)
Liabilities relinquished
The accompanying notes are an integral part of these statements.
Millions of yen
2012
2011
Thousands of
U.S. dollars
(Note 3)
2012
¥
11,826
¥
166,485
$
144,220
242,913
5,301
(172)
(13,926)
55,574
2,322
(195,502)
(2,405)
124,495
6,350
104,886
(4,165)
337,497
103,818
9,638
(291,733)
(39,426)
(18,435)
15,444
(129,450)
(27,083)
(377,227)
370,911
(206,325)
(130,767)
(37,007)
(42)
490
(2,740)
(2,065)
(44,535)
258,840
214,305
31,759
43,912
189,664
222,201
¥
¥
250,412
8,611
(33,588)
(6,406)
9,018
3,594
5,616
(92,135)
50,841
(5,163)
(22,361)
36,660
371,584
58,391
5,427
(229,229)
(30,851)
(6,201)
(38,424)
−
26,187
(214,700)
159,807
(406,846)
112,395
(17,601)
(159)
188
(152,216)
(13,277)
(8,609)
267,449
258,840
33,478
61,342
−
−
¥
¥
2,962,354
64,646
(2,097)
(169,829)
677,732
28,317
(2,384,171)
(29,329)
1,518,232
77,439
1,279,098
(50,795)
4,115,817
1,266,073
117,537
(3,557,720)
(480,805)
(224,817)
188,342
(1,578,659)
(330,280)
(4,600,329)
4,523,305
(2,516,159)
(1,594,720)
(451,305)
(512)
5,976
(33,415)
(25,182)
(543,109)
3,156,585
$ 2,613,476
$
387,305
535,512
2,312,976
2,709,768
28 TOSHIBA Annual Report 2012
RESTATEMENT OF PREVIOUSLY ISSUED CONSOLIDATED FINANCIAL STATEMENTS
Because the full text was amended, the text is not underlined.
1) Background
On February 12, 2015, Toshiba Corporation (“the Company”) received a report order from the Securities and Exchange
Surveillance Commission pursuant to Article 26 of the Financial Instruments and Exchange Act and was subject to a
disclosure inspection with respect to some projects in which the percentage-of-completion of accounting method was
used, among others. Following that, in the course of a self-investigation by the Company to deal with the issues identified
relating to those projects in the disclosure inspection, it was noted that some matters require investigation in respect of
accounting treatments for some infrastructure projects of the Company in which the percentage-of-completion method
was used during the fiscal year ended March 31, 2014. Based on this situation, it was decided that the Special Investigation
Committee consisting of the Company’s internal committee members as well as external attorneys-at-law and certified
public accountants would be established as of April 3, 2015, and the Company would of its own accord implement an
investigation of the relevant facts. Then the Special Investigation Committee found that, in respect of some infrastructure
projects, the total amount of the contract cost was underestimated and Contract Losses (including provisions for contract
losses) were not recorded in a timely manner, and also, issues requiring further investigation were identified.
Consequently, the Company decided to shift to the framework of investigation to an Independent Investigation
Committee comprising independent and impartial external experts who did not have any interests in the Company as of
May 8, 2015. The scope of the investigation delegated to the Independent Investigation Committee covers four matters:
(1) accounting treatments in relation to projects in which the percentage-of-completion method was used; (2) accounting
treatments in relation to recording of operating expenses in the Visual Products Business; (3) accounting treatments in
relation to the valuation of inventory in the Semiconductor Business, mainly discrete and system LSIs; and (4) accounting
treatments in relation to parts transactions, etc. in the PC Business. The Company received an investigation report from
the Independent Investigation Committee on July 20, 2015.
In parallel with such efforts, the Company and all its consolidated subsidiaries as of March 31, 2015 underwent self-
checks with respect to whether or not there was any issue that was not compliant with the accounting standards, internal
regulations and other rules or any other inappropriate accounting treatment, and whether or not the Company and its
consolidated subsidiaries were aware of any such issue or inappropriate accounting treatment, etc. including minor
matters at each quarter-end in the period between the fiscal year ended March 31, 2010 and the fiscal year ended March
31, 2015 and during the period between April 1, 2015 and May 31, 2015.
The Company amended the consolidated financial statements for each fiscal year in the period from the fiscal year
ended March 31, 2010 to the fiscal year ended March 31, 2014 and for each quarter (first three months, first six months and
first nine months) in the period from the fiscal year ended March 31, 2011 to the fiscal year ended March 31, 2015, to
reflect the correction of the events identified in the investigation report of the Independent Investigation Committee
stated above and the internal self-checks and the correction of other issues that had not been corrected due to a
materiality viewpoint.
In line with the amendment, data in the consolidated financial statements were also reclassified for disclosure in
connection with discontinued operations, and ASU No. 2011-05 has been applied retrospectively to disclose consolidated
statement of comprehensive income. Information on discontinued operations is disclosed in Note 4.
2) Overview
Restatement for the accounting treatment under the percentage-of-completion method
As the result of the above investigations, it was found that in certain infrastructure projects in which the percentage-of-
completion method was used, there were cases where the estimated total cost was not calculated based on the latest
information on incurred expenses, where provisions for contract losses were not recorded at the time when generation of
losses became evident, and where the estimated total cost was calculated in anticipation of cost reductions which
remained unsubstantiated.
To correct these accounting treatments, the Company restated data in the consolidated financial statements issued in
the fiscal year ended March 31, 2010 and the following years. The effect of this restatement on net sales and income from
continuing operations, before income taxes and noncontrolling interests, for the fiscal years ended March 31, 2012 and
2011 is as stated in 3) below.
Restatement for the accounting treatment in relation to recording operating expenses in the Visual Products Business
As the result of the above investigations, etc., it was found that in the Visual Products Business, there were cases where
some expenses were not recorded as expenses using the accrual-based method, where profits that should not be realized
were recognized by making use of transactions between consolidated group companies, and where discounts in the
purchase prices were recognized, for example by reflecting adjustment or increase of the procurement prices for the
following periods, even if cost was not actually reduced.
TOSHIBA Annual Report 2012
29
To correct these accounting treatments, the Company restated data in the consolidated financial statements issued in
the fiscal year ended March 31, 2010 and the following years. The effect of this restatement on net sales and income from
continuing operations, before income taxes and noncontrolling interests, for the fiscal years ended March 31, 2012 and
2011 is as stated in 3) below.
Restatement for the accounting treatment in the parts transactions in the PC Business
As the result of the above investigations, it was found that in the PC Business, there were cases where inappropriate
profits were recognized in each fiscal period for parts transactions with manufacturing subcontractors, as well as cases
where some expenses were not recorded as expenses using the accrual-based method and where profits that should not
be realized were recognized by making use of transactions between consolidated group companies.
To correct these accounting treatments, the Company restated data in the consolidated financial statements issued in
the fiscal year ended March 31, 2010 and the following years. The effect of this restatement on income from continuing
operations, before income taxes and noncontrolling interests, for the fiscal years ended March 31, 2012 and 2011 is as
stated in 3) below.
Restatement for the accounting treatment in relation to valuation of inventory in the Semiconductor Business
As the result of the above investigations, it was found that in the Semiconductor Business, there were cases where
valuation losses for work-in-progress inventories and others were not recognized until the time of actual disposal of the
inventories, and where the book values of term-end intermediate products and term-end completed products were
overstated due to the lack of consistency between the front-end and back-end for revision of the standard cost in the
standard cost accounting, and consequently cost of goods sold was understated.
To correct these accounting treatments, the Company restated data in the consolidated financial statements issued in
the fiscal year ended March 31, 2010 and the following years. The effect of this restatement on income from continuing
operations, before income taxes and noncontrolling interests, for the fiscal years ended March 31, 2012 and 2011 is as
stated in 3) below.
Restatement for the account treatment for events identified in self-check and others
The Company restated data in the consolidated financial statements issued in the fiscal year ended March 31, 2010 and
the following years, including events identified in the above self-check and other matters that had not been corrected
from the standpoint of materiality. This restatement includes the correction of the inappropriate accounting treatment
for preparing financial statements for prior years of Toshiba Medical Information Systems Corporation. The effect of this
restatement on net sales and income from continuing operations, before income taxes and noncontrolling interests, for
the fiscal years ended March 31, 2012 and 2011 is as stated in 3) below.
Additional recognition of impairment losses and resulting adjustment to depreciation
Incidental with the above correction of accounting treatments, the Company recognized impairment losses on fixed
assets and made a correction of the recognition timing thereof and the resulting adjustment to depreciation for the
Visual Products Business, PC Business, discrete and system LSIs businesses of the Semiconductor Business. Consequently,
relevant data were restated in the consolidated financial statements issued in the fiscal year ended March 31, 2010 and
the following years. The effect of this restatement on income from continuing operations, before income taxes and
noncontrolling interests, for the fiscal years ended March 31, 2012 and 2011 is as stated in 3) below.
Others
For significant business combinations conducted in prior years, some data in the consolidated financial statements were
retrospectively reclassified due to the completion of allocation of acquisition amounts to assets acquired and liabilities
assumed. The effect on income from continuing operations, before income taxes and noncontrolling interests, for the
fiscal years ended March 31, 2012 and 2011 is as stated in 3) below.
Income taxes
Although the effect of the correction of the above accounting treatments on income taxes for the current fiscal year in
the consolidated tax filing group led by the Company and in subsidiaries is insignificant, the Company made adjustments
to deferred tax assets and liabilities and reviewed valuation allowances due to a change in temporary differences
resulting from the above correction of accounting treatments for prior years. Consequently, relevant data were restated in
the consolidated financial statements issued in the fiscal year ended March 31, 2010 and the following years. The effect of
this restatement on income taxes for the fiscal years ended March 31, 2012 and 2011 is as stated in 3) below.
30 TOSHIBA Annual Report 2012
3) Summary of effects of restatement
(1) Summary of effects on net sales
The following table shows the summary of effects of the restatement on net sales:
Year ended March 31
Net sales, as previously reported
Reclassified as discontinued operations
Adjustments:
Correction of the accounting treatment under the percentage-of-
completion method
Correction of the accounting treatment in relation to recording
operating expenses in the Visual Products Business
Correction of the account treatment for events identified in self-
check and others
Sub total of adjustments
Net sales, as restated
Millions of yen
2012
¥ 6,100,262
(105,915)
¥
2011
6,398,505
(127,821)
Thousands of
U.S. dollars
2012
$ 74,393,439
(1,291,646)
(222)
(286)
5,335
−
(2,707)
(3,488)
2,575
2,067
¥ 5,996,414
(12,029)
(6,694)
6,263,990
¥
31,402
25,207
$ 73,127,000
TOSHIBA Annual Report 2012
31
(2) Summary of effects on income from continuing operations, before income taxes and noncontrolling interests, income
from continuing operations, before noncontrolling interests, income from discontinued operations, before
noncontrolling interests, and net income attributable to shareholders of the Company
The following table shows the summary of effects of the restatement on income from continuing operations, before
income taxes and noncontrolling interests, income from continuing operations, before noncontrolling interests, loss from
discontinued operations, before noncontrolling interests, and net income attributable to shareholders of the Company:
Year ended March 31
Income from continuing operations, before income taxes and
noncontrolling interests, as previously reported
Reclassified as discontinued operations
Adjustments:
Correction of the accounting treatment under the percentage-
of-completion method
Correction of the accounting treatment in relation to recording
operating expenses in the Visual Products Business
Correction of the accounting treatment in the parts
transactions in the PC Business
Correction of the accounting treatment in relation to valuation
of inventory in the Semiconductor Business
Correction of the account treatment for events identified in
self-check and others
Additional recognition of impairment losses and resulting
adjustment to depreciation
Other
Sub total of adjustments
Income from continuing operations, before income taxes and
noncontrolling interests, as restated
Income taxes, as previously reported
Adjustment to income taxes
Income taxes, as restated
Income from continuing operations, before noncontrolling interests,
as restated
Loss from discontinued operations, before noncontrolling interests
(net of tax), as previously reported
Reclassified as discontinued operations
Loss from discontinued operations, before noncontrolling interests
(net of tax), as restated
Net income before noncontrolling interests, after reclassification as
discontinued operations
Less: Net income attributable to noncontrolling interests, as
previously reported
Adjustment to: less: net income attributable to noncontrolling
interests
Less: Net income attributable to noncontrolling interests, as restated
Net income (loss) attributable to shareholders of the Company, as
Millions of yen
2012
2011
Thousands of
U.S. dollars
2012
¥
152,405
¥
195,549
$ 1,858,598
(134)
(827)
(1,634)
(7,892)
12,717
(22,258)
(10,294)
(7,332)
(48,959)
(6,826)
(90,844)
61,427
64,964
(16,524)
48,440
12,987
(1,295)
134
(1,161)
11,826
12,441
(3,809)
8,632
7,065
(6,533)
11,320
(1,554)
(3,553)
318
−
7,063
201,785
40,720
(12,776)
27,944
173,841
(8,183)
827
(7,356)
166,485
8,801
(642)
8,159
(96,244)
155,085
(271,438)
(125,537)
(89,415)
(597,061)
(83,244)
(1,107,854)
749,110
792,244
(201,512)
590,732
158,378
(15,793)
1,635
(14,158)
144,220
151,720
(46,451)
105,269
restated
¥
3,194
¥
158,326
$
38,951
32 TOSHIBA Annual Report 2012
(3) Adjustments to the opening balance of each equity item
The following table shows the summary of adjustments made to the balance of each equity item at the beginning of the
fiscal year ended March 31, 2011 as cumulative effects in the fiscal year ended March 31, 2010 and the prior periods. No
adjustment is made to common stock and treasury stock, at cost.
March 31, 2010, as previously reported
¥
447,733
¥
375,376
¥
(464,250)
¥
330,167
Additional paid-in capital
Retained earnings
Accumulated other
comprehensive income (loss)
Equity attributable to
non-controlling interests
Millions of yen
Adjustments:
Correction of the accounting treatment
under the percentage-of-completion
method
Correction of the accounting treatment
in relation to recording operating
expenses in the Visual Products Business
Correction of the accounting treatment
in the parts transactions in the PC
Business
Correction of the accounting treatment
in relation to valuation of inventory in
the Semiconductor Business
Correction of the account treatment for
events identified in self-check and others
Additional recognition of impairment
losses and resulting adjustment to
depreciation
Adjustment to income taxes
Adjustment to noncontrolling interests
Sub total of adjustments
March 31, 2010, as restated
−
−
−
−
(1)
−
−
−
(1)
447,732
¥
¥
(7,080)
(13,100)
(48,357)
(4,356)
(13,442)
(38,763)
27,024
1,544
(96,530)
278,846
−
−
−
−
−
−
−
−
5,006
312
−
−
−
5,006
(459,244)
¥
−
−
(1,544)
(1,232)
328,935
¥
TOSHIBA Annual Report 2012
33
(4) Summary of effects on consolidated balance sheet
The following table shows the summary of effects of the restatement above on the consolidated balance sheet.
March 31, 2012
Assets
Current assets
Cash and cash equivalents
Notes and accounts receivable, trade:
Inventories
Deferred tax assets
Other receivables
Prepaid expenses and other current assets
Total current assets
Long-term receivables and investments
Long-term receivables
Investments in and advances to affiliates
Marketable securities and other investments
Total long-term receivables and investments
Property, plant and equipment
Land
Buildings
Machinery and equipment
Construction in progress
Accumulated depreciation
Total property, plant and equipment
Other assets
Goodwill and other intangible assets
Deferred tax assets
Other assets
Total other assets
Total assets
Amount as
previously reported
Adjustment
Amount as restated
Millions of yen
¥
214,305
1,307,634
884,264
146,825
202,649
245,740
3,001,417
49,164
414,716
237,519
701,399
100,029
940,935
2,132,059
79,006
3,252,029
(2,400,664)
851,365
711,665
376,817
88,583
1,177,065
¥ 5,731,246
¥
¥
−
(10,772)
(29,967)
29,219
(1,411)
6,578
(6,353)
−
(1,210)
−
(1,210)
(5,282)
(34,316)
(38,076)
(11,770)
(89,444)
19,749
(69,695)
(2,058)
25,216
(4,082)
19,076
(58,182)
¥
214,305
1,296,862
854,297
176,044
201,238
252,318
2,995,064
49,164
413,506
237,519
700,189
94,747
906,619
2,093,983
67,236
3,162,585
(2,380,915)
781,670
709,607
402,033
84,501
1,196,141
¥ 5,673,064
34 TOSHIBA Annual Report 2012
March 31, 2012
Liabilities
Current liabilities
Short-term borrowings
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
Total current liabilities
Long-term liabilities
Long-term debt
Accrued pension and severance costs
Other liabilities
Total long-term liabilities
Total liabilities
Equity
Equity attributable to shareholders of Toshiba Corporation
Common stock:
Authorized:
Issued:
10,000,000,000 shares
4,237,602,026 shares
Additional paid-in capital
Retained earnings
Accumulated other comprehensive loss
Treasury stock, at cost
Total equity attributable to shareholders of Toshiba Corporation
2,636,058 shares
Equity attributable to noncontrolling interests
Total equity
Commitments and contingent liabilities
Total liabilities and equity
Amount as
previously reported
Adjustment
Amount as restated
Millions of yen
¥
119,515
206,626
1,293,028
394,707
46,536
271,874
326,974
2,659,260
909,620
778,580
147,264
1,835,464
4,494,724
439,901
401,125
595,583
(567,843)
(1,498)
867,268
369,254
1,236,522
¥
−
−
(2,126)
2,742
−
(5)
78,564
79,175
−
834
14,473
15,307
94,482
−
(4,336)
(146,560)
2,292
−
(148,604)
(4,060)
(152,664)
¥
119,515
206,626
1,290,902
397,449
46,536
271,869
405,538
2,738,435
909,620
779,414
161,737
1,850,771
4,589,206
439,901
396,789
449,023
(565,551)
(1,498)
718,664
365,194
1,083,858
¥ 5,731,246
¥
(58,182)
¥ 5,673,064
TOSHIBA Annual Report 2012
35
March 31, 2011
Assets
Current assets
Cash and cash equivalents
Notes and accounts receivable, trade:
Inventories
Deferred tax assets
Other receivables
Prepaid expenses and other current assets
Total current assets
Long-term receivables and investments
Long-term receivables
Investments in and advances to affiliates
Marketable securities and other investments
Total long-term receivables and investments
Property, plant and equipment
Land
Buildings
Machinery and equipment
Construction in progress
Accumulated depreciation
Total property, plant and equipment
Other assets
Goodwill and other intangible assets
Deferred tax assets
Other assets
Total other assets
Total assets
Amount as
previously reported
Adjustment
Amount as restated
Millions of yen
¥
258,840
1,124,180
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
5,379,319
¥
¥
¥
−
(11,844)
(13,117)
29,025
(1,545)
(1,050)
1,469
−
−
−
−
(2,306)
(16,614)
(16,346)
(1,052)
(36,318)
11,087
(25,231)
(11,634)
8,423
(1,003)
(4,214)
(27,976)
¥
258,840
1,112,336
851,265
190,222
187,483
200,991
2,801,137
2,540
416,431
241,409
660,380
97,528
979,795
2,314,219
112,080
3,503,622
(2,628,648)
874,974
547,612
365,015
102,225
1,014,852
5,351,343
¥
36 TOSHIBA Annual Report 2012
March 31, 2011
Liabilities
Current liabilities
Short-term borrowings
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
Total current liabilities
Long-term liabilities
Long-term debt
Accrued pension and severance costs
Other liabilities
Total long-term liabilities
Total liabilities
Equity
Equity attributable to shareholders of Toshiba Corporation
Common stock:
Authorized:
Issued:
10,000,000,000 shares
4,237,602,026 shares
Additional paid-in capital
Retained earnings
Accumulated other comprehensive loss
Treasury stock, at cost
Total equity attributable to shareholders of Toshiba Corporation
2,519,870 shares
Equity attributable to noncontrolling interests
Total equity
Commitments and contingent liabilities
Total liabilities and equity
Amount as
previously reported
Adjustment
Amount as restated
Millions of yen
¥
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
4,199,703
439,901
399,552
551,523
(521,396)
(1,461)
868,119
311,497
1,179,616
¥
2,500
−
(6,027)
5,829
(1,959)
2
48,443
48,788
−
−
(372)
(372)
48,416
−
(1)
(76,049)
1,791
−
(74,259)
(2,133)
(76,392)
¥
154,848
159,414
1,188,202
386,189
36,238
271,068
351,138
2,547,097
769,544
734,309
197,169
1,701,022
4,248,119
439,901
399,551
475,474
(519,605)
(1,461)
793,860
309,364
1,103,224
¥
5,379,319
¥
(27,976)
¥
5,351,343
TOSHIBA Annual Report 2012
37
March 31, 2012
Assets
Current assets
Cash and cash equivalents
Notes and accounts receivable, trade:
Inventories
Deferred tax assets
Other receivables
Prepaid expenses and other current assets
Total current assets
Long-term receivables and investments
Long-term receivables
Investments in and advances to affiliates
Marketable securities and other investments
Total long-term receivables and investments
Property, plant and equipment
Land
Buildings
Machinery and equipment
Construction in progress
Accumulated depreciation
Total property, plant and equipment
Other assets
Goodwill and other intangible assets
Deferred tax assets
Other assets
Total other assets
Total assets
Thousands of U.S. dollars
Amount as
previously reported
Adjustment
Amount as restated
$ 2,613,476
15,946,756
10,783,707
1,790,549
2,471,329
2,996,829
36,602,646
599,561
5,057,513
2,896,573
8,553,647
1,219,866
11,474,817
26,000,719
963,488
39,658,890
(29,276,390)
10,382,500
8,678,841
4,595,329
1,080,281
14,354,451
$ 69,893,244
$
−
(131,366)
(365,451)
356,329
(17,207)
80,220
(77,475)
−
(14,757)
−
(14,757)
(64,415)
(418,487)
(464,341)
(143,537)
(1,090,780)
240,841
(849,939)
(25,097)
307,512
(49,781)
232,634
(709,537)
$
$ 2,613,476
15,815,390
10,418,256
2,146,878
2,454,122
3,077,049
36,525,171
599,561
5,042,756
2,896,573
8,538,890
1,155,451
11,056,330
25,536,378
819,951
38,568,110
(29,035,549)
9,532,561
8,653,744
4,902,841
1,030,500
14,587,085
$ 69,183,707
38 TOSHIBA Annual Report 2012
March 31, 2012
Liabilities
Current liabilities
Short-term borrowings
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
Total current liabilities
Long-term liabilities
Long-term debt
Accrued pension and severance costs
Other liabilities
Total long-term liabilities
Total liabilities
Equity
Equity attributable to shareholders of Toshiba Corporation
Common stock:
Authorized:
Issued:
10,000,000,000 shares
4,237,602,026 shares
Additional paid-in capital
Retained earnings
Accumulated other comprehensive loss
Treasury stock, at cost
Total equity attributable to shareholders of Toshiba Corporation
2,636,058 shares
Equity attributable to noncontrolling interests
Total equity
Commitments and contingent liabilities
Total liabilities and equity
Thousands of U.S. dollars
Amount as
previously reported
Adjustment
Amount as restated
$ 1,457,500
2,519,829
15,768,634
4,813,500
567,512
3,315,537
3,987,488
32,430,000
11,092,927
9,494,878
1,795,902
22,383,707
54,813,707
5,364,647
4,891,768
7,263,207
(6,924,915)
(18,268)
10,576,439
4,503,098
15,079,537
$
−
−
(25,926)
33,439
−
(61)
958,097
965,549
−
10,171
176,500
186,671
1,152,220
(1)
(52,878)
(1,787,317)
27,952
−
(1,812,244)
(49,513)
(1,861,757)
$ 1,457,500
2,519,829
15,742,708
4,846,939
567,512
3,315,476
4,945,585
33,395,549
11,092,927
9,505,049
1,972,402
22,570,378
55,965,927
5,364,646
4,838,890
5,475,890
(6,896,963)
(18,268)
8,764,195
4,453,585
13,217,780
$ 69,893,244
$
(709,537)
$ 69,183,707
TOSHIBA Annual Report 2012
39
(5) Summary of effects on consolidated statement of income
The following table shows the summary of effects of the restatement above on the consolidated statement of income.
March 31, 2012
Sales and other income
Costs and expenses
Income from continuing operations, before
income taxes and noncontrolling interests
Income taxes
Income from continuing operations, before
noncontrolling interests
Loss from discontinued operations, before
noncontrolling interests
Net income before noncontrolling interests
Less: Net income attributable to
noncontrolling interests
Net income attributable to shareholders of
Toshiba Corporation
Per share information (Yen)
Basic net earnings (loss) per share
attributable to shareholders of Toshiba
Corporation
Earnings from continuing operations
Loss from discontinued operations
Net earnings
Diluted net earnings (loss) per share
attributable to shareholders of Toshiba
Corporation
Earnings from continuing operations
Loss from discontinued operations
Net earnings
Millions of yen
Amount as
previously reported
¥ 6,204,725
6,052,320
Reclassified as
discontinued operations
(106,415)
(106,281)
¥
Adjustment
Amount as restated
¥
4,331
95,175
¥ 6,102,641
6,041,214
152,405
64,964
87,441
(1,295)
86,146
12,441
73,705
17.70
(0.30)
17.40
17.47
(0.30)
17.17
(134)
−
(134)
134
−
−
−
(90,844)
(16,524)
(74,320)
−
(74,320)
(3,809)
(70,511)
61,427
48,440
12,987
(1,161)
11,826
8,632
3,194
1.13
(0.37)
0.75
1.11
(0.37)
0.74
40 TOSHIBA Annual Report 2012
March 31, 2011
Sales and other income
Costs and expenses
Income from continuing operations, before
income taxes and noncontrolling interests
Income taxes
Income from continuing operations, before
noncontrolling interests
Loss from discontinued operations, before
noncontrolling interests
Net income before noncontrolling interests
Less: Net income attributable to
noncontrolling interests
Net income attributable to shareholders of
Toshiba Corporation
Per share information (Yen)
Basic net earnings (loss) per share
attributable to shareholders of Toshiba
Corporation
Earnings from continuing operations
Loss from discontinued operations
Net earnings
Diluted net earnings (loss) per share
attributable to shareholders of Toshiba
Corporation
Earnings from continuing operations
Loss from discontinued operations
Net earnings
Millions of yen
Amount as
previously reported
6,493,498
¥
6,297,949
Reclassified as
discontinued operations
(128,386)
(127,559)
¥
¥
(827)
−
(827)
827
−
−
−
195,549
40,720
154,829
(8,183)
146,646
8,801
137,845
34.47
(1.92)
32.55
33.10
(1.92)
31.25
Adjustment
Amount as restated
(6,550)
(13,613)
7,063
(12,776)
19,839
−
19,839
(642)
20,481
¥
6,358,562
6,156,777
201,785
27,944
173,841
(7,356)
166,485
8,159
158,326
39.24
(1.86)
37.38
37.68
(1.86)
35.90
TOSHIBA Annual Report 2012
41
March 31, 2012
Sales and other income
Costs and expenses
Income from continuing operations, before
income taxes and noncontrolling interests
Income taxes
Income from continuing operations, before
noncontrolling interests
Loss from discontinued operations, before
noncontrolling interests
Net income before noncontrolling interests
Less: Net income attributable to
noncontrolling interests
Net income attributable to shareholders of
Toshiba Corporation
Per share information (U.S. dollar)
Basic net earnings (loss) per share
attributable to shareholders of Toshiba
Corporation
Earnings from continuing operations
Loss from discontinued operations
Net earnings
Diluted net earnings (loss) per share
attributable to shareholders of Toshiba
Corporation
Earnings from continuing operations
Loss from discontinued operations
Net earnings
Thousands of U.S. dollars
Amount as
previously reported
$ 75,667,377
73,808,779
Reclassified as
discontinued operations
$ (1,297,744)
(1,296,109)
Adjustment
Amount as restated
$
52,818
1,160,671
$ 74,422,451
73,673,341
1,858,598
792,244
1,066,354
(15,793)
1,050,561
151,720
898,841
0.22
(0.01)
0.21
0.21
(0.00)
0.21
(1,635)
−
(1,635)
1,635
−
−
−
(1,107,853)
(201,512)
(906,341)
−
(906,341)
(46,451)
(859,890)
749,110
590,732
158,378
(14,158)
144,220
105,269
38,951
0.01
(0.00)
0.01
0.01
(0.00)
0.01
42 TOSHIBA Annual Report 2012
(6) Summary of effects on consolidated statement of cash flows
The following table shows the summary of effects of the restatement above on the consolidated statement of cash flows.
Amount as
previously reported
Millions of yen
Adjustment
Amount as restated
¥ 86,146
¥ (74,320)
¥ 11,826
Year ended March 31, 2012
Cash flows from operating activities
Net income before noncontrolling interests
Adjustments to reconcile net income 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 affiliates, net of dividends
(Gain) loss from sales, disposal and impairment of
246,970
5,301
18,095
(13,926)
property, plant and equipment and intangible assets, net
(2,372)
(Gain) loss from sales and impairment of securities and
other investments, 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
2,322
(194,430)
(20,917)
120,594
4,391
104,893
(22,070)
248,851
334,997
Year ended March 31, 2012
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
Acquisition of Landis+Gyr AG
Other
Net cash provided by (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) financing activities
Effect of exchange rate changes on cash and cash equivalents
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year
Amount as
previously reported
¥ 103,818
9,638
(291,733)
(39,426)
(18,435)
15,444
(129,450)
(27,083)
(377,227)
370,911
(206,325)
(128,267)
(37,007)
(42)
490
(240)
(2,065)
(44,535)
258,840
214,305
(4,057)
−
(18,267)
−
57,946
−
(1,072)
18,512
3,901
1,959
(7)
17,905
242,913
5,301
(172)
(13,926)
55,574
2,322
(195,502)
(2,405)
124,495
6,350
104,886
(4,165)
76,820
2,500
325,671
337,497
Millions of yen
Adjustment
¥
−
−
−
−
−
−
−
−
−
−
−
(2,500)
−
−
−
(2,500)
−
−
−
−
Amount as restated
¥ 103,818
9,638
(291,733)
(39,426)
(18,435)
15,444
(129,450)
(27,083)
(377,227)
370,911
(206,325)
(130,767)
(37,007)
(42)
490
(2,740)
(2,065)
(44,535)
258,840
214,305
TOSHIBA Annual Report 2012
43
Year ended March 31, 2011
Cash flows from operating activities
Net income before noncontrolling interests
Adjustments to reconcile net income before
noncontrolling interests to net cash provided by
operating activities
Amount as
previously reported
Millions of yen
Adjustment
Amount as restated
¥ 146,646
¥
19,839
¥ 166,485
Depreciation and amortization
Provisions for pension and severance costs, less payments
Deferred income taxes
Equity in (earnings) losses of affiliates, net of dividends
(Gain) loss from sales, disposal and impairment of
259,604
8,611
(22,771)
(6,406)
property, plant and equipment and intangible assets, net
276
(Gain) loss from sales and impairment of securities and
other investments, 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
3,594
96
(100,945)
59,176
(3,204)
(22,363)
51,770
227,438
374,084
(9,192)
−
(10,817)
−
8,742
−
5,520
8,810
(8,335)
(1,959)
2
(15,110)
(22,339)
(2,500)
250,412
8,611
(33,588)
(6,406)
9,018
3,594
5,616
(92,135)
50,841
(5,163)
(22,361)
36,660
205,099
371,584
Year ended March 31, 2011
Cash flows from investing activities
Amount as
previously reported
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 provided by (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) financing activities
Effect of exchange rate changes on cash and cash equivalents
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year
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
Millions of yen
Adjustment
¥
Amount as restated
¥
58,391
5,427
(229,229)
(30,851)
(6,201)
(38,424)
26,187
(214,700)
159,807
(406,846)
112,395
(17,601)
(159)
188
(152,216)
(13,277)
(8,609)
267,449
258,840
−
−
−
−
−
−
−
−
−
−
2,500
−
−
−
2,500
−
−
−
−
44 TOSHIBA Annual Report 2012
Amount as
previously reported
Adjustment
Amount as restated
Thousands of U.S. dollars
$ 1,050,561
$ (906,341)
$ 144,220
Year ended March 31, 2012
Cash flows from operating activities
Net income before noncontrolling interests
Adjustments to reconcile net income 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 affiliates, net of dividends
(Gain) loss from sales, disposal and impairment of
3,011,829
64,646
220,671
(169,829)
property, plant and equipment and intangible assets, net
(28,927)
(Gain) loss from sales and impairment of securities and
other investments, net
28,317
(Increase) decrease in notes and accounts receivable, trade (2,371,098)
(Increase) decrease in inventories
(255,085)
(Increase) decrease in notes and accounts payable, trade
1,470,658
Increase (decrease) in accrued income and other taxes
53,549
Increase (decrease) in advance payments received
1,279,183
Other
(269,146) 3,034,768
4,085,329
Net cash provided by (used in) operating activities
(49,475)
−
(222,768)
−
706,659
−
(13,073)
225,756
47,574
23,890
(85)
218,351
2,962,354
64,646
(2,097)
(169,829)
677,732
28,317
(2,384,171)
(29,329)
1,518,232
77,439
1,279,098
936,829
30,488
(50,795) 3,971,597
4,115,817
TOSHIBA Annual Report 2012
45
Year ended March 31, 2012
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
Acquisition of Landis+Gyr AG
Other
Net cash provided by (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 used in financing activities
Effect of exchange rate changes on cash and cash equivalents
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year
Amount as
previously reported
Adjustment
Amount as restated
Thousands of U.S. dollars
$ 1,266,073
117,537
(3,557,720)
(480,805)
(224,817)
188,342
(1,578,659)
(330,280)
(4,600,329)
4,523,305
(2,516,159)
(1,564,232)
(451,305)
(512)
5,976
(2,927)
(25,182)
(543,109)
3,156,585
2,613,476
$
−
−
−
−
−
−
−
−
−
−
(30,488)
−
−
−
(30,488)
−
−
−
−
$ 1,266,073
117,537
(3,557,720)
(480,805)
(224,817)
188,342
(1,578,659)
(330,280)
(4,600,329)
4,523,305
(2,516,159)
(1,594,720)
(451,305)
(512)
5,976
(33,415)
(25,182)
(543,109)
3,156,585
2,613,476
46 TOSHIBA Annual Report 2012
Notes to Consolidated Financial Statements
Toshiba Corporation and Subsidiaries
March 31, 2012
Restated text is underlined except for Restatement of previously issued consolidated financial statements.
1. DESCRIPTION OF BUSINESS
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, 2012, sales of
Social Infrastructure represented the most significant portion of the Group's total sales or approximately 37 percent.
Digital Products, second to Social Infrastructure, represented approximately 26 percent, Electronic Devices approximately
23 percent and Home Appliances approximately 9 percent of the Group's total sales. For the year ended March 31, 2011,
sales of Social Infrastructure represented the most significant portion of the Group's total sales or approximately 34
percent. Digital Products represented approximately 28 percent, Electronic Devices approximately 24 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 46 percent of its sales in Japan both for the years ended March 31, 2012 and
2011, 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.
BASIS OF CONSOLIDATION AND INVESTMENTS IN AFFILIATES
The consolidated financial statements 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 the Accounting Standards
Codification (“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, goodwill and investments, 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 statement of income.
TOSHIBA Annual Report 2012
47
Notes to Consolidated Financial Statements
Toshiba Corporation and Subsidiaries
March 31, 2012
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.
48 TOSHIBA Annual Report 2012
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 statement of income. Deferred income taxes are recorded to
reflect the expected future tax consequences of temporary differences between the tax basis of assets and liabilities and
their reported amounts in the financial statements, and are measured by applying currently enacted tax laws.The effect
on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that the change is
enacted.Valuation allowances are recorded to reduce deferred tax assets when it is more likely than not that a tax benefit
will not be realized.
The 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”) are 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 selling price 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. The Company
adopted Accounting Standards Updates ("ASU") No.2009-13 effective April 1, 2011, which amends ASC No.605. The
adoption of ASU No.2009-13 does not have a material impact on the Company's financial position and results of
operations.
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. The Company adopted ASU No.2009-14 effective April 1, 2011, which amends
ASC No.985 “Software”. The adoption of ASU No.2009-14 does not have a material impact on the Company's financial
position and results of operations.
TOSHIBA Annual Report 2012
49
Notes to Consolidated Financial Statements
Toshiba Corporation and Subsidiaries
March 31, 2012
SHIPPING AND HANDLING COSTS
The Group includes shipping and handling costs which totaled ¥73,459 million ($895,841 thousand) and ¥79,866 million
for the years ended March 31, 2012 and 2011, 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 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 sheet.
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 June 2011, the Financial Accounting Standards Board (“FASB”) issued ASU No.2011-05. ASU No.2011-05 amends ASC
No.220 “Comprehensive Income”, and eliminates the option to present the other comprehensive income as part of the
statement of changes in stakeholder's equity. Therefore, the Company is required to report comprehensive income in
either a single continuous statement or two separate but consecutive statements. ASU No.2011-05 is effective for fiscal
years beginning after December 15, 2011 and the Company will adopt ASU No.2011-05 effective April 1, 2012. The
Company is currently examining both presentations mentioned above. The adoption of ASU No.2011-05 will not impact
the Company's financial position and results of operations.
In September 2011, the FASB issued ASU No.2011-08. ASU No.2011-08 amends ASC No.350 “Intangibles-Goodwill and
other” (“ASC No.350”) and provides entities an option to perform a qualitative assessment to determine whether it is
necessary to perform the two-step goodwill impairment test. ASU No.2011-08 is effective for fiscal years beginning after
December 15, 2011. The Company is currently evaluating the impact of adoption of ASU No.2011-08 on the Company's
consolidated financial statements.
The information provided is about the status as of the submission date of the original annual securities report in June
2012 before correction for restatement in September, 2015.
SUBSEQUENT EVENTS
The Group has evaluated subsequent events up to the submission dates of the annual securities report before
restatement (June 22, 2012), and revised financial statements (September 7, 2015) in accordance with ASC 855 “Subsequent
Events”.
RECLASSIFICATIONS
In addition to the restatements previously described, 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.
50 TOSHIBA Annual Report 2012
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 ¥82=U.S.$1, the approximate current rate of exchange
at March 31, 2012, 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
shares of the new company to Fujitsu. On April 1, 2012, the Company sold 19.9% of the shares of the new company to
Fujitsu. All shares of the company have been transferred by this transaction.
In accordance with this contract, the Company ceased manufacturing and selling of the existing models of mobile phones
during the second quarter of FY2011. However, the Company continues the maintenance service of products
manufactured and supplied.
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 statement 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
¥
2012
21,636
23,955
¥
2011
84,167
98,004
(2,319)
(944)
(1,375)
−
(13,837)
(5,631)
(8,206)
−
Thousands of
U.S. dollars
2012
263,854
292,134
$
(28,280)
(11,512)
(16,768)
−
(1,375)
(8,206)
(16,768)
TOSHIBA Annual Report 2012
51
Notes to Consolidated Financial Statements
Toshiba Corporation and Subsidiaries
March 31, 2012
On March 26, 2014, the Company entered into definitive agreements with Samsung Electronics Co., Ltd. (“Samsung
Electronics”) and OPTIS Co., Ltd. ("OPTIS") for the transfer of its optical disc drive ("ODD") business as part of the
Company's restructuring of the ODD business in response to the changing market environment.
Under the terms of the agreements, Toshiba Samsung Storage Technology Corporation ("TSST"), which is the Company
and Samsung Electronics' Japan-based joint holding company for the ODD business, will transfer Toshiba Samsung
Storage Technology Korea Corporation ("TSST-K"), which is TSST's wholly-owned operating subsidiary, to OPTIS in stages
over three years. As the first step in the transfer process, OPTIS subscribed to a new issue of TSST-K’s shares on April 29,
2014, which diluted TSST’s shareholding in TSST-K to 50.1%.
In accordance with ASC No.205-20, operating results relating to the ODD business are separately presented as
discontinued operations in the consolidated statement of income.
Operating results relating to the ODD business, which are reclassified as discontinued operations, are as follows.
Year ended March 31
Sales and other income
Costs and expenses
Income from discontinued operations,
before income taxes and noncontrolling interests
Income taxes
Income from discontinued operations,
before noncontrolling interests
Less:Net income from discontinued operations
attributable to noncontrolling interests
Net income (loss) from discontinued operations
attributable to shareholders of the Company
Millions of yen
¥
2012
106,415
106,281
¥
2011
128,386
127,559
Thousands of
U.S. dollars
2012
$ 1,297,744
1,296,109
134
0
134
457
(323)
827
0
827
558
269
1,635
0
1,635
5,574
(3,939)
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 statement of income are separately presented as
discontinued operations. These amounts were not significant.
52 TOSHIBA Annual Report 2012
5. FAIR VALUE MEASUREMENTS
ASC No.820 “Fair Value Measurements” 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, 2012 and 2011 are as follows:
March 31, 2012
Assets:
Marketable securities:
Equity securities
Debt securities
Derivative assets:
Forward exchange contracts
Total assets
Liabilities:
Derivative liabilities:
Forward exchange contracts
Interest rate swap agreements
Currency swap agreements
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
¥
¥
¥
¥
174,388
−
−
174,388
−
−
−
−
¥
¥
¥
¥
428
−
4,609
5,037
5,908
1,663
465
8,036
¥
¥
¥
¥
−
3,067
−
3,067
−
−
−
−
¥
¥
¥
¥
174,816
3,067
4,609
182,492
5,908
1,663
465
8,036
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
¥
¥
¥
TOSHIBA Annual Report 2012
53
Notes to Consolidated Financial Statements
Toshiba Corporation and Subsidiaries
March 31, 2012
March 31, 2012
Assets:
Marketable securities:
Equity securities
Debt securities
Derivative assets:
Forward exchange contracts
Total assets
Liabilities:
Derivative liabilities:
Forward exchange contracts
Interest rate swap agreements
Currency swap agreements
Total liabilities
Level 1
Level 2
Level 3
Total
Thousands of U.S. dollars
$ 2,126,683
−
−
$ 2,126,683
$
$
−
−
−
−
$
$
$
$
5,220
−
56,207
61,427
72,049
20,280
5,671
98,000
$
$
$
$
−
37,402
−
37,402
−
−
−
−
$ 2,131,903
37,402
56,207
$ 2,225,512
$
$
72,049
20,280
5,671
98,000
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.
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.
Analyses of the changes in Level 3 assets measured at fair value on a recurring basis for the years ended March 31, 2012
and 2011 are as follows:
Millions of yen
Marketable securities
5
¥
(143)
3,205
−
−
−
3,067
Year ended March 31, 2012
Balance at beginning of year
Total gains or losses (realized or unrealized):
Included in other comprehensive income (loss):
Net unrealized gains and losses on securities
Purchases
Sales
Issuances
Settlements
Balance at end of year
¥
54 TOSHIBA Annual Report 2012
Year ended March 31, 2011
Balance at beginning of year
Total gains or losses (realized or unrealized):
Marketable securities
¥
2,393
Included in gains (losses):
Other expense
Purchases
Sales
Issuances
Settlements
Balance at end of year
¥
(461)
−
−
−
(1,927)
5
Millions of yen
Subordinated
retained interests
5,942
¥
−
−
−
−
(5,942)
−
¥
Total
¥
8,335
(461)
−
−
−
(7,869)
5
¥
Year ended March 31, 2012
Balance at beginning of year
Total gains or losses (realized or unrealized):
Included in other comprehensive income (loss):
Net unrealized gains and losses on securities
Purchases
Sales
Issuances
Settlements
Balance at end of year
$
Thousands of U.S. dollars
Marketable securities
$
61
(1,744)
39,085
−
−
−
37,402
At March 31, 2012, Level 3 assets measured at fair value on a recurring basis consisted of corporate debt securities. At
March 31, 2011, Level 3 assets measured at fair value on a recurring basis consisted of corporate debt securities and
subordinated retained interests.
TOSHIBA Annual Report 2012
55
Notes to Consolidated Financial Statements
Toshiba Corporation and Subsidiaries
March 31, 2012
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, 2012 and 2011 are as follows:
March 31, 2012
Assets:
Investments in affiliates
Long-lived assets held for use
Total assets
March 31, 2011
Assets:
Equity securities
Investments in affiliates
Long-lived assets held for use
Total assets
March 31, 2012
Assets:
Investments in affiliates
Long-lived assets held for use
Total assets
Level 1
Level 2
Level 3
Total
Millions of yen
¥
¥
¥
¥
$
$
3,723
−
3,723
Level 1
−
−
−
−
Level 1
45,402
−
45,402
¥
¥
¥
¥
$
$
−
−
−
¥
¥
5,872
0
5,872
Millions of yen
Level 2
Level 3
−
−
−
−
¥
¥
85
9,379
0
9,464
Thousands of U.S. dollars
Level 2
Level 3
−
−
−
$
$
71,610
0
71,610
¥
¥
¥
¥
$
$
9,595
0
9,595
Total
85
9,379
0
9,464
Total
117,012
0
117,012
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.
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 from continuing operations for the years ended March 31, 2012 and 2011 were ¥65,564
million ($799,561 thousand) loss and ¥26,359 million loss, respectively.
56 TOSHIBA Annual Report 2012
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, 2012 and 2011 are as follows:
March 31, 2012:
Equity securities
Debt securities
March 31, 2011:
Equity securities
Debt securities
March 31, 2012:
Equity securities
Debt securities
Cost
Gross unrealized
holding gains
Gross unrealized
holding losses
Fair value
Millions of yen
76,682
3,210
79,892
91,790
5
91,795
¥
¥
¥
¥
99,957
0
99,957
113,388
0
113,388
¥
¥
¥
¥
1,823
143
1,966
3,367
0
3,367
¥
¥
¥
¥
174,816
3,067
177,883
201,811
5
201,816
Cost
Gross unrealized
holding gains
Gross unrealized
holding losses
Fair value
Thousands of U.S. dollars
935,147
39,146
974,293
$ 1,218,988
0
$ 1,218,988
$
$
22,232
1,744
23,976
$ 2,131,903
37,402
$ 2,169,305
¥
¥
¥
¥
$
$
At March 31, 2012 and 2011, debt securities mainly consist of corporate debt securities.
Contractual maturities of debt securities classified as available-for-sale at March 31, 2012 are as follows:
March 31, 2012:
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
3,210
3,210
¥
¥
0
3,067
3,067
$
$
0
39,146
39,146
$
$
0
37,402
37,402
The proceeds from sales of available-for-sale securities for the years ended March 31, 2012 and 2011 were ¥9,297 million
($113,378 thousand) and ¥4,751 million, respectively. The gross realized gains on those sales for the years ended March 31,
2012 and 2011 were ¥3,425 million ($41,768 thousand) and ¥1,810 million, respectively. The gross realized losses on those
sales for the years ended March 31, 2012 and 2011 were ¥132 million ($1,610 thousand) and ¥19 million, respectively.
At March 31, 2012, 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 ¥52,780 million
($643,659 thousand) and ¥39,323 million at March 31, 2012 and 2011, respectively. At March 31, 2012 and 2011, investments
with an aggregate cost of ¥49,550 million ($604,268 thousand) and ¥39,237 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
values of those 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 ¥7,411 million ($90,378 thousand) and ¥6,505 million related to other-than-
temporary impairments in the marketable and non-marketable equity securities for the years ended March 31, 2012 and
2011, respectively.
TOSHIBA Annual Report 2012
57
Notes to Consolidated Financial Statements
Toshiba Corporation and Subsidiaries
March 31, 2012
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.
The Group recognized losses of ¥1,120 million ($13,659 thousand) and ¥1,530 million on the transfers of receivables for
the years ended March 31, 2012 and 2011, respectively.
Subsequent to transfers, the Group retains collection and administrative responsibilities for the receivables and
deferred proceeds from sale. 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 fair value of deferred proceeds from sale
at the time of transfer is determined based on the estimate of uncollectible receivables, average collection period of
receivables and discount rate and classified into level 3.
The table below summarizes certain cash flows received from and paid to banks or bank-related special purpose
entities ("SPEs") on the above securitization transactions.
Year ended March 31
Proceeds from new securitizations
Servicing fees received
Purchases of delinquent and foreclosed receivables
¥
2012
886,567
554
161
¥
2011
783,088
504
318
Millions of yen
Thousands of
U.S. dollars
2012
$ 10,811,793
6,756
1,963
Quantitative information about delinquencies, net credit losses, and components of securitized receivables as of and for
the years ended March 31, 2012 and 2011 are as follows. Of these receivables, deferred proceeds from sale as of March 31,
2012 and 2011 were ¥55,915 million ($681,890 thousand) and ¥62,410 million, respectively, and these proceeds were
recorded as other receivables.
Total principal amount
of receivables
March 31
Millions of yen
Amount 90 days
or more past due
Net credit losses
Year ended March 31
Accounts receivable
Notes receivable
Total managed portfolio
Securitized receivables
Total receivables
2012
¥ 1,536,550
92,134
1,628,684
(262,993)
¥ 1,365,691
2011
1,280,694
98,482
1,379,176
(247,221)
1,131,955
¥
¥
2012
44,839
13
44,852
¥
¥
2011
30,975
19
30,994
¥
¥
2012
2011
¥
¥
2,013
189
2,202
¥
¥
2,226
348
2,574
Accounts receivable
Notes receivable
Total managed portfolio
Securitized receivables
Total receivables
Thousands of U.S. dollars
Amount 90 days
or more past due
March 31, 2012
$
$
546,817
159
546,976
Total principal amount
of receivables
$ 18,738,415
1,123,585
19,862,000
(3,207,232)
$ 16,654,768
Net credit losses
Year ended March 31, 2012
$
$
24,549
2,305
26,854
58 TOSHIBA Annual Report 2012
8. INVENTORIES
Inventories at March 31, 2012 and 2011 consist of the following:
March 31
Finished products
Work in process:
Long-term contracts
Other
Raw materials
Millions of yen
2012
288,716
¥
95,822
299,001
170,758
854,297
¥
2011
331,824
92,283
265,159
161,999
851,265
¥
¥
Thousands of
U.S. dollars
2012
$ 3,520,927
1,168,561
3,646,354
2,082,414
$ 10,418,256
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, 2012 were: NREG Toshiba Building Co., Ltd(35.0%);
Topcon Corporation (35.5%); Toshiba Machine Co., Ltd. (22.1%); Toshiba Mitsubishi-Electric Industrial Systems Corporation
(50.0%); and Semp Toshiba Amazonas S.A. (40.0%). As disclosed in Note 28, on February 1, 2012, the Company increased
its ownership in Toshiba Finance Corporation (“TFC”), and consequently acquired the controlling financial interest of TFC
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 ¥37,046 million ($451,780 thousand) and ¥35,443 million at March 31, 2012 and
2011, respectively. The Group's investments in these companies had market values of ¥61,886 million ($754,707 thousand)
and ¥42,525 million at March 31, 2012 and 2011, 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
2012
¥ 1,099,093
979,734
¥ 2,078,827
835,997
¥
499,185
743,645
¥ 2,078,827
2011
1,439,938
1,225,127
2,665,065
1,264,533
662,619
737,913
2,665,065
¥
¥
¥
¥
Millions of yen
2012
¥ 1,933,680
62,953
¥
2011
2,037,365
62,318
Thousands of
U.S. dollars
2012
$ 13,403,573
11,947,976
$ 25,351,549
$ 10,195,085
6,087,622
9,068,842
$ 25,351,549
Thousands of
U.S. dollars
2012
$ 23,581,463
767,720
TOSHIBA Annual Report 2012
59
Notes to Consolidated Financial Statements
Toshiba Corporation and Subsidiaries
March 31, 2012
A summary of transactions and balances with the affiliates accounted for by the equity method is presented below:
Year ended March 31
Sales
Purchases
Dividends
March 31
Notes and accounts receivable, trade
Other receivables
Long-term loans receivable
Notes and accounts payable, trade
Other payables
Capital lease obligations
¥
¥
2012
166,796
155,522
3,391
2012
44,045
15,877
121,877
17,023
12,943
−
Millions of yen
¥
2011
163,185
135,500
11,341
Millions of yen
¥
2011
47,533
11,644
131,275
89,315
31,179
25,714
Thousands of
U.S. dollars
2012
$ 2,034,098
1,896,610
41,354
$
Thousands of
U.S. dollars
2012
537,134
193,622
1,486,305
207,598
157,841
−
60 TOSHIBA Annual Report 2012
10. GOODWILL AND OTHER INTANGIBLE ASSETS
The Group tested goodwill for impairment in accordance with ASC No.350, applying a fair value based test and has
concluded that there was no impairment for the years ended March 31, 2012 and 2011.
The components of acquired intangible assets excluding goodwill at March 31, 2012 and 2011 are as follows:
March 31, 2012
Other intangible assets subject to amortization:
Software
Technical license fees
Core and current technology
Customer relationships
Other
Total
Other intangible assets not subject to amortization:
Brand name
Other
Total
March 31, 2011
Other intangible assets subject to amortization:
Software
Technical license fees
Core and current technology
Customer relationships
Other
Total
Other intangible assets not subject to amortization:
Brand name
Other
Total
Gross carrying
amount
¥
¥
181,801
55,522
129,516
74,512
42,982
484,333
Millions of yen
Accumulated
amortization
¥
¥
118,794
40,354
29,546
11,459
18,256
218,409
Gross carrying
amount
¥
¥
190,701
60,967
122,211
36,928
44,463
455,270
Millions of yen
Accumulated
amortization
¥
¥
130,119
38,863
27,801
6,698
24,325
227,806
Net carrying
amount
63,007
15,168
99,970
63,053
24,726
265,924
37,450
2,076
39,526
305,450
Net carrying
amount
60,582
22,104
94,410
30,230
20,138
227,464
34,047
2,648
36,695
264,159
¥
¥
¥
¥
¥
¥
TOSHIBA Annual Report 2012
61
Notes to Consolidated Financial Statements
Toshiba Corporation and Subsidiaries
March 31, 2012
March 31, 2012
Other intangible assets subject to amortization:
Software
Technical license fees
Core and current technology
Customer relationships
Other
Total
Other intangible assets not subject to amortization:
Brand name
Other
Total
Gross carrying
amount
$ 2,217,085
677,098
1,579,463
908,683
524,171
$ 5,906,500
Thousands of U.S. dollars
Accumulated
amortization
$ 1,448,707
492,122
360,317
139,744
222,634
$ 2,663,524
Net carrying
amount
$
768,378
184,976
1,219,146
768,939
301,537
$ 3,242,976
456,707
25,317
482,024
$ 3,725,000
Other intangible assets acquired during the year ended March 31, 2012 primarily consisted of software of ¥24,536 million
($299,220 thousand). The weighted-average amortization period of software for the year ended March 31, 2012 was
approximately 5.1 years.
The weighted-average amortization periods for other intangible assets were approximately 11.7 years and 11.4 years for
the years ended March 31, 2012 and 2011, respectively. Amortization expenses of other intangible assets subject to
amortization for the years ended March 31, 2012 and 2011 are ¥44,905 million ($547,622 thousand) and ¥46,543 million,
respectively. The future amortization expense for each of the next 5 years relating to other intangible assets currently
recorded in the consolidated balance sheet at March 31, 2012 is estimated as follows:
Year ending March 31
2013
2014
2015
2016
2017
¥
Millions of yen
43,903
37,656
28,515
21,393
15,433
$
Thousands of
U.S. dollars
535,402
459,220
347,744
260,890
188,207
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, 2012 and 2011 are as follows:
Year ended March 31
Balance at beginning of year
Goodwill acquired during the year
Foreign currency translation adjustments
Balance at end of year
Millions of yen
2012
283,453
123,578
(2,874)
404,157
¥
¥
2011
305,398
2,653
(24,598)
283,453
¥
¥
Thousands of
U.S. dollars
2012
$ 3,456,744
1,507,049
(35,049)
$ 4,928,744
As of March 31, 2012 and 2011, goodwill allocated within Social Infrastructure is ¥376,076 million ($4,586,293 thousand)
and ¥255,459 million, respectively. The rest was mainly allocated within Digital Products.
The Company is in the process of allocating the purchase price to the assets acquired and liabilities assumed in
accordance with ASC No.805 “Business Combinations” (“ASC No.805”) but the process has not been finalized. The
provisional amounts as of March 31, 2012 will be generally adjusted by increasing or decreasing goodwill when the
purchase price allocation is finalized.
Goodwill acquired during the year ended March 31, 2012 is mainly due to the acquisition of shares of Landis+Gyr AG
(“L+G”).
62 TOSHIBA Annual Report 2012
11. SHORT-TERM BORROWINGS AND LONG-TERM DEBT
Short-term borrowings at March 31, 2012 and 2011 consist of the following:
March 31
Loans and overdrafts, principally from banks, with
weighted-average interest rate of 1.04% at March 31, 2012,
and 1.89% at March 31, 2011:
Secured
Unsecured
Commercial paper with weighted-average interest rate of
0.19% at March 31, 2011
Millions of yen
2012
2011
Thousands of
U.S. dollars
2012
¥
¥
22,646
96,869
−
119,515
¥
¥
−
27,848
127,000
154,848
$
276,171
1,181,329
−
$ 1,457,500
Substantially all of the short-term borrowings are with banks which have written basic agreements with the Group to the
effect that, with respect to all present or future loans with such banks, the Group shall provide collateral (including sums
on deposit with such banks) or guaranties immediately upon the bank's request, and that any collateral furnished
pursuant to such agreements or otherwise shall be applicable to all indebtedness to such banks.
At March 31, 2012, the Group had unused committed lines of credit from short-term financing arrangements
aggregating ¥331,120 million ($4,038,049 thousand). The lines of credit expire on various dates from April 2012 through
March 2013. Under the agreements, the Group is required to pay commitment fees ranging from 0.030 percent to 0.220
percent on the unused portion of the lines of credit.
Long-term debt at March 31, 2012 and 2011 consist of the following:
March 31
Loans, principally from banks,
due 2012 to 2028 with weighted-average interest rate
of 0.90% at March 31, 2012, and due 2011 to 2029 with
weighted-average interest rate of 1.52% at March 31, 2011:
Secured
Unsecured
Unsecured yen bonds, due 2013 to 2020 with interest rate
ranging from 0.89% to 2.20% at March 31, 2012 and 2011
Interest deferrable and early redeemable subordinated bonds:
Millions of yen
2012
2011
Thousands of
U.S. dollars
2012
¥
19,206
572,840
¥
−
293,885
$
234,219
6,985,854
310,000
310,000
3,780,488
Due 2069 with interest rate of 7.50% at March 31, 2012 and 2011
180,000
180,000
2,195,122
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
Capital lease obligations
Less-Portion due within one year
−
95,010
−
−
34,200
1,116,246
(206,626)
909,620
¥
502
49,561
928,958
(159,414)
769,544
¥
−
417,073
13,612,756
(2,519,829)
$ 11,092,927
TOSHIBA Annual Report 2012
63
Notes to Consolidated Financial Statements
Toshiba Corporation and Subsidiaries
March 31, 2012
Substantially all of the unsecured loan agreements permit the lenders to require collateral or guaranties for such loans.
The carrying amount of corresponding notes and accounts receivable, trade and long-term receivables which were
accounted for as secured borrowings under ASC No.860 at March 31, 2012 was ¥52,689 million ($642,549 thousand).
The aggregate annual maturities of long-term debt, as of March 31, 2012, excluding those of capital lease obligations, are
as follows:
Year ending March 31
2013
2014
2015
2016
2017
Thereafter
Millions of yen
196,356
201,248
50,368
193,566
98,548
341,960
1,082,046
¥
¥
$
Thousands of
U.S. dollars
2,394,585
2,454,244
614,244
2,360,561
1,201,805
4,170,244
$ 13,195,683
12. ISSUANCE OF CONVERTIBLE BOND
In July, 2004, the Company issued ¥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, 2011.
The exercisable period of the stock acquisition rights ended, and the principal amount of the 2011 Bonds was redeemed
at maturity.
(The 2011 Bonds' conditions allowing exercise of stock acquisition rights)
The period prior to (but not including) July 21, 2010
The period on or after July 21, 2010
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.
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 years ended March 31, 2012 and 2011.
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 years ended March 31, 2012 and
2011.
64 TOSHIBA Annual Report 2012
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.
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, 2012 and 2011 and the funded status
at March 31, 2012 and 2011 are as follows:
March 31
Change in benefit obligation:
Benefit obligation at beginning of year
Service cost
Interest cost
Plan participants' contributions
Plan amendments
Actuarial loss
Benefits paid
Acquisitions and divestitures
Foreign currency exchange impact
Benefit obligation at end of year
Change in plan assets:
Fair value of plan assets at beginning of year
Actual return on plan assets
Employer contributions
Plan participants' contributions
Benefits paid
Acquisitions and divestitures
Foreign currency exchange impact
Fair value of plan assets at end of year
Funded status
Millions of yen
2012
2011
¥ 1,524,466
52,940
38,265
4,390
649
77,645
(79,617)
(9,736)
(1,359)
¥ 1,607,643
¥
¥
¥
790,399
12,207
72,769
4,390
(53,405)
3,234
(958)
828,636
(779,007)
¥
¥
¥
¥
¥
1,516,036
52,120
38,687
4,114
(18,951)
28,533
(83,185)
(2,764)
(10,124)
1,524,466
800,883
(7,926)
52,207
4,114
(51,773)
93
(7,199)
790,399
(734,067)
Amounts recognized in the consolidated balance sheets at March 31, 2012 and 2011 are as follows:
March 31
Other assets
Other current liabilities
Accrued pension and severance costs
Millions of yen
2012
1,175
(768)
(779,414)
(779,007)
¥
¥
2011
870
(628)
(734,309)
(734,067)
¥
¥
Thousands of
U.S. dollars
2012
$ 18,591,049
645,610
466,646
53,536
7,915
946,890
(970,939)
(118,732)
(16,573)
$ 19,605,402
$ 9,639,012
148,866
887,427
53,536
(651,280)
39,439
(11,683)
$ 10,105,317
$ (9,500,085)
Thousands of
U.S. dollars
2012
$
14,329
(9,365)
(9,505,049)
$ (9,500,085)
TOSHIBA Annual Report 2012
65
Notes to Consolidated Financial Statements
Toshiba Corporation and Subsidiaries
March 31, 2012
Amounts recognized in accumulated other comprehensive loss at March 31, 2012 and 2011 are as follows:
March 31
Unrecognized actuarial loss
Unrecognized prior service cost
Millions of yen
2012
632,236
(36,318)
595,918
¥
¥
2011
587,066
(40,922)
546,144
¥
¥
Thousands of
U.S. dollars
2012
$ 7,710,195
(442,902)
$ 7,267,293
The accumulated benefit obligation at March 31, 2012 and 2011 are as follows:
March 31
Accumulated benefit obligation
Millions of yen
2012
¥ 1,511,834
2011
1,436,210
¥
Thousands of
U.S. dollars
2012
$ 18,437,000
The components of the net periodic pension and severance cost for the years ended March 31, 2012 and 2011 are as
follows:
Year ended March 31
Service cost
Interest cost on projected benefit 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
2012
52,940
38,265
(22,540)
(3,550)
34,125
69
99,309
¥
¥
2011
52,120
38,687
(28,748)
(2,829)
30,944
8
90,182
¥
¥
$
Thousands of
U.S. dollars
2012
645,610
466,646
(274,878)
(43,293)
416,159
841
$ 1,211,085
Other changes in plan assets and benefit obligation recognized in the other comprehensive income (loss) for the years
ended March 31, 2012 and 2011 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
2012
87,978
(34,125)
649
3,550
58,052
¥
¥
2011
65,207
(30,944)
(18,959)
2,829
18,133
¥
¥
Thousands of
U.S. dollars
2012
$ 1,072,902
(416,159)
7,915
43,293
707,951
$
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
2013
¥
(4,077)
37,465
Thousands of
U.S. dollars
2013
(49,720)
456,890
$
Year ending March 31
Prior service cost
Actuarial loss
66 TOSHIBA Annual Report 2012
For the year ended March 31, 2012, the Company contributed certain marketable equity securities to employee retirement
benefit trusts, with no cash proceeds thereon. The fair value of these securities at the time of contribution was ¥14,800
million ($180,488 thousand). The Group expects to contribute ¥65,125 million ($794,207 thousand) to its defined benefit
plans, included Cash Balance Plan, in the year ending March 31, 2013.
The following benefit payments are expected to be paid:
Year ending March 31
2013
2014
2015
2016
2017
2018 - 2022
¥
Millions of yen
90,236
86,682
91,691
96,346
94,535
508,733
$
Thousands of
U.S. dollars
1,100,439
1,057,098
1,118,183
1,174,951
1,152,866
6,204,061
Weighted-average assumptions used to determine benefit obligations as of March 31, 2012 and 2011 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
2012
2.2%
3.3%
2012
2.6%
2.9%
3.2%
2011
2.6%
3.2%
2011
2.7%
3.6%
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 25 percent or more
of total investments, and investments in equity securities, debt securities and life insurance company general accounts at
70 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.
TOSHIBA Annual Report 2012
67
Notes to Consolidated Financial Statements
Toshiba Corporation and Subsidiaries
March 31, 2012
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, 2012 and 2011 by asset category are as follows:
Level 1
Level 2
Level 3
¥
34,585
¥
−
¥
Millions of yen
March 31, 2012
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, 2012
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
Level 1
$
421,768
1,201,537
547,061
277,561
1,029,634
−
−
206,500
−
−
−
−
$ 3,684,061
98,526
44,859
22,760
84,430
−
−
16,933
−
−
−
−
302,093
−
−
−
−
−
−
−
−
−
−
−
4,137
97,117
24,857
−
−
126,111
¥
−
−
−
50,451
1,184,354
303,134
−
−
$ 1,537,939
Total
¥
34,585
98,526
44,859
207,779
84,430
224
25,926
161,714
97,117
24,857
44,511
4,108
828,636
¥
Total
$
421,768
1,201,537
547,061
2,533,890
1,029,634
2,732
316,171
1,972,122
1,184,354
303,134
542,817
50,097
$ 10,105,317
−
−
185,019
−
224
25,926
140,644
−
−
44,511
4,108
400,432
−
−
2,256,329
−
2,732
316,171
1,715,171
−
−
542,817
50,097
$ 4,883,317
¥
$
Thousands of U.S. dollars
Level 2
Level 3
−
$
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 20% Japanese government bonds, 35% foreign government bonds, 45% municipal bonds and corporate bonds.
68 TOSHIBA Annual Report 2012
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
¥
23,711
¥
−
¥
Millions of yen
Total
¥
23,711
93,142
27,674
29,457
75,670
−
−
11,737
−
−
−
−
261,391
−
−
231,664
−
959
24,680
129,040
−
−
23,905
4,725
414,973
¥
−
−
−
−
−
−
−
−
93,142
27,674
261,121
75,670
959
24,680
140,777
96,724
17,311
23,905
4,725
790,399
Hedge funds
Real estate
Life insurance company general accounts
Other assets
Total
¥
96,724
17,311
−
−
114,035
¥
¥
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.
TOSHIBA Annual Report 2012
69
Notes to Consolidated Financial Statements
Toshiba Corporation and Subsidiaries
March 31, 2012
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
pooled funds that invest in debt securities, 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, 2012 and 2011 are as
follows:
Year ended March 31, 2012
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, 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
¥
Pooled funds
−
¥
Hedge funds
96,724
¥
Real estate
¥
17,311
Total
¥
114,035
Millions of yen
−
180
3,957
4,137
Hedge funds
91,530
¥
51
5,944
(801)
96,724
149
211
33
97,117
¥
Millions of yen
Real estate
¥
22,871
(1,810)
(703)
(3,047)
17,311
¥
107
(518)
7,957
24,857
¥
256
(127)
11,947
126,111
¥
Total
¥
114,401
(1,759)
5,241
(3,848)
114,035
¥
Year ended March 31, 2012
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
Pooled funds
−
$
Hedge funds
$ 1,179,561
Real estate
$
211,110
Total
$ 1,390,671
Thousands of U.S. dollars
−
2,195
48,256
50,451
$
1,817
2,573
403
$ 1,184,354
1,305
(6,317)
97,036
303,134
$
3,122
(1,549)
145,695
$ 1,537,939
Certain of the Company's subsidiaries provide certain health care and life insurance benefits to retired employees. Such
benefits were not material for the years ended March 31, 2012 and 2011.
70 TOSHIBA Annual Report 2012
14. RESEARCH AND DEVELOPMENT COSTS
Research and development costs are expensed as incurred and amounted to ¥319,418 million ($3,895,341 thousand) and
¥318,803 million for the years ended March 31, 2012 and 2011, respectively.
15. ADVERTISING COSTS
Advertising costs are expensed as incurred. Advertising costs amounted to ¥33,804 million ($412,244 thousand) and
¥32,862 million for the years ended March 31, 2012 and 2011, respectively.
16. OTHER INCOME AND OTHER EXPENSE
FOREIGN EXCHANGE LOSSES
For the years ended March 31, 2012 and 2011, the net foreign exchange losses were ¥15,614 million ($190,415 thousand)
and ¥2,975 million, respectively.
GAINS AND LOSSES ON SALES OR DISPOSAL OF FIXED ASSETS
For the years ended March 31, 2012 and 2011, the sale and disposal of fixed assets resulted in net gains of ¥4,383 million
($53,451 thousand) and ¥21,059 million, respectively. Gains on sales of fixed assets were ¥24,275 million ($296,037
thousand), and losses on disposal of fixed assets were ¥19,892 million ($242,585 thousand) for the year ended March 31,
2012. Gains on sales of fixed assets were ¥33,076 million, and losses on disposal of fixed assets were ¥12,017 million for the
year ended March 31, 2011.
GAINS AND LOSSES ON SALES OF THE SHARES OF TOSHIBA MOBILE DISPLAY CO., LTD.
In November 2011, the Company, Innovation Network Corporation of Japan ("INCJ"), Hitachi, Ltd. and Sony Corporation
signed definitive agreements to integrate their small- and medium-sized display businesses. The Company, INCJ and a
new company (currently called Japan Display Inc. ("JDI")) also signed agreements to transfer all of the issued shares of
Toshiba Mobile Display Co., Ltd. ("TMD") to JDI. In March 2012, the Company sold all of the issued shares of TMD to JDI and
acquired 10% of the shares of JDI. Gains and losses on these transactions were not significant.
17. IMPAIRMENT OF LONG-LIVED ASSETS
Due to a decrease in profitability of the following business, the Group recorded impairment losses related to the property,
plant and equipment, and finite-lived intangible assets. Impairment losses recorded for the year ended March 31, 2012
were consisted of ¥5,157 million in the Visual Products business, ¥3,270 million in the PC business, ¥47,380 million in the
Analog Imaging IC business, and ¥3,215 million in the System LSI business. The impairment losses recognized in the year
ended March 31, 2011 consisted of ¥5,371 million in the Visual Products business, ¥5,019 million in the PC business,
¥15,873 million in the System LSI business. These impairment losses are recorded are included in cost of sales in the
consolidated statement of income.
Impairment losses in the Visual Products and the PC businesses are included in the Digital Products segment, while those
in the Analog Imaging IC and the System LSI businesses are included in the Electronic Devices segment.
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, 2012 and 2011.
Amendments to the Japanese tax regulations were enacted into law on November 30, 2011. As a result of these
amendments, the effective statutory tax rate used to calculate deferred tax assets and liabilities was changed from
existing 40.7 percent to 38.0 percent for temporary difference expected to be eliminated during the period from the fiscal
year beginning on April 1, 2012 to the fiscal year beginning on April 1, 2014, and 35.6 percent for temporary difference
expected to be eliminated in and after the fiscal year beginning on April 1, 2015. The effect of a re-evaluation of deferred
tax assets and liabilities for this change in the tax rate was reflected in income taxes in the consolidated statement of
income for the year ended March 31, 2012.
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:
TOSHIBA Annual Report 2012
71
Notes to Consolidated Financial Statements
Toshiba Corporation and Subsidiaries
March 31, 2012
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
Net decrease in deferred tax assets by enacted changes
in tax laws and rates
The difference between the current effective statutory
tax rate and the future effective statutory tax rate
Tax rate difference relating to foreign subsidiaries
Deferred tax liabilities on undistributed earnings of
foreign subsidiaries and affiliates
Other
Income tax expense
Millions of yen
2012
2011
¥
25,001
¥
82,126
$
(1,009)
2,650
(13,438)
36,240
12,137
(11,567)
(6,425)
4,851
48,440
¥
(1,765)
3,271
(20,669)
−
−
(11,186)
(20,267)
(3,566)
27,944
¥
Thousands of
U.S. dollars
2012
304,891
(12,305)
32,317
(163,878)
441,951
148,012
(141,061)
(78,354)
59,159
590,732
$
The significant components of deferred tax assets and deferred tax liabilities as of March 31, 2012 and 2011 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 benefit trusts
Undistributed earnings of foreign subsidiaries and affiliates
Goodwill and other intangible assets
Other
Deferred tax liabilities
Net deferred tax assets
Millions of yen
2012
2011
¥
¥
¥
¥
21,177
123,486
243,253
203,581
116,149
66,574
127,257
901,477
(211,006)
690,471
(4,570)
(15,987)
(31,593)
(19,269)
(32,870)
(76,859)
(17,616)
(198,764)
491,707
¥
¥
¥
¥
22,605
119,503
262,127
215,914
126,034
61,470
134,537
942,190
(275,274)
666,916
(4,236)
(10,125)
(37,698)
(17,381)
(38,043)
(60,767)
(18,573)
(186,823)
480,093
Thousands of
U.S. dollars
2012
$
258,256
1,505,927
2,966,500
2,482,695
1,416,451
811,878
1,551,915
10,993,622
(2,573,244)
$ 8,420,378
$
(55,732)
(194,963)
(385,281)
(234,988)
(400,854)
(937,304)
(214,829)
(2,423,951)
$ 5,996,427
Deferred tax liabilities included in other current liabilities and other liabilities at March 31, 2012 and 2011 were ¥86,370
million ($1,053,293 thousand) and ¥75,144 million, respectively.
The net changes in the total valuation allowance for the years ended March 31, 2012 and 2011 were a decrease of
¥64,268 million ($783,756 thousand) and ¥28,273 million, respectively.
The amounts of adjustments of the beginning-of-the-year balance of the valuation allowance because of a change in
judgment about the realizability of the related deferred tax assets in future years for the year ended March 31, 2012 were
¥36,041 million ($439,524 thousand). The amounts of adjustments for the year ended March 31, 2011 were ¥11,701 million.
72 TOSHIBA Annual Report 2012
The Group's tax loss carryforwards for the corporate and local taxes at March 31, 2012 amounted to ¥601,740 million
($7,338,293 thousand) and ¥742,306 million ($9,052,512 thousand), respectively, the majority of which will expire during
the period from the year ending March 2013 through 2021. The Group utilized tax loss carryforwards of ¥126,432 million
($1,541,854 thousand) and ¥119,953 million to reduce current corporate taxes and of ¥120,232 million ($1,466,244
thousand) and ¥68,530 million to reduce current local taxes during the years ended March 31, 2012 and 2011, respectively.
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 the current year
Reductions for tax positions of prior years
Lapse of statute of limitations or closed audits
Additions from acquisitions
Foreign currency translation adjustments
Balance at end of year
Millions of yen
2012
2011
¥
¥
3,473
737
225
(14)
(431)
(1,627)
2,375
(65)
4,673
¥
¥
4,493
598
683
−
(72)
(1,772)
−
(457)
3,473
Thousands of
U.S. dollars
2012
42,354
8,988
2,744
(171)
(5,256)
(19,841)
28,963
(793)
56,988
$
$
The total amounts of unrecognized tax benefits that would reduce the effective tax rate, if recognized, are ¥1,715 million
($20,915 thousand) and ¥2,274 million at March 31, 2012 and 2011, respectively.
The Group recognizes interest and penalties accrued related to unrecognized tax benefits in income taxes in the
consolidated statement of income. Both interest and penalties accrued as of March 31, 2012 and 2011, and interest and
penalties included in income taxes for the years ended March 31, 2012 and 2011 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, 2012, 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.
TOSHIBA Annual Report 2012
73
Notes to Consolidated Financial Statements
Toshiba Corporation and Subsidiaries
March 31, 2012
19. EQUITY
COMMON STOCK
The total number of authorized shares of the Company is 10,000,000,000. The total number of shares issued for the years
ended March 31,2012 and 2011 are 4,237,602,026.
RETAINED EARNINGS
Retained earnings at March 31, 2012 and 2011 included a legal reserve of ¥29,286 million ($357,146 thousand) and ¥24,129
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 appropriations
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, 2012 do not reflect current year-end distributions of ¥16,939 million ($206,573 thousand) which started to be
paid from June 1, 2012.
Retained earnings at March 31, 2012 included the Group's equity in undistributed earnings of equity method investees
in the amount of ¥105,780 million ($1,290,000 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, and the retained earnings was increased by the same amount effective June 30,
2010 on the Company's consolidated balance sheet.
ACCUMULATED OTHER COMPREHENSIVE LOSS
Analyses of the changes in accumulated other comprehensive loss, net of tax, for the years ended March 31, 2012 and
2011 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
2012
2011
¥
¥
¥
¥
¥
¥
¥
¥
¥
¥
62,455
(5,362)
57,093
(273,317)
(10,517)
(283,834)
(308,681)
(29,667)
(338,348)
(62)
(400)
(462)
(519,605)
(45,946)
(565,551)
¥
¥
¥
¥
¥
¥
¥
¥
¥
¥
73,226
(10,771)
62,455
(231,130)
(42,187)
(273,317)
(298,679)
(10,002)
(308,681)
(2,661)
2,599
(62)
(459,244)
(60,361)
(519,605)
Thousands of
U.S. dollars
2012
$
$
761,645
(65,390)
696,255
$ (3,333,134)
(128,256)
$ (3,461,390)
$ (3,764,402)
(361,793)
$ (4,126,195)
$
$
(756)
(4,878)
(5,634)
$ (6,336,646)
(560,317)
$ (6,896,963)
74 TOSHIBA Annual Report 2012
Tax effects allocated to each component of other comprehensive income (loss) for the years ended March 31, 2012 and
2011 are shown below:
For the year ended March 31, 2012:
Net unrealized gains and losses on securities:
Unrealized holding losses arising during year
Less: reclassification adjustment for losses included in net income
attributable to shareholders of the Company
Foreign currency translation adjustments:
Currency translation adjustments arising during year
Less: reclassification adjustment for losses included in net income
attributable to shareholders of the Company
Pension liability adjustments:
Pension liability adjustments arising during year
Less: reclassification 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: reclassification adjustment for losses included in net income
attributable to shareholders of the Company
Other comprehensive loss
For the year ended March 31, 2011:
Net unrealized gains and losses on securities:
Unrealized holding losses arising during year
Less: reclassification adjustment for losses included in net income
attributable to shareholders of the Company
Foreign currency translation adjustments:
Currency translation adjustments arising during year
Less: reclassification adjustment for losses included in net income
attributable to shareholders of the Company
Pension liability adjustments:
Pension liability adjustments arising during year
Less: reclassification 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: reclassification adjustment for losses included in net income
attributable to shareholders of the Company
Pre-tax
amount
Millions of yen
Tax benefit
(expense)
Net-of-tax
amount
¥
(13,768)
¥
5,011
¥
(8,757)
5,723
(2,328)
3,395
(10,813)
241
(80,668)
36,058
231
(1,285)
55
−
29,619
(14,676)
41
613
(10,758)
241
(51,049)
21,382
272
(672)
¥
(64,281)
¥
18,335
¥
(45,946)
¥
(16,708)
¥
4,077
¥
(12,631)
3,132
(50,183)
10,760
(43,909)
26,785
3,043
1,727
(1,272)
(2,764)
−
18,025
(10,903)
(1,519)
(652)
1,860
(52,947)
10,760
(25,884)
15,882
1,524
1,075
Other comprehensive loss
¥
(65,353)
¥
4,992
¥
(60,361)
TOSHIBA Annual Report 2012
75
Notes to Consolidated Financial Statements
Toshiba Corporation and Subsidiaries
March 31, 2012
For the year ended March 31, 2012:
Net unrealized gains and losses on securities:
Unrealized holding losses arising during year
Less: reclassification adjustment for losses included in net income
attributable to shareholders of the Company
Foreign currency translation adjustments:
Currency translation adjustments arising during year
Less: reclassification adjustment for losses included in net income
attributable to shareholders of the Company
Pension liability adjustments:
Pension liability adjustments arising during year
Less: reclassification 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: reclassification adjustment for losses included in net income
attributable to shareholders of the Company
Pre-tax
amount
Thousands of U.S. dollars
Tax benefit
(expense)
Net-of-tax
amount
$
(167,902)
$
61,110
$
(106,792)
69,793
(28,391)
41,402
(131,866)
2,939
(983,756)
439,732
2,817
(15,671)
671
−
361,207
(178,976)
500
7,476
(131,195)
2,939
(622,549)
260,756
3,317
(8,195)
Other comprehensive loss
$
(783,914)
$
223,597
$
(560,317)
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.
76 TOSHIBA Annual Report 2012
20. NET EARNINGS 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 per share attributable to shareholders of the Company for the years ended March 31, 2012 and 2011.
Year ended March 31
Income from continuing operations attributable to
shareholders of the Company
Loss from discontinued operations attributable to
shareholders of the Company
Millions of yen
2012
2011
Thousands of
U.S. dollars
2012
¥
4,777
¥
166,187
$
58,256
(1,583)
(7,861)
(19,305)
Net income attributable to shareholders of the Company
¥
3,194
¥
158,326
$
38,951
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
2012
4,235,024
56,982
2011
4,235,297
175,295
4,292,006
4,410,592
Year ended March 31
Earnings from continuing operations per share attributable to
shareholders of the Company:
−Basic
−Diluted
Losses from discontinued operations per share attributable to
shareholders of the Company:
−Basic
−Diluted
Net earnings per share attributable to shareholders of the Company:
−Basic
−Diluted
Yen
2012
2011
U.S. dollars
2012
¥
¥
¥
1.13
1.11
(0.37)
(0.37)
0.75
0.74
¥
¥
¥
39.24
37.68
(1.86)
(1.86)
37.38
35.90
$
$
$
0.01
0.01
(0.00)
(0.00)
0.01
0.01
Due to their anti-dilutive effect, incremental shares from assumed conversions of dilutive convertible debentures are
excluded from the calculation of diluted net losses from discontinued operations per share attributable to shareholders
of the Company for the year ended March 31, 2012 and 2011.
Net earnings per share attributable to shareholders of the Company are computed independently for income from
continuing operations attributable to shareholders of the Company, losses from discontinued operations attributable to
shareholders of the Company, and net income 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.
TOSHIBA Annual Report 2012
77
Notes to Consolidated Financial Statements
Toshiba Corporation and Subsidiaries
March 31, 2012
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 2012 to 2018.
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 statement 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 6 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 6 years.
The Group expects to reclassify ¥512 million ($6,244 thousand) of net loss 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.
78 TOSHIBA Annual Report 2012
The Group's forward exchange contract amounts, the aggregate notional principal amounts of interest rate swap
agreements and currency swap agreements outstanding at March 31, 2012 and 2011 are summarized below:
March 31
Forward exchange contracts:
To sell foreign currencies
To buy foreign currencies
Interest rate swap agreements
Currency swap agreements
Millions of yen
2012
2011
¥
167,866
71,688
403,791
164,678
¥
147,035
173,175
120,982
230,461
Thousands of
U.S. dollars
2012
$ 2,047,146
874,244
4,924,280
2,008,268
(2) FAIR VALUE OF FINANCIAL INSTRUMENTS
The fair values of the Group's financial instruments and the location in the consolidated balance sheet at March 31, 2012
and 2011 are summarized as follows:
March 31
Location
Derivatives designated as hedging instruments:
Assets:
Forward exchange contracts
Interest rate 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
Other current liabilities
Other current liabilities
Other liabilities
Other current liabilities
Derivatives not designated as hedging instruments:
Assets:
Forward exchange contracts
Currency swap agreements
Prepaid expenses and
other current assets
Prepaid expenses and
other current assets
Liabilities:
Forward exchange contracts
Interest rate swap agreements
Currency swap agreements
Other current liabilities
Other liabilities
Other current liabilities
March 31
Nonderivatives:
Liabilities:
Millions of yen
2012
2011
Thousands of
U.S. dollars
2012
¥
3,115
¥
4,514
$
37,988
−
(2,735)
(1,161)
(477)
−
1,494
−
(3,173)
(25)
(465)
2
(1,459)
−
(2,394)
(1,241)
1,811
1,716
(1,534)
(13)
−
−
(33,354)
(14,158)
(5,817)
−
18,219
−
(38,695)
(305)
(5,671)
Millions of yen
2012
2011
Carrying
amount
Fair value
Carrying
amount
Fair value
Long-term debt, including current portion
¥ (1,082,046)
¥ (1,088,464)
¥
(879,397)
¥
(882,341)
March 31
Nonderivatives:
Liabilities:
Thousands of U.S. dollars
2012
Carrying
amount
Fair value
Long-term debt, including current portion
$ (13,195,683)
$ (13,273,951)
TOSHIBA Annual Report 2012
79
Notes to Consolidated Financial Statements
Toshiba Corporation and Subsidiaries
March 31, 2012
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 estimated discounted
value of future cash flows when market quotes are not available, and is classified within Level 2 or Level 3. 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 statement of income for the year ended March 31, 2012 is as
follows:
Cash flow hedge:
Amount of
gain (loss)
recognized in
OCI
Amount
recognized
Forward exchange contracts
Interest rate swap agreements
¥
(178)
450
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
Amount
recognized
¥
672
Location
Other income
Amount
recognized
¥
686
Millions of yen
Amount of gain (loss)
recognized in income (loss)
Location
Other income
Other income
Amount
recognized
¥
404
7
Forward exchange contracts
Currency options
Cash flow hedge:
Amount of
gain (loss)
recognized in
OCI
Amount
recognized
Forward exchange contracts
Interest rate swap agreements
$
(2,171)
5,488
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
Amount
recognized
$
8,195
Location
Other income
Amount
recognized
$
8,366
Forward exchange contracts
Currency options
Thousands of U.S. dollars
Amount of gain (loss)
recognized in income (loss)
Location
Other income
Other income
Amount
recognized
$
4,927
85
80 TOSHIBA Annual Report 2012
The effect of derivative instruments on the consolidated statement 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
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, 2012 and 2011 were ¥115,110 million ($1,403,780 thousand)
and ¥147,760 million, respectively.
The Group also leases certain machinery and equipment which are accounted for as capital leases. As of March 31, 2012
and 2011, the costs under capital leases were approximately ¥64,723 million ($789,305 thousand) and ¥73,847 million, and
the related accumulated amortization were approximately ¥30,482 million ($371,732 thousand) and ¥30,861 million,
respectively.
As of March 31, 2011, the costs under capital leases from TFC and Toshiba Medical Finance Co., Ltd., affiliates of the
Company, were approximately ¥47,800 million, and the related accumulated amortization was approximately ¥22,100
million. As disclosed in Note 28, on February 1, 2012, the Company increased its ownership in TFC, and consequently
acquired the controlling financial interest of TFC. As a consequence, the costs under capital leases from affiliates of the
Company and the related accumulated amortization as of March 31, 2012, were not significant.
Minimum lease payments for the Group's capital and non-cancelable operating leases as of March 31, 2012 are as
follows:
Year ending March 31
2013
2014
2015
2016
2017
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
¥
¥
38,933
25,383
10,451
9,409
5,624
20,792
110,592
¥
¥
11,570
8,158
5,307
3,327
2,339
23,889
54,590
(2,036)
(18,354)
34,200
(10,270)
23,930
Capital
leases
141,098
99,488
64,720
40,573
28,524
291,329
665,732
(24,829)
(223,830)
417,073
(125,244)
291,829
$
$
Operating
leases
474,793
309,549
127,451
114,744
68,585
253,561
1,348,683
$
$
TOSHIBA Annual Report 2012
81
Notes to Consolidated Financial Statements
Toshiba Corporation and Subsidiaries
March 31, 2012
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, 2012 totaled approximately ¥31,151 million ($379,890 thousand).
As of March 31, 2012, contingent liabilities, other than guarantees disclosed in Note 24, approximated ¥434 million
($5,293 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 2012 to 2020 as of March 31, 2012 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 ¥308,445 million ($3,761,524 thousand) as of March 31, 2012.
GUARANTEES OF EMPLOYEES' HOUSING LOANS
The Group guarantees housing loans of its employees. Expiration dates vary from 2012 to 2032. 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 ¥6,059 million ($73,890 thousand) as of March 31, 2012. 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 July 2016. The maximum potential payments by
the Group for such residual value guarantees were ¥22,837 million ($278,500 thousand) as of March 31, 2012.
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 ¥7,862 million ($95,878 thousand)
as of March 31, 2012.
The carrying amounts of the liabilities for the Group's obligations under the guarantees described above as of March 31,
2012 were not significant.
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, 2012 and 2011:
Year ended March 31
Balance at beginning of year
Warranties issued
Settlements made
Foreign currency translation adjustments
Other
Balance at end of year
Millions of yen
2012
36,961
45,605
(48,070)
(428)
4,813
38,881
¥
¥
2011
44,370
29,780
(34,875)
(2,314)
−
36,961
¥
¥
Thousands of
U.S. dollars
2012
450,744
556,159
(586,219)
(5,220)
58,695
474,159
$
$
Other includes the warranties assumed in the acquisition of Landis+Gyr AG ("L+G").
82 TOSHIBA Annual Report 2012
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 brought an
action to the General Court of the European Union seeking annulment of the European Commission's decision in April
2007. In July 2011, the General Court of the European Union handed down a judgment and annulled the entire fine
imposed on the Company, but upheld the European Commission's determination about alleged anti-competitive
behavior. The Company appealed to the European Court of Justice in September 2011, since there was certain
inconsistency between the contents of the judgment and the facts as recognized by the Company. The Company will
assert its position in the appeal.
In August 2007, General Electric Capital Leasing Corporation (currently General Electric Japan Inc.("GE Japan")) filed a
lawsuit against six companies including the Company and its two subsidiaries for compensation of damages caused by
false transactions. Although such transactions were conducted by a former employee of the Group without any relation
to the business operation of the Group, GE Japan alleged the damages in accordance with the employer liability clause of
Civil Code. In October 2010, GE Japan settled the case with Transcosmos Inc. and Parametric Technology Corporation
Japan, both of which were defendants, and assigned the claims to them. In July 2011, Tokyo District Court ordered the
Company to pay approximately ¥4,550 million ($55,488 thousand) but the Company immediately appealed against this
court ruling because the Company believes it is not responsible for the illegal transactions conducted by the former
employee.
In February 2011, the Ministry of Defense of Japan ("MOD") cancelled contract for development and manufacture of
"reconnaissance system for F-15" between MOD and the Company. In July 2011, the Company filed a lawsuit against MOD
to Tokyo District Court seeking payment of approximately ¥9,319 million ($113,646 thousand) including payment for parts
which have been already completed. The Company properly executed its duties pursuant to conditions of the contract.
Therefore, the Company thinks that MOD's cancellation of the contract is unreasonable and will assert its position in the
Court.
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 judgment 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.
The information provided is about the status as of the submission date of the annual securities report before
correction.
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 ¥9,021 million ($110,012
thousand) and ¥9,213 million at March 31, 2012 and 2011, 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 ¥12,572 million ($153,317 thousand) and ¥15,624 million as of
March 31, 2012 and 2011, 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.
TOSHIBA Annual Report 2012
83
Notes to Consolidated Financial Statements
Toshiba Corporation and Subsidiaries
March 31, 2012
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, 2012 and 2011 are as
follows:
Year ended March 31
Balance at beginning of year
Accretion expense
Liabilities settled
Liabilities incurred
Revisions in estimated cash flows
Foreign currency translation adjustments
Balance at end of year
28. BUSINESS COMBINATIONS
Millions of yen
2012
2011
¥
¥
18,683
576
(1,447)
460
(2,253)
(403)
15,616
¥
¥
21,165
1,777
(4,542)
4,347
(2,594)
(1,470)
18,683
Thousands of
U.S. dollars
2012
227,841
7,024
(17,646)
5,610
(27,476)
(4,914)
190,439
$
$
Vital Images, Inc.
On April 27, 2011 (Eastern Standard Time), Toshiba Medical Systems Corporation ("TMSC"), a consolidated subsidiary of the
Company, and Vital Images, Inc. ("VITAL"), a leading provider of advanced visualization and analysis software, entered into
a definitive agreement pursuant to which a subsidiary of TMSC ("Merger Sub") would acquire all of the outstanding shares
of VITAL for $18.75 per share. In response to the commencement of the take-over bid, approximately 86.7% of the
outstanding shares of VITAL were validly tendered in the offering period. In addition, Merger Sub exercised its option to
purchase additional shares directly from VITAL, resulting in the acquisition of more than 90% of the outstanding shares.
On June 16, 2011 (Eastern Standard Time), Merger Sub merged with VITAL, and on the same date, remaining shares that
were not validly tendered have been converted into the right to receive cash. As a result, VITAL has become a wholly
owned subsidiary of TMSC. This transaction will allow TMSC to significantly strengthen its Imaging Solutions business by
integrating technologies of TMSC and VITAL to meet the global demand for advanced visualization and imaging
informatics provided to healthcare professionals and healthcare IT providers.
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 following table summarizes the allocation of the purchase price to the identifiable assets acquired and liabilities
assumed as of the acquisition date:
As of the acquisition date
Purchase price
Current assets
Non-current assets
Intangible assets subject to amortization
Current liabilities
Total identifiable net assets acquired
Millions of yen
22,105
¥
Thousands of U.S. dollars
$
269,573
¥
¥
10,910
2,091
4,159
2,269
14,891
$
$
133,049
25,500
50,720
27,671
181,598
Identifiable intangible assets acquired mainly consist of customer relationships. The Group is amortizing the intangible
assets over a weighted-average estimated life of 8.0 years.
The excess of the purchase price over the fair value of the identifiable assets acquired and liabilities assumed, amounted
to ¥7,214 million ($87,975 thousand), which was recorded as goodwill and allocated within Social Infrastructure. Among
the factors that contributed to the recognition of goodwill were the efforts of dedicated sales force and the strong
relationships developed with hospitals, university medical schools and distribution partners.
Operating results of VITAL are included in the Company's consolidated statement of income from the acquisition date.
These amounts are not significant.
84 TOSHIBA Annual Report 2012
Landis+Gyr AG
On May 19, 2011 (Japan Standard Time), the Company entered into a definitive agreement to acquire the entire shares of
L+G, and consequently acquired L+G for approximately $2.3 billion in cash on July 29, 2011 (Greenwich Time).
The Company also entered into a shareholders' agreement and a share purchase agreement with Innovation Network
Corporation of Japan ("INCJ"). The agreements prescribe INCJ's participation to invest in L+G. The Company transferred
all shares in L+G and a part of receivables ($1.7 billion in total) to a Special Purpose Entity ("SPE")(Present Landis+Gyr
Holdings A.G.) established in Switzerland for the purpose of managing L+G, and sold 40% of share in the SPE ($680 million
in total) to INCJ on August 22, 2011 (Japan Standard Time).
L+G is a leading provider of smart meter, significant component for constructing smart grid, with having over 8,000
utility customers and strong sales network around the world. L+G 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. This transaction will allow the Company to provide the sophisticated one-stop solutions that offers optimum
power management and effective applications based on cloud computing technologies by the combination of L+G's
extensive customer networks, advanced services and technologies, with the Company's comprehensive expertise in
energy management for utility companies such as power companies and the energy consumers in corporate buildings
and household sectors. The Group positions the Smart Community business as a new focus area and is determined to
maximize its presence and capabilities in the market. 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.
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
Intangilble assets subject to amortizaiton
Non-current assets
Current liabilities
Non-current liabilities
Total identifiable net assets acquired
Identifiable intangible assets acquired are as follows:
Customer relationships
(Weighted-average estimated period: 12.8 year)
Core and current technologies
(Weighted-average estimated period: 10.5 year)
Brand name
(Weighted-average estimated period: 15.7 year)
¥
Millions of yen
126,126
53,179
179,305
¥
¥
54,552
59,221
32,956
40,849
35,086
70,794
Thousands of U.S. dollars
1,538,122
$
648,524
2,186,646
$
$
665,268
722,207
401,902
498,158
427,878
863,341
Millions of yen
¥
36,960
Thousands of U.S. dollars
$
450,732
13,419
8,842
163,646
107,829
The excess of the purchase price and the fair value of noncontrolling interests over the fair value of the identifiable
assets acquired and liabilities assumed, amounted to ¥108,511 million ($1,323,305 thousand), which was recorded as
goodwill and allocated to Social Infrastructure.
Operating results of L+G are included in the Company's consolidated statement of income from the acquisition date.
L+G's net sales included in the Company's consolidated statement of income for the year ended March 31, 2012 were
80,982 million ($987,585 thousand). The amount of net income is not significant.
TOSHIBA Annual Report 2012
85
Notes to Consolidated Financial Statements
Toshiba Corporation and Subsidiaries
March 31, 2012
Toshiba Finance Corporation
On February 1, 2012, the former affiliate TFC transferred the corporate financial services business to its subsidiary, and
subsequently transferred 90% of the share in its subsidiary to IBJ Leasing.
Simultaneously, the Company increased its ownership in TFC by acquiring an additional 65% stake to 100% in cash, and
consequently acquired the controlling financial interest of TFC.
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 previously held equity
interest to the identifiable assets acquired and liabilities assumed as of the acquisition date:
As of the acquisition date
Purchase price
Previously held equity interest
Total
Current assets
Non-current assets
Current liabilities
Non-current liabilities
Total identifiable net assets acquired
Millions of yen
10,906
5,872
16,778
¥
¥
¥
¥
121,226
25,803
99,292
23,289
24,448
Thousands of U.S. dollars
$
133,000
71,610
204,610
$
$
$
1,478,366
314,671
1,210,878
284,012
298,147
The excess of the purchase price and the fair value of previously held equity interest over the fair value of the identifiable
assets acquired and liabilities assumed after reassessment of recognition and measurement with careful investigation and
analysis, amounted to ¥7,670 million ($93,537 thousand), was recorded in “Other income” as a gain on bargain purchase in
the acquisition. The book value of equity interest that the Company held before acquiring the additional stake was
¥10,086 million ($123,000 thousand), and the difference between the book value and fair value remeasured after
acquiring the additional stake is included in the operating results.
Operating results of TFC are included in the Company's consolidated statement of income from the acquisition date.
These amounts are not significant.
The following table summarizes the unaudited pro-forma results of operations, as though the above business
combinations had taken place on April 1, 2010.
Year ended March 31
Net Sales
Net income attributable to shareholders of the Company
Billions of yen
¥
2012
6,046.7
2.2
¥
2011
6,414.8
162.7
Millions of
U.S. dollars
2012
$
73,740
27
86 TOSHIBA Annual Report 2012
29. Variable Interest Entities
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 Social Infrastructure 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, 2012 and 2011, the total assets of VIEs on the consolidated balance sheet were ¥9,544 million ($116,390
thousand) and ¥8,986 million, and the total liabilities of VIEs on the consolidated balance sheet were ¥5,599 million
($68,280 thousand) and ¥2,669 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 are established for the purpose of supplying stable electric power systems, and providing electric services
and 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, 2012 and 2011, 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:
March 31, 2012
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
Millions of yen
VIEs involved in
Electronic Devices
439,850
¥
176,242
24,902
211,922
VIEs involved in
Social Infrastructure
91,591
¥
55,283
−
55,283
TOSHIBA Annual Report 2012
87
Notes to Consolidated Financial Statements
Toshiba Corporation and Subsidiaries
March 31, 2012
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, 2012
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
Millions of yen
VIEs involved in
Electronic Devices
417,904
¥
175,689
25,650
217,230
VIEs involved in
Social Infrastructure
74,271
¥
48,704
−
48,704
Thousands of U.S. dollars
VIEs involved in
Electronic Devices
$ 5,364,024
2,149,293
303,683
2,584,415
VIEs involved in
Social Infrastructure
$ 1,116,963
674,183
−
674,183
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 relations to the losses anticipated to be incurred from the Group's involvement with
the VIEs and are considered to exceed the anticipated losses.
30. SEGMENT INFORMATION
In accordance with the provisions of 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 in the year ended March 31, 2012. The hard disk drive (HDD) business and the optical disk
drive (ODD) business were reclassified from the Digital Products segment to the Electronic Devices segment on July 1,
2011.
Principal products that belong to each segment are as follows.
(1) Digital Products:
(2) Electronic Devices:
(3) Social Infrastructure: Energy-related equipment, Medical equipment, IT solutions, Elevators, etc.
(4) Home Appliances:
(5) Others:
Refrigerators, Washing drying machines, Light fixtures, Air-conditioners, etc.
Logistics Service, etc.
Personal computers, Visual products, Multi-function peripherals, etc.
Semiconductors, Hard disk drives, Liquid crystal displays, etc.
88 TOSHIBA Annual Report 2012
BUSINESS SEGMENTS
Financial information by segments as of and for the years ended March 31, 2012 and 2011 are as follows:
As of and for the year ended March 31, 2012
Millions of yen
Digital
Products
Electronic
Devices
Social
Infrastructure
Home
Appliances
Others
Total
Corporate and
Eliminations
Consolidated
Net sales
(1) Unaffiliated customers
(2) Intersegment
Total
Segment operating income (loss)
Identifiable assets
Depreciation and amortization
Capital expenditures
As of and for the year ended March 31, 2011
Net sales
(1) Unaffiliated customers
(2) Intersegment
Total
Segment operating income
Identifiable assets
Depreciation and amortization
Capital expenditures
As of and for the year ended March 31, 2012
Net sales
(1) Unaffiliated customers
(2) Intersegment
Total
Segment operating income (loss) $
Identifiable assets
Depreciation and amortization
Capital expenditures
¥ 1,615,323
51,231
¥ 1,666,554
¥
¥ 820,591
13,697
21,819
¥ 1,418,690
91,655
¥ 1,510,345
29,025
¥ 1,306,566
131,190
200,368
¥ 2,328,380
83,975
¥ 2,412,355
¥ 116,276
¥ 2,852,713
77,326
93,912
¥ 552,908
23,842
¥ 576,750
5,672
¥
¥ 327,776
14,489
15,912
¥
81,113
245,864
¥ 326,977
2,831
¥
¥ 404,056
5,415
6,522
¥ 5,996,414
496,567
¥ 6,492,981
¥ 113,365
¥ 5,711,702
242,117
338,533
¥
(496,567)
− ¥ 5,996,414
−
¥ (496,567) ¥ 5,996,414
¥ 114,902
¥
(38,638) ¥ 5,673,064
¥
242,117
338,533
1,537
−
−
(40,439) ¥
Digital
Products
Electronic
Devices
Social
Infrastructure
Home
Appliances
Others
Total
Corporate and
Eliminations
Millions of yen
Consolidated
¥ 1,867,155
51,084
¥ 1,918,239
¥
34,931
¥ 882,772
11,976
16,634
¥ 1,530,755
99,293
¥ 1,630,048
¥
68,943
¥ 1,409,954
143,984
126,256
¥ 2,200,629
69,850
¥ 2,270,479
¥ 128,706
¥ 2,531,977
69,396
96,993
¥ 578,211
21,574
¥ 599,785
¥
8,873
¥ 341,195
16,831
13,928
¥
87,240
247,843
¥ 335,083
¥
2,003
¥ 290,566
6,955
7,858
¥ 6,263,990
489,644
¥ 6,753,634
¥ 243,456
¥ 5,456,464
249,142
261,669
¥
(489,644)
− ¥ 6,263,990
−
¥ (489,644) ¥ 6,263,990
¥
¥ 244,532
¥ (105,121) ¥ 5,351,343
249,142
261,669
1,076
−
−
Digital
Products
Electronic
Devices
Social
Infrastructure
Home
Appliances
Others
Total
Thousands of U.S. dollars
Corporate and
Eliminations
Consolidated
624,768
1,117,744
1,024,085
989,183 $ 73,127,000 $
$ 19,699,061 $ 17,301,098 $ 28,394,878 $ 6,742,780 $
− $ 73,127,000
−
$ 20,323,829 $ 18,418,842 $ 29,418,963 $ 7,033,537 $ 3,987,524 $ 79,182,695 $ (6,055,695) $ 73,127,000
18,744 $ 1,401,244
(471,195) $ 69,183,707
2,952,646
4,128,451
34,523 $ 1,382,500 $
$ 10,007,207 $ 15,933,732 $ 34,789,183 $ 3,997,268 $ 4,927,512 $ 69,654,902 $
2,952,646
4,128,451
353,963 $ 1,418,000 $
943,000
1,145,268
1,599,878
2,443,512
176,695
194,049
167,036
266,085
66,037
79,537
(6,055,695)
(493,157) $
69,171 $
2,998,341
6,055,695
290,757
−
−
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, 2011 has been reclassified to conform to the current classification, following changes of the structure of the Group's internal organization in
the fiscal year ended March 31, 2012.
4) Some prior-period data relating to the discontinued operation has been reclassified following corrections to the consolidated financial statements.
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, 2012 and 2011 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 affiliates
Other income
Interest
Other expense
Millions of yen
¥
¥
2012
113,365
1,537
114,902
10,195
17,035
78,997
(31,815)
(127,887)
¥
¥
2011
243,456
1,076
244,532
8,168
18,478
67,926
(32,328)
(104,991)
Thousands of
U.S. dollars
2012
$ 1,382,500
18,744
$ 1,401,244
124,329
207,744
963,378
(387,988)
(1,559,597)
Income from continuing operations, before income taxes and
noncontrolling interests
¥
61,427
¥
201,785
$
749,110
TOSHIBA Annual Report 2012
89
Notes to Consolidated Financial Statements
Toshiba Corporation and Subsidiaries
March 31, 2012
GEOGRAPHIC INFORMATION
Net Sales
Net sales by region based on the location of the customer for the years ended March 31, 2012 and 2011 are as follows:
Year ended March 31
Japan
Overseas
Asia
North America
Europe
Others
Total
Millions of yen
2012
¥ 2,774,249
¥ 3,222,165
1,071,036
1,125,851
732,330
292,948
¥ 5,996,414
2011
2,857,941
3,406,049
1,153,243
1,147,132
814,633
291,041
6,263,990
¥
¥
¥
Property, plant and equipment
Property, plant and equipment by region at March 31, 2012 and 2011 are as follows:
March 31
Japan
Overseas
Asia
North America
Europe
Others
Total
Millions of yen
2012
558,450
223,220
97,905
62,249
54,570
8,496
781,670
¥
¥
¥
2011
679,624
195,350
103,688
55,313
29,674
6,675
874,974
¥
¥
¥
Thousands of
U.S. dollars
2012
$ 33,832,305
$ 39,294,695
13,061,415
13,729,890
8,930,854
3,572,536
$ 73,127,000
Thousands of
U.S. dollars
2012
$ 6,810,366
$ 2,722,195
1,193,963
759,134
665,488
103,610
$ 9,532,561
Notes: 1) There are no individually material countries which should be separately disclosed.
2) There are no material sales to a single unaffiliated customer.
3) Some prior-period data relating to the discontinued operation has been reclassified following corrections to the consolidated financial statements.
31. SUBSEQUENT EVENT
Acquisition of IBM's Retail Store Point-of-Sale Solutions Business
Pursuant to resolutions adopted at a board meeting held on April 17, 2012, Toshiba TEC Corporation (“TEC”), a
consolidated subsidiary of the Company, entered into a definitive agreement under which TEC will acquire International
Business Machines Corporation (“IBM”) 's Retail Store Solutions business. The purchase price is approximately $850
million. The transaction is expected to close late in June or in July, 2012 subject to the satisfaction of regulatory
requirements and customary closing conditions, but it has not been finalized as of the submission date of the original
annual securities report in June 2012 before correction for restatements in September 2015.
A new holding company will be established in Japan. This company will hold the equity of a number of companies
organized in countries around the world. TEC will acquire an 80.1 percent interests in the holding company and in order
to promote a smooth transfer, IBM will hold a 19.9 percent interests in the holding company. Eventually, the holding
company will become a wholly owned subsidiary of TEC.
A portion of the aggregate purchase price will be paid on the closing date (51.0 percent) and on the first anniversary of
the closing (29.1 percent). The remaining portion will be paid on the third anniversary in exchange for IBM’s 19.9 percent
equity interest.
Upon completion of the transaction, TEC would become the world’s foremost retail point- of-sale systems company,
offering high-quality hardware, software and integrated in-store solutions worldwide to meet the growing demand for
multi-channel commerce.
The information provided is about the status as of the submission date of the original annual securities report in June
2012 before correction for restatements in September 2015.
90 TOSHIBA Annual Report 2012
Ernst & Young ShinNihon LLC
Hibiya Kokusai Bldg.
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Chiyoda-ku, Tokyo, Japan 100-0011
TEL +813 3503 1100
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Independent Auditor’s Report
The Board of Directors of
Toshiba Corporation
We have audited the accompanying consolidated financial statements of Toshiba Corporation (the “Company”) and its
consolidated subsidiaries, which comprise the consolidated balance sheet as at March 31, 2012, and the consolidated
statements of income, comprehensive income, equity, and cash flows for the year then ended and the related notes to
the consolidated financial statements, all expressed in Japanese yen.
Management’s Responsibility for the Consolidated Financial Statements
Management is responsible for the preparation and fair presentation of these consolidated financial statements in
conformity with U.S. generally accepted accounting principles, and for designing and operating such internal control as
management determines is necessary to enable the preparation and fair presentation of the consolidated financial
statements that are free from material misstatement, whether due to fraud or error.
Auditor’s Responsibility
Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We conducted
our audit in accordance with auditing standards generally accepted in Japan. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free from
material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated
financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of
material misstatement of the consolidated financial statements, whether due to fraud or error. The purpose of an audit of
the consolidated financial statements is not to express an opinion on the effectiveness of the entity’s internal control, but
in making these risk assessments the auditor considers internal controls relevant to the entity’s preparation and fair
presentation of the consolidated financial statements in order to design audit procedures that are appropriate in the
circumstances. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness
of accounting estimates made by management, as well as evaluating the overall presentation of the consolidated
financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Opinion
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the
consolidated financial position of Toshiba Corporation and its consolidated subsidiaries as at March 31, 2012, and their
consolidated financial performance and cash flows for the year then ended in conformity with U.S. generally accepted
accounting principles.
Emphasis of Matter
As discussed in “Restatement of previously issued consolidated financial statements” in the consolidated financial
statements, the Company has amended the consolidated financial statements. We issued the Independent Auditor’s
Report before the restatement of the consolidated financial statements on June 22, 2012.
Our opinion is not qualified in respect of this matter.
Convenience Translation
We have reviewed the translation of these consolidated financial statements into U.S. dollars, presented for the
convenience of readers, and, in our opinion, the accompanying consolidated financial statements have been properly
translated on the basis described in Note 3.
September 7, 2015
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