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 2014
Restatement for the accounting treatment in the parts transactions in the PC Business
As the result of the above investigations, etc., 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, etc., it was found that in the Semiconductor Business, there were cases where
valuation losses for work-in-progress inventories, etc. 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 175th Fiscal Period from April 1, 2013 to March 31, 2014, which was submitted as of June 25, 2014, 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 submisstion data of the original annual securities report in Jure 25,
2014 before correction for restatements in September 7, 2015.
TOSHIBA Annual Report 2014
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 (Note 1)
Income (loss) from continuing operations, before
income taxes and noncontrolling interests
Income taxes
Net income (loss) attributable to shareholders of the
Company
Per share of common stock:
Earnings (loss) attributable to shareholders of
the Company (Note 2)
−Basic
−Diluted
Cash dividends
Total assets
Equity attributable to shareholders of the Company
Capital expenditures (Property, plant and equipment)
Depreciation (Property, plant and equipment)
R&D expenditures
Number of employees
¥
¥
¥
2014
¥ 6,489,702
4,865,787
1,366,789
257,126
182,336
92,045
60,240
¥
14.23
−
8.00
¥ 6,172,519
1,027,189
229,540
125,901
327,913
200,260
¥
Millions of yen,
except per share amounts
2012
5,996,414
4,628,451
1,253,061
114,902
¥
61,427
48,440
3,194
2013
5,722,248
4,413,476
1,216,719
92,053
74,926
38,356
13,425
2011
6,263,990
4,771,797
1,247,661
244,532
201,785
27,944
158,326
3.17
−
8.00
6,021,603
824,584
237,280
153,799
300,028
206,087
¥
¥
0.75
0.74
8.00
5,673,064
718,664
298,104
198,907
319,418
209,784
¥
¥
37.38
35.90
5.00
5,351,343
793,860
229,913
209,239
318,803
202,638
¥
¥
¥
2010
6,137,689
4,760,217
1,305,684
71,788
(14,342)
24,789
(53,943)
(13.47)
(13.47)
−
5,463,714
705,930
209,287
246,218
310,651
203,889
Notes: 1) Operating income 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 legal settlement
costs 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) Diluted net earnings per share attributable to shareholders of the Company for the years ended March 31, 2014 and 2013 have been omitted because the company did not have potential common
stock that were outstanding for the period.
4) The Optical Disc Drive (ODD) business has been classified as discontinued operations since the fiscal year ended March 31, 2014, in accordance with Accounting Standards Codification (“ASC”)
No.205-20 “Presentation of Financial Statements - Discontinued Operations” (“ASC No.205-20”). Prior-period data for the fiscal years up to March 31, 2013 has been reclassified to conform with the
current classification.
5) Following the acquisition of IBM's Retail Store Solutions business in July 2012, the Company completed the allocation of the cost of the acquisition to assets and liabilities, according to ASC No.805
“Business Combinations” (“ASC No.805”), in the fiscal year ended March 31, 2014. Results for the fiscal year ended March 31, 2013 have been revised to reflect this change.
6) Following the acquisition of Landis+Gyr AG in July 2011, the Company completed the allocation of the cost of the acquisition to assets and liabilities, according to ASC No.805, in the fiscal year
ended March 31, 2013. Results for the fiscal year ended March 31, 2012 have been revised to reflect this change.
7) The Mobile Phone business has been classified as discontinued operations since the end of the fiscal year ended March 2011, in accordance with ASC No.205-20. Results for the fiscal year ended
March 31, 2010 has been reclassified to conform with the current classification.
8) Some prior-period data relating to the discontinued operations has been amended following corrections to the consolidated financial statements.
4. Management's Discussion and Analysis 20. Consolidated Balance Sheet 22. Consolidated Statement of Income
23. Consolidated Statement of Comprehensive Income 24. Consolidated Statement of Equity
26. Consolidated Statement of Cash Flows 45. Notes to Consolidated Financial Statements
91. Report of Independent Auditors
04 TOSHIBA Annual Report 2014
SCOPE OF CONSOLIDATION
As of the end of March 2014, Toshiba Group ("the Group") comprised Toshiba Corporation (“the Company”) and 598
consolidated subsidiaries and its principal operations were in the Energy & Infrastructure, Community Solutions,
Healthcare Systems & Services, Electronic Devices & Components and Lifestyle Products & Services business domains. Of
the consolidated subsidiaries, 208 were involved in Energy & Infrastructure, 158 in Community Solutions, 42 in Healthcare
Systems & Services, 51 in Electronic Devices & Components, 58 in Lifestyle Products & Services and 81 in others. The
number of consolidated subsidiaries was 8 more than at the end of March 2013. 208 affiliates were accounted for by the
equity method as of the end of March 2014.
RESULTS OF OPERATIONS
(1) Overview of Consolidated Results
Year Ended March 31
Net sales
Operating income
Income from continuing operations, before income taxes
and noncontrolling interests
Net income attributable to shareholders of the Company [1]
( * Change from the year-earlier period)
2014
6,489.7
257.1
182.3
60.2
Billions of yen
Change*
+767.5
+165.0
+107.4
+46.8
The overall world economy recorded a growth rate similar to that of the previous year, regardless of a slowdown in some
emerging economies owing to weakening currencies and increasing inflation rates. The U.S. economy remained solid
despite a tighter Round 3 of Quantitative Easing (QE3), financial problems and other difficulties. The EU economy
continued a gradual recovery. After China reframed economic policy, its economy picked up again in the summer. The
overall economic growth of Southeast Asia also remained firm. The Japanese economy continued its slow recovery on an
increase in consumption spurred by a last-minute rise in demand before an increase in the consumption tax, and the
Quantitative and Qualitative Monetary Easing and fiscal stimulus initiated by the government. Although there are
concerns both in overseas and in Japan, including a bad debt problem in China, a weak recovery in the EU and emerging
economies and sluggishness in Japan due to the increase in consumption tax, the global economy is expected to record
higher growth than in the year ended March 31, 2014.
In these circumstances, the Group has endeavored to create new value by combining internal and external technologies
to expand their application areas into new and untapped markets and customer bases. In addition to Energy and Storage,
the Group has defined Healthcare as a third pillar of business and value creation. Furthermore, the Group has launched
globally competitive products and services worldwide, especially in emerging economies.
The Group’s net sales increased by 767.5 billion yen to 6,489.7 billion yen (US$63,006.8 million) with all five business
segments recording higher sales, most notably the Electronic Devices & Components segment. Consolidated operating
income increased by 165.0 billion yen to 257.1 billion yen (US$2,496.4 million). Although the Energy & Infrastructure
segment saw a decrease in operating income reflecting at one time negative impact of a conservative reassessment of
the asset value of a U.S. developer of nuclear power plants, the Lifestyle Products & Services segment improved, the
Electronic Devices & Components segment recorded significantly higher operating income, and the Community
Solutions and Healthcare Systems & Services segments also recorded higher operating incomes.
Income (loss) from continuing operations, before income taxes and noncontrolling interests increased by 107.4 billion
yen to 182.3 billion yen (US$1,770.3 million). Net income attributable to shareholders of the Company increased by 46.8
billion yen to 60.2 billion yen (US$584.9 million) despite the negative impact of the reassessment of the asset value of a
U.S. developer of nuclear power plants and abolition of the Special Corporation Tax for Reconstruction.
TOSHIBA Annual Report 2014
05
Management's Discussion and Analysis
Consolidated Results by Segment are as follows;
Energy & Infrastructure
Community Solutions
Healthcare Systems & Services
Electronic Devices & Components
Lifestyle Products & Services
Others
Eliminations
Total
( * Change from the year-earlier period)
Billions of yen
Net Sales
Change*
1,805.5
1,356.7
410.7
1,687.3
1,314.6
504.0
(589.1)
6,489.7
+166.5
+180.6
+31.1
+407.1
+46.8
+5.2
−
+767.5
+10%
+15%
+8%
+32%
+4%
+1%
−
+13%
Operating Income (Loss)
1.3
53.3
28.6
241.6
(58.1)
(8.7)
(0.9)
257.1
Change*
(81.4)
+26.6
+8.7
+200.4
+14.8
(2.1)
−
+165.0
Energy & Infrastructure:
The net sales of the Energy & Infrastructure segment increased by 166.5 billion yen to 1,805.5 billion yen (US$17,529.4
million). Although the Nuclear Power Systems business in Japan saw lower sales, the overall Social Infrastructure business
recorded growth, reflecting higher sales in the Electric Power Distribution Systems, Solar Photovoltaic Systems, Railroad
Systems, Automotive Systems and other businesses.
Segment operating income decreased by 81.4 billion yen to 1.3 billion yen (US$12.4 million). The Solar Photovoltaic
Systems business reported higher operating income, reflecting higher sales. The Thermal & Hydro Power Systems
business performed well but recorded lower operating income. The Nuclear Power Systems business deteriorated
reflecting a temporary expense incurred overseas, and at one time negative impact of a conservative reassessment of the
asset value of a U.S. developer of nuclear power plants. The Electric Power Distribution Systems business also
deteriorated.
Community Solutions:
The net sales of the Community Solutions segment increased by 180.6 billion yen to 1,356.7 billion yen (US$13,171.2
million). The Retail Information Systems and Office Equipment business reported significantly higher sales on positive
effects from a business acquisition and other factors. The Disaster Prevention Systems, Elevator & Building Systems,
Lighting and Commercial Air-Conditioners businesses also saw sales increases.
Segment operating income increased by 26.6 billion yen to 53.3 billion yen (US$517.7 million). The Retail Information
Systems and Office Equipment business saw higher operating income reflecting higher sales, and the Elevator & Building
Systems and Commercial Air-Conditioners businesses also recorded higher operating income.
Healthcare Systems & Services:
The net sales of the Healthcare Systems & Services segment increased by 31.1 billion yen to 410.7 billion yen (US$3,987.6
million). Healthcare systems, especially computerized tomography (CT) systems, recorded higher sales on higher unit
sales in emerging economies and sales growth in the overseas service sector.
Segment operating income increased by 8.7 billion yen to 28.6 billion yen (US$277.5 million). The segment saw higher
operating income on higher sales in emerging economies and the overseas service sector.
Electronic Devices & Components:
The net sales of the Electronic Devices & Components segment increased by 407.1 billion yen to 1,687.3 billion yen
(US$16,381.4 million). The Memories business saw significantly higher sales on increased sales volume, and the Discrete
business reported higher sales. The Storage Products business also recorded higher sales, especially in 3.5-inch hard disk
drives (HDDs).
Segment operating income increased by 200.4 billion yen to 241.6 billion yen (US$2,345.2 million). The Memories
business saw a notable upswing, maintaining high profitability.
06 TOSHIBA Annual Report 2014
Lifestyle Products & Services:
The net sales of the Lifestyle Products & Services segment increased by 46.8 billion yen to 1,314.6 billion yen (US$12,763.3
million). The Visual Products business, which includes LCD TVs, saw sales decrease due to a shift in focus to redefined
sales territories and other factors, while the PC and White Goods businesses recorded higher sales.
Segment operating income (loss) improved by 14.8 billion yen to -58.1 billion yen (US$-563.9 million). The Visual Products
business saw a considerable improvement, due to positive effects from a focus on redefined sales territories. The White
Goods business deteriorated owing to a weaker yen but secured higher operating income in the second half through
efforts to strengthen product lines and measures to respond to the weaker yen. Although the PC business saw a
considerable second-half improvement against the first half, operating income deteriorated, reflecting the impacts of yen
depreciation.
Others:
The Others segment recorded an operating loss of 8.7 billion yen (US$84.4 million) over sales of 504.0 billion yen
(US$4,893.4 million). The IT Solutions business saw lower operating income despite higher sales.
Net sales by segment listed above include 589.1 billion yen, which is net sales of inter-company transactions.
(2) Cash Flows
In the fiscal year under review, net cash provided by operating activities amounted to 284.1 billion yen, an increase of
151.8 billion yen from net cash provided by operating activities of 132.3 billion yen in the previous year due to
improvement of working capital.
Net cash used in investing activities amounted to 244.1 billion yen, an increase of 47.8 billion yen from 196.3 billion yen
in the previous year.
As a result of the foregoing, free cash flow increased by 104.0 billion yen to 40.0 billion yen (US$388.7 million) from
-64.0 billion yen in the previous year.
Net cash used in financing activities amounted to -89.3 billion yen, a decrease of 131.1 billion yen from 41.8 billion yen
in the previous year.
The effect of exchange rate changes was to increase cash by 11.4 billion yen. Cash and cash equivalents at the end of
the fiscal year declined 37.9 billion yen, from 209.2 billion yen of the end of the previous fiscal year to 171.3 billion yen.
Note:
The Group’s Consolidated Financial Statements are based on U.S. generally accepted accounting principles (“GAAP”).
Operating income (loss) 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 legal settlement costs are not included in it.
Some prior-period data relating to the discontinued operation has been reclassified following corrections to the
consolidated financial statements. Details of the reclassification are provided in “V. Financial Information.”
Following the acquisition of IBM's Retail Store Solutions business in July 2012, the Company completed the allocation of
the cost of the acquisition to assets and liabilities, according to ASC 805, in the fiscal year ended March 31, 2014. Results
for the fiscal year ended March 31, 2013 have been revised to reflect this change.
The ODD business is classified as a discontinued operation in accordance with ASC 205-20. The results of the ODD
business have been excluded from net sales, operating income (loss), and income (loss) from continuing operations,
before income taxes and noncontrolling interests. Net income of the Group is calculated by reflecting the ODD business
results to income (loss) from continuing operations, before income taxes and noncontrolling interests. Results of the past
fiscal year have been revised to reflect this change.
The HDD and SSD businesses are referred to as the Storage Products business.
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 Board of the Directors determines each dividend based on the policy of paying the dividends twice a year.
In addition, it is provided in Articles of Incorporation of the Company as follows; "Unless otherwise provided by laws
and ordinances, matters stipulated in each item of Article 459, Paragraph 1 of the Companies Act including matters
relating to the dividends of surplus shall be determined by resolutions of the Board of Directors, not by resolutions of
General Meeting of Shareholders."
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 the year ended March 31, 2014 was 8.0 yen per share.
TOSHIBA Annual Report 2014
07
Management's Discussion and Analysis
RESEARCH AND DEVELOPMENT
The Group’s new management policy defines Growth through Creativity and Innovation as the main target, to be
achieved through Value Creation and Productivity Improvements. We have also added Healthcare to Energy and Data
Storage as a core business. In achieving this management policy, in addition to our long-standing promotion of Value
Innovation, which encompasses the unearthing of society’s potential needs and issues and the creation of innovative
technologies, and Process Innovation, the constant productivity improvements that fuel profit creation and strengthen
competitiveness, we will promote New Concept Innovation that utilizes the wide-ranging technology assets of the Group
in many and diverse fields to generate synergies, and create new value for customers.
The Group's overall R&D expenditure reached 327.9 billion yen in the fiscal year ended March 31, 2014. Expenditures for
each business segment were as follows:
Energy & Infrastructure
Community Solutions
Healthcare Systems & Services
Electronic Devices & Components
Lifestyle Products & Services
Others
CAPITAL EXPENDITURES
Billions of yen
64.7
45.0
31.7
145.5
34.8
6.2
CAPITAL EXPENDITURE OVERVIEW
(1) 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 the year ended March 31, 2014 as a result of proactive investment in new businesses to achieve growth through
creativity and innovation, the total amount of investment and loan amounted to 415.9 billion yen. In relation to capital
investment, the Group carefully selected projects in fields in which growth is expected, placing importance on efficiency
of investment. Consequently, capital expenditure on ordering basis amounted to 340.2 billion yen, which was 10.2 billion
yen increase from the initial plan, 330.0 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.
Energy & Infrastructure
Community Solutions
Healthcare Systems & Services
Electronic Devices & Components
Lifestyle Products & Services
Others
Total
Notes: 1) Based on ordering basis and includes intangible assets.
2) Based on payment basis.
Capital expenditure
(billion yen) (Note 1)
61.0
28.6
11.1
201.5
8.5
29.5
340.2
Investments & loans
(billion yen) (Note 2)
29.8
25.6
0.8
19.1
0.0
0.4
75.7
Total investments
(billion yen)
90.8
54.2
11.9
220.6
8.5
29.9
415.9
08 TOSHIBA Annual Report 2014
(2) Primary Capital Investment
Completed during
the term
Energy &
Infrastructure
Segment
Outline
• Building for Keihin Global Engineering and Manufacturing Center (the Company's Keihin
Product Operations)
• Manufacturing building, facilities, interior decorating and power equipment, and
manufacturing facilities for transmission and distribution systems business (Brazil)
Electronic Devices
& Components
Others
• Manufacturing facilities for NAND flash memory (the Company's Yokkaichi Operations)
• Manufacturing facilities for post-process of discrete semiconductor device (Thailand)
• Interior decorating and power equipment for building of Smart Building for Smart Community
business (Note)
Ordered during
the term
Energy &
Infrastructure
Electronic Devices
& Components
• Manufacturing facilities for equipments of transmission and distribution systems business
(India)
• Manufacturing building, facilities, interior decorating and power equipment, and
manufacturing facilities for NAND flash memory (the Company's Yokkaichi Operations)
(Note) The building is owned by NREG Toshiba Building Co., Ltd..
(3) Primary Investment and Loan
Segment
Energy & Infrastructure
Outline
• Acquisition of power transformer, distribution transformer, and switchgear businesses from Vijai
Electricals Ltd. in India
Community Solutions
Electronic Devices &
Components
• Acquisition of Sigma Power Janex Co., Ltd., a company operating wind power generation business
• Investment in UEM, a water treatment engineering company in India
• Acquisition of assets related to development of white LEDs chips from Bridgelux in the U.S.
• Acquisition of assets related the solid-state storage business from OCZ Technology Group Inc. in the
U.S.
PLANS FOR CONSTRUCTING NEW FACILITIES AND RETIRING EXISTING FACILITIES
At the end of this fiscal year ended March 31, 2014, investment for newly-established facilities and upgrades of equipment
is planned to be amounted as 370.0 billion yen in the year ending March 31, 2015 (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, Ltd. and others, which are companies accounted for by the equity method. The
funds for capital expenditures will be financed by the internal funds.
Business Segment
Energy & Infrastructure
Community Solutions
Healthcare Systems & Services
Electronic Devices & Components
Lifestyle Products & Services
Others
Total
Investments & loans
Total investments
Billions of yen
Planned Capital
Investments for
the year ending March 31, 2014
70.0
35.0
10.0
202.0
13.0
40.0
370.0
80.0
450.0
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 the year ending March 31, 2015 are as follows:
Major Contents and Purposes
As of March 31, 2014
Manufacturing facilities for Transmission & Distribution of
energy systems, etc.
−
−
Manufacturing facilities for NAND flash memories.
−
−
−
Name of Company
and Office
Place
Flash Forward
Ltd. and others
Yokkaichi, Mie
Business
Segment
Electronic
Devices &
Components
Type of Facility
Planned
Beginning
Capacity Improvement after
Completion of Construction
Manufacturing facilities
for semiconductors, etc.
June 2014
Enhancement of
manufacturing
facilities, etc.
As of March 31, 2014
TOSHIBA Annual Report 2014
09
Management's Discussion and Analysis
TREASURY STOCK
Shares held as of the closing
date of last period:
Shares acquired during the
period:
Demand for purchase of shares
less than one unit from
shareholders
Demand for purchase of shares
by shareholders dissenting from
Absorption-type Merger
Shares disposed during the
period:
Demand for sale of shares less
than one unit from shareholders
Shares held as of the closing
date of this period:
Aggregate amount of
acquisition costs:
Aggregate amount of
acquisition costs:
Aggregate amount of
sales value:
2,789,946
(common stock)
333,471
(common stock)
151,256
(thousand yen)
750
(common stock)
323
(thousand yen)
12,700
(common stock)
5,781
(thousand yen)
3,111,467
(common stock)
10 TOSHIBA Annual Report 2014
MAJOR SUBSIDIARIES AND AFFILIATED COMPANIES
Consolidated Subsidiaries
Affiliated companies
As of March 31, 2014
Flash Alliance, Ltd.
Flash Forward
Flash Partners, Ltd.
NREG Toshiba Building Co., Ltd.
Shibaura Mechatronics Corporation
Topcon Corporation
Toshiba Machine Co., Ltd.
Toshiba Medical Finance Co., Ltd.
Toshiba Mitsubishi-Electric Industrial Systems Corporation
Dalian Toshiba Locomotive Electric Equipment Co., Ltd.
Energy Asia Holdings, Ltd
Guangdong Meizhi Compressor Ltd.
Guangdong Midea Air-Conditioning Equipment Co., Ltd.
Guangdong Midea Commercial Air-Conditioning Equipment Co., Ltd.
Guangdong Midea Group Wuhan Air-Conditioning Equipment Co., Ltd.
Guangdong Midea Group Wuhu Air-Conditioning Epuipment Co., Ltd.
Nuclear Innovation North America LLC
PM&T Holding B.V.
Semp Toshiba Amazonas S.A.
TMEIC Corporation
UNISON Co., Ltd
Iwate Toshiba Electronics Co., Ltd.
Kaga Toshiba Electronics Corporation
Kokusai Chart Corporation
Nishishiba Electric Co., Ltd.
NuFlare Technology, Inc.
Toshiba Carrier Corporation
Toshiba Consumer Marketing Corporation
Toshiba Denzai Marketing Co., Ltd.
Toshiba Elevator and Building Systems Corporation
Toshiba Global Commerce Solutions Holdings Corporation
Toshiba Home Appliances Corporation
Toshiba Industrial Products and Systems Corporation
Toshiba Information Equipments Co., Ltd.
Toshiba Lighting & Technology Corporation
Toshiba Logistics Corporation
Toshiba Medical Systems Corporation
Toshiba Plant Systems & Services Corporation
Toshiba Solutions Corporation
Toshiba TEC Corporation
Toshiba Trading Inc.
Dalian Toshiba Television Co., Ltd.
Landis +Gyr A.G.
Landis +Gyr Holding A.G.
TAI Receivables Corporation
Taiwan Toshiba International Procurement Corporation
Toshiba America Business Solutions, Inc.
Toshiba America Electronic Components, Inc.
Toshiba America Information Systems, Inc.
Toshiba America Medical Systems, Inc.
Toshiba America Nuclear Energy Corporation
Toshiba America, Inc.
Toshiba Asia Pacific Pte., Ltd.
Toshiba Carrier (Thailand) Co., Ltd.
Toshiba (China) Co., Ltd.
Toshiba Dalian Co., Ltd.
Toshiba Digital Media Network Taiwan Corporation
Toshiba Electronics Asia, Ltd.
Toshiba Electronics Korea Corporation
Toshiba Elevator (China) Co., Ltd.
Toshiba Europe GmbH
Toshiba Information Equipment (Hangzhou) Co., Ltd.
Toshiba Information Equipment (Philippines), Inc.
Toshiba Information Systems (UK) Ltd.
Toshiba Infrastructure Systems South America Ltd.
Toshiba International Corporation
Toshiba International Finance (UK) Plc.
Toshiba International Procurement Hong Kong, Limited
Toshiba JSW Power Systems Private Ltd.
Toshiba Lighting & Technology (Kunshan) Co., Ltd
Toshiba Medical Systems Europe B.V.
Toshiba Nuclear Energy Holdings (UK) Ltd.
Toshiba Nuclear Energy Holdings (US) Inc.
Toshiba TEC France Imaging Systems S.A.
Toshiba TEC U.K. Imaging Systems Ltd.
Toshiba Transmission & Distribution India Private Limited
Westinghouse Electric Company LLC
The Company has 598 consolidated subsidiaries in total including 56 above and 208 affiliated companies in total including 21 above
accounted for by the equity method.
TOSHIBA Annual Report 2014
11
Management's Discussion and Analysis
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. However, they
should not be regarded as a complete and comprehensive statement of risk factors relating to the Group, and there are
unforeseeable risk factors other than those 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 25, 2014
and involve inherent uncertainties, and, therefore, the actual results may differ. The Group recognizes these risks and
makes every effort to avoid the occurrence of these risks and minimize any impact from them when they occur, by
maintaining the proper risk management.
1. Risks related to management policy
(1) Strategic concentrated investment
The Group is making strategic concentrated investments in the categories which aim to implement comprehensive
solutions for the issues 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. 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 is making 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. Therefore, when making strategic concentrated investments, 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 business alliance or 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. The Group, in an attempt to minimize impact from exchange rate fluctuations, has made efforts to
expand globally optimized production and procurement and to secure multiple suppliers, among other things. While
consolidating and optimizing facilities in Japan and abroad, the Group aims to achieve a structure that maximizes Group
synergy, in addition to streamlining the business structure. However, in the event of unexpected fluctuations in foreign
exchange rates, or the failure of the reform programs to produce the expected results, the Group may incur additional
expenses for business structure reform and in such case the Group’s operating results or financial condition may be
affected.
(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 may take defensive
measures against it 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 Group 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.
12 TOSHIBA Annual Report 2014
2. Risks related to financial condition, results of operations and cash flow
(1) Business environment of the Energy and Infrastructure business
A significant portion of the net sales in the Energy and 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
the economic recession, and exchange rate fluctuations may have a negative impact on this business.
Furthermore, this business promotes and involves the supply of products and services for large-scale projects on a
worldwide basis. Post order changes in the specifications or other terms, delays, appreciation of material costs, changes
to and suspension or stoppage 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 retroactively
reassess profits recorded as accrued and record them as a loss, in the event that, among other things, the original
estimate is over- or understated, the expected profits from such projects do not meet original expectations or the
projects are delayed or cancelled for some reason. In the past, the Group recorded losses on certain projects.
Furthermore, it may not be possible to pass on to the customer or others any additional costs incurred due to changes in
terms or delays in the work process, and such costs may not be collected, or a dispute may arise over such costs. In fact,
there are certain projects regarding which the Group is taking legal action. With respect to the investments in an operator
that promotes a certain project which investment is made in order to secure the order from such operator, there may be
impairments in investments, increases in the financial burden, delays in payouts depending upon the trends in projects.
In order to deal with these issues, the Group makes every effort to grasp trends in markets and projects, make sound
investment decisions and 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.
(2) Business environment of the Community Solutions business
The Community Solutions business provides diversified solutions and strengthens the smart community business aimed
at delivering multiple urban and regional solutions that include the facilities business related to facilities, such as
buildings, factories and housings, and the urban infrastructure solution business and the retail business. Furthermore, the
Group has participated in demonstration experiments in the area of the smart community business on a worldwide basis
and has provided diversified solutions in collaboration with local governments.
Since a significant portion of the net sales in this business is attributable to sales related to expenditures on public
works and capital expenditures by the private sector, reductions or delays in spending on public works, low levels of
private capital expenditures due to the economic recession, and trends in building and housing construction on a
worldwide basis and other factors may have a negative impact on this business.
This business is promoting its business development on a worldwide basis. Post order changes in the specifications or
other terms, changes to and stoppages of plans for various reasons including policy changes, changes in regulations,
appreciation of material costs and personnel expenses, natural and other disasters and other factors, may adversely and
substantially affect the progress of this business. In addition, exchange rate fluctuations and other factors may also have a
negative impact on this business.
(3) Business environment of the Healthcare Systems and Services business
A significant portion of the net sales in the Healthcare Systems and Services business is attributable to medical
businesses. While the medical businesses expands and develops its global market amid improvements in the medical
infrastructure in emerging economies, the escalation of social welfare spending is a challenge for countries in which the
population is aging, and this business is situated in a business environment which is significantly affected by policy to
reduce medical expenses.
Products for medical institutions, by their nature, require a lot of time to design, research and develop and, sell the
products since they require a certain amount of time to prove the clinical effects of the new technology and products,
and also require obtaining approval and homologation pursuant to the laws and regulations on medical devices in
various countries. On the other hand, as recent medical technology has been remarkably advanced, state-of-the-art
research and development, collaborating with advanced medical institutions in various countries, has been carried out
on a global scale. Continuous investments in R&D expenditures are essential to keeping up with the speed of
revolutionary medical technology. As a result, although the Group makes investments based on detailed considerations
and expectations, the Group may not be able to foresee changes in the market environment and medical policies and
other factors, to sell products in line with market needs in a timely manner and thus may not be able to maintain its
TOSHIBA Annual Report 2014
13
Management's Discussion and Analysis
competitiveness, and consequently, investments in R&D expenditures and investments in advances into new business
areas for the Healthcare Systems and Services business may not fully generate the anticipated level of profit.
(4) Business environment of the Electronic Devices and Components business
The market for the Electronic Devices and Components 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 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 changes in the consumer market or semiconductor heavy users may influence
demand for System LSIs and other semiconductor products.
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.
(5) Business environment of the Lifestyle Products and Services business
The market for the Lifestyle Products and Services business is intensely competitive, with many companies manufacturing
and selling products similar to those offered by the Group. Additionally, this business may be significantly affected by
exchange rate fluctuations, economic fluctuations and consumer spending trends which may be affected by the
scheduled increase in consumption tax, among other things. The Group makes efforts to monitor the latest trends in
market demand in order to better respond to changes in supply and demand conditions, and also makes every effort to
minimize the potential impact of the market volatility. 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 Group is promoting structural reforms in an attempt to improve profit and enhance the basic structure of the
Lifestyle Products and Services business. In this connection, there is a possibility that the Group will incur expenses for
business structure reform which may give material negative impact on profitability.
(6) 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 a change in the balance in each 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
14 TOSHIBA Annual Report 2014
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
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
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.
(7) 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.
In addition, 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 the
relevant loan repayments may be accelerated upon demand by the relevant lending financial institutions. Furthermore,
any breach by the Company of those 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 understanding of the lending financial
institutions with respect to this, in order to avoid breaching financial covenants and the consequent acceleration of
repayments. However, if any acceleration of the Company’s loan repayments occurs, it may materially affect the
Company’s business operations.
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
TOSHIBA Annual Report 2014
15
Management's Discussion and Analysis
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. In addition, a shortage in the electric power supply resulted from
the suspension of the operation of nuclear power plants in Japan and a further rise in electricity costs due to the rise of
fuel costs affected by exchange rate fluctuations may affect business activities, including manufacturing operations, of
the Group, since a stable supply of electricity is essential to the Group’s business activities.
Any failure by the Group to procure such materials, components and other goods from key suppliers or any shortage in
the power supply or further rise in electricity costs 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.
(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. 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.
Cultivation of new businesses entails substantial uncertainty, and if any new business in which the Group invests or
which the Group attempts to develop does not progress as planned, the Group may be adversely affected by incurring
investment expenses that do not lead to the anticipated results. In order to avoid these risks, the Group makes every
effort to resolve various technological issues and to develop and capture potential demand effectively in the new
business development process.
5. Risks related to trade practices
(1) Parent company’s guarantees
When a subsidiary of the Company accepts an order for a large project, such as a plant, the Company, as the parent
company, may, at the request of the customer, provide guarantees with respect to the subsidiary’s performance under
the contract. Such parent guarantees are made pursuant to standard business practices and in the ordinary course of
business. If the subsidiary subsequently fails to fulfill its obligations, the Company may be obligated to bear the resulting
loss. The Company makes every effort to conduct appropriate management by periodically monitoring the subsidiaries’
fulfillment of the contract requirements and by cooperating with such subsidiaries where necessary.
6. Risks related to new products and new technology
(1) Development of new products
It is critically important for the Group to offer innovative and attractive new products and services. 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.
16 TOSHIBA Annual Report 2014
7. Risks related to laws and regulations
(1) Information security
The Group maintains and manages personal information obtained through business operations. Even though the Group
makes every effort to manage this information appropriately, the Group’s brand image, reputation and business
performance may be subject to negative influences, or the Group may be found to be liable for damages in the event of
an unanticipated leak of such information which results in illegal retention or usage of such information by a third party.
The Group also maintains and manages trade secrets regarding the Group’s technology, marketing and other business
operations. The Group is implementing measures to prevent leakage of such trade secrets outside the Group through
maintaining and tightening control of its information management system, training its employees, and other measures.
However, in the past, situations have occurred in which leakage of trade secrets was suspected. The Group’s competitive
power may be weakened and the Group’s business, operating results and financial condition may be subject to negative
influences, in the event of an unanticipated leak of such information which results in illegal retention or usage of such
information 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, and in such cases the Group’s business performance may be adversely affected.
(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. Moreover, 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
interpretations of laws and regulations by the relevant authorities may also cause difficulty in achieving compliance with
laws and regulations, or in continuing business in certain regions or business categories, and may result in increased
compliance costs. Furthermore, if the Group is in violation of these laws and regulations, the Group may be subject to
administrative sanctions, such as fines, or criminal penalties, and legal actions claiming damages may be filed against the
Group. In such cases, the Group’s reputation may be adversely affected, and the Group’s business, operating results and
financial condition may be adversely affected.
(3) The environment
The Group is subject to various environmental laws, including laws on air pollution, water pollution, toxic substances,
waste disposal, product recycling, prevention of global warming and energy policies, in its global business activities.
While the Group pays careful attention to these laws and regulations, it is possible that the Group may encounter legal or
social liability for environmental matters, such as liability for the clean up of land at manufacturing bases throughout the
world, regardless of whether the Group is at fault or not, with respect to its business activities, including its past activities.
It is also possible that, in future, the Group will face more stringent requirements on the removal of environmental
hazards, including toxic substances, or on further reducing emissions of greenhouse gases, as a result of the introduction
of more demanding environmental regulations or in accordance with societal requirements.
The Group’s operations require the use of various chemical compounds, radioactive materials, nuclear materials and
other toxic materials. The Group takes maximum care of such materials, giving first priority to human life and safety.
However, the Group may incur damage, or the Group’s reputation may be adversely affected, as a result of a natural
disaster, the threat or occurrence of a terrorist incident, or of an accident or other contingency (including those beyond
the Group’s control) that leads to environmental pollution or the potential for such pollution.
(4) Product quality claims
While the Group makes every effort to implement quality control measures and to manufacture its products in
accordance with appropriate quality-control standards, in the past, the Group recalled certain products, and lawsuits and
other claims relating to product quality were filed against the Group, and there is no assurance that all products are free
of defects that may result in such product quality claims 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
TOSHIBA Annual Report 2014
17
Management's Discussion and Analysis
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.
The Group is under investigation by the European 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. In addition, class action lawsuits and other claims with
respect to alleged anti-competitive behavior regarding certain products brought against the Group are currently pending
in the United States.
The Ministry of Defense (“MOD”) cancelled a contract for the development and manufacture of the “reconnaissance
system for the F-15” between MOD and the Company. Therefore, in July 2011, the Company filed a lawsuit against MOD
with the Tokyo District Court seeking payment therefore. In October 2012, MOD filed a countersuit for penalty charges
based on the alleged infringement by the Company of the contract. The Company believes that it had properly executed
its duties pursuant to the conditions of the contract and that MOD’s cancellation of the contract and claim for penalty
charges were unreasonable. Therefore, the Company will assert its opinion in the suit.
In the U.S., since December 2006, actions against the Group and others to claim for damages have been filed by
purchasers, etc. of LCD-related products on the ground of alleged infringements of U.S. Competition Law. Among them,
lawsuits with individual companies have been pending. Believing that the Group has not committed any violations in the
LCD business, the Company intends to take any legal action to have its claims accepted.
In December 2012, the European Commission determined that there was an infringement of EU Competition Law in the
Color Picture Cathode Ray Tube market, and adopted the decision to impose a fine of approximately 28 million euro on
the Company, plus a fine of approximately 87 million euro jointly and severally with Panasonic Corporation and MT
Picture Display Co., Ltd. According to the Company’s investigation, the Company has not infringed EU Competition law.
Therefore, the Company brought an action to the General Court of the European Union in February 2013.
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 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 87% at present. The remainder is held by two companies in Japan and
overseas (the “Minority Shareholders”). The Company is considering inviting the participation of new investors in
Westinghouse, on the condition that the Company retains a majority-in-interest.
The Minority Shareholders, based on a separate agreement with the Company, have been given an option to sell all or
part of their ownership interests to the Company (“Put Options”).
The Group also has an option to purchase from the Minority Shareholders all or part of their respective ownership
interests 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 a certain amount of 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.
18 TOSHIBA Annual Report 2014
The Group 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 the past, law suits or similar actions or proceedings have been brought against the Group in respect of intellectual
property rights, and the Group has filed law suits in order to protect its intellectual property rights. Such lawsuits and
actions may be brought against the Group or the Group may file lawsuits against infringing third parties in the future.
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, including rules and regulations concerning investment, repatriation of profits, export and
import controls, foreign exchange, and taxation, and exchange rate fluctuations, in Japan or overseas, may impact market
demand and the Group’s business operations.
(4) Natural disasters
Most of the Group’s Japanese production facilities are located in the Keihin region of Japan, which includes Tokyo,
Kawasaki City, Yokohama City and the surrounding area, while key semiconductor production facilities are located in
Kyushu, Tokai, Hanshin and Tohoku. The Group is currently expanding its production facilities in Asia. As a result, any
occurrence of a wide-scale disaster, terrorism or epidemic illness, such as a new type of flu, particularly in any of these
areas could have a 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.
TOSHIBA Annual Report 2014
19
Consolidated Balance Sheet
Toshiba Corporation and Subsidiaries
As of March 31, 2014
Assets
Current assets:
Cash and cash equivalents
Notes and accounts receivable, trade:
Notes (Notes 7 and 11)
Accounts (Notes 7 and 11)
Allowance for doubtful notes and accounts
Inventories (Note 8)
Deferred tax assets (Note 17)
Other receivables (Note 7)
Prepaid expenses and other current assets (Notes 20 and 22)
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 16 and 21):
Land
Buildings
Machinery and equipment
Construction in progress
Less-Accumulated depreciation
Total property, plant and equipment
Other assets: (Note 16)
Goodwill and other intangible assets (Note 10)
Deferred tax assets (Note 17)
Other assets
Total other assets
Total assets
The accompanying notes are an integral part of these statements.
Millions of yen
2014
2013
Thousands of
U.S. dollars
(Note 3)
2014
¥
171,340
¥
209,169
$ 1,663,495
38,850
1,467,590
(17,703)
884,809
171,022
151,038
291,727
3,158,673
461
384,344
277,749
662,554
94,769
944,284
2,068,028
76,094
3,183,175
(2,273,056)
910,119
994,888
311,725
134,560
1,441,173
33,620
1,344,088
(16,882)
940,238
176,001
156,382
266,114
3,108,730
30,379
411,506
264,391
706,276
93,729
915,590
2,032,400
79,707
3,121,426
(2,299,127)
822,299
901,816
385,416
97,066
1,384,298
377,184
14,248,447
(171,874)
8,590,379
1,660,408
1,466,388
2,832,301
30,666,728
4,476
3,731,495
2,696,592
6,432,563
920,087
9,167,806
20,077,942
738,777
30,904,612
(22,068,505)
8,836,107
9,659,107
3,026,456
1,306,408
13,991,971
¥ 6,172,519
¥
6,021,603
$ 59,927,369
20 TOSHIBA Annual Report 2014
Liabilities and equity
Current liabilities:
Short-term borrowings (Note 11)
Current portion of long-term debt (Notes 11 and 20)
Notes and accounts payable, trade
Accounts payable, other and accrued expenses (Note 25)
Accrued income and other taxes
Advance payments received
Other current liabilities (Notes 17, 20 and 23)
Total current liabilities
Long-term liabilities:
Long-term debt (Notes 11 and 20)
Accrued pension and severance costs (Note 12)
Other liabilities (Notes 17, 20, 25 and 26)
Total long-term liabilities
Millions of yen
2014
2013
¥
146,105
57,418
1,204,883
503,056
74,092
325,697
422,259
2,733,510
1,184,864
610,592
197,559
1,993,015
¥
191,453
241,675
1,200,429
439,144
58,133
297,208
440,692
2,868,734
1,038,448
715,450
193,148
1,947,046
Thousands of
U.S. dollars
(Note 3)
2014
$ 1,418,495
557,456
11,697,893
4,884,039
719,340
3,162,107
4,099,602
26,538,932
11,503,534
5,928,078
1,918,048
19,349,660
Total liabilities
¥ 4,726,525
¥
4,815,780
$ 45,888,592
Equity attributable to shareholders of the Company (Note 18):
Common stock:
Authorized−10,000,000,000 shares Issued:
2014 and 2013 −4,237,602,026 shares
Additional paid-in capital
Retained earnings
Accumulated other comprehensive loss
Treasury stock, at cost:
2014−3,111,467 shares
2013−2,789,946 shares
Total equity attributable to shareholders of the Company
Equity attributable to noncontrolling interests
Total equity
Commitments and contingent liabilities (Notes 22, 23 and 24)
¥
439,901
401,830
454,931
(267,786)
(1,687)
−
1,027,189
418,805
¥ 1,445,994
¥
¥
439,901
401,594
428,569
(443,938)
−
(1,542)
824,584
381,239
1,205,823
$ 4,270,884
3,901,262
4,416,806
(2,599,864)
(16,379)
−
9,972,709
4,066,068
$ 14,038,777
Total liabilities and equity
¥ 6,172,519
¥
6,021,603
$ 59,927,369
TOSHIBA Annual Report 2014
21
Consolidated Statement of Income
Toshiba Corporation and Subsidiaries
For the years ended March 31, 2014
Sales and other income:
Net sales
Interest and dividends
Equity in earnings of affiliates (Note 9)
Other income (Notes 5, 6, 15 and 20)
Costs and expenses:
Cost of sales (Notes 5, 10, 13, 16, 21 and 25)
Selling, general and administrative (Notes 5, 10, 13, 14 and 21)
Interest
Other expense (Notes 5, 6, 7, 15 and 20)
Millions of yen
2014
2013
¥ 6,489,702
13,756
3,254
65,732
6,572,444
4,865,787
1,366,789
33,696
123,836
6,390,108
¥
5,722,248
12,139
21,560
100,755
5,856,702
4,413,476
1,216,719
32,677
118,904
5,781,776
Thousands of
U.S. dollars
(Note 3)
2014
$ 63,006,816
133,554
31,592
638,174
63,810,136
47,240,650
13,269,796
327,146
1,202,291
62,039,883
Income from continuing operations,
before income taxes and noncontrolling interests
182,336
74,926
1,770,253
Income taxes (Note 17):
Current
Deferred
Income from continuing operations,
before noncontrolling interests
Loss from discontinued operations,
before noncontrolling interests (Notes 4 and 5)
Net income before noncontrolling interests
Less: Net income attributable
to noncontrolling interests
52,583
39,462
92,045
50,854
(12,498)
38,356
510,515
383,126
893,641
90,291
36,570
876,612
(15,021)
75,270
(4,983)
31,587
(145,835)
730,777
15,030
18,162
145,923
Net income attributable to shareholders of the Company
¥
60,240
¥
13,425
$
584,854
Basic net earnings (loss) per share attributable
to shareholders of the Company (Note 19)
Earnings from continuing operations
Loss from discontinued operations
Net earnings
Cash dividends per share (Note 18)
The accompanying notes are an integral part of these statements.
Yen
U.S. dollars
(Note 3)
¥
¥
¥
¥
16.28
(2.05)
14.23
8.00
¥
¥
¥
¥
3.76
(0.59)
3.17
8.00
$
$
$
$
0.16
(0.02)
0.14
0.08
22 TOSHIBA Annual Report 2014
Consolidated Statement of Comprehensive Income
Toshiba Corporation and Subsidiaries
For the years ended March 31, 2014
Net income before noncontrolling interests
¥
75,270
¥
31,587
$
Millions of yen
2014
2013
Other comprehensive income (loss), net of tax (Note 18)
Net unrealized gains and losses on securities (Note 6)
Foreign currency translation adjustments
Pension liability adjustments (Note 12)
Net unrealized gains and losses on derivative instruments (Note 20)
Total other comprehensive income
18,417
128,278
55,797
(1,734)
200,758
25,571
145,066
38,506
(841)
208,302
Thousands of
U.S. dollars
(Note 3)
2014
730,777
178,806
1,245,417
541,718
(16,835)
1,949,106
Comprehensive income before noncontrolling interests
276,028
239,889
2,679,883
Less:Comprehensive income attributable
to noncontrolling interests
39,636
60,037
384,815
Comprehensive income attributable
to shareholders of the Company
The accompanying notes are an integral part of these statements.
¥
236,392
¥
179,852
$ 2,295,068
TOSHIBA Annual Report 2014
23
Consolidated Statement of Equity
Toshiba Corporation and Subsidiaries
For the years ended March 31, 2014
Balance at March 31, 2012
Change in ownership for
noncontrolling
interests and others
Dividend attributable to
shareholders of the Company
Dividends attributable to
noncontrolling interests
Comprehensive income:
Net income
Other comprehensive income
(loss), net of tax (Note 18):
Net unrealized gains and
losses on securities (Note 6)
Foreign currency
translation adjustments
Pension liability
adjustments (Note 12)
Net unrealized gains and
losses on derivative
instruments (Note 20)
Total comprehensive
income
Purchase of treasury stock,
net, at cost
Balance at March 31, 2013
Change in ownership for
noncontrolling
interests and others
Dividend attributable to
shareholders of the Company
Dividends attributable to
noncontrolling interests
Comprehensive income:
Net income
Other comprehensive income
(loss), net of tax (Note 18):
Net unrealized gains and
losses on securities (Note 6)
Foreign currency
translation adjustments
Pension liability
adjustments (Note 12)
Net unrealized gains and
losses on derivative
instruments (Note 20)
Total comprehensive
income
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
noncontrolling
interests
Total
equity
¥ 439,901 ¥ 396,789 ¥ 449,023 ¥ (565,551) ¥
(1,498) ¥ 718,664 ¥ 365,194 ¥ 1,083,858
4,811
(44,814)
(40,003)
(39,057)
(79,060)
(33,879)
(33,879)
(33,879)
13,425
13,425
18,162
31,587
(4,935)
(4,935)
21,072
107,078
38,992
21,072
4,499
25,571
107,078
37,988
145,066
38,992
(486)
38,506
(715)
(715)
(126)
(841)
179,852
60,037
239,889
439,901
(6)
401,594
428,569
(443,938)
(44)
(1,542)
(50)
824,584
381,239
(50)
1,205,823
236
236
1,826
2,062
(33,878)
(33,878)
(33,878)
60,240
60,240
15,030
75,270
(3,896)
(3,896)
15,759
108,700
53,082
15,759
2,658
18,417
108,700
19,578
128,278
53,082
2,715
55,797
(1,389)
(1,389)
(345)
(1,734)
236,392
39,636
276,028
(145)
(145)
(1,687) ¥ 1,027,189 ¥ 418,805 ¥ 1,445,994
(145)
Balance at March 31, 2014
¥ 439,901 ¥ 401,830 ¥ 454,931 ¥ (267,786) ¥
24 TOSHIBA Annual Report 2014
Common
stock
Additional
paid-in capital
Retained
earnings
Thousands of U.S. dollars (Note 3)
Accumulated
other
comprehen-
sive
income (loss)
Treasury
stock
Equity
attributable
to
shareholders
of
the Company
Equity
attributable to
noncontrolling
interests
Total
equity
$ 4,270,884 $ 3,898,971 $ 4,160,865 $ (4,310,078) $
(14,971) $ 8,005,671 $ 3,701,349 $ 11,707,020
2,291
2,291
17,728
20,019
(328,913)
(328,913)
(328,913)
584,854
584,854
145,923
730,777
(37,825)
(37,825)
153,000
1,055,340
515,359
153,000
25,806
178,806
1,055,340
190,078
1,245,418
515,359
26,359
541,718
(13,485)
(13,485)
(3,350)
(16,835)
Balance at March 31, 2013
Change in ownership for
noncontrolling
interests and others
Dividend attributable to
shareholders of the Company
Dividends attributable to
noncontrolling interests
Comprehensive income:
Net income
Other comprehensive income
(loss), net of tax
(Note 18):
Net unrealized gains and losses
on securities (Note 6)
Foreign currency translation
adjustments
Pension liability adjustments
(Note 12)
Net unrealized gains and losses
on derivative instruments
(Note 20)
Total comprehensive
income
Purchase of treasury stock,
net, at cost
Balance at March 31, 2014
The accompanying notes are an integral part of these statements.
$ 4,270,884 $ 3,901,262 $ 4,416,806 $ (2,599,864) $
2,295,069
384,816
2,679,884
(1,408)
(1,408)
(16,379) $ 9,972,709 $ 4,066,068 $ 14,038,777
(1,408)
TOSHIBA Annual Report 2014
25
Consolidated Statement of Cash Flows
Toshiba Corporation and Subsidiaries
For the years ended March 31, 2014
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
loss from sales, disposal and impairment of property, plant and
equipment and intangible assets, net
(Gain) loss from sales and impairment of securities and
other investments, net
(Increase) decrease in notes and accounts receivable, trade
(Increase) decrease in inventories
Decrease in notes and accounts payable, trade
Increase in accrued income and other taxes
Increase (decrease) in advance payments received
Other
Net cash provided by operating activities
Cash flows from investing activities
Proceeds from sale of property, plant and equipment and
intangible assets
Proceeds from sale of securities
Acquisition of property, plant and equipment
Acquisition of intangible assets
Purchase of securities
(Increase) decrease in investments in affiliates
Other
Net cash used in investing activities
Cash flows from financing activities
Proceeds from long-term debt
Repayment of long-term debt
Increase (decrease) in short-term borrowings, net
Dividends paid
Purchase of treasury stock, net
Purchase of shares of Westinghouse Group from noncontrolling
interests
Other
Net cash provided by (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
The accompanying notes are an integral part of these statements.
Millions of yen
2014
2013
Thousands of
U.S. dollars
(Note 3)
2014
¥
75,270
¥
31,587
$
730,777
171,796
(12,960)
40,510
12,992
16,873
(4,086)
(91,309)
46,363
(59,784)
4,703
12,831
70,933
284,132
40,491
12,134
(200,924)
(50,975)
(5,292)
(1,437)
(38,098)
(244,101)
198,826
(234,773)
(13,678)
(38,954)
(145)
−
(585)
(89,309)
11,449
(37,829)
209,169
171,340
33,777
50,997
¥
¥
197,747
(2,021)
(12,498)
(13,889)
14,533
3,000
6,369
(24,804)
(167,415)
8,355
(3,844)
95,196
132,316
87,672
3,876
(266,581)
(29,630)
(9,203)
24,616
(7,097)
(196,347)
350,101
(208,865)
66,885
(42,547)
(50)
(124,724)
972
41,772
17,123
(5,136)
214,305
209,169
1,667,922
(125,825)
393,301
126,136
163,816
(39,670)
(886,495)
450,125
(580,427)
45,660
124,573
688,670
2,758,563
393,116
117,806
(1,950,719)
(494,903)
(51,379)
(13,951)
(369,883)
(2,369,913)
1,930,349
(2,279,350)
(132,796)
(378,194)
(1,408)
−
(5,679)
(867,078)
111,156
(367,272)
2,030,767
$ 1,663,495
33,090
48,662
$
327,932
495,117
¥
¥
26 TOSHIBA Annual Report 2014
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.
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, 2014 and
2013 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, 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.
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, 2014 and
2013 is as stated in 3) below.
TOSHIBA Annual Report 2014
27
Restatement for the accounting treatment in the parts transactions in the PC Business
As the result of the above investigations, etc., 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, 2014 and 2013 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, 2014 and 2013 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 the correction of 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 accounting period
attribution in revenue recognition. 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, 2014 and 2013 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, 2014 and 2013 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, 2014 and 2013 is as stated in 3) below.
28 TOSHIBA Annual Report 2014
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
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
2014
¥ 6,502,543
2013
5,726,986
¥
Thousands of
U.S. dollars
2014
$ 63,131,486
(7,282)
(518)
(3,016)
191
(70,699)
(5,029)
(5,041)
(12,841)
¥ 6,489,702
(1,913)
(4,738)
5,722,248
¥
(48,942)
(124,670)
$ 63,006,816
TOSHIBA Annual Report 2014
29
(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, income
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
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
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
Millions of yen
2014
2013
Thousands of
U.S. dollars
2014
¥
180,938
¥
159,629
$ 1,756,680
(24,526)
800
10,353
16,271
(12,115)
10,615
1,398
182,336
96,299
(4,254)
92,045
90,291
(15,021)
−
(15,021)
75,270
18,792
(3,762)
15,030
60,240
(17,979)
(2,798)
(28,157)
(36,587)
(12,903)
13,721
(84,703)
74,926
59,315
(20,959)
38,356
36,570
(4,983)
−
(4,983)
31,587
17,965
197
18,162
13,425
¥
0
(238,117)
7,767
100,515
157,971
(117,621)
103,058
13,573
1,770,253
934,942
(41,301)
893,641
876,612
(145,835)
−
(145,835)
730,777
182,447
(36,524)
145,923
584,854
$
Less: Net income attributable to noncontrolling interests, as restated
Net income attributable to shareholders of the Company, as restated
¥
30 TOSHIBA Annual Report 2014
(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, 2013 as cumulative effects in the fiscal year ended March 31, 2012 and the prior periods. No
adjustment is made to common stock and treasury stock, at cost.
March 31, 2012, as previously reported
¥
401,125
¥
591,932
¥
(567,979)
¥
366,730
Additional paid-in capital
Retained earnings
Accumulated other
comprehensive income (loss)
Equity attributable to
noncontrolling 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, 2012, as restated
−
−
−
−
(4,336)
−
−
−
(4,336)
396,789
¥
(7,907)
(6,916)
(59,295)
(16,204)
(24,327)
−
−
−
−
−
−
−
−
2,428
2,025
(87,404)
55,583
3,561
(142,909)
449,023
¥
−
−
−
2,428
(565,551)
¥
−
−
(3,561)
(1,536)
365,194
¥
TOSHIBA Annual Report 2014
31
(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, 2014
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
¥
171,340
1,506,400
934,018
146,121
152,537
298,808
3,209,224
461
386,436
277,749
664,646
97,550
977,233
2,128,297
78,131
3,281,211
(2,321,176)
960,035
1,006,640
264,349
136,729
1,407,718
¥ 6,241,623
¥
¥
−
(17,663)
(49,209)
24,901
(1,499)
(7,081)
(50,551)
−
(2,092)
−
(2,092)
(2,781)
(32,949)
(60,269)
(2,037)
(98,036)
48,120
(49,916)
(11,752)
47,376
(2,169)
33,455
(69,104)
¥
171,340
1,488,737
884,809
171,022
151,038
291,727
3,158,673
461
384,344
277,749
662,554
94,769
944,284
2,068,028
76,094
3,183,175
(2,273,056)
910,119
994,888
311,725
134,560
1,441,173
¥ 6,172,519
32 TOSHIBA Annual Report 2014
March 31, 2014
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
3,111,467 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
¥
146,105
57,418
1,199,539
501,314
74,097
317,713
295,860
2,592,046
1,184,864
610,592
201,794
1,997,250
4,589,296
439,901
404,564
652,367
(266,079)
(1,687)
1,229,066
423,261
1,652,327
¥
−
−
5,344
1,742
(5)
7,984
126,399
141,464
−
−
(4,235)
(4,235)
137,229
−
(2,734)
(197,436)
(1,707)
−
(201,877)
(4,456)
(206,333)
¥
146,105
57,418
1,204,883
503,056
74,092
325,697
422,259
2,733,510
1,184,864
610,592
197,559
1,993,015
4,726,525
439,901
401,830
454,931
(267,786)
(1,687)
1,027,189
418,805
1,445,994
¥ 6,241,623
¥
(69,104)
¥ 6,172,519
TOSHIBA Annual Report 2014
33
March 31, 2013
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
¥
209,169
1,372,307
1,003,108
146,967
155,961
272,928
3,160,440
30,379
411,418
264,391
706,188
99,102
948,918
2,081,402
90,858
3,220,280
(2,335,600)
884,680
912,128
336,330
100,236
1,348,694
6,100,002
¥
¥
¥
−
(11,481)
(62,870)
29,034
421
(6,814)
(51,710)
−
88
−
88
(5,373)
(33,328)
(49,002)
(11,151)
(98,854)
36,473
(62,381)
(10,312)
49,086
(3,170)
35,604
(78,399)
¥
209,169
1,360,826
940,238
176,001
156,382
266,114
3,108,730
30,379
411,506
264,391
706,276
93,729
915,590
2,032,400
79,707
3,121,426
(2,299,127)
822,299
901,816
385,416
97,066
1,384,298
6,021,603
¥
34 TOSHIBA Annual Report 2014
March 31, 2013
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
2,789,946 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
¥
191,453
241,675
1,190,201
434,790
57,465
297,902
323,953
2,737,439
1,038,448
715,450
192,588
1,946,486
4,683,925
439,901
404,430
635,419
(443,940)
(1,542)
1,034,268
381,809
1,416,077
¥
−
−
10,228
4,354
668
(694)
116,739
131,295
−
−
560
560
131,855
−
(2,836)
(206,850)
2
−
(209,684)
(570)
(210,254)
¥
191,453
241,675
1,200,429
439,144
58,133
297,208
440,692
2,868,734
1,038,448
715,450
193,148
1,947,046
4,815,780
439,901
401,594
428,569
(443,938)
(1,542)
824,584
381,239
1,205,823
¥
6,100,002
¥
(78,399)
¥
6,021,603
TOSHIBA Annual Report 2014
35
March 31, 2014
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
$ 1,663,495
14,625,242
9,068,136
1,418,650
1,480,942
2,901,050
31,157,515
4,476
3,751,806
2,696,592
6,452,874
947,087
9,487,699
20,663,078
758,553
31,856,417
(22,535,689)
9,320,728
9,773,204
2,566,495
1,327,466
13,667,165
$ 60,598,282
$
$
−
(171,485)
(477,757)
241,758
(14,554)
(68,749)
(490,787)
−
(20,311)
−
(20,311)
(27,000)
(319,893)
(585,136)
(19,776)
(951,805)
467,184
(484,621)
(114,097)
459,961
(21,058)
324,806
(670,913)
$ 1,663,495
14,453,757
8,590,379
1,660,408
1,466,388
2,832,301
30,666,728
4,476
3,731,495
2,696,592
6,432,563
920,087
9,167,806
20,077,942
738,777
30,904,612
(22,068,505)
8,836,107
9,659,107
3,026,456
1,306,408
13,991,971
$ 59,927,369
36 TOSHIBA Annual Report 2014
March 31, 2014
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
3,111,467 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
$ 1,418,495
557,456
11,646,010
4,867,126
719,389
3,084,592
2,872,427
25,165,495
11,503,534
5,928,078
1,959,165
19,390,777
44,556,272
4,270,884
3,927,806
6,333,660
(2,583,291)
(16,379)
11,932,680
4,109,330
16,042,010
$
−
−
51,883
16,913
(49)
77,515
1,227,175
1,373,437
−
−
(41,117)
(41,117)
1,332,320
−
(26,544)
(1,916,854)
(16,573)
−
(1,959,971)
(43,262)
(2,003,233)
$ 1,418,495
557,456
11,697,893
4,884,039
719,340
3,162,107
4,099,602
26,538,932
11,503,534
5,928,078
1,918,048
19,349,660
45,888,592
4,270,884
3,901,262
4,416,806
(2,599,864)
(16,379)
9,972,709
4,066,068
14,038,777
$ 60,598,282
$
(670,913)
$ 59,927,369
TOSHIBA Annual Report 2014
37
(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, 2014
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 (loss) attributable to
noncontrolling interests
Net income attributable to shareholders of
Toshiba Corporation
Per share information (Yen)
Basic net income (loss) per share
attributable to shareholders of Toshiba
Corporation
Income from continuing operations
Loss from discontinued operations
Net income
Amount as
previously reported
¥ 6,586,600
6,405,662
180,938
96,299
84,639
(15,021)
69,618
18,792
50,826
14.06
(2.06)
12.00
Millions of yen
Reclassified as
discontinued operations
¥
−
−
−
−
−
−
−
−
−
Adjustment
Amount as restated
¥
(14,156)
(15,554)
¥ 6,572,444
6,390,108
1,398
(4,254)
5,652
−
5,652
(3,762)
9,414
182,336
92,045
90,291
(15,021)
75,270
15,030
60,240
16.28
(2.05)
14.23
38 TOSHIBA Annual Report 2014
March 31, 2013
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 (loss) attributable to
noncontrolling interests
Net income attributable to shareholders of
Toshiba Corporation
Per share information (Yen)
Basic net income (loss) per share
attributable to shareholders of Toshiba
Corporation
Income from continuing operations
Loss from discontinued operations
Net income
Amount as
previously reported
5,861,532
¥
5,701,903
159,629
59,315
100,314
(4,983)
95,331
17,965
77,366
18.85
(0.58)
18.27
Millions of yen
Reclassified as
discontinued operations
Adjustment
Amount as restated
¥
−
−
−
−
−
−
−
−
−
¥
(4,830)
79,873
(84,703)
(20,959)
(63,744)
−
(63,744)
197
(63,941)
¥
5,856,702
5,781,776
74,926
38,356
36,570
(4,983)
31,587
18,162
13,425
3.76
0.59
3.17
TOSHIBA Annual Report 2014
39
Thousands of U.S. dollars
Reclassified as
discontinued operations
$
−
−
−
−
−
−
−
−
−
March 31, 2014
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 (loss) attributable to
noncontrolling interests
Net income attributable to shareholders of
Toshiba Corporation
Per share information (U.S. dollar)
Basic net income (loss) per share
attributable to shareholders of Toshiba
Corporation
Income from continuing operations
Loss from discontinued operations
Net income
Amount as
previously reported
$ 63,947,573
62,190,893
1,756,680
934,942
821,738
(145,835)
675,903
182,447
493,456
0.14
(0.02)
$0.12
Adjustment
Amount as restated
$
(137,437)
(151,010)
$ 63,810,136
62,039,883
13,573
(41,301)
54,874
−
54,874
(36,524)
91,398
1,770,253
893,641
876,612
(145,835)
730,777
145,923
584,854
0.16
(0.02)
$0.14
40 TOSHIBA Annual Report 2014
(6) Summary of effects on consolidated statement of comprehensive income
The following table shows the summary of effects of the restatement above on the consolidated statement of
comprehensive income.
Millions of yen
Amount as
previously reported
69,618
¥
Adjustment
Amount as restated
¥
5,652
¥
75,270
18,417
130,110
55,797
(1,734)
202,590
272,208
43,521
228,687
−
(1,832)
−
−
(1,832)
3,820
(3,885)
7,705
¥
18,417
128,278
55,797
(1,734)
200,758
276,028
39,636
236,392
¥
Millions of yen
Amount as
previously reported
95,331
¥
Adjustment
Amount as restated
¥
(63,744)
¥
31,587
March 31, 2014
Net income before noncontrolling interests
Other comprehensive income (loss), net of tax
Net unrealized gains and losses on securities
Foreign currency translation adjustments
Pension liability adjustments
Net unrealized gains and losses on derivative instruments
Total other comprehensive income
Comprehensive income before noncontrolling interests
Less: Comprehensive income attributable to noncontrolling interests
Comprehensive income attributable to shareholders of the Company
¥
March 31, 2013
Net income before noncontrolling interests
Other comprehensive income (loss), net of tax
Net unrealized gains and losses on securities
Foreign currency translation adjustments
Pension liability adjustments
Net unrealized gains and losses on derivative instruments
Total other comprehensive income
Comprehensive income before noncontrolling interests
Less: Comprehensive income attributable to noncontrolling interests
Comprehensive income attributable to shareholders of the Company
¥
25,571
147,523
38,506
(841)
210,759
306,090
59,871
246,219
March 31, 2014
Net income before noncontrolling interests
Other comprehensive income (loss), net of tax
Net unrealized gains and losses on securities
Foreign currency translation adjustments
Pension liability adjustments
Net unrealized gains and losses on derivative instruments
Total other comprehensive income
Comprehensive income before noncontrolling interests
Less: Comprehensive income attributable to noncontrolling interests
Comprehensive income attributable to shareholders of the Company
Amount as
previously reported
675,903
$
178,806
1,263,204
541,718
(16,835)
1,966,893
2,642,796
422,534
$ 2,220,262
−
(2,457)
−
−
(2,457)
(66,201)
166
(66,367)
¥
25,571
145,066
38,506
(841)
208,302
239,889
60,037
179,852
¥
Thousands of U.S. dollars
Adjustment
Amount as restated
$
54,874
$
730,777
−
(17,787)
−
−
(17,787)
37,087
(37,719)
74,806
$
178,806
1,245,417
541,718
(16,835)
1,949,106
2,679,883
384,815
$ 2,295,068
TOSHIBA Annual Report 2014
41
(7) 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
¥ 69,618
¥
5,652
¥ 75,270
Year ended March 31, 2014
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
186,405
(12,960)
43,557
10,299
property, plant and equipment and intangible assets, net
7,540
(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 operating activities
(883)
(97,491)
60,158
(54,900)
5,413
4,153
65,677
216,968
286,586
(14,609)
−
(3,047)
2,693
9,333
(3,203)
6,182
(13,795)
(4,884)
(710)
8,678
5,256
171,796
(12,960)
40,510
12,992
16,873
(4,086)
(91,309)
46,363
(59,784)
4,703
12,831
70,933
(8,106)
(2,454)
208,862
284,132
Year ended March 31, 2014
Cash flows from investing activities
Proceeds from sale of property, plant and equipment and
intangible assets
Proceeds from sale of securities
Acquisition of property, plant and equipment
Acquisition of intangible assets
Purchase of securities
Increase (decrease) in investments in affiliates
Other
Net cash used in investing activities
Cash flows from financing activities
Proceeds from long-term debt
Repayment of long-term debt
Increase (decrease) in short-term borrowings, net
Dividends paid
Purchase of treasury stock, net
Purchase of shares of Westinghouse Group from
noncontrolling interests
Other
Net cash provided by (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
42 TOSHIBA Annual Report 2014
Amount as
previously reported
Millions of yen
Adjustment
Amount as restated
40,491
12,134
(203,377)
(50,975)
(5,292)
(1,437)
(38,099)
(246,555)
198,826
(234,773)
(13,678)
(38,954)
(145)
−
(585)
(89,309)
11,449
(37,829)
209,169
¥ 171,340
−
−
2,453
−
−
−
1
2,454
−
−
−
−
−
−
−
−
−
−
−
−
40,491
12,134
(200,924)
(50,975)
(5,292)
(1,437)
(38,098)
(244,101)
198,826
(234,773)
(13,678)
(38,954)
(145)
−
(585)
(89,309)
11,449
(37,829)
209,169
¥ 171,340
Amount as
previously reported
Millions of yen
Adjustment
Amount as restated
¥
95,726
¥
(64,139)
¥
31,587
Year ended March 31, 2013
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
217,752
(2,021)
9,380
(13,889)
property, plant and equipment and intangible assets, net
(4,971)
(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 operating activities
3,000
5,660
(64,874)
(179,769)
7,753
(3,155)
61,724
36,590
132,316
(20,005)
−
(21,878)
−
19,504
−
709
40,070
12,354
602
(689)
33,472
197,747
(2,021)
(12,498)
(13,889)
14,533
3,000
6,369
(24,804)
(167,415)
8,355
(3,844)
95,196
64,139
−
100,729
132,316
Year ended March 31, 2013
Cash flows from investing activities
Proceeds from sale of property, plant and equipment and
intangible assets
Proceeds from sale of securities
Acquisition of property, plant and equipment
Acquisition of intangible assets
Purchase of securities
Increase (decrease) in investments in affiliates
Other
Net cash used in investing activities
Cash flows from financing activities
Proceeds from long-term debt
Repayment of long-term debt
Increase (decrease) in short-term borrowings, net
Dividends paid
Purchase of treasury stock, net
Purchase of shares of Westinghouse Group from
noncontrolling interests
Other
Net cash provided by (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
Amount as
previously reported
Millions of yen
Adjustment
Amount as restated
87,672
3,876
(266,581)
(29,630)
(9,203)
24,616
(7,097)
(196,347)
350,101
(208,865)
66,885
(42,547)
(50)
(124,724)
972
41,772
17,123
(5,136)
214,305
¥ 209,169
−
−
−
−
−
−
−
−
−
−
−
−
−
−
−
−
−
−
−
87,672
3,876
(266,581)
(29,630)
(9,203)
24,616
(7,097)
(196,347)
350,101
(208,865)
66,885
(42,547)
(50)
(124,724)
972
41,772
17,123
(5,136)
214,305
¥ 209,169
TOSHIBA Annual Report 2014
43
Amount as
previously reported
Adjustment
Amount as restated
Thousands of U.S. dollars
$ 675,903
$ 54,874
$ 730,777
Year ended March 31, 2014
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
1,809,757
(125,825)
422,884
99,990
property, plant and equipment and intangible assets, net
73,204
(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 operating activities
(8,573)
(946,514)
584,058
(533,010)
52,553
40,320
637,641
2,106,485
2,782,388
(141,835)
−
(29,583)
26,146
90,612
(31,097)
60,019
(133,932)
(47,417)
(6,893)
84,252
51,029
1,667,922
(125,825)
393,301
126,136
163,816
(39,670)
(886,495)
450,125
(580,427)
45,660
124,573
688,670
(78,699)
(23,825)
2,027,786
2,758,563
Year ended March 31, 2014
Cash flows from investing activities
Proceeds from sale of property, plant and equipment and
intangible assets
Proceeds from sale of securities
Acquisition of property, plant and equipment
Acquisition of intangible assets
Purchase of securities
Increase (decrease) in investments in affiliates
Other
Net cash used in investing activities
Cash flows from financing activities
Proceeds from long-term debt
Repayment of long-term debt
Increase (decrease) in short-term borrowings, net
Dividends paid
Purchase of treasury stock, net
Purchase of shares of Westinghouse Group from
noncontrolling interests
Other
Net cash provided by (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
Amount as
previously reported
Adjustment
Amount as restated
Thousands of U.S. dollars
393,116
117,806
(1,974,534)
(494,903)
(51,379)
(13,951)
(369,893)
(2,393,738)
1,930,349
(2,279,350)
(132,796)
(378,194)
(1,408)
−
(5,679)
(867,078)
111,156
(367,272)
2,030,767
$ 1,663,495
−
−
23,815
−
−
−
10
23,825
−
−
−
−
−
−
−
−
−
−
−
−
393,116
117,806
(1,950,719)
(494,903)
(51,379)
(13,951)
(369,883)
(2,369,913)
1,930,349
(2,279,350)
(132,796)
(378,194)
(1,408)
−
(5,679)
(867,078)
111,156
(367,272)
2,030,767
$ 1,663,495
44 TOSHIBA Annual Report 2014
Notes to Consolidated Financial Statements
Toshiba Corporation and Subsidiaries
March 31, 2014
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)Energy & Infrastructure, (2)
Community Solutions, (3)Healthcare Systems & Services, (4)Electronic Devices & Components, (5)Lifestyle Products &
Services, and (6)Others. For the year ended March 31, 2014, sales of Energy & Infrastructure represented the most significant
portion of the Group's total sales or approximately 25 percent. Electronic Devices & Components, second to Energy &
Infrastructure, represented approximately 24 percent, Community Solutions approximately 19 percent, Lifestyle Products &
Services approximately 19 percent, and Healthcare Systems & Services approximately 6 percent of the Group's total sales.
For the year ended March 31, 2013, sales of Energy & Infrastructure represented the most significant portion of the Group's
total sales or approximately 26 percent. Electronic Devices & Components represented approximately 21 percent, Lifestyle
Products & Services approximately 20 percent, Community Solutions approximately 19 percent and Healthcare Systems &
Services approximately 6 percent of the Group's total sales. The Group's products are manufactured and marketed
throughout the world with approximately 42 percent and 46 percent of its sales in Japan for the years ended March 31,
2014 and 2013, 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 2014
45
Notes to Consolidated Financial Statements
Toshiba Corporation and Subsidiaries
March 31, 2014
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 is computed generally by the straight-line method.
Depreciation for property, plant and equipment associated with the Company and domestic subsidiaries has been
computed generally by the declining-balance method. Depreciation for property, plant and equipment for foreign
subsidiaries has been generally computed using the straight-line method.
However, the Company and domestic subsidiaries changed the method of calculating depreciation for property, plant
and equipment to the straight-line method, starting from April 1, 2013.
Based on the FY2013 Mid-Term Business Plan which started from April 1, 2013, the Group plans to continuously establish
stable and strong profitable businesses by focusing on certain businesses and accelerating globalization through
optimizing business location and overseas merger and acquisition.
Following this strategy, the Group estimates more stable profit by optimizing global production, aggregating domestic
production facilities and becoming more focus on value-added products. Operation of domestic production facilities will
be leveled by integrating domestic locations. Furthermore, domestic capital expenditure is planned mainly for renewal
and rationalization of existing facilities. The Company believes this will lead domestic property, plant and equipment
utilization to be more stable hereinafter. Therefore, the Company and domestic subsidiaries believe that the new method
makes a better cost allocation than the previous method.
In accordance with ASC No.250 “Accounting Changes and Error Collection”, this change in depreciation method is
classified as changes in accounting estimates due to changes in accounting policies. Therefore, this change in
depreciation method has an impact on and after April 1, 2013. For the year ended March 31, 2014, income from continuing
operations before income taxes and noncontrolling interests and net income attributable to shareholders of the
Company increased by ¥32,150 million ($312,136 thousand) and ¥20,225 million ($196,359 thousand), respectively, and
basic net earnings per share attributable to shareholders of the Company increased by ¥4.78 ($0.05), respectively
compared with the figures under the previous method.
The effect on segment information is disclosed in Note 29.
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.
46 TOSHIBA Annual Report 2014
GOODWILL AND OTHER INTANGIBLE ASSETS
Goodwill and intangible assets with indefinite useful lives are not amortized, but instead are tested for impairment at
least annually. Goodwill is allocated among and tested for impairment at the reporting unit level. Intangible assets with
finite useful lives, consisting primarily of core and current technology and software, are amortized using the straight-line
method over their respective contractual periods or estimated useful lives.
ENVIRONMENTAL LIABILITIES
Liabilities for environmental remediation and other environmental costs are accrued when environmental assessments or
remedial efforts are probable and the costs can be reasonably estimated, based on current law and existing technologies.
Such liabilities are adjusted as further information develops or circumstances change. Costs of future obligations are not
discounted to their present values.
INCOME TAXES
The provision for income taxes is computed based on the income (loss) from continuing operations, before income taxes
and noncontrolling interests included in the consolidated 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. 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.
REVENUE RECOGNITION
Revenue of mass-produced standard products, such as Electronic Devices & Components and Lifestyle Products &
Services, 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 Energy & Infrastructure, 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”. Otherwise,
revenue is deferred until the undelivered elements are fulfilled as a single unit of accounting.
Revenue from the development of custom software products is recognized when there is persuasive evidence of an
arrangement, the sales price is fixed or determinable, collectibility is probable, and the software product has been
delivered and accepted by the customer.
TOSHIBA Annual Report 2014
47
Notes to Consolidated Financial Statements
Toshiba Corporation and Subsidiaries
March 31, 2014
SHIPPING AND HANDLING COSTS
The Group includes shipping and handling costs which totaled ¥72,905 million ($707,816 thousand) and ¥69,412 million
for the years ended March 31, 2014 and 2013, 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 20 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 April 2014, the Financial Accounting Standards Boards (“FASB”) issued Accounting Standards Updates (“ASU”) No.2014-
08. ASU No.2014-08 amends ASC No.205-20 “Presentation of Financial Statements - Discontinued Operations” (“ASC
No.205-20”), changes the requirements for reporting discontinued operations in ASC No.205-20 and requires additional
disclosures about discontinued operations. ASU No.2014-08 is effective for fiscal year beginning on or after December 15,
2014, and early adoption is permitted. The Company is currently evaluating the timing of adoption of ASU No.2014-08.
The Company does not expect ASU No.2014-08 to have a material impact on the Company's financial position and results
of operations.
In May 2014, FASB issued ASU No.2014-09. ASU No.2014-09 supersedes the revenue recognition requirements, and
affects any entity that either enters into contracts for the transfer of nonfinancial assets unless those contracts are within
the scope of other standards. To achieve the core principle, an entity should apply the 5 steps. ASU No.2014-09 requires
an entity to disclose the qualitative and quantitative information, contracts with customers, significant judgments and
changes in judgments, and assets recognized from the costs to obtain or fulfill a contract. ASU No.2014-09 is effective for
fiscal year beginning after December 15, 2016, and the Company will adopt ASU No.2014-09 effective April 1, 2017. The
Company is currently evaluating the impact of adoption of ASU No.2014-09 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 before
correction for restatements in September, 2015.
SUBSEQUENT EVENTS
In accordance with ASC 855 “Subsequent Events,” the Group assessed subsequent events up to the submission dates of
the annual securities report before correction (June 25, 2014), and revised financial statements (September 7, 2015).
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.
48 TOSHIBA Annual Report 2014
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 ¥103=U.S. $1, the approximate current rate of exchange
at March 31, 2014, 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 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
Loss from discontinued operations,
before income taxes and noncontrolling interests
Income taxes
Loss from discontinued operations,
before noncontrolling interests
Less:Net income (loss) from discontinued operations
attributable to noncontrolling interests
Net loss from discontinued operations
attributable to shareholders of the Company
Millions of yen
¥
2014
74,733
89,754
¥
2013
73,727
78,710
(15,021)
0
(15,021)
(6,319)
(8,702)
(4,983)
0
(4,983)
(2,504)
(2,479)
Thousands of
U.S. dollars
2014
725,563
871,398
$
(145,835)
0
(145,835)
(61,350)
(84,485)
TOSHIBA Annual Report 2014
49
Notes to Consolidated Financial Statements
Toshiba Corporation and Subsidiaries
March 31, 2014
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, 2014 and 2013 are as follows:
Level 1
Level 2
Level 3
Total
Millions of yen
¥
228,786
−
−
−
−
228,786
−
−
−
¥
¥
¥
¥
75
−
2,517
65
18
2,675
2,497
2,796
5,293
¥
¥
¥
¥
−
4,552
−
−
−
4,552
−
−
−
¥
228,861
4,552
2,517
65
18
236,013
2,497
2,796
5,293
¥
¥
¥
Level 1
Level 2
Level 3
Total
Millions of yen
203,355
−
−
−
203,355
−
−
−
−
¥
¥
¥
¥
268
−
4,926
616
5,810
4,828
3,711
177
8,716
¥
¥
¥
¥
−
3,742
−
−
3,742
−
−
−
−
¥
¥
¥
¥
203,623
3,742
4,926
616
212,907
4,828
3,711
177
8,716
¥
¥
¥
¥
¥
¥
¥
March 31, 2014
Assets:
Marketable securities:
Equity securities
Debt securities
Derivative assets:
Forward exchange contracts
Currency swap agreements
Currency options
Total assets
Liabilities:
Derivative liabilities:
Forward exchange contracts
Interest rate swap agreements
Total liabilities
March 31, 2013
Assets:
Marketable securities:
Equity securities
Debt securities
Derivative assets:
Forward exchange contracts
Currency options
Total assets
Liabilities:
Derivative liabilities:
Forward exchange contracts
Interest rate swap agreements
Currency swap agreements
Total liabilities
50 TOSHIBA Annual Report 2014
March 31, 2014
Assets:
Marketable securities:
Equity securities
Debt securities
Derivative assets:
Forward exchange contracts
Currency swap agreements
Currency options
Total assets
Liabilities:
Derivative liabilities:
Forward exchange contracts
Interest rate swap agreements
Total liabilities
Level 1
Level 2
Level 3
Total
Thousands of U.S. dollars
$ 2,221,223
−
−
−
−
$ 2,221,223
$
$
−
−
−
$
$
$
$
728
−
24,437
631
175
25,971
24,243
27,146
51,389
$
$
$
$
−
44,194
−
−
−
44,194
$ 2,221,951
44,194
24,437
631
175
$ 2,291,388
−
−
−
$
$
24,243
27,146
51,389
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, 2014
and 2013 are as follows:
Millions of yen
Marketable securities
3,742
¥
Year ended March 31, 2014
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
¥
364
−
−
446
−
4,552
TOSHIBA Annual Report 2014
51
Notes to Consolidated Financial Statements
Toshiba Corporation and Subsidiaries
March 31, 2014
Year ended March 31, 2013
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
¥
Year ended March 31, 2014
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
$
Millions of yen
Marketable securities
¥
3,067
Thousands of U.S. dollars
Marketable securities
$
36,330
391
3,346
−
−
(3,062)
3,742
3,534
−
−
4,330
−
44,194
At March 31, 2014 and 2013, Level 3 assets measured at fair value on a recurring basis consisted of corporate debt
securities.
52 TOSHIBA Annual Report 2014
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, 2014 and 2013 are as follows:
Year ended March 31, 2014
Assets:
Equity securities
Investments in and advances to affiliates
Long-lived assets held for use
Component held for sale
Total assets
Year ended March 31, 2013
Assets:
Equity securities
Investments in and advances to affiliates
Long-lived assets held for use
Component held for sale
Total assets
Year ended March 31, 2014
Assets:
Equity securities
Investments in and advances to affiliates
Long-lived assets held for use
Component held for sale
Total assets
Level 1
Level 2
Level 3
Total
Millions of yen
¥
¥
¥
¥
$
$
−
3,000
−
−
3,000
Level 1
−
25,886
−
−
25,886
Level 1
−
29,126
−
−
29,126
¥
¥
¥
¥
$
$
−
−
−
−
−
¥
¥
632
35,617
0
0
36,249
Millions of yen
Level 2
Level 3
−
−
−
−
−
¥
¥
166
2,411
0
6,000
8,577
Thousands of U.S. dollars
Level 2
Level 3
−
−
−
−
−
$
$
6,136
345,796
0
0
351,932
¥
¥
¥
¥
$
$
632
38,617
0
0
39,249
Total
166
28,297
0
6,000
34,463
Total
6,136
374,922
0
0
381,058
Certain non-marketable equity securities accounted for under the cost method were written down to their fair value,
resulting in other-than-temporary impairment for the years ended March 31, 2014 and 2013. 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.
Previous equity interests of newly controlled subsidiaries in step acquisitions and retained investment in the former
subsidiary were remeasured to their fair value for the years ended March 31, 2014 and 2013. Some of them were classified
within Level 1 as they were valued based on quoted market prices in active markets. Others 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 in and advances to affiliates were written down to their fair value, resulting in
other-than-temporary impairment for the year ended March 31, 2014. Some of them were classified within Level 1 as they
were valued based on quoted market prices in active markets. Others 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 future assumptions such as
discounted cash flows expected to be generated by the related assets with unobservable inputs for the years ended
March 31, 2014 and 2013.
Component held for sale were classified within Level 3 as they were valued based on future assumptions such as cash
flows expected to be generated by the related assets with unobservable inputs for the years ended March 31, 2014 and
2013. The loss of component held for sale in loss from discontinued operations, before noncontrolling interests is ¥6,117
million ($59,388 thousand) for the year ended March 31, 2014.
As a result, the net impacts from continuing operations for the years ended March 31, 2014 and 2013 were ¥52,730
million ($511,942 thousand) loss and ¥29,011 million loss, respectively. They are included in cost of sales, selling, general
and administrative, and other income and other expense.
TOSHIBA Annual Report 2014
53
Notes to Consolidated Financial Statements
Toshiba Corporation and Subsidiaries
March 31, 2014
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, 2014 and 2013 are as follows:
March 31, 2014:
Equity securities
Debt securities
March 31, 2013:
Equity securities
Debt securities
March 31, 2014:
Equity securities
Debt securities
Cost
Gross unrealized
holding gains
Gross unrealized
holding losses
Fair value
Millions of yen
64,247
3,797
68,044
67,419
3,351
70,770
¥
¥
¥
¥
165,735
755
166,490
137,108
391
137,499
¥
¥
¥
¥
1,121
−
1,121
904
−
904
¥
¥
¥
¥
228,861
4,552
233,413
203,623
3,742
207,365
Cost
Gross unrealized
holding gains
Gross unrealized
holding losses
Fair value
Thousands of U.S. dollars
623,757
36,864
660,621
$ 1,609,077
7,330
$ 1,616,407
$
$
10,883
−
10,883
$ 2,221,951
44,194
$ 2,266,145
¥
¥
¥
¥
$
$
At March 31, 2014 and 2013, debt securities mainly consist of corporate debt securities.
Contractual maturities of debt securities classified as available-for-sale at March 31, 2014 are as follows:
March 31, 2014:
Due within one year
Due after one year within five years
Due after five years within ten years
Millions of yen
Thousands of U.S. dollars
Cost
Fair value
Cost
Fair value
¥
¥
96
−
3,701
3,797
¥
¥
108
−
4,444
4,552
$
$
932
−
35,932
36,864
$
$
1,048
−
43,146
44,194
The proceeds from sales of available-for-sale securities for the years ended March 31, 2014 and 2013 were ¥12,134 million
($117,806 thousand) and ¥3,876 million, respectively. The gross realized gains on those sales for the years ended March 31,
2014 and 2013 were ¥6,440 million ($62,524 thousand) and ¥1,675 million, respectively. The gross realized losses on those
sales for the years ended March 31, 2014 and 2013 were ¥5 million ($49 thousand) and ¥1,030 million, respectively.
At March 31, 2014, 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 ¥40,773 million
($395,854 thousand) and ¥52,009 million at March 31, 2014 and 2013, respectively. At March 31, 2014 and 2013, investments
with an aggregate cost of ¥36,441 million ($353,796 thousand) and ¥51,843 million were not evaluated for impairment
because (a)the Group did not estimate the fair value of those investments as it was not practicable to estimate the fair
value 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 value of those investments.
Included in other expense are charges of ¥4,013 million ($38,961 thousand) and ¥5,096 million related to other-than-
temporary impairments in the marketable and non-marketable equity securities for the years ended March 31, 2014 and
2013, respectively.
54 TOSHIBA Annual Report 2014
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 sheet.
The Group recognized losses of ¥915 million ($8,883 thousand) and ¥968 million on the transfers of receivables for the
years ended March 31, 2014 and 2013, respectively.
Subsequent to the transfers, the Group retains collection and administrative responsibilities for the receivables
transferred and retains a portion of the receivables for which proceeds are deferred. 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 at the point of transfer of receivables is measured based on the economic
hypothesis including the estimate of uncollected receivables, average collection period of receivables and discount rate
and it is classified within Level 3.
The table below summarizes certain cash flows received from and paid to banking institutions or special purpose
entities ("SPEs") related to banking institutions on the above securitization transactions.
Year ended March 31
Proceeds from new securitizations
Servicing fees for the collection of receivables
Repurchase of delinquent or unqualified receivables
¥
2014
922,012
563
117
¥
2013
849,187
512
49
Millions of yen
Thousands of
U.S. dollars
2014
$ 8,951,573
5,466
1,136
Quantitative information about delinquencies, net credit losses, and components of securitized receivables as of and for
the years ended March 31, 2014 and 2013 are as follows. Of these receivables, deferred proceeds for the receivables
transferred as of March 31, 2014 and 2013 were ¥44,571 million ($432,728 thousand) and ¥49,939 million, respectively and
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
2014
¥ 1,655,578
89,511
1,745,089
(238,188)
¥ 1,506,901
2013
1,573,280
78,960
1,652,240
(244,153)
1,408,087
¥
¥
2014
43,552
12
43,564
¥
¥
2013
35,900
12
35,912
¥
¥
2014
2013
¥
¥
2,391
117
2,508
¥
¥
1,637
0
1,637
Accounts receivable
Notes receivable
Total managed portfolio
Securitized receivables
Total receivables
Thousands of U.S. dollars
Amount 90 days
or more past due
$
$
422,835
116
422,951
Total principal amount
of receivables
March 31, 2014
$ 16,073,573
869,039
16,942,612
(2,312,505)
$ 14,630,107
Net credit losses
Year ended March 31, 2014
$
$
23,214
1,136
24,350
TOSHIBA Annual Report 2014
55
Notes to Consolidated Financial Statements
Toshiba Corporation and Subsidiaries
March 31, 2014
8. INVENTORIES
Inventories at March 31, 2014 and 2013 consist of the following:
March 31
Finished products
Work in process:
Long-term contracts
Other
Raw materials
Millions of yen
2014
323,169
¥
82,063
320,881
158,696
884,809
¥
2013
334,008
99,107
334,389
172,734
940,238
¥
¥
Thousands of
U.S. dollars
2014
$ 3,137,563
796,728
3,115,350
1,540,738
$ 8,590,379
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, 2014 were: NREG Toshiba Building Co., Ltd. (35.0%);
Topcon Corporation (30.4%); Toshiba Machine Co., Ltd. (22.1%); Toshiba Mitsubishi-Electric Industrial Systems Corporation
(50.0%); and Semp Toshiba Amazonas S.A. (40.0%).
Of the affiliates which were accounted for by the equity method, the investments in common stock of the listed
companies were carried at ¥40,524 million ($393,437 thousand) and ¥42,804 million at March 31, 2014 (4 companies) and
2013 (5 companies), respectively. The Group's investments in these companies had market values of ¥79,489 million
($771,738 thousand) and ¥57,499 million at March 31, 2014 and 2013, 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
2014
¥ 1,215,470
1,089,912
¥ 2,305,382
996,564
¥
430,545
878,273
¥ 2,305,382
2013
1,091,617
915,934
2,007,551
764,641
417,344
825,566
2,007,551
¥
¥
¥
¥
Millions of yen
2014
¥ 1,864,530
40,071
¥
2013
1,658,877
59,367
Thousands of
U.S. dollars
2014
$ 11,800,680
10,581,670
$ 22,382,350
$ 9,675,379
4,180,049
8,526,922
$ 22,382,350
Thousands of
U.S. dollars
2014
$ 18,102,233
389,039
56 TOSHIBA Annual Report 2014
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
Short-term loans receivable
Long-term loans receivable
Notes and accounts payable, trade
Other payables
¥
¥
2014
152,195
169,698
16,161
2014
47,487
16,694
5,000
88,083
26,959
11,713
Millions of yen
¥
2013
126,611
110,916
7,411
Millions of yen
¥
2013
34,038
11,029
51,500
62,982
18,565
11,208
Thousands of
U.S. dollars
2014
$ 1,477,621
1,647,553
156,903
$
Thousands of
U.S. dollars
2014
461,039
162,078
48,544
855,175
261,738
113,718
TOSHIBA Annual Report 2014
57
Notes to Consolidated Financial Statements
Toshiba Corporation and Subsidiaries
March 31, 2014
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, 2014 and 2013.
The components of acquired intangible assets excluding goodwill at March 31, 2014 and 2013 are as follows:
March 31, 2014
Other intangible assets subject to amortization:
Software
Technical license fees
Core and current technology
Customer relationship
Other
Total
Other intangible assets not subject to amortization:
Brand name
Other
Total
March 31, 2013
Other intangible assets subject to amortization:
Software
Technical license fees
Core and current technology
Customer relationship
Other
Total
Other intangible assets not subject to amortization:
Brand name
Other
Total
March 31, 2014
Other intangible assets subject to amortization:
Software
Technical license fees
Core and current technology
Customer relationship
Other
Total
Other intangible assets not subject to amortization:
Brand name
Other
Total
58 TOSHIBA Annual Report 2014
Gross carrying
amount
¥
¥
209,671
62,445
210,697
132,053
50,051
664,917
Gross carrying
amount
¥
¥
197,024
57,503
186,911
116,768
47,014
605,220
Millions of yen
Accumulated
amortization
¥
¥
133,245
48,715
60,277
29,226
22,639
294,102
Millions of yen
Accumulated
amortization
¥
¥
129,000
46,154
41,332
19,513
20,280
256,279
Gross carrying
amount
$ 2,035,641
606,262
2,045,602
1,282,068
485,932
$ 6,455,505
Thousands of U.S. dollars
Accumulated
amortization
$ 1,293,641
472,961
585,214
283,748
219,795
$ 2,855,359
Net carrying
amount
76,426
13,730
150,420
102,827
27,412
370,815
47,572
1,981
49,553
420,368
Net carrying
amount
68,024
11,349
145,579
97,255
26,734
348,941
42,688
2,042
44,730
393,671
¥
¥
¥
¥
¥
¥
Net carrying
amount
$
742,000
133,301
1,460,388
998,320
266,137
$ 3,600,146
461,864
19,233
481,097
$ 4,081,243
Other intangible assets acquired during the year ended March 31, 2014 primarily consisted of software of ¥41,888 million
($406,680 thousand). The weighted-average amortization period of software for the year ended March 31, 2014 was
approximately 5.3 years.
The weighted-average amortization periods for other intangible assets were approximately 12.2 years and 11.4 years for
the years ended March 31, 2014 and 2013, respectively. Amortization expenses of other intangible assets subject to
amortization for the years ended March 31, 2014 and 2013 are ¥51,692 million ($501,864 thousand) and ¥44,083 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, 2014 is estimated as follows:
Year ending March 31
2015
2016
2017
2018
2019
¥
Millions of yen
47,103
39,270
32,718
28,447
26,163
$
Thousands of
U.S. dollars
457,311
381,262
317,650
276,184
254,010
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, 2014 and 2013 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
2014
508,145
11,100
55,275
574,520
¥
¥
2013
404,157
49,097
54,891
508,145
¥
¥
Thousands of
U.S. dollars
2014
$ 4,933,447
107,767
536,650
$ 5,577,864
As of March 31, 2014 and 2013, goodwill allocated to Energy & Infrastructure is ¥469,155 million ($4,554,903 thousand) and
¥431,946 million, respectively. The rest was mainly allocated to Community Solutions.
11. SHORT-TERM BORROWINGS AND LONG-TERM DEBT
Short-term borrowings at March 31, 2014 and 2013 consist of the following:
March 31
Loans and overdrafts, principally from banks, with
weighted-average interest rate of 3.92% at March 31, 2014,
and 1.67% at March 31, 2013:
Secured
Unsecured
Commercial paper with weighted-average interest rate of
0.11% at March 31, 2014, and 0.13% at March 31, 2013:
Millions of yen
2014
2013
Thousands of
U.S. dollars
2014
¥
¥
−
91,105
55,000
146,105
¥
¥
−
130,453
61,000
191,453
$
−
884,514
533,981
$ 1,418,495
TOSHIBA Annual Report 2014
59
Notes to Consolidated Financial Statements
Toshiba Corporation and Subsidiaries
March 31, 2014
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, 2014, the Group had unused committed lines of credit from short-term financing arrangements
aggregating ¥342,000 million ($3,320,388 thousand). The lines of credit expire on various dates from April 2014 through
March 2015. Under the agreements, the Group is required to pay commitment fees ranging from 0.030 percent to 0.100
percent on the unused portion of the lines of credit.
Long-term debt at March 31, 2014 and 2013 consist of the following:
March 31
Loans, principally from banks,
due 2014 to 2027 with weighted-average interest rate
of 0.53% at March 31, 2014, and due 2013 to 2027 with
weighted-average interest rate of 0.61% at March 31, 2013:
Millions of yen
2014
2013
Thousands of
U.S. dollars
2014
Secured
Unsecured
¥
−
688,018
¥
19,206
756,008
$
−
6,679,786
Unsecured yen bonds, due 2015 to 2020 with interest rates
ranging from 0.25% to 2.20% at March 31, 2014, and due
2013 to 2020 with interest rates ranging from 0.62% to
2.20% at March 31, 2013
Interest deferrable and early redeemable subordinated bonds:
Due 2069 with interest rate of 7.50% at March 31, 2014 and 2013
Capital lease obligations
Less-Portion due within one year
340,000
290,000
3,300,971
180,000
34,264
1,242,282
(57,418)
¥ 1,184,864
180,000
34,909
1,280,123
(241,675)
1,038,448
¥
1,747,573
332,660
12,060,990
(557,456)
$ 11,503,534
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, 2013 were ¥26,978 million.
The aggregate annual maturities of long-term debt, as of March 31, 2014, excluding those of capital lease obligations, are
as follows:
Millions of yen
47,925
204,781
203,063
235,678
131,568
385,003
1,208,018
¥
¥
$
Thousands of
U.S. dollars
465,291
1,988,165
1,971,486
2,288,136
1,277,359
3,737,893
$ 11,728,330
Year ending March 31
2015
2016
2017
2018
2019
Thereafter
60 TOSHIBA Annual Report 2014
12. 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, 2014 and 2013 and the funded status
at March 31, 2014 and 2013 are as follows:
March 31
Change in benefit obligation:
Benefit obligation at beginning of year
Service cost
Interest cost
Plan participants' contributions
Plan amendments
Actuarial loss (gain)
Benefits paid
Acquisitions and divestitures
Foreign currency exchange impact
Benefit obligation at end of year
Change in plan assets:
Fair value of plan assets at beginning of year
Actual return on plan assets
Employer contributions
Plan participants' contributions
Benefits paid
Acquisitions and divestitures
Foreign currency exchange impact
Fair value of plan assets at end of year
Funded status
Millions of yen
2014
2013
¥ 1,675,280
59,304
34,105
4,709
(1,589)
(5,514)
(81,433)
−
25,951
¥ 1,710,813
¥
959,081
87,425
85,378
4,709
(54,466)
−
18,344
¥ 1,100,471
(610,342)
¥
¥
¥
¥
¥
¥
1,607,643
54,841
34,463
4,401
−
37,338
(87,009)
1,974
21,629
1,675,280
828,636
91,958
75,441
4,401
(55,722)
134
14,233
959,081
(716,199)
Amounts recognized in the consolidated balance sheet at March 31, 2014 and 2013 are as follows:
March 31
Other assets
Other current liabilities
Accrued pension and severance costs
Millions of yen
2014
1,390
(1,140)
(610,592)
(610,342)
¥
¥
2013
198
(947)
(715,450)
(716,199)
¥
¥
Thousands of
U.S. dollars
2014
$ 16,264,854
575,767
331,117
45,718
(15,427)
(53,534)
(790,612)
−
251,952
$ 16,609,835
$ 9,311,466
848,786
828,913
45,719
(528,796)
−
178,097
$ 10,684,185
$ (5,925,650)
Thousands of
U.S. dollars
2014
$
13,495
(11,067)
(5,928,078)
$ (5,925,650)
TOSHIBA Annual Report 2014
61
Notes to Consolidated Financial Statements
Toshiba Corporation and Subsidiaries
March 31, 2014
Amounts recognized in accumulated other comprehensive loss at March 31, 2014 and 2013 are as follows:
March 31
Unrecognized actuarial loss
Unrecognized prior service cost
Millions of yen
2014
479,262
(30,202)
449,060
¥
¥
2013
567,467
(32,272)
535,195
¥
¥
Thousands of
U.S. dollars
2014
$ 4,653,029
(293,223)
$ 4,359,806
The accumulated benefit obligation at March 31, 2014 and 2013 are as follows:
March 31
Accumulated benefit obligation
Millions of yen
2014
¥ 1,664,330
2013
1,562,698
¥
Thousands of
U.S. dollars
2014
$ 16,158,544
The components of the net periodic pension and severance cost for the years ended March 31, 2014 and 2013 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
Net periodic pension and severance cost
Millions of yen
2014
59,304
34,105
(28,322)
(3,659)
27,574
89,002
¥
¥
2013
54,841
34,463
(23,793)
(3,476)
37,625
99,660
¥
¥
Thousands of
U.S. dollars
2014
575,767
331,116
(274,971)
(35,524)
267,709
864,097
$
$
Other changes in plan assets and benefit obligation recognized in the other comprehensive income (loss) for the years
ended March 31, 2014 and 2013 are as follows:
Year ended March 31
Current year actuarial gain
Recognized actuarial loss
Prior service cost due to plan amendments
Amortization of prior service cost
Millions of yen
2014
(64,617)
(27,574)
(1,589)
3,659
(90,121)
¥
¥
2013
(30,827)
(37,625)
−
3,476
(64,976)
¥
¥
Thousands of
U.S. dollars
2014
(627,349)
(267,709)
(15,427)
35,524
(874,961)
$
$
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
2015
¥
(4,366)
21,585
Thousands of
U.S. dollars
2015
(42,388)
209,563
$
Year ending March 31
Prior service cost
Actuarial loss
62 TOSHIBA Annual Report 2014
For the year ended March 31, 2014, 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 ¥18,767
million ($182,204 thousand). The Group expects to contribute ¥70,798 million ($687,359 thousand) to its defined benefit
plans, included Cash Balance Plan, in the year ending March 31, 2015.
The following benefit payments are expected to be paid:
Year ending March 31
2015
2016
2017
2018
2019
2020 - 2024
¥
Millions of yen
81,488
85,532
83,270
87,959
95,944
528,497
$
Thousands of
U.S. dollars
791,146
830,408
808,447
853,971
931,495
5,131,039
Weighted-average assumptions used to determine benefit obligations as of March 31, 2014 and 2013 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
2014
1.8%
3.1%
2014
2.1%
2.9%
3.2%
2013
2.1%
3.2%
2013
2.2%
2.8%
3.3%
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 2014
63
Notes to Consolidated Financial Statements
Toshiba Corporation and Subsidiaries
March 31, 2014
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, 2014 and 2013 by asset category are as follows:
Level 1
Level 2
Level 3
¥
27,551
¥
−
¥
Millions of yen
March 31, 2014
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, 2014
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
$
267,485
1,698,301
612,379
334,359
2,072,010
−
−
361,495
−
−
−
−
$ 5,346,029
174,925
63,075
34,439
213,417
−
−
37,234
−
−
−
−
550,641
−
−
−
−
−
−
−
−
−
−
−
6,677
157,247
39,762
−
−
203,686
¥
−
−
−
64,825
1,526,670
386,039
−
−
$ 1,977,534
Total
¥
27,551
174,925
63,075
157,128
213,417
244
11,363
175,725
157,247
39,762
78,557
1,477
¥ 1,100,471
Total
$
267,485
1,698,301
612,379
1,525,514
2,072,010
2,369
110,320
1,706,068
1,526,670
386,039
762,689
14,340
$ 10,684,184
−
−
122,689
−
244
11,363
131,814
−
−
78,557
1,477
346,144
−
−
1,191,155
−
2,369
110,320
1,279,748
−
−
762,689
14,340
$ 3,360,621
¥
$
Thousands of U.S. dollars
Level 2
Level 3
−
$
Notes: 1) Pooled funds in equity securities invest in listed equity securities consisting of approximately 6% Japanese companies and 94% foreign companies.
2) Government bonds include approximately 80% Japanese government bonds and 20% foreign government bonds.
3) Pooled funds in debt securities invest in approximately 45% foreign government bonds, 55% municipal bonds and corporate bonds.
64 TOSHIBA Annual Report 2014
March 31, 2013
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
Level 2
Level 3
¥
54,579
¥
−
¥
Millions of yen
138,579
56,348
31,241
88,534
−
−
23,282
−
−
−
−
392,563
−
−
119,445
−
218
26,385
209,432
−
−
64,431
6,062
425,973
¥
−
−
−
−
−
−
−
5,672
105,834
29,039
−
−
140,545
¥
Total
¥
54,579
138,579
56,348
150,686
88,534
218
26,385
238,386
105,834
29,039
64,431
6,062
959,081
¥
Notes: 1) Pooled funds in equity securities invest in listed equity securities consisting of approximately 5% Japanese companies and 95% foreign companies.
2) Government bonds include approximately 60% Japanese government bonds and 40% foreign government bonds.
3) Pooled funds in debt securities invest in approximately 30% Japanese government bonds, 30% foreign government bonds, 40% municipal bonds and corporate bonds.
TOSHIBA Annual Report 2014
65
Notes to Consolidated Financial Statements
Toshiba Corporation and Subsidiaries
March 31, 2014
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 years ended March 31, 2014 and 2013 are as
follows:
Purchases, issuances and settlements
Balance at end of year
¥
Year ended March 31, 2014
Balance at beginning of year
Actual return:
Relating to assets sold
Relating to assets still held
Year ended March 31, 2013
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
5,672
¥
Hedge funds
105,834
¥
Real estate
¥
29,039
Total
¥
140,545
Millions of yen
−
1,005
−
6,677
(354)
18,938
32,829
157,247
¥
(921)
2,144
9,500
39,762
¥
(1,275)
22,087
42,329
203,686
¥
Pooled funds
4,137
¥
Hedge funds
97,117
¥
Real estate
¥
24,857
Total
¥
126,111
Millions of yen
−
1,535
−
5,672
1,693
7,458
(434)
105,834
¥
(771)
1,397
3,556
29,039
¥
922
10,390
3,122
140,545
¥
Year ended March 31, 2014
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
55,068
$
Hedge funds
$ 1,027,515
Real estate
$
281,932
Total
$ 1,364,515
Thousands of U.S. dollars
−
9,757
−
64,825
$
(3,437)
183,864
318,728
$ 1,526,670
(8,942)
20,816
92,233
386,039
$
(12,379)
214,437
410,961
$ 1,977,534
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, 2014 and 2013.
66 TOSHIBA Annual Report 2014
13. RESEARCH AND DEVELOPMENT COSTS
Research and development costs are expensed as incurred and amounted to ¥327,913 million ($3,183,621 thousand) and
¥300,028 million for the years ended March 31, 2014 and 2013, respectively.
14. ADVERTISING COSTS
Advertising costs are expensed as incurred and amounted to ¥33,046 million ($320,835 thousand) and ¥30,725 million for
the years ended March 31, 2014 and 2013, respectively.
15. OTHER INCOME AND OTHER EXPENSE
FOREIGN EXCHANGE GAINS
For the years ended March 31, 2014 and 2013, the net foreign exchange gains were ¥15,343 million ($148,961 thousand)
and ¥8,102 million, respectively.
LOSSES ON SALES OF SECURITIES
The losses on sales of securities were ¥11,204 million ($108,777 thousand) for the year ended March 31, 2014. These were
mainly related to the effects of foreign currency translation adjustments due to the sales of overseas subsidiaries. The
losses on sales of securities for the year ended March 31, 2013, were not significant.
GAINS AND LOSSES ON SALES OR DISPOSAL OF FIXED ASSETS
For the years ended March 31, 2014 and 2013, the sale and disposal of fixed assets resulted in net impacts of ¥482 million
($4,680 thousand) loss and ¥11,927 million gain, respectively. Gains on sales of fixed assets were ¥3,703 million ($35,951
thousand), and losses on disposal of fixed assets were ¥4,185 million ($40,631 thousand) for the year ended March 31,
2014. Gains on sales of fixed assets were ¥21,440 million, and losses on disposal of fixed assets were ¥9,513 million for the
year ended March 31, 2013.
LOSSES ON SALES OF THE SHARES OF TOSHIBA FINANCE CO., LTD.
In April 2013, the Company entered into a definitive agreement to transfer all of the issued shares of Toshiba Finance Co.,
Ltd. ("TFC") to AEON Financial Services Co., Ltd. ("AFS"). In May 2013, the Company sold all of the issued shares of TFC to
AFS. Losses on the transaction of ¥16,280 million were recorded for the year ended March 31, 2013.
16. 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, 2014
were consisted of ¥1,940 million ($18,835 thousand) in the Visual Products business, ¥4,611 million ($44,767 thousand) in
the PC business, ¥4,647 million ($45,117 thousand) in the Analog Imaging IC business, and ¥4,423 million ($42,942
thousand) in the System LSI business. The impairment losses recognized in the year ended March 31, 2013 consisted of
¥935 million in the Visual Products business, ¥4,641 million in the PC business, ¥16,130 million in the Analog Imaging IC
business, and ¥4,251 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 Lifestyle Products & Services
segment, while those in the Analog Imaging IC and the System LSI businesses are included in the Electronic Devices &
Components segment.
17. 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 38.0 percent for the years ended March 31, 2014 and 2013, respectively.
Amendments to the Japanese tax regulations were enacted into law on March 20, 2014. As a result of these
amendments, the effective statutory tax rate used to calculate deferred tax assets and liabilities was changed from 38.0
percent to 35.6 percent for temporary difference expected to be eliminated during the period from the fiscal year
beginning on April 1, 2014. And the tax rate of corporate inhabitant tax on a corporation tax basis will be reduced
approximately 4.4 percent and the local corporation tax will be introduced in and after the fiscal year beginning on
October 1, 2014. The effect of 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, 2014.
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 2014
67
Notes to Consolidated Financial Statements
Toshiba Corporation and Subsidiaries
March 31, 2014
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
2014
2013
¥
69,288
¥
28,472
$
(3,433)
5,471
14,139
9,503
−
(10,010)
7,123
(36)
92,045
¥
(5,605)
5,220
11,847
−
4,785
(10,397)
1,499
2,535
38,356
¥
Thousands of
U.S. dollars
2014
672,699
(33,330)
53,117
137,272
92,262
−
(97,184)
69,155
(350)
893,641
$
The significant components of deferred tax assets and deferred tax liabilities as of March 31, 2014 and 2013 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
2014
2013
¥
¥
¥
¥
23,619
120,705
201,924
148,898
154,654
48,076
146,934
844,810
(227,735)
617,075
−
(21,723)
(58,034)
(8,840)
(40,957)
(95,054)
(20,417)
(245,025)
372,050
¥
¥
¥
¥
21,710
129,705
236,571
177,590
152,469
62,495
135,671
916,211
(220,038)
696,173
(1,291)
(24,107)
(45,406)
(15,239)
(41,883)
(93,727)
(19,914)
(241,567)
454,606
Thousands of
U.S. dollars
2014
$
229,311
1,171,893
1,960,427
1,445,612
1,501,495
466,757
1,426,544
8,202,039
(2,211,020)
$ 5,991,019
$
−
(210,903)
(563,437)
(85,825)
(397,641)
(922,854)
(198,223)
(2,378,883)
$ 3,612,136
Deferred tax liabilities included in other current liabilities and other liabilities at March 31, 2014 and 2013 were ¥110,697
million ($1,074,728 thousand) and ¥106,811 million, respectively.
The net changes in the total valuation allowance for the years ended March 31, 2014 and 2013 were an increase of
¥7,697 million ($74,728 thousand) and an increase of ¥9,032 million, respectively.
The amount 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, 2014 was
¥9,438 million ($91,631 thousand). The amount of adjustments for the year ended March 31, 2013 was not significant.
68 TOSHIBA Annual Report 2014
The Group's tax loss carryforwards for the corporate and local taxes at March 31, 2014 amounted to ¥465,714 million
($4,521,495 thousand) and ¥682,570 million ($6,626,893 thousand), respectively, the majority of which will expire during
the period from the year ending March 2015 through 2023. The Group utilized tax loss carryforwards of ¥124,024 million
($1,204,117 thousand) and ¥50,068 million to reduce current corporate taxes and ¥73,260 million ($711,262 thousand) and
¥23,904 million to reduce current local taxes during the years ended March 31, 2014 and 2013, 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
Foreign currency translation adjustments
Balance at end of year
Millions of yen
2014
2013
¥
¥
5,349
353
250
(567)
(722)
(575)
481
4,569
¥
¥
4,673
346
486
(377)
(24)
(414)
659
5,349
Thousands of
U.S. dollars
2014
51,932
3,427
2,427
(5,505)
(7,010)
(5,582)
4,670
44,359
$
$
The total amounts of unrecognized tax benefits that would reduce the effective tax rate, if recognized, are ¥1,472 million
($14,291 thousand) and ¥1,664 million at March 31, 2014 and 2013, 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, 2014 and 2013, and interest and
penalties included in income taxes for the years ended March 31, 2014 and 2013 are not significant.
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, 2014, 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, 2012 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 2014
69
Notes to Consolidated Financial Statements
Toshiba Corporation and Subsidiaries
March 31, 2014
18. 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, 2014 and 2013 are 4,237,602,026.
RETAINED EARNINGS
Retained earnings at March 31, 2014 and 2013 included a legal reserve of ¥39,232 million ($380,893 thousand) and ¥34,780
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, 2014 do not reflect current year-end distributions of ¥16,937 million ($164,437 thousand) which started to be
paid from June 2, 2014.
Retained earnings at March 31, 2014 included the Group's equity in undistributed earnings of equity method investees
in the amount of ¥108,750 million ($1,055,825 thousand).
ACCUMULATED OTHER COMPREHENSIVE LOSS
The changes in accumulated other comprehensive loss for the year ended March 31, 2014 are as follows:
Balance at beginning of year
Other comprehensive income
arising during year
Amounts reclassified from accumulated
other comprehensive loss
Net current year change
Balance at end of year
Net unrealized gains and
losses on securities
78,165
¥
Foreign currency
translation adjustments
(219,546)
¥
Millions of yen
Pension liability
adjustments
Net unrealized gains and
losses on derivative
instruments
¥
(301,584)
¥
(973)
¥
18,145
(2,386)
15,759
93,924
¥
¥
97,013
11,687
38,184
14,898
¥
¥
108,700
(110,846)
¥
¥
53,082
(248,502)
¥
¥
9
(1,398)
(1,389)
(2,362)
Total
(443,938)
153,351
22,801
¥
¥
176,152
(267,786)
Balance at beginning of year
Other comprehensive income
arising during year
Amounts reclassified from accumulated
other comprehensive loss
Net current year change
Balance at end of year
Net unrealized gains and
losses on securities
758,884
$
Foreign currency
translation adjustments
$ (2,131,515)
Pension liability
adjustments
$ (2,928,000)
Net unrealized gains and
losses on derivative
instruments
$
(9,447)
Total
$ (4,310,078)
Thousands of U.S. dollars
176,165
941,874
370,718
88
1,488,845
(23,165)
113,466
144,641
(13,573)
221,369
$
$
153,000
911,884
$ 1,055,340
$ (1,076,175)
$
515,359
$ (2,412,641)
$
$
(13,485)
(22,932)
$ 1,710,214
$ (2,599,864)
The changes in accumulated other comprehensive loss for the year ended March 31, 2013 are as follows:
¥
Foreign currency
translation adjustments
(283,834)
64,288
(219,546)
¥
Millions of yen
Pension liability
adjustments
¥
¥
(338,348)
36,764
(301,584)
Net unrealized gains and
losses on derivative
instruments
¥
¥
(462)
(511)
(973)
Total
(565,551)
121,613
(443,938)
¥
¥
Balance at beginning of year
Current year change
Balance at end of year
Net unrealized gains and
losses on securities
57,093
¥
21,072
78,165
¥
70 TOSHIBA Annual Report 2014
Amounts reclassified from accumulated other comprehensive loss for the year ended March 31, 2014 are as follows:
Millions of yen
Thousands of
U.S. dollars
Amounts reclassified from accumulated
other comprehensive loss
Affected line item in Consolidated
Statement of Income
Net unrealized gains and
losses on securities
¥
Foreign currency
translation adjustments
Pension liability adjustments
Net unrealized gains and
losses on derivative instruments
(3,680)
1,293
(2,387)
(1)
(2,386)
11,712
−
11,712
25
11,687
23,792
(8,446)
15,346
448
14,898
(2,420)
890
(1,530)
(132)
(1,398)
$
(35,728)
12,553
(23,175)
(10)
(23,165)
113,709
−
113,709
243
113,466
230,990
(82,000)
148,990
4,349
144,641
(23,495)
8,641
(14,854)
(1,281)
(13,573)
Other income
Income taxes
Net income before noncontrolling interests
Less: Net income attributable to noncontrolling interests
Net income attributable to shareholders of the Company
Other expense
Income taxes
Net income before noncontrolling interests
Less: Net income attributable to noncontrolling interests
Net income attributable to shareholders of the Company
(Notes 1)
Income taxes
Net income before noncontrolling interests
Less: Net income attributable to noncontrolling interests
Net income attributable to shareholders of the Company
Other income
Income taxes
Net income before noncontrolling interests
Less: Net income attributable to noncontrolling interests
Net income attributable to shareholders of the Company
Total reclassifications−net of tax
and noncontrolling interests
¥
22,801
$
221,369
Notes: 1) Included in the computation of net periodic pension and severance cost. Details are disclosed in Note 12.
2) Increase (decrease) of amounts reclassified from accumulated other comprehensive loss indicates decrease (increase) of income in Consolidated Statement of Income.
TOSHIBA Annual Report 2014
71
Notes to Consolidated Financial Statements
Toshiba Corporation and Subsidiaries
March 31, 2014
Tax effects allocated to each component of other comprehensive income (loss) for the years ended March 31, 2014 and
2013 are shown below:
For the year ended March 31, 2014:
Net unrealized gains and losses on securities:
Unrealized holding gains arising during year
Less: reclassification adjustment for gains 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 gains included in net income
attributable to shareholders of the Company
Other comprehensive income
For the year ended March 31, 2013:
Net unrealized gains and losses on securities:
Unrealized holding gains 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 losses arising during year
Less: reclassification adjustment for gains included in net income
attributable to shareholders of the Company
Pre-tax
amount
Millions of yen
Tax benefit
(expense)
Net-of-tax
amount
¥
29,358
¥
(11,213)
¥
18,145
(3,679)
1,293
(2,386)
100,120
11,687
58,976
23,101
(126)
(2,209)
(3,107)
−
(20,792)
(8,203)
135
811
97,013
11,687
38,184
14,898
9
(1,398)
¥
217,228
¥
(41,076)
¥
176,152
¥
32,510
¥
(12,083)
¥
20,427
1,002
109,061
3,155
26,664
33,189
(130)
(755)
(357)
(5,138)
−
(9,044)
(11,817)
(152)
322
645
103,923
3,155
17,620
21,372
(282)
(433)
Other comprehensive income
¥
204,696
¥
(38,269)
¥
166,427
72 TOSHIBA Annual Report 2014
For the year ended March 31, 2014:
Net unrealized gains and losses on securities:
Unrealized holding gains arising during year
Less: reclassification adjustment for gains 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 gains 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
$
285,029
$
(108,864)
$
176,165
(35,718)
12,553
(23,165)
972,039
113,466
572,583
224,281
(1,223)
(21,447)
(30,165)
−
(201,865)
(79,640)
1,311
7,874
941,874
113,466
370,718
144,641
88
(13,573)
Other comprehensive income
$ 2,109,010
$
(398,796)
$ 1,710,214
TAKEOVER DEFENSE MEASURE
The Company has 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.
TOSHIBA Annual Report 2014
73
Notes to Consolidated Financial Statements
Toshiba Corporation and Subsidiaries
March 31, 2014
19. 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 net earnings
per share attributable to shareholders of the Company for the years ended March 31, 2014 and 2013.
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
2014
2013
Thousands of
U.S. dollars
2014
¥
68,942
¥
15,904
$
669,340
(8,702)
(2,479)
(84,486)
Net income attributable to shareholders of the Company
¥
60,240
¥
13,425
$
584,854
Year ended March 31
Weighted-average number of shares of common stock
outstanding for the year
Thousands of shares
2014
4,234,659
2013
4,234,899
Year ended March 31
Earnings from continuing operations per share attributable to
shareholders of the Company:
−Basic
Loss from discontinued operations per share attributable to
shareholders of the Company:
−Basic
Net earnings per share attributable to shareholders of the Company:
−Basic
Yen
2014
2013
U.S. dollars
2014
¥
¥
¥
16.28
(2.05)
14.23
¥
¥
¥
3.76
(0.59)
3.17
$
$
$
0.16
(0.02)
0.14
Diluted net earnings per share attributable to shareholders of the Company for the years ended March 31, 2014 and 2013
have been omitted because the Company did not have potential common stock that were outstanding for the period.
74 TOSHIBA Annual Report 2014
20. 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 2014 to 2021.
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 and currency options utilized by the Group effectively reduce fluctuation in cash flow
from commitments on future trade transactions denominated in foreign currencies for the next 7 years and 1 year,
respectively.
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 7 years.
The Group expects to reclassify ¥51 million ($495 thousand) of net income on derivative financial instruments from
accumulated other comprehensive loss to net income (loss) attributable to shareholders of the Company during the next
12 months due to the collection of accounts receivable denominated in foreign currencies and the payments of accounts
payable denominated in foreign currencies and variable interest associated with the floating-rate debts.
Derivatives Not Designated as Hedging Instruments Strategy
The Group has entered into certain forward exchange contracts, interest rate swap agreements, currency swap
agreements and currency options to offset the earnings impact related to fluctuations in foreign currency exchange rates
on monetary assets and liabilities denominated in foreign currencies and in interest rates on debt instruments. Although
some of these contracts have not been designated as hedges as required in order to apply hedge accounting, the
contracts are effective from an economic perspective. The changes in the fair value of those contracts are recorded in
earnings immediately.
TOSHIBA Annual Report 2014
75
Notes to Consolidated Financial Statements
Toshiba Corporation and Subsidiaries
March 31, 2014
The Group's forward exchange contract amounts, the aggregate notional principal amounts of interest rate swap
agreements, currency swap agreements and currency options outstanding at March 31, 2014 and 2013 are summarized
below:
March 31
Forward exchange contracts:
To sell foreign currencies
To buy foreign currencies
Interest rate swap agreements
Currency swap agreements
Currency options
Millions of yen
2014
2013
¥
202,361
159,044
526,038
61,377
7,989
¥
110,637
94,190
543,520
123,376
25,955
Thousands of
U.S. dollars
2014
$ 1,964,670
1,544,117
5,107,165
595,893
77,563
(2) FAIR VALUE OF FINANCIAL INSTRUMENTS
The fair value of the Group's financial instruments and the location in the consolidated balance sheet at March 31, 2014
and 2013 are summarized as follows:
March 31
Location
Derivatives designated as hedging instruments:
Assets:
Forward exchange contracts
Currency options
Liabilities:
Forward exchange contracts
Interest rate swap agreements
Prepaid expenses and
other current assets
Prepaid expenses and
other current assets
Other current liabilities
Other current liabilities
Other 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
2014
2013
Thousands of
U.S. dollars
2014
¥
1,211
¥
2,733
$
11,757
18
(1,727)
−
(2,785)
1,306
65
(770)
(11)
−
616
(1,492)
(143)
(3,547)
2,193
−
(3,336)
(21)
(177)
175
(16,767)
−
(27,039)
12,680
631
(7,476)
(107)
−
Millions of yen
2014
2013
Carrying
amount
Fair value
Carrying
amount
Fair value
Long-term debt, including current portion
¥ (1,208,018)
¥ (1,215,525)
¥ (1,245,214)
¥ (1,252,204)
March 31
Nonderivatives:
Liabilities:
Thousands of U.S. dollars
2014
Carrying
amount
Fair value
Long-term debt, including current portion
$ (11,728,330)
$ (11,801,214)
76 TOSHIBA Annual Report 2014
The above table excludes the financial instruments for which fair value 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 value 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, 2014 is as
follows:
Cash flow hedge:
Forward exchange contracts
Interest rate swap agreements
Currency options
Amount of
gain (loss)
recognized in
OCI
Amount
recognized
¥
(143)
579
(427)
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
¥
1,299
Location
Other expense
Amount
recognized
¥
(167)
Other income
99
Other income
98
Derivatives not designated as hedging instruments:
Forward exchange contracts
Cash flow hedge:
Forward exchange contracts
Interest rate swap agreements
Currency options
Millions of yen
Amount of gain (loss)
recognized in income (loss)
Location
Other expense
Amount
recognized
¥
(1,070)
Amount of
gain (loss)
recognized in
OCI
Amount
recognized
$
(1,388)
5,621
(4,145)
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
$
12,612
Location
Other expense
Amount
recognized
$
(1,621)
Other income
961
Other income
951
Derivatives not designated as hedging instruments:
Forward exchange contracts
Thousands of U.S. dollars
Amount of gain (loss)
recognized in income (loss)
Location
Other expense
Amount
recognized
$
(10,388)
TOSHIBA Annual Report 2014
77
Notes to Consolidated Financial Statements
Toshiba Corporation and Subsidiaries
March 31, 2014
The effect of derivative instruments on the consolidated statement of income for the year ended March 31, 2013 is as
follows:
Cash flow hedge:
Forward exchange contracts
Interest rate swap agreements
Currency options
Amount of
gain (loss)
recognized in
OCI
Amount
recognized
¥
705
(1,384)
601
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 income
Amount
recognized
309
124
Location
Other income
¥
Other income
Amount
recognized
491
25
Derivatives not designated as hedging instruments:
Forward exchange contracts
Millions of yen
Amount of gain (loss)
recognized in income (loss)
Location
Other income
Amount
recognized
¥
2,401
78 TOSHIBA Annual Report 2014
21. 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, 2014 and 2013 were ¥81,140 million ($787,767 thousand)
and ¥90,660 million, respectively.
The Group also leases certain machinery and equipment which are accounted for as capital leases. As of March 31, 2014
and 2013, the costs of machinery and equipment under capital leases were approximately ¥64,717 million ($628,320
thousand) and ¥65,362 million, and the related accumulated amortization were approximately ¥29,758 million ($288,913
thousand) and ¥30,501 million, respectively.
The costs of machinery and equipment under capital leases from affiliates of the Company and the related accumulated
amortization as of March 31, 2014 and 2013 were not significant.
Minimum lease payments for the Group's capital and non-cancelable operating leases as of March 31, 2014 are as
follows:
Year ending March 31
2015
2016
2017
2018
2019
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
¥
¥
34,276
29,867
17,389
10,074
7,724
25,765
125,095
¥
¥
10,968
8,283
5,914
3,627
2,527
25,018
56,337
(2,032)
(20,041)
34,264
(9,493)
24,771
Capital
leases
106,485
80,418
57,417
35,214
24,534
242,893
546,961
(19,728)
(194,573)
332,660
(92,165)
240,495
$
$
Operating
leases
332,777
289,971
168,825
97,806
74,990
250,146
1,214,515
$
$
22. COMMITMENTS AND CONTINGENT LIABILITIES
Commitments for the purchase of property, plant and equipment, and unconditional purchase obligation for license fees
outstanding at March 31, 2014 totaled approximately ¥26,096 million ($253,359 thousand).
As of March 31, 2014, contingent liabilities, other than guarantees disclosed in Note 23, approximated ¥178 million
($1,728 thousand) mainly for recourse obligations related to notes receivable transferred. The Group recognizes revenues
from several claims and unapproved change orders if and only if the amounts are reliably estimated, its realization is
probable and there is a legal basis. As of March 31, 2014, recognized revenue from several claims and unapproved change
orders approximated ¥32,379 ($314,359 thousand), and are included in prepaid expenses and other current assets on the
consolidated balance sheet.
TOSHIBA Annual Report 2014
79
Notes to Consolidated Financial Statements
Toshiba Corporation and Subsidiaries
March 31, 2014
23. 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 2014 to 2023 as of March 31, 2014 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 ¥65,317 million ($634,146 thousand) as of March 31, 2014.
GUARANTEES OF EMPLOYEES' HOUSING LOANS
The Group guarantees housing loans of its employees. Expiration dates vary from 2014 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 ¥3,891 million ($37,777 thousand) as of March 31, 2014. 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 September 2017. The maximum potential
payments by the Group for such residual value guarantees were ¥7,114 million ($69,068 thousand) as of March 31, 2014.
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 ¥7,737 million ($75,117 thousand)
as of March 31, 2014.
The carrying amounts of the liabilities for the Group's obligations under the guarantees described above as of March 31,
2014 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, 2014 and 2013:
Year ended March 31
Balance at beginning of year
Warranties issued
Settlements made
Foreign currency translation adjustments
Balance at end of year
Millions of yen
2014
36,273
44,007
(49,484)
2,589
33,385
¥
¥
2013
40,902
45,675
(53,174)
2,870
36,273
¥
¥
Thousands of
U.S. dollars
2014
352,165
427,252
(480,427)
25,136
324,126
$
$
80 TOSHIBA Annual Report 2014
24. LEGAL PROCEEDINGS
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. In April 2007, the
Company filed an appeal to the General Court of the European Union (the “GC”) seeking annulment of the Commission's
decision. In July 2011, the GC handed down a judgment and annulled the entire fine imposed on the Company, but
upheld the Commission's determination about alleged anti-competitive behavior. The Company appealed the GC’s
judgment to the European Court of Justice (the “ECJ”) in September 2011. In June 2012, the Commission adopted a
decision re-imposing fines on the Company, by recalculating the above-mentioned fines. In this decision, the Company
was individually fined €56.8 million and was also fined €4.65 million jointly and severally with Mitsubishi Electric
Corporation. The Company filed an appeal with the GC seeking annulment of this decision in September 2012 on the
ground that the procedure and substance of the new decision are unreasonable. In December 2013, the ECJ delivered its
final ruling to support the Commission’s decision in respect of the alleged infringement of EU competition laws in the gas
insulated switchgear market. As a result, the Company accrued the reasonably estimated amount expected to be paid for
the fines.
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 ($90,476 thousand) including payment for parts
which have been already completed. In October 2012, MOD filed a counterclaim seeking payment for the penalty of the
cancellation of the contract. In March 2014, the Company increased the amount of its claim by approximately ¥3,017
million ($29,291 thousand). The Company properly executed its duties pursuant to conditions of the contract. Therefore,
the Company thinks that MOD's cancellation of the contract and the claim for penalty is unreasonable and will assert its
position in the Court.
Since December 2006, in the United States, certain purchasers of LCD panels and related products from the Group and
other defendants have filed lawsuits against the Group and other defendants, seeking compensation of damages caused
by alleged infringement of U.S. antitrust law. Though the Group settled with the class action plaintiffs, litigations between
direct action plaintiffs are still pending. As the Group believes that there was no illegal activity in the LCD business, the
Group plans to pursue all available legal avenues to defend in the pending litigations.
In December 2012, the Commission adopted a decision imposing a fine of approximately €28 million on the Company,
plus a fine of €87 million jointly and severally with Panasonic Corporation and MT Picture Display Co. , Ltd. for
infringement of EU Competition Law in the color picture tube (used for Televisions) market. 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 GC in February 2013.
In November 2013, Japan Post Co., Ltd. (“JP”) filed a lawsuit against the Company and NEC Corporation for violating the
antitrust law concerning a bid for postal code automatic reading and sorting equipment, seeking payment of
approximately ¥3,756 million ($36,466 thousand) and delayed damages. This claim is based on the cease and desist order
issued by the Japan Fair Trade Commission in December 2010. The Company will assert its position in the Court because it
considers there is no causal association between its action and damage claimed by JP and that JP's claim is unreasonable
in the Tokyo High 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. 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 Group's Management currently 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.
TOSHIBA Annual Report 2014
81
Notes to Consolidated Financial Statements
Toshiba Corporation and Subsidiaries
March 31, 2014
25. 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 March 2027. The Group accrued ¥7,926 million ($76,951
thousand) and ¥8,526 million at March 31, 2014 and 2013, 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 ¥12,887 million ($125,117 thousand) and ¥12,013 million as of
March 31, 2014 and 2013, 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.
26. 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, 2014 and 2013 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
Millions of yen
2014
2013
¥
¥
18,765
1,071
(271)
711
89
1,557
21,922
¥
¥
15,616
750
(193)
1,675
(934)
1,851
18,765
Thousands of
U.S. dollars
2014
182,184
10,398
(2,631)
6,903
864
15,117
212,835
$
$
82 TOSHIBA Annual Report 2014
27. BUSINESS COMBINATIONS
NuFlare Technology, Inc.
On December 26, 2012, the Company increased its ownership in NuFlare Technology Inc. (“NFT”) by acquiring an
additional 8.8% stake to more than 50% totaling approximately ¥5,886 million in cash and consequently acquired a
controlling financial interest of NFT.
NFT manufactures and sells advanced semiconductor manufacturing equipment and has a close relationship with the
Company in development of related technologies. The Company decided to acquire additional shares in consideration of
the need to extend its support to NFT in technological and management operations and to retain its advanced
technologies, so that NFT will continue its supply of technologically advanced equipment to the market.
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, the fair value of previously held equity interest,
and the fair value of noncontrolling interests to the identifiable assets acquired and liabilities assumed as of the
acquisition date:
As of the acquisition date
Purchase price
Previously held equity interest
Noncontrolling interests
Total
Current assets
Non-current assets
Intangible assets subject to amortization
Current liabilities
Non-current liabilities
Total identifiable net assets acquired
Millions of yen
5,886
25,886
31,439
63,211
53,194
4,880
26,839
22,796
16,687
45,430
¥
¥
¥
¥
Identifiable intangible assets acquired mainly consist of core and current technologies. The Group is amortizing the
intangible assets over a weighted-average estimated life of 8.9 years.
The excess of the purchase price, the fair value of previously held equity interest, and the fair value of noncontrolling
interests over the fair value of the identifiable assets acquired and liabilities assumed, amounted to ¥17,781 million, which
was recorded as goodwill and allocated to Electronic Devices. The book value of equity interest that the Company held
before acquiring the additional stake was ¥9,466 million, and the difference between the book value and the fair value
remeasured after acquiring the additional stake is included in the statement of income for the year ended March 31, 2013.
Operating results of NFT are included in the Company's consolidated statement of income from the acquisition date.
NFT's net sales and net income included in the Company's consolidated statement of income for the year ended March
31, 2013 were ¥7,089 million and ¥1,109 million, respectively.
TOSHIBA Annual Report 2014
83
Notes to Consolidated Financial Statements
Toshiba Corporation and Subsidiaries
March 31, 2014
IBM's Retail Store Solutions business
Toshiba TEC Corporation (“TEC”), a consolidated subsidiary of the Company, entered into an agreement with International
Business Machines Corporation (“IBM”), a US company, to acquire IBM's Retail Store Solutions business (“RSS business”) for
$850 million on April 17, 2012 (Japan Standard Time), and acquired the business on July 31, 2012 (Eastern U.S. Time).
In accordance with this agreement, the business was acquired through Toshiba Global Commerce Solutions Holdings
Corporation, a holding company established in Japan (“Holding Company”), and new companies and their branches
established in 44 countries and regions including U.S. under the umbrella of the Holding Company. TEC acquired an
80.1% stake and IBM Taiwan Holdings B.V. (“IBM Taiwan”) acquired a 19.9% stake in the Holding Company.
According to the price adjustment clause on compensations for acquisition of the business, the purchase price was
adjusted to $797 million from $850 million in the original agreement. In this regard, the amount equivalent to 80.1% of
the total compensation for acquisition was paid by the submission date of the annual securities report before correction
(June 25, 2014). And the final payment will be made by purchasing shares held by IBM Taiwan which are equivalent to
19.9% in January 2016. Upon the final payment, the Holding Company will become a wholly owned subsidiary of TEC.
After acquisition of the RSS business, TEC will become the foremost retail point of sale systems company that provides
new value to customers, globally offering high-level products and solutions in the retail solution market which has been
rapidly growing in the Americas, Europe, Japan, Asia, and worldwide.
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 value of noncontrolling interests to the
identifiable assets acquired and liabilities assumed as of the acquisition date:
As of the acquisition date
Purchase price
Noncontrolling interests
Total
Current assets
Non-current assets
Current liabilities
Non-current liabilities
Total identifiable net assets acquired
Identifiable intangible assets acquired are as follows:
Customer relationships
(Weighted-average estimated period: 17.0 year)
Core and current technologies
(Weighted-average estimated period: 15.7 year)
Brand name
(Weighted-average estimated period: - year)
Millions of yen
49,903
12,398
62,301
3,953
47,164
9,511
147
41,459
¥
¥
¥
¥
Millions of yen
¥
27,684
14,071
1,954
The excess of the purchase price and the fair value of the noncontrolling interests over the fair value of the identifiable
assets acquired and liabilities assumed, amounted to ¥20,842 million, which was recorded as goodwill and allocated to
Community Solutions.
Operating results of IBM's Retail Store Solutions business are included in the Company's consolidated statement of
income from the acquisition date. IBM's Retail Store Solutions business's net sales and net income included in the
Company's consolidated statement of income for the year ended March 31, 2013 were ¥45,992 million and ¥541 million,
respectively.
84 TOSHIBA Annual Report 2014
Vijai Electricals Ltd.'s power transmission and distribution businesses
The Company entered into an agreement with Vijai Electricals Ltd. (“Vijai”) to acquire the major part of Vijai's power
transmission and distribution (“T&D”) businesses for approximately 13.7 billion Indian Rupee on September 6, 2013 (Japan
Standard Time), and acquired the businesses on December 27, 2013.
In accordance with this agreement, the businesses were acquired through a new company established in India, Toshiba
Transmission & Distribution Systems (India) Pvt. Ltd. (“New Company”).
Vijai was established in 1973, to manufacture and sell electricity distribution transformers. The business has grown on
the strength of the company's high quality production capabilities, which have allowed it to win the top share in the
Indian market and major footholds in both Europe and Africa. Vijai further expanded its T&D businesses in 2006, when it
entered the power transformer and switchgear businesses.
The New Company will run the acquired businesses and provide them with the Company's latest design, development
and production capabilities in order to supply a wide range of T&D products globally as well as in India.
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 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
Non-current liabilities
Total identifiable net assets acquired
Identifiable intangible assets acquired are as follows:
Core and current technologies
(Weighted-average estimated period: 10.6 year)
Contract-based intangible assets
(Weighted-average estimated period: 5.0 year)
Customer relationships
(Weighted-average estimated period: 3.3 year)
Millions of yen
23,165
Thousands of U.S. dollars
$
224,903
9,431
7,637
3,054
4,995
701
14,426
$
$
91,563
74,146
29,650
48,495
6,806
140,058
¥
¥
¥
Millions of yen
Thousands of U.S. dollars
¥
2,287
$
22,203
434
333
4,214
3,233
The excess of the purchase price over the fair value of the identifiable assets acquired and liabilities assumed, amounted
to ¥8,739 million ($84,845 thousand), which was recorded as goodwill and allocated to Energy & Infrastructure.
Operating results of Vijai’s T&D businesses have been 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, 2012.
Year ended March 31
Net sales
Net income attributable to shareholders of the Company
Billions of yen
¥
2014
6,496.5
59.9
¥
2013
5,791.8
14.4
Millions of
U.S. dollars
2014
$
63,073
582
TOSHIBA Annual Report 2014
85
Notes to Consolidated Financial Statements
Toshiba Corporation and Subsidiaries
March 31, 2014
28. 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 Energy & 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, 2014 and 2013, the total assets of VIEs on the consolidated balance sheet were ¥24,376 million ($236,660
thousand) and ¥18,682 million, and the total liabilities of VIEs on the consolidated balance sheet were ¥14,961 million
($145,252 thousand) and ¥12,432 million, respectively. The assets consisted primarily of property, plant and equipment.
The liabilities consisted primarily of accounts payable. 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 Energy & 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 share power equally. Unconsolidated VIEs involved in Energy & Infrastructure
are established for the purpose of developing nuclear power plants, supplying stable electric power systems, and
providing electric services and equipment to electric power operators. The principal VIE involved in Energy &
Infrastructure is an entity which is seeking regulatory approval for the construction of a nuclear power plant. For the year
ended March 31, 2014, the Group recorded a loss of ¥30,961 million ($300,592 thousand) due to a reassessment of the
value of assets of the VIE involved in Energy & Infrastructure in the United States. 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, 2014 and 2013, 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, 2014
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
350,094
¥
135,781
15,145
174,782
VIEs involved in
Energy & Infrastructure
¥
119,639
42,639
7,923
34,716
86 TOSHIBA Annual Report 2014
March 31, 2013
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, 2014
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
290,182
¥
142,033
19,619
192,354
VIEs involved in
Energy & Infrastructure
106,681
¥
65,655
−
65,655
Thousands of U.S. dollars
VIEs involved in
Electronic Devices
$ 3,398,971
1,318,262
147,039
1,696,913
VIEs involved in
Energy & Infrastructure
$ 1,161,544
413,971
76,922
337,049
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.
29. SEGMENT INFORMATION
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 for the year ended
March 31, 2014 of about ¥42,800 million ($415,534 thousand) and legal settlement costs are not included in it.
The Group has implemented comprehensive reforms in its business segments and corporate staff organization as of
October 1, 2013. The Group's previous business segments, "Digital Products," "Electronic Devices," "Social Infrastructure,"
and "Home Appliances," were reorganized into "Energy & Infrastructure," "Community Solutions," "Healthcare Systems &
Services," "Electronic Devices & Components," and "Lifestyle Products & Services".
As a result, principal products that belong to each segment were changed as follows.
Before the Organizational Reforms
(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, POS systems, Multi-function peripherals, Visual products, etc.
Semiconductors, Hard disk drives, etc.
After the Organizational Reforms
(1) Energy & Infrastructure:
(2) Community Solutions:
Energy-related equipment, Transportation systems, etc.
Building facilities (Elevators, Light fixtures, and Air-conditioners), POS systems,
Multi-function peripherals, etc.
Medical equipment, Healthcare solutions, etc.
(3) Healthcare Systems & Services:
(4) Electronic Devices & Components: Semiconductors, Hard disk drives, etc.
(5) Lifestyle Products & Services:
Personal computers, Visual products, Refrigerators, Washing drying machines,
etc.
Cloud Solutions, Logistics Service, etc.
As a result of above reforms, the data relating to the consolidated segment information is presented in conformity with
the new organization from October 1, 2013, and prior year information has been restated.
(6) Others:
TOSHIBA Annual Report 2014
87
Notes to Consolidated Financial Statements
Toshiba Corporation and Subsidiaries
March 31, 2014
BUSINESS SEGMENTS
Financial information by segments as of and for the years ended March 31, 2014 and 2013 are as follows:
As of and for the year ended March 31, 2014
Millions of yen
Energy &
Infrastructure
Community
Solutions
Healthcare Systems
& Services
Electronic Devices
& Components
Lifestyle Products
& Services
Others
Total
Corporate and
Eliminations
Consolidated
Net sales
(1) Unaffiliated customers
(2) Intersegment
Total
Segment operating income
(loss)
¥ 1,705,231 ¥ 1,300,894 ¥
100,296
55,742
¥ 1,805,527 ¥ 1,356,636 ¥
408,477 ¥ 1,596,720 ¥ 1,252,187 ¥
90,565
410,727 ¥ 1,687,285 ¥ 1,314,617 ¥
62,430
2,250
− ¥ 6,489,702
226,193 ¥ 6,489,702 ¥
277,823
−
504,016 ¥ 7,078,808 ¥ (589,106) ¥ 6,489,702
(589,106)
589,106
¥
1,277 ¥
53,328 ¥
28,582 ¥
241,552 ¥
(58,083) ¥
(8,696) ¥
257,960 ¥
(834) ¥
257,126
Identifiable assets
Depreciation and amortization
Capital expenditures
¥ 2,639,459 ¥
57,657
70,963
983,079 ¥
28,099
33,345
284,589 ¥ 1,373,770 ¥
8,704
10,486
59,496
122,204
618,430 ¥
10,089
14,195
419,004 ¥ 6,318,331 ¥ (145,812) ¥ 6,172,519
170,796
280,915
170,796
280,915
6,751
29,722
−
−
As of and for the year ended March 31, 2013
Millions of yen
Energy &
Infrastructure
Community
Solutions
Healthcare Systems
& Services
Electronic Devices
& Components
Lifestyle Products
& Services
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
¥ 1,572,518 ¥ 1,127,062 ¥ 377,319 ¥ 1,189,249 ¥ 1,222,590 ¥ 233,510 ¥ 5,722,248 ¥
90,995
− ¥ 5,722,248
−
¥ 1,639,008 ¥ 1,176,063 ¥ 379,556 ¥ 1,280,244 ¥ 1,267,818 ¥ 498,842 ¥ 6,241,531 ¥ (519,283) ¥ 5,722,248
(519,283)
519,283
265,332
49,001
66,490
45,228
2,237
¥
82,711 ¥
26,692 ¥
19,911 ¥
41,180 ¥
(72,891) ¥
(6,562) ¥
91,041 ¥
1,012 ¥
92,053
¥ 2,369,404 ¥ 982,567 ¥ 243,012 ¥ 1,320,656 ¥ 694,746 ¥ 533,253 ¥ 6,143,638 ¥ (122,035) ¥ 6,021,603
196,943
266,943
196,943
266,943
83,360
126,453
6,855
12,455
11,597
25,260
26,259
33,403
58,590
58,396
10,282
10,976
−
−
As of and for the year ended March 31, 2014
Energy &
Infrastructure
Community
Solutions
Healthcare Systems
& Services
Electronic Devices
& Components
Lifestyle Products
& Services
Others
Total
Thousands of U.S. dollars
Corporate and
Eliminations
Consolidated
Net sales
(1) Unaffiliated customers
(2) Intersegment
Total
Segment operating income
(loss)
Identifiable assets
Depreciation and amortization
Capital expenditures
$ 16,555,641 $ 12,630,039 $ 3,965,796 $ 15,502,136 $ 12,157,156 $ 2,196,048 $ 63,006,816 $
879,272
− $ 63,006,816
−
$ 17,529,389 $ 13,171,223 $ 3,987,641 $ 16,381,408 $ 12,763,272 $ 4,893,359 $ 68,726,292 $ (5,719,476) $ 63,006,816
(5,719,476)
5,719,476
2,697,311
541,184
606,116
973,748
21,845
$
12,398 $
517,748 $
277,495 $ 2,345,165 $ (563,913) $
(84,427) $ 2,504,466 $
(8,096) $ 2,496,370
$ 25,625,816 $ 9,544,456 $ 2,763,000 $ 13,337,573 $ 6,004,175 $ 4,068,000 $ 61,343,019 $ (1,415,650) $ 59,927,369
1,658,214
2,727,330
1,658,214
2,727,330
577,631
1,186,447
84,505
101,806
272,806
323,738
559,777
688,961
97,951
137,815
65,544
288,563
−
−
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) Depreciation for property, plant and equipment associated with the Company and domestic subsidiaries has been computed generally by the declining-balance method. However, the Company
and domestic subsidiaries changed the method of calculating depreciation for property, plant and equipment to the straight line method, starting from April 1, 2013. Segment operating income
(loss) increased by ¥23,640 million ($229,515 thousand) in Electronic Devices & Components and ¥3,724 million ($36,155 thousand) in Energy & Infrastructure, compared with the figures under the
previous method. The impacts on the amounts of segment operating income (loss) in the other segments are not significant.
4) Prior-period data relating to the discontinued operation has been reclassified to conform with the current classification.
88 TOSHIBA Annual Report 2014
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, 2014 and 2013 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
¥
¥
2014
257,960
(834)
257,126
13,756
3,254
65,732
(33,696)
(123,836)
¥
¥
2013
91,041
1,012
92,053
12,139
21,560
100,755
(32,677)
(18,904)
Thousands of
U.S. dollars
2014
$ 2,504,466
(8,096)
$ 2,496,370
133,554
31,592
638,174
(327,146)
(1,202,291)
Income from continuing operations, before income taxes and
noncontrolling interests
¥
182,336
¥
74,926
$ 1,770,253
GEOGRAPHIC INFORMATION
Net sales
Net sales by region based on the location of the customer for the years ended March 31, 2014 and 2013 are as follows:
Year ended March 31
Japan
Overseas
Asia
North America
Europe
Others
Total
Millions of yen
2014
¥ 2,727,415
¥ 3,762,287
1,383,640
1,160,489
846,267
371,891
¥ 6,489,702
2013
2,625,098
3,097,150
984,314
1,067,106
725,193
320,537
5,722,248
¥
¥
¥
Property, plant and equipment
Property, plant and equipment by region at March 31, 2014 and 2013 are as follows:
March 31
Japan
Overseas
Asia
North America
Europe
Others
Total
Millions of yen
2014
587,811
322,308
163,822
75,591
68,078
14,817
910,119
¥
¥
¥
2013
515,328
306,971
159,688
71,119
61,505
14,659
822,299
¥
¥
¥
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) Prior-period data relating to the discontinued operation has been reclassified to conform with the current classification.
Thousands of
U.S. dollars
2014
$ 26,479,758
$ 36,527,058
13,433,398
11,266,883
8,216,184
3,610,593
$ 63,006,816
Thousands of
U.S. dollars
2014
$ 5,706,903
$ 3,129,204
1,590,505
733,893
660,952
143,854
$ 8,836,107
TOSHIBA Annual Report 2014
89
Notes to Consolidated Financial Statements
Toshiba Corporation and Subsidiaries
March 31, 2014
30. SUBSEQUENT EVENT
Notice of Fund Procurement through Hybrid Financing for the prematurity redemption of the 1st Series Unsecured,
Interest Deferrable and Early Redeemable Subordinated Bonds Solely for Qualified Institutional Investors
The Company decided on June 25, 2014 the fund procurement through Hybrid Financing (Subordinated Loans)
(hereinafter referred to as the “Subordinated Loan”) for the prematurity redemption of the 1st Series Unsecured, Interest
Deferrable and Early Redeemable Subordinated Bonds Solely for Qualified Institutional Investors (hereinafter referred to
as the “Existing Hybrid Securities”) for the objectives of achieving the large reduction of interest costs and ensuring more
diverse and flexible replacement measures.
(1) Summary of Subordinated Loan
The detail of the expected terms and conditions of the Subordinated Loan are as follows.
1) Loan Amount:
2) Rate of Interest:
3) Use of Proceeds:
4) Repayment Date:
5) Replacement Restrictions:
6) Interest Clause:
7) Subordination Clause:
JPY 180 billion
Floating rate from June 25, 2014 to June 25, 2019
Stepped up floating rate(1% higher) from June 25, 2019
Subordinated Loan shall be applied to the prematurity redemption of Existing Hybrid
Securities
June 25, 2074
Provided, however, that prepayment in full or in part of the principal amount is
permitted on any business days on and after June 25, 2019, or in the case of certain
specified occasions.
The Company intends to make prepayment of the principal amount after the Company
raises funds having equity credit equal to or higher than the evaluated equity of the
Subordinated Loan’s principal prepayment amount by issuance of stock, subordinated
loan or other means granted equity credit by Rating and Investment Information, Inc.,
within the period of 12 months preceding (and including) to the prepayment date. (If
convertible bonds that satisfy certain requirements and are issued on or after the
closing date of the Subordinated Loan are converted into the shares of our common
stock within the period of 6 months preceding (and including) to the prepayment date,
the Company intends to make prepayment of the principal amount after the Company
raises funds having equity credit equal to or higher than the amount obtained by
subtracting the increase of net assets by the conversion from the evaluated equity of
the Subordinated Loan’s principal prepayment amount.)
Optional suspension of interest payment / Mandatory payment of the Optional
Deferred Payment Amount
In liquidation proceedings, bankruptcy proceedings, corporate reorganization
proceedings or civil rehabilitation proceedings of the Company or any proceedings
that are equivalent thereto in accordance with laws other than Japanese law, the
lenders of the Subordinated Loan shall have the claim against the Company
subordinated to senior debt and only to the extent that the Subordinated Loan are
treated as substantially pari passu with most preferred stock issued or to be issued by
the Company which ranks most senior with respect to the right to receive dividends
from surplus.
Each clauses of the Subordinated Loan shall not be revised if the revision will get
negative effect to the Company's creditors other than lenders of the Subordinated
Loan.
(2) Outline of prematurity redemption of Existing Hybrid Securities
1) Total Amount of prematurity redemption (Total face value): JPY 180 billion
2) Rate of Interest:
3) Redemption Value:
4) Reason for Redemption:
7.5% per annum(fixed rate)
JPY 100 per JPY 100 of the principal amount of each Existing Hybrid Securities
Pursuant to the prematurity redemption clause of the Existing Hybrid Securities
The information provided is about the status as of the submission date of the original annual securities report in June
2014 before correction for restatements in September 2015.
90 TOSHIBA Annual Report 2014
Ernst & Young ShinNihon LLC
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Chiyoda-ku, Tokyo, Japan 100-0011
Tel : +813 3503 1100
Fax: +813 3503 1197
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, 2014, 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, 2014, 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 25, 2014.
As discussed in Note 2 “Summary of Significant Accounting Policies” to the consolidated financial statements, effective
April 1, 2013, the Company has elected to change its method of accounting for depreciation.
Our opinion is not qualified in respect of these matters.
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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TOSHIBA Annual Report 2014
91
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Corporate Communications Division