2015
5
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 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
¥
¥
¥
2015
¥ 6,655,894
5,079,028
1,406,427
170,439
136,644
155,659
(37,825)
¥
(8.93)
−
4.00
¥ 6,334,778
1,083,996
218,459
133,142
352,685
198,741
¥
Millions of yen,
except per share amounts
2013
5,722,248
4,413,476
1,216,719
92,053
¥
74,926
38,356
13,425
2014
6,489,702
4,865,787
1,366,789
257,126
182,336
92,045
60,240
2012
5,996,414
4,628,451
1,253,061
114,902
61,427
48,440
3,194
14.23
−
8.00
6,172,519
1,027,189
229,540
125,901
327,913
200,260
¥
¥
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
¥
¥
¥
2011
6,263,990
4,771,797
1,247,661
244,532
201,785
27,944
158,326
37.38
35.90
5.00
5,351,343
793,860
229,913
209,239
318,803
202,638
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, 2015, 2014 and 2013 have been omitted because the company did not have potential
common stock that were outstanding for the period.
4) In February 2015, the Company received an order from the Securities and Exchange Surveillance Commission (“SESC”), based on Article 26 of the Financial Instruments and Exchange Act, requiring
submission of a report. The Company was then subject to inspection regarding projects that used percentage-of-completion accounting. Later, after establishing an Independent Investigation
Committee and conducting the investigation, it was found that the Company made inappropriate accountings and, therefore, the Company filed amendments of the past Annual Securities
Reports and other reports for the fiscal year ended March 31, 2008 to 2014. Accordingly the results for 2011, 2012, 2013, and 2014 as previously presented, have been restated above.
2. Management’s Discussion and Analysis 18. Consolidated Balance Sheets 20. Consolidated Statements of Income
21. Consolidated Statements of Comprehensive Income 22. Consolidated Statements of Equity
24. Consolidated Statements of Cash Flows 25. Notes to Consolidated Financial Statements
75. Report of Independent Auditors
02 TOSHIBA Annual Report 2015
SCOPE OF CONSOLIDATION
As of the end of March 2015, Toshiba Group (“the Group”) comprised Toshiba Corporation (“the Company”) and 584
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, 211 were involved in Energy & Infrastructure, 153 in Community Solutions, 41 in Healthcare
Systems & Services, 44 in Electronic Devices & Components, 52 in Lifestyle Products & Services and 83 in others. The
number of consolidated subsidiaries was 14 less than at the end of March 2014. 217 affiliates were accounted for by the
equity method as of the end of March 2015.
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
( * Change from the year-earlier period)
Billions of yen
2015
6,655.9
170.4
136.6
(37.8)
Change*
+166.2
(86.7)
(45.7)
(98.0)
While the US economy lost some momentum in the second half of FY2014 (October-March), the UK witnessed a strong
performance and the Eurozone sustained a gradual recovery. Despite a slowdown in China, the emerging economies as a
whole saw a continued gradual recovery, reflecting solid growth in Southeast Asia and India.
In Japan, the recovery in domestic demand remained slow, due to the still lingering effects of the increase in the
consumption tax and a fall in real income. Despite improved performances by export-driven large enterprises, the
industrial economy as a whole remained flat, reflecting deteriorated profitability at small and medium enterprises, which
largely rely on domestic demand, as did the service economy.
In the first half of FY2015 (April-September), China’s economy is expected to slow further, but the overall global
economy is expected to see accelerated growth from the second half of FY2014, on a gradual recovery in other countries
and regions. The forecast for the Japanese economy is for a gradual recovery, but with subdued growth on a lack of
accelerating factors.
In these circumstances, Toshiba Group has endeavored to create value by combining technologies developed in-house
and with third parties, and so contribute to a safe, secure and comfortable society. The Group has defined Healthcare that
seeks to enhance people’s health and lifestyles as a third pillar of business and value creation, alongside Energy and
Storage. Furthermore, the Group has launched globally competitive products and services in markets around the world,
especially emerging economies.
Toshiba Group’s net sales increased by 166.2 billion yen to 6,655.9 billion yen (US$55,465.8 million), reflecting higher
sales in the Energy & Infrastructure, Community Solutions and Electronic Devices & Components segments, despite a
decrease in sales in the Lifestyle Products & Services segment. Consolidated operating income decreased by 86.7 billion
yen to 170.4 billion yen (US$1,420.3 million). While the Energy & Infrastructure segment recorded higher operating
income, despite an impairment loss on investment and financing for a US developer of nuclear power plants and other
factors, and the Electronic Devices & Components segment saw lower operating income, the result of an impairment loss
for Discretes in the Semiconductor business. The Lifestyle Products & Services segment recorded significantly
deteriorated operating income (loss) as a result of an impairment loss in its Home Appliances business and other factors.
Income (loss) from continuing operations, before income taxes and noncontrolling interests decreased by 45.7 billion yen
to 136.6 billion yen (US$1,138.7 million). Net income (loss) attributable to shareholders of the Company decreased by 98.0
billion yen to -37.8 billion yen (US$-315.2 million), due to the effects of reversal of deferred tax assets on the tax system
revision and other factors.
TOSHIBA Annual Report 2015
03
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)
Net Sales
+198.3
+54.0
+1.8
+81.5
(150.9)
+25.0
−
+166.2
Billions of yen
Change*
+11%
+4%
+0%
+5%
(11%)
+5%
−
+3%
2,003.8
1,410.7
412.5
1,768.8
1,163.7
529.0
(632.6)
6,655.9
Operating Income (Loss)
19.5
53.9
23.9
216.6
(109.7)
7.5
(41.3)
170.4
Change*
+13.0
(1.6)
(6.0)
(30.2)
(55.1)
(4.1)
−
(86.7)
Energy & Infrastructure:
Net sales in the Energy & Infrastructure segment increased by 198.3 billion yen to 2,003.8 billion yen (US$16,698.4 million),
reflecting higher sales in all social inflastruture businesses, including Nuclear Power Systems, Thermal & Hydro Power
Systems, Transmission & Distribution Systems and Solar Photovoltaic Systems.
Segment operating income increased by 13.0 billion yen to 19.5 billion yen (US$163.1 million). The Nuclear Power
Systems business recorded a significant improvement in operating income despite an impairment loss on investment and
financing for a US developer of nuclear power plants and other factors, and the Transmission & Distribution System
business also saw improved operating income. The Thermal & Hydro Power Systems and Solar Photovoltaic Systems
businesses saw lower operating income.
Community Solutions:
Net sales in the Community Solutions segment increased by 54.0 billion yen to 1,410.7 billion yen (US$11,755.7 million),
reflecting higher sales in the Water & Environmental Systems, Elevator and Building Systems, Commercial Air-Conditioners
and Retail Information Systems and Office Equipment businesses.
Segment operating income decreased by 1.6 billion yen to 53.9 billion yen (US$449.2 million), reflecting lower operating
income in the Retail Information Systems and Office Equipment business, despite higher operating income in the Water &
Environmental Systems, Elevator and Building Systems and Commercial Air-Conditioners businesses.
Healthcare Systems & Services:
Net sales in the Healthcare Systems & Services segment increased by 1.8 billion yen to 412.5 billion yen (US$3,437.6
million). While sales of medical imaging systems were solid in North America and emerging economies, especially of
mainstay computerized tomography (CT) systems, sales in Japan were lower, affected by a revision of the medical fee
reimbursement system and other factors.
Segment operating income decreased by 6.0 billion yen to 23.9 billion yen (US$198.9 million), reflecting continued
up-front investments made to drive forward future growth, particularly in R&D of next-generation CT systems.
Electronic Devices & Components:
Net sales in the Electronic Devices & Components segment increased by 81.5 billion yen to 1,768.8 billion yen (US$14,739.6
million). In the Semiconductor business, Memories saw higher sales on increased sales volume, but Discretes and System
LSIs reported lower sales. The Storage Products business recorded higher sales.
Segment operating income decreased by 30.2 billion yen to 216.6 billion yen (US$1,805.4 million), reflecting a significant
deterioration and an impairment loss in Discretes. Memories also saw lower operating income despite continued high
profitability, while System LSIs saw an improvement in operating income. The Storage Products business also saw higher
operating income.
04 TOSHIBA Annual Report 2015
Lifestyle Products & Services:
Net sales in the Lifestyle Products & Services segment decreased by 150.9 billion yen to 1,163.7 billion yen (US$9,697.4
million). The Visual Products business and the PC business saw lower sales, due to a shift in focus to redefined sales
territories, and the Home Appliances business also recorded lower sales.
Segment operating loss increased by 55.1 billion yen to 109.7 billion yen (US$-914.6 million). The Visual Products and PC
businesses saw a deterioration in operating income, and the Home Appliances business saw a significant fall, the result of
recording an impairment loss.
Others:
The Others segment recorded operating income of 7.5 billion yen (US$62.3 million) on sales of 529.0 billion yen
(US$4,408.5 million).
(2) Cash Flows
In the fiscal year under review, net cash provided by operating activities amounted to 330.4 billion yen, an increase of
46.3 billion yen from net cash provided by operating activities of 284.1 billion yen in the previous year due to increased
working capital.
Net cash used in investing actities amounted to 190.1 billion yen, a decrease of 54.0 billion yen from 244.1 billion yen in
the previous year.
As a result of the foregoing, free cash flow increased by 100.3 billion yen to 140.3 billion yen (US$1,169.3 million) from
40.0 billion yen in the previous year.
Net cash used in financing activities amounted to -125.8 billion yen, a decrease of 36.5 billion yen from -89.3 billion yen
in the previous year.
The effect of exchange rate changes was to increase cash by 13.6 billion yen. Cash and cash equivalents at the end of
the fiscal year increased 28.1 billion yen, from 171.3 billion yen of the end of the previous fiscal year to 199.4 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, litigation settlement and other costs are not
included in it.
Starting in FY2014, the method of computing operating income (loss) in each segment has been changed. 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
While giving full consideration to such factors as the strategic investments necessary to secure medium- to long-term
growth, the Company seeks to achieve continuous increases in its actual dividend payments, in line with a payout ratio in
the region of 30 percent, on a consolidated basis.
Though the Company had decided to pay 4.0 yen per share as the interim dividend, as for the year-end dividend, the
Company has decided not to pay because the Company could not meet the deadline to finalize its financial statements
for the purpose of dividend payment procedures.
TOSHIBA Annual Report 2015
05
Management's Discussion and Analysis
RESEARCH AND DEVELOPMENT
The Group’s management policy defines Growth through Creativity and Innovation as the main target, to be achieved
through Value Creation and Productivity Improvements. We have Energy, Data Storage and Healthcare as a core business.
The Group is aiming to create Human Smart Community-a safe, secure and comfortable society. In achieving this, the
Group creates new value for customers based on a concept what value for our customers we can provide through our
products rather than what we can make. To generate new value for customers, the Group tries to identify customers’ need
faster. Furthermore, the Group promotes Value Innovation, which develops advanced technology, and New Concept
Innovation that utilizes our wide-ranging technology in many and diverse fields to generate synergies.
The Group’s overall R&D expenditure reached 352.7 billion yen in the fiscal year ended March 31, 2015. 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
69.3
48.3
38.1
161.3
29.4
6.3
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 FY2014, as a result of making investments in priority businesses to achieve growth through creativity and innovation,
the total amount of investment and loan amounted to 391.7 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 353.1 billion yen, increasing by 12.9 billion yen from
340.2 billion yen in the previous year.
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.
Impairment losses for Discretes in the Semiconductor business and in Home Appliances business are disposed.
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)
57.9
30.9
9.3
221.8
11.9
21.3
353.1
Investments & loans
(billion yen) (Note 2)
34.7
1.2
1.0
1.3
0.0
0.4
38.6
Total investments
(billion yen)
92.6
32.1
10.3
223.1
11.9
21.7
391.7
06 TOSHIBA Annual Report 2015
(2) Primary Capital Investment
Completed during
the term
Ordered during
the term
Segment
Healthcare Systems
& Services
Electronic Devices
& Components
Energy &
Infrastructure
Electronic Devices
& Components
(3) Primary Investment and Loan
(cid:129) Manufacturing facility for medical diagnostic imaging system (Malaysia)
Outline
(cid:129) Manufacturing building, facilities, interior decorating and power equipment, and
manufacturing facilities for NAND flash memory (the Company’s Yokkaichi Operations)
(cid:129) Equipment for power transmission and distribution systems business (India)
(cid:129) Manufacturing building, interior decorating and power equipment, and manufacturing
facilities for NAND flash memory (the Company’s Yokkaichi Operations)
Segment
Energy & Infrastructure
(cid:129) Acquisition of stake in NuGeneration Limited in the U.K. (making it a consolidated subsidiary)
(cid:129) Acquisition of Mangiarotti spa in Italy
Outline
PLANS FOR CONSTRUCTING NEW FACILITIES AND RETIRING EXISTING FACILITIES
Investment for newly-established facilities and upgrades of equipment in the year ending March 31, 2016 is not
determined due to inappropriate accounting treatment.
TREASURY STOCK
Shares held as of the closing
date of last period:
Shares acquired during the
period:
Demand for purchase of shares
less than one unit from
shareholders
Shares disposed during the
period:
Demand for sale of shares less
than one unit from shareholders
Shares held as of the closing
date of this period:
Aggregate amount of
acquisition costs:
Aggregate amount of
sales value:
3,111,467
(common stock)
292,948
(common stock)
139,075
(thousand yen)
9,991
(common stock)
4,628
(thousand yen)
3,394,424
(common stock)
TOSHIBA Annual Report 2015
07
Management's Discussion and Analysis
MAJOR SUBSIDIARIES AND AFFILIATED COMPANIES
Consolidated Subsidiaries
Affiliated companies
As of March 31, 2015
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 Equipment 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 Lifestyle Products & Services 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.
Advance Energy UK Ltd.
Landis +Gyr A.G.
Landis +Gyr Holding A.G.
Mangiarotti S.p.A.
NuGeneration Limited
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 International Corporation
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 of Europe Ltd.
Toshiba South America Ltda.
Toshiba TEC France Imaging Systems S.A.
Toshiba TEC U.K. Imaging Systems Ltd.
Toshiba Transmission & Distribution India Private Limited
Toshiba Nuclear Energy Holdings (UK) Ltd.
Toshiba Nuclear Energy Holdings (US) Inc.
Westinghouse Electric Company LLC
The Company has 584 consolidated subsidiaries in total including 58 above and 217 affliated companies in total including 21 above
accounted for by the equity method.
08 TOSHIBA Annual Report 2015
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. Under such circumstance, 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 September 7,
2015 and involve inherent uncertainties, and, therefore, the actual results may differ.
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 various 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, drastic change 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.
(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.
(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 the Group has incurred expenses for business structure reform in this connection and
there is a possibility that the Group continues to incur such expenses in the future. 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 due to the necessity of additional measures and in such case
the Group’s operating results or financial condition may be adversely affected.
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. Accordingly, this business
could be affected by trends in such capital expenditures, and 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, in the projects where the
percentage-of-completion method is used for revenue recognition, the Group may retroactively reassess profits that had
been recorded as accrued and record them as losses if, among other things, the original estimate is overestimated or
underestimated, 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 the
stoppage of the project, changes in regulations or other 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
TOSHIBA Annual Report 2015
09
Management's Discussion and Analysis
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.
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.
In addition, in projects where the percentage-of-completion method is used for revenue recognition, the Group may
retroactively reassess profits that had been recorded as accrued and record them as losses if, among other things, the
original estimate is overestimated or underestimated, 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.
(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
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
While the substantial portion of operating income/loss of the Group relies on the Electronic Devices and Components
business, the market for the Electronic Devices and Components business is highly cyclical, depending on demand and
supply, 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 adversely influence demand for System LSIs and other semiconductor products.
Fluctuations in the results of this business may materially and adversely 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
10 TOSHIBA Annual Report 2015
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. However, there is a
possibility that the necessary amount of capital expenditure cannot be secured at appropriate timing depending on the
financing environment of the Group and other factors.
(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 and under the circumstances where earnings are structurally
difficult to be recorded. 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. Moreover, 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 a large amount
of 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
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 adversely 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.
TOSHIBA Annual Report 2015
11
Management's Discussion and Analysis
(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. As of March 31, 2015, 673,817 million yen of goodwill was recorded in
the Company’s consolidated balance sheets in accordance with U.S. generally accepted accounting principles. Out of the
above, 555,680 million yen was allocated to the Energy and Infrastructure business, most of which was recorded due to
the acquisition of Westinghouse group conducted in October 2006 and the acquisition of Landis+Gyr conducted in July
2011. 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
negatively 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. Moreover, because of the
amendments of the past Annual Securities Reports and other reports, which is described in “10. Past inappropriate
accountings,” below, the credit rating may be downgraded.
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 will make 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 and adversely 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
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 adversely 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,
12 TOSHIBA Annual Report 2015
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 or require costs more than in the past in order to obtain such 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.
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 losses as a
result.
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. In certain products and technological fields, the research and
development may not proceed due to more focus on research and development in other products and technological
fields, and as a result, the Group’s technological superiority may be impaired.
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.
TOSHIBA Annual Report 2015
13
Management's Discussion and Analysis
(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 the 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. It was found that inappropriate accountings such as the priority of benefit and advance of expenses
were repeatedly conducted in the Company for the past several years, and there was deficiency in the internal control
related to reporting of business and financial matters. The Company recognizes the importance of the internal control
related to the reporting of business and financial matters and, based on the recommendations by the Independent
Investigation Committee established on May 15, 2015, in order to correct the deficiency, the Company has decided to
establish Management Revitalization Committee which is intended to appropriately operate and implement, among
others, new management structure, reform of the governance structure and measures to prevent reoccurrence of
inappropriate accountings. At the initiative of such Committee, the Company will correct the deficiencies mentioned
above, take measures to prevent reoccurrence of inappropriate accountings and construct and operate appropriate
internal control systems under the new structure. 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.
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.
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
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, 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.
14 TOSHIBA Annual Report 2015
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 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.
In November 2014, there was an arbitral award against the Group to find the breach of contracts with clients for the
reason of defect of electricity meter in Europe. In July 2015, new arbitration seeking damages was filed. Going forward,
the Group intends to assert its opinion in the arbitration.
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.
(3) Agreements regarding natural gas
The Company executed (i) the service agreements for processing liquefied natural gas with the companies providing
services for liquefying natural gas in the United States, and (ii) the pipeline agreements with the pipeline companies in
United States, for the purpose to sell natural gas to the users in other countries including Japan. Pursuant to these
agreements, the Company will be provided the series of services. In these agreements, it is assumed that the Company
will use certain amount of the liquefying ability of the companies providing services for liquefying natural gas and the
pipelines of the pipeline companies for the period of twenty (20) years from 2019. The Company generally expects to
execute long-term transaction agreements with users with respect to the total amount of liquefied natural gas (LNG) the
Company will obtain. However, since the payment obligations of service fee to such companies continues even if the
Company cannot sell LNG to the users or in the market under conditions (including the price) the Company expects, the
Company may be obligated to bear losses as a result.
10. Past inappropriate accountings
In February 2015, the Company received an order from the Securities and Exchange Surveillance Commission, based on
Article 26 of the Financial Instruments and Exchange Act, requiring submission of a report. The Company was then
subject to inspection regarding projects that used percentage-of-completion accounting. Later, after establishing the
Independent Investigation Committee and conducting the investigation, it was found that the Company continuously
made inappropriate accountings and, therefore, the Company filed amendments of the past Annual Securities Reports
and other reports.
TOSHIBA Annual Report 2015
15
Management's Discussion and Analysis
Going forward, the Company may be sued by its shareholders and others with respect to such inappropriate
accountings and depending on the progress of such procedures, the Group’s business, operating results and financial
condition may be adversely affected. In addition, the Company may be charged administrative monetary penalty by the
Financial Services Agency, sanctions by stock exchange in which the Company is listed, or administrative actions or
investigations, including the nomination stop and suspension of business related to construction, by governmental
authorities. If the Company receives such sanctions, the Group may suffer from opportunity loss or degradation of social
reputation accompanied thereby, and as a result, the Group’s business, operating results and financial condition may be
adversely affected.
With respect to administrative monetary penalty, a reasonably estimated amount of allowance has been reserved.
Moreover, if the net asset value of the Company is adversely affected based on the inappropriate accountings, when
the Company executes an EPC (Engineering, Procurement and Construction) agreement, the Company may not be able
to satisfy the financial standards required by the ordering party, and as a result, the Company’s ability to accept orders
may be adversely affected.
In addition, because of the inappropriate accountings, the Company is in breach of representations and warranties and
covenants under the loan agreements among the Company and multiple financial institutions; however, such financial
institutions have agreed to continue financing for the time being. Moreover, in the shelf registration supplemental
prospectus the Company prepared at the time of issuance of corporate bonds, the Company is required to regularly
report to the bond administrator, but the Company has agreed on the extension of such report.
11. Others
(1) Measures against counterfeit products
While the Group protects and seeks to enhance the value of the Toshiba brand, counterfeit products created by third
parties are found worldwide. While the Group makes every effort to prevent counterfeit products, the heavy circulation
of counterfeit products may dilute the value of the Toshiba brand, and the Group’s net sales may be adversely affected.
(2) Protection of intellectual property rights
The Group makes every effort to secure intellectual property rights. However, in some regions, it may not be possible to
secure sufficient protection.
The Group 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 adversely
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, strike, 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 adversely 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.
16 TOSHIBA Annual Report 2015
(5) Natural disasters
Most of the Group’s Japanese production facilities are located in the Keihin region of Japan, which includes Tokyo,
Kawasaki City, Yokohama City and the surrounding area, while key semiconductor production facilities are located in
Kyushu, Tokai, Hanshin and Tohoku. The Group is currently expanding its production facilities in Asia. As a result, any
occurrence of a wide-scale disaster, terrorism or epidemic illness, such as a new type of flu, particularly in any of these
areas could have a more significant adverse effect on the Group’s results.
Additionally, large-scale disasters, such as earthquakes or typhoons, in regions where production or distribution sites
are located may damage or destroy production capabilities, suspend procurement of raw materials or components, and
cause transportation and sales interruptions or other similar disruptions, which could affect production capabilities
significantly. In the past, the businesses of the Group were affected to a certain extent by the Great East Japan Earthquake
and the floods in Thailand.
In order to manage these risks, the Group established the “Business Continuity Plan (BCP)” as part of its continuing
effort to avoid or minimize any impact from such disasters in addition to establishing the precautionary measures, such
as construction of earthquake-resistant buildings and emergency procedures responsive to large-scale disasters.
TOSHIBA Annual Report 2015
17
Consolidated Balance Sheets
Toshiba Corporation and Subsidiaries
As of March 31, 2015 and 2014
Assets
Current assets:
Cash and cash equivalents
Notes and accounts receivable, trade:
Notes (Note 7)
Accounts (Note 7)
Allowance for doubtful notes and accounts
Inventories (Note 8)
Deferred tax assets (Note 17)
Other receivables
Prepaid expenses and other current assets (Notes 20 and 22)
Total current assets
Long-term receivables and investments:
Long-term receivables (Note 7)
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 5, 16 and 21):
Land
Buildings
Machinery and equipment
Construction in progress
Less-Accumulated depreciation
Total property, plant and equipment
Other assets (Notes 5 and 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
2015
2014
Thousands of
U.S. dollars
(Note 3)
2015
¥
199,366
¥
171,340
$ 1,661,383
38,397
1,426,531
(36,308)
1,004,739
198,066
173,938
333,677
3,338,406
9,937
362,787
277,099
649,823
94,246
948,137
2,077,734
81,712
3,201,829
(2,315,506)
886,323
1,124,607
190,802
144,817
1,460,226
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
319,975
11,887,758
(302,566)
8,372,825
1,650,550
1,449,483
2,780,642
27,820,050
82,809
3,023,225
2,309,158
5,415,192
785,383
7,901,142
17,314,450
680,933
26,681,908
(19,295,883)
7,386,025
9,371,725
1,590,017
1,206,808
12,168,550
¥ 6,334,778
¥
6,172,519
$ 52,789,817
Results for the year ended March 31, 2014 have been restated.
18 TOSHIBA Annual Report 2015
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, 23 and 24)
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
2015
2014
¥
89,104
207,275
1,226,330
519,527
67,274
398,127
403,231
2,910,868
1,045,005
582,671
230,877
1,858,553
¥
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
Thousands of
U.S. dollars
(Note 3)
2015
$
742,533
1,727,292
10,219,416
4,329,392
560,617
3,317,725
3,360,258
24,257,233
8,708,375
4,855,592
1,923,975
15,487,942
Total liabilities
¥ 4,769,421
¥
4,726,525
$ 39,745,175
Equity attributable to shareholders of the Company (Note 18):
Common stock:
Authorized−10,000,000,000 shares Issued:
2015 and 2014 −4,237,602,026 shares
Additional paid-in capital
Retained earnings
Accumulated other comprehensive loss
Treasury stock, at cost:
2015−3,394,424 shares
2014−3,111,467 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
402,008
383,231
(139,323)
(1,821)
−
1,083,996
481,361
¥ 1,565,357
¥
¥
439,901
401,830
454,931
(267,786)
−
(1,687)
1,027,189
418,805
1,445,994
$ 3,665,841
3,350,067
3,193,592
(1,161,025)
(15,175)
−
9,033,300
4,011,342
$ 13,044,642
Total liabilities and equity
¥ 6,334,778
¥
6,172,519
$ 52,789,817
Results for the year ended March 31, 2014 have been restated.
TOSHIBA Annual Report 2015
19
Consolidated Statements of Income
Toshiba Corporation and Subsidiaries
For the years ended March 31, 2015 and 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 25)
Interest
Other expense (Notes 5, 6, 7, 15 and 20)
Millions of yen
2015
2014
¥ 6,655,894
10,886
20,763
118,049
6,805,592
5,079,028
1,406,427
24,984
158,509
6,668,948
¥
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
Thousands of
U.S. dollars
(Note 3)
2015
$ 55,465,783
90,717
173,025
983,741
56,713,266
42,325,233
11,720,225
208,200
1,320,908
55,574,566
Income from continuing operations,
before income taxes and noncontrolling interests
136,644
182,336
1,138,700
Income taxes (Note 17):
Current
Deferred
Income (loss) from continuing operations,
before noncontrolling interests
Loss from discontinued operations,
before noncontrolling interests (Note 4)
Net income (loss) before noncontrolling interests
Less: Net income attributable
to noncontrolling interests
69,538
86,121
155,659
52,583
39,462
92,045
579,483
717,675
1,297,158
(19,015)
90,291
(158,458)
0
(19,015)
(15,021)
75,270
0
(158,458)
18,810
15,030
156,750
Net income (loss) attributable to shareholders of the Company
¥
(37,825)
¥
60,240
$
(315,208)
Basic net earnings (loss) per share attributable
to shareholders of the Company (Note 19)
Earnings (loss) from continuing operations
Loss from discontinued operations
Net earnings (loss)
Cash dividends per share (Note 18)
The accompanying notes are an integral part of these statements.
Yen
U.S. dollars
(Note 3)
¥
¥
¥
¥
(8.93)
0.00
(8.93)
4.00
¥
¥
¥
¥
16.28
(2.05)
14.23
8.00
$
$
$
$
0.07
(0.00)
0.07
0.03
Results for the year ended March 31, 2014 have been restated.
20 TOSHIBA Annual Report 2015
Consolidated Statements of Comprehensive Income
Toshiba Corporation and Subsidiaries
For the years ended March 31, 2015 and 2014
Net income (loss) before noncontrolling interests
Millions of yen
2015
(19,015)
¥
2014
¥
75,270
$
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
Comprehensive income before noncontrolling interests
22,664
129,089
5,041
4,785
161,579
142,564
Thousands of
U.S. dollars
(Note 3)
2015
(158,458)
188,867
1,075,742
42,008
39,875
1,346,492
18,417
128,278
55,797
(1,734)
200,758
276,028
1,188,034
Less:Comprehensive income attributable
to noncontrolling interests
51,926
39,636
432,717
Comprehensive income attributable
to shareholders of the Company
The accompanying notes are an integral part of these statements.
¥
90,638
¥
236,392
$
755,317
Results for the year ended March 31, 2014 have been restated.
TOSHIBA Annual Report 2015
21
Consolidated Statements of Equity
Toshiba Corporation and Subsidiaries
For the years ended March 31, 2015 and 2014
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
Change in ownership for
noncontrolling
interests and others
Dividend attributable to
shareholders of the Company
Dividends attributable to
noncontrolling interests
Comprehensive income:
Net income (loss)
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
non-controlling
interests
Total
equity
¥
439,901 ¥
401,594 ¥
428,569 ¥ (443,938) ¥
(1,542) ¥
824,584 ¥
381,239 ¥ 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)
439,901
401,830
454,931
(267,786)
236,392
39,636
276,028
(145)
(1,687)
(145)
1,027,189
418,805
(145)
1,445,994
178
178
18,697
18,875
(33,875)
(33,875)
(33,875)
(37,825)
(37,825)
18,810
(19,015)
(8,067)
(8,067)
19,643
96,089
8,330
4,401
19,643
3,021
22,664
96,089
33,000
129,089
8,330
(3,289)
5,041
4,401
384
4,785
90,638
51,926
142,564
(134)
(134)
(1,821) ¥ 1,083,996 ¥ 481,361 ¥ 1,565,357
(134)
Balance at March 31, 2015
¥ 439,901 ¥ 402,008 ¥ 383,231 ¥ (139,323) ¥
Results for the year ended March 31, 2014 have been restated.
22 TOSHIBA Annual Report 2015
Balance at March 31, 2014
Change in ownership for
noncontrolling
interests and others
Dividend attributable to
shareholders of the Company
Dividends attributable to
noncontrolling interests
Comprehensive income:
Net income (loss)
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
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
non-controlling
interests
Total
equity
$ 3,665,841 $ 3,348,584 $ 3,791,092 $ (2,231,550) $
(14,058) $ 8,559,909 $ 3,490,041 $ 12,049,950
1,483
1,483
155,809
157,292
(282,292)
(282,292)
(282,292)
(315,208)
(315,208)
156,750
(158,458)
(67,225)
(67,225)
163,691
800,742
69,417
163,691
25,176
188,867
800,742
275,000
1,075,742
69,417
(27,409)
42,008
36,675
36,675
3,200
39,875
755,317
432,717
1,188,034
(1,117)
(1,117)
(15,175) $ 9,033,300 $ 4,011,342 $ 13,044,642
(1,117)
Balance at March 31, 2015
The accompanying notes are an integral part of these statements.
$ 3,665,841 $ 3,350,067 $ 3,193,592 $ (1,161,025) $
Results for the year ended March 31, 2014 have been restated.
TOSHIBA Annual Report 2015
23
Millions of yen
2015
2014
Thousands of
U.S. dollars
(Note 3)
2015
¥
(19,015)
¥
75,270
$
(158,458)
189,938
(14,355)
86,121
(10,708)
107,585
(25,224)
94,186
(80,372)
(43,124)
(5,082)
38,489
12,003
330,442
54,059
66,486
(236,510)
(51,374)
(4,052)
8,769
(27,508)
(190,130)
241,845
(249,795)
(74,353)
(42,068)
(134)
(1,290)
(125,795)
13,509
28,026
171,340
199,366
28,194
86,846
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
1,582,817
(119,625)
717,675
(89,233)
896,542
(210,200)
784,883
(669,767)
(359,367)
(42,350)
320,742
100,025
2,753,684
450,492
554,050
(1,970,917)
(428,117)
(33,767)
73,075
(229,233)
(1,584,417)
2,015,375
(2,081,625)
(619,608)
(350,567)
(1,117)
(10,750)
(1,048,292)
112,575
233,550
1,427,833
$ 1,661,383
33,777
50,997
$
234,950
723,717
¥
¥
Consolidated Statements of Cash Flows
Toshiba Corporation and Subsidiaries
For the years ended March 31, 2015 and 2014
Cash flows from operating activities
Net income (loss) 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 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 (decrease) in accrued income and other taxes
Increase in advance payments received
Other
Net cash provided by operating activities
Cash flows from investing activities
Proceeds from sale of property, plant and equipment 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
Decrease in short-term borrowings, net
Dividends paid
Purchase of treasury stock, net
Other
Net cash used in financing activities
Effect of exchange rate changes on cash and cash equivalents
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year
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.
¥
¥
Results for the year ended March 31, 2014 have been restated.
24 TOSHIBA Annual Report 2015
Notes to Consolidated Financial Statements
Toshiba Corporation and Subsidiaries
March 31, 2015
1. DESCRIPTION OF BUSINESS
Toshiba Corporation (“the Company”) and its subsidiaries (hereinafter collectively, “the Group”) are engaged in research
and development, manufacturing and sales of high-technology electronic and energy products, which range (1)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, 2015, sales of Energy & Infrastructure
represented the most significant portion of the Group’s total sales or approximately 28 percent. Electronic Devices &
Components, second to Energy & Infrastructure, represented approximately 24 percent, Community Solutions
approximately 19 percent, Lifestyle Products & Services approximately 16 percent, and Healthcare Systems & Services
approximately 6 percent of the Group’s total sales. 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 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. The Group’s products are manufactured and marketed throughout the world with approximately 41 percent and 42
percent of its sales in Japan for the years ended March 31, 2015 and 2014, respectively, and the remainder in Asia, North
America, Europe and other parts of the world.
Results for the year ended March 31, 2014 have been restated.
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 statements of income.
Results for the year ended March 31, 2014 have been restated.
TOSHIBA Annual Report 2015
25
Notes to Consolidated Financial Statements
Toshiba Corporation and Subsidiaries
March 31, 2015
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.
The estimated useful lives of buildings are 3 to 50 years, and those of machinery and equipment are 2 to 20 years.
Maintenance and repairs, including minor renewals and betterments, are expensed as incurred.
IMPAIRMENT OF LONG-LIVED ASSETS
Long-lived assets, other than goodwill and intangible assets with indefinite useful lives, are evaluated for impairment
using an estimate of undiscounted cash flows whenever events or changes in circumstances indicate that the carrying
amount of such asset may not be recoverable. If the estimate of undiscounted cash flow is less than the carrying amount
of the asset, an impairment loss is recorded based on the fair value of the asset. Fair value is determined primarily by
using the anticipated cash flows discounted at a rate commensurate with the risk involved. For assets held for sale, an
impairment loss is further increased by costs to sell. Long-lived assets to be disposed of other than by sale are considered
held and used until disposed of.
GOODWILL AND OTHER INTANGIBLE ASSETS
Goodwill and intangible assets with indefinite useful lives are not amortized, but instead are tested for impairment at
least annually. Goodwill is allocated among and tested for impairment at the reporting unit level. Intangible assets with
finite useful lives, consisting primarily of core and current technology and software, are amortized using the straight-line
method over their respective contractual periods or estimated useful lives.
ENVIRONMENTAL LIABILITIES
Liabilities for environmental remediation and other environmental costs are accrued when environmental assessments or
remedial efforts are probable and the costs can be reasonably estimated, based on current law and existing technologies.
Such liabilities are adjusted as further information develops or circumstances change. Costs of future obligations are not
discounted to their present values.
INCOME TAXES
The provision for income taxes is computed based on the income (loss) from continuing operations, before income taxes
and noncontrolling interests included in the consolidated statements of income. Deferred income taxes are recorded to
reflect the expected future tax consequences of temporary differences between the tax basis of assets and liabilities and
their reported amounts in the financial statements, and are measured by applying currently enacted tax laws. The effect
on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that the change is
enacted. Valuation allowances are recorded to reduce 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.
Results for the year ended March 31, 2014 have been restated.
26 TOSHIBA Annual Report 2015
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.
SHIPPING AND HANDLING COSTS
The Group includes shipping and handling costs which totaled ¥76,887 million ($640,725 thousand) and ¥72,905 million
for the years ended March 31, 2015 and 2014, 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 sheets.
Results for the year ended March 31, 2014 have been restated.
TOSHIBA Annual Report 2015
27
Notes to Consolidated Financial Statements
Toshiba Corporation and Subsidiaries
March 31, 2015
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 the Company will adopt ASU No.2014-08 effective April 1, 2015. The adoption of ASU No.2014-08 will not have
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 with customers to transfer goods or services or 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 five 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, 2017, and the Company will adopt ASU No.2014-09 effective April 1, 2018. The Company is currently
evaluating the impact of adoption of ASU No.2014-09 on the Company’s consolidated financial statements.
SUBSEQUENT EVENTS
The Group has evaluated subsequent events up to September 7, 2015 of Annual Securities Reports in accordance with
ASC No.855 “Subsequent Events”.
RECLASSIFICATIONS
Certain reclassifications to the prior year’s consolidated financial statements and related footnote amounts have been
made to conform to the presentation for the current year.
Results for the year ended March 31, 2014 have been restated.
28 TOSHIBA Annual Report 2015
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 ¥120=U.S. $1, the approximate current rate of exchange
at March 31, 2015, 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 statements of income.
Operating results relating to the ODD business, which are reclassified as discontinued operations, are as follows. At March
31, 2015, these amounts are not significant.
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
(15,021)
0
(15,021)
(6,319)
(8,702)
Results for the year ended March 31, 2014 have been restated.
TOSHIBA Annual Report 2015
29
Notes to Consolidated Financial Statements
Toshiba Corporation and Subsidiaries
March 31, 2015
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, 2015 and 2014 are as follows:
March 31, 2015
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
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
Millions of yen
¥
243,622
−
−
−
243,622
−
−
−
−
¥
¥
¥
¥
¥
¥
¥
1,004
−
17,002
42
18,048
4,742
3,417
28
8,187
¥
¥
¥
¥
−
320
−
−
320
−
−
−
−
¥
244,626
320
17,002
42
261,990
4,742
3,417
28
8,187
¥
¥
¥
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
¥
¥
¥
Results for the year ended March 31, 2014 have been restated.
30 TOSHIBA Annual Report 2015
March 31, 2015
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
Level 1
Level 2
Level 3
Total
Thousands of U.S. dollars
$ 2,030,183
−
−
−
$ 2,030,183
$
$
−
−
−
−
$
$
$
$
8,367
−
141,683
350
150,400
39,517
28,475
233
68,225
$
$
$
$
−
2,667
−
−
2,667
−
−
−
−
$ 2,038,550
2,667
141,683
350
$ 2,183,250
$
$
39,517
28,475
233
68,225
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, 2015
and 2014 are as follows:
Year ended March 31, 2015
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
4,552
¥
17
200
(5)
133
(4,577)
320
Results for the year ended March 31, 2014 have been restated.
TOSHIBA Annual Report 2015
31
Notes to Consolidated Financial Statements
Toshiba Corporation and Subsidiaries
March 31, 2015
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
¥
Year ended March 31, 2015
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
¥
3,742
Thousands of U.S. dollars
Marketable securities
$
37,933
364
−
−
446
−
4,552
142
1,667
(42)
1,108
(38,141)
2,667
At March 31, 2015 and 2014, Level 3 assets measured at fair value on a recurring basis consisted of corporate debt
securities.
Results for the year ended March 31, 2014 have been restated.
32 TOSHIBA Annual Report 2015
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, 2015 and 2014 are as follows:
Year ended March 31, 2015
Assets:
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
Year ended March 31, 2015
Assets:
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
¥
¥
¥
¥
$
$
−
−
−
−
Level 1
−
3,000
−
−
3,000
Level 1
−
−
−
−
¥
¥
¥
¥
$
$
−
−
−
−
¥
¥
0
43,651
0
43,651
Millions of yen
Level 2
Level 3
−
−
−
−
−
¥
¥
632
35,617
0
0
36,249
Thousands of U.S. dollars
Level 2
Level 3
−
−
−
−
$
$
0
363,758
0
363,758
¥
¥
¥
¥
$
$
0
43,651
0
43,651
Total
632
38,617
0
0
39,249
Total
0
363,758
0
363,758
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. 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. They 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, 2015 and 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 year ended March
31, 2015 and 2014. The discount rate used for the weighted average cost was 6.2% to 9.8%.
Components 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, 2015 and
2014. The loss of component held for sale in loss from discontinued operations, before noncontrolling interests was ¥6,117
million for the year ended March 31, 2014.
As a result, the net impacts from continuing operations for the years ended March 31, 2015 and 2014 were ¥132,729
million ($1,106,075 thousand) loss and ¥52,730 million loss, respectively. They are included in cost of sales, selling, general
and administrative, and other income and other expense.
Results for the year ended March 31, 2014 have been restated.
TOSHIBA Annual Report 2015
33
Notes to Consolidated Financial Statements
Toshiba Corporation and Subsidiaries
March 31, 2015
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, 2015 and 2014 are as follows:
March 31, 2015:
Equity securities
Debt securities
March 31, 2014:
Equity securities
Debt securities
March 31, 2015:
Equity securities
Debt securities
Cost
Gross unrealized
holding gains
Gross unrealized
holding losses
Fair value
Millions of yen
42,800
291
43,091
64,247
3,797
68,044
¥
¥
¥
¥
203,364
29
203,393
165,735
755
166,490
¥
¥
¥
¥
1,538
−
1,538
1,121
−
1,121
¥
¥
¥
¥
244,626
320
244,946
228,861
4,552
233,413
Cost
Gross unrealized
holding gains
Gross unrealized
holding losses
Fair value
Thousands of U.S. dollars
356,667
2,425
359,092
$ 1,694,700
242
$ 1,694,942
$
$
12,817
−
12,817
$ 2,038,550
2,667
$ 2,041,217
¥
¥
¥
¥
$
$
At March 31, 2015 and 2014, debt securities mainly consist of corporate debt securities.
Contractual maturities of debt securities classified as available-for-sale at March 31, 2015 are as follows:
March 31, 2015:
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
¥
¥
291
−
−
291
¥
¥
320
−
−
320
$
$
2,425
−
−
2,425
$
$
2,667
−
−
2,667
The proceeds from sales of available-for-sale securities for the years ended March 31, 2015 and 2014 were ¥66,450 million
($553,750 thousand) and ¥12,134 million, respectively. The gross realized gains on those sales for the years ended March
31, 2015 and 2014 were ¥35,395 million ($294,958 thousand) and ¥6,440 million, respectively. The gross realized losses on
those sales for the years ended March 31, 2015 and 2014 were ¥520 million ($4,333 thousand) and ¥5 million, respectively.
At March 31, 2015, 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 ¥30,019 million
($250,158 thousand) and ¥40,773 million at March 31, 2015 and 2014, respectively. At March 31, 2015 and 2014, investments
with an aggregate cost of ¥28,587 million ($238,225 thousand) and ¥36,441 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 ¥7,915 million ($65,958 thousand) and ¥4,013 million related to other-than-
temporary impairments in the marketable and non-marketable equity securities for the years ended March 31, 2015 and
2014, respectively.
Results for the year ended March 31, 2014 have been restated.
34 TOSHIBA Annual Report 2015
7. SECURITIZATIONS
The Group has transferred certain trade notes and accounts receivable under several securitization programs. These
securitization transactions are accounted for as a sale in accordance with ASC No.860, because the Group has relinquished
control of the receivables. Accordingly, the receivables transferred under these facilities are excluded from the
accompanying consolidated balance sheets.
The Group recognized losses of ¥956 million ($7,967 thousand) and ¥915 million on the transfers of receivables for the
years ended March 31, 2015 and 2014, 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 the transfer of the receivables is measured based on the
economic hypothesis including the estimate of uncollectible 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 the receivables
Repurchase of delinquent or unqualified receivables
2015
¥ 1,000,743
645
54
¥
2014
922,012
563
117
Millions of yen
Thousands of
U.S. dollars
2015
$ 8,339,525
5,375
450
Quantitative information about delinquencies, net credit losses, and components of securitized receivables as of and for
the years ended March 31, 2015 and 2014 are as follows: Of these receivables, deferred proceeds for the receivables
transferred as of March 31, 2015 and 2014 were ¥59,216 million ($493,467 thousand) and ¥44,571 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
2015
¥ 1,646,209
90,476
1,736,685
(261,820)
¥ 1,474,865
2014
1,655,578
89,511
1,745,089
(238,188)
1,506,901
¥
¥
2015
47,586
0
47,586
¥
¥
2014
43,552
12
43,564
¥
¥
2015
2014
¥
¥
4,086
0
4,086
¥
¥
2,391
117
2,508
Accounts receivable
Notes receivable
Total managed portfolio
Securitized receivables
Total receivables
March 31, 2015
Thousands of U.S. dollars
Amount 90 days
or more past due
$
$
396,550
0
396,550
Total principal amount
of receivables
$ 13,718,408
753,967
14,472,375
(2,181,833)
$ 12,290,542
Net credit losses
Year ended March 31, 2015
$
$
34,050
0
34,050
Results for the year ended March 31, 2014 have been restated.
TOSHIBA Annual Report 2015
35
Notes to Consolidated Financial Statements
Toshiba Corporation and Subsidiaries
March 31, 2015
8. INVENTORIES
Inventories at March 31, 2015 and 2014 consist of the following:
March 31
Finished products
Work in process:
Long-term contracts
Other
Raw materials
Millions of yen
2015
373,533
¥
82,665
348,634
199,907
¥ 1,004,739
2014
323,169
¥
82,063
320,881
158,696
884,809
¥
Thousands of
U.S. dollars
2015
$ 3,112,775
688,875
2,905,283
1,665,892
$ 8,372,825
Results for the year ended March 31, 2014 have been restated.
36 TOSHIBA Annual Report 2015
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, 2015 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 ¥43,973 million ($366,442 thousand) and ¥40,524 million at March 31, 2015 (4 companies) and
2014 (4 companies), respectively. The Group’s investments in these companies had market values of ¥124,525 million
($1,037,708 thousand) and ¥79,489 million at March 31, 2015 and 2014, 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
2015
¥ 1,534,571
1,172,854
¥ 2,707,425
¥ 1,347,234
417,492
942,699
¥ 2,707,425
2014
1,215,470
1,089,912
2,305,382
996,564
430,545
878,273
2,305,382
¥
¥
¥
¥
Millions of yen
2015
¥ 2,020,563
70,091
¥
2014
1,864,530
40,071
Thousands of
U.S. dollars
2015
$ 12,788,092
9,773,783
$ 22,561,875
$ 11,226,950
3,479,100
7,855,825
$ 22,561,875
Thousands of
U.S. dollars
2015
$ 16,838,025
584,092
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
¥
¥
2015
190,083
189,640
11,411
2015
50,465
21,327
−
66,706
28,806
11,609
Millions of yen
¥
2014
152,195
169,698
16,161
Millions of yen
¥
2014
47,487
16,694
5,000
88,083
26,959
11,713
Thousands of
U.S. dollars
2015
$ 1,584,025
1,580,333
95,092
$
Thousands of
U.S. dollars
2015
420,542
177,725
−
555,883
240,050
96,742
Results for the year ended March 31, 2014 have been restated.
TOSHIBA Annual Report 2015
37
Notes to Consolidated Financial Statements
Toshiba Corporation and Subsidiaries
March 31, 2015
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, 2015 and 2014.
The components of acquired intangible assets excluding goodwill at March 31, 2015 and 2014 are as follows:
March 31, 2015
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
March 31, 2015
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
Gross carrying
amount
¥
¥
216,615
62,645
240,022
150,825
53,306
723,413
Gross carrying
amount
¥
¥
209,671
62,445
210,697
132,053
50,051
664,917
Millions of yen
Accumulated
amortization
¥
¥
136,826
51,415
84,115
38,141
19,560
330,057
Millions of yen
Accumulated
amortization
¥
¥
133,245
48,715
60,277
29,226
22,639
294,102
Gross carrying
amount
$ 1,805,125
522,042
2,000,183
1,256,875
444,217
$ 6,028,442
Thousands of U.S. dollars
Accumulated
amortization
$ 1,140,217
428,458
700,958
317,842
163,000
$ 2,750,475
Net carrying
amount
79,789
11,230
155,907
112,684
33,746
393,356
55,309
2,125
57,434
450,790
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
$
664,908
93,584
1,299,225
939,033
281,217
$ 3,277,967
460,908
17,708
478,616
$ 3,756,583
Results for the year ended March 31, 2014 have been restated.
38 TOSHIBA Annual Report 2015
Other intangible assets acquired during the year ended March 31, 2015 primarily consisted of software of ¥40,897 million
($340,808 thousand). The weighted-average amortization period of software for the year ended March 31, 2015 was
approximately 4.9 years.
The weighted-average amortization periods for other intangible assets were approximately 12.5 years and 12.2 years
for the years ended March 31, 2015 and 2014, respectively. Amortization expenses of other intangible assets subject to
amortization for the years ended March 31, 2015 and 2014 are ¥46,518 million ($387,650 thousand) and ¥51,692 million,
respectively. The future amortization expense for each of the next 5 years relating to other intangible assets currently
recorded in the consolidated balance sheets at March 31, 2015 is estimated as follows:
Year ending March 31
2016
2017
2018
2019
2020
¥
Millions of yen
52,566
47,545
43,577
33,855
27,836
$
Thousands of
U.S. dollars
438,050
396,208
363,142
282,125
231,967
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, 2015 and 2014 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
2015
574,520
26,592
72,705
673,817
¥
¥
2014
508,145
11,100
55,275
574,520
¥
¥
Thousands of
U.S. dollars
2015
$ 4,787,667
221,600
605,875
$ 5,615,142
As of March 31, 2015 and 2014, goodwill allocated to Energy & Infrastructure is ¥555,680 million ($4,630,667 thousand) and
¥469,155 million, respectively. The rest was mainly allocated to Community Solutions.
Results for the year ended March 31, 2014 have been restated.
TOSHIBA Annual Report 2015
39
Notes to Consolidated Financial Statements
Toshiba Corporation and Subsidiaries
March 31, 2015
11. SHORT-TERM BORROWINGS AND LONG-TERM DEBT
Short-term borrowings at March 31, 2015 and 2014 consist of the following:
March 31
Loans and overdrafts, principally from banks, with
weighted-average interest rate of 2.18% at March 31, 2015,
and 3.92% at March 31, 2014:
Secured
Unsecured
Commercial paper with weighted-average interest rate of
0.11% at March 31, 2014:
Millions of yen
2015
2014
Thousands of
U.S. dollars
2015
¥
¥
−
89,104
−
89,104
¥
¥
−
91,105
55,000
146,105
$
$
−
742,533
−
742,533
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, 2015, the Group had unused committed lines of credit from short-term financing arrangements
aggregating ¥320,000 million ($2,666,667 thousand). The lines of credit expire on various dates from April 2015 through
March 2016. 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, 2015 and 2014 consist of the following:
March 31
Loans, principally from banks,
due 2015 to 2030 with weighted-average interest rate
of 0.69% at March 31, 2015, and due 2014 to 2027 with
weighted-average interest rate of 0.53% at March 31, 2014:
Secured
Unsecured
Unsecured yen bonds, due 2015 to 2020 with interest rates
ranging from 0.25% to 2.20% at March 31, 2015, and due
2015 to 2020 with interest rates ranging from 0.25% to
2.20% at March 31, 2014
Interest deferrable and early redeemable subordinated bonds:
Due 2069 with interest rate of 7.50% at March 31, 2014
Capital lease obligations
Less-Portion due within one year
Millions of yen
2015
2014
Thousands of
U.S. dollars
2015
¥
−
850,772
¥
−
688,018
$
−
7,089,767
370,000
340,000
3,083,333
−
31,508
1,252,280
(207,275)
¥ 1,045,005
180,000
34,264
1,242,282
(57,418)
1,184,864
¥
−
262,567
10,435,667
(1,727,292)
$ 8,708,375
Substantially all of the unsecured loan agreements permit the lenders to require collateral or guaranties for such loans.
Results for the year ended March 31, 2014 have been restated.
40 TOSHIBA Annual Report 2015
The aggregate annual maturities of long-term debt, as of March 31, 2015, excluding those of capital lease obligations, are
as follows:
Year ending March 31
2016
2017
2018
2019
2020
Thereafter
Millions of yen
198,229
208,754
239,430
163,302
340,502
70,555
1,220,772
¥
¥
$
Thousands of
U.S. dollars
1,651,908
1,739,617
1,995,250
1,360,850
2,837,517
587,958
$ 10,173,100
Article of representations and warranties, article of undertaking and Regular reports
Due to inappropriate accounting treatments, the Group conflicts with the article of representations and warranties, and
the article of undertaking in loan agreements with several financial institutions. The Group reached the agreement with
these financial institutions to be continuously financed for the time being. In Supplement to Self Registration Statement,
which the Company submitted at time of issuing bonds, the Company is required to submit regular reports to bond
administrator. The Company agreed with bond administrator to extend due of report.
Results for the year ended March 31, 2014 have been restated.
TOSHIBA Annual Report 2015
41
Notes to Consolidated Financial Statements
Toshiba Corporation and Subsidiaries
March 31, 2015
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, 2015 and 2014 and the funded status
at March 31, 2015 and 2014 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
2015
2014
¥ 1,710,813
67,527
30,277
4,867
(303)
92,583
(84,823)
(1,976)
27,142
¥ 1,846,107
¥ 1,100,471
125,300
67,675
4,867
(56,241)
−
20,217
¥ 1,262,289
(583,818)
¥
¥
¥
¥
¥
¥
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)
Amounts recognized in the consolidated balance sheets at March 31, 2015 and 2014 are as follows:
March 31
Other assets
Other current liabilities
Accrued pension and severance costs
Millions of yen
2015
−
(1,147)
(582,671)
(583,818)
¥
¥
2014
1,390
(1,140)
(610,592)
(610,342)
¥
¥
Thousands of
U.S. dollars
2015
$ 14,256,775
562,725
252,308
40,558
(2,525)
771,525
(706,858)
(16,467)
226,184
$ 15,384,225
$ 9,170,592
1,044,167
563,958
40,558
(468,675)
−
168,475
$ 10,519,075
$ (4,865,150)
Thousands of
U.S. dollars
2015
$
−
(9,558)
(4,855,592)
$ (4,865,150)
Results for the year ended March 31, 2014 have been restated.
42 TOSHIBA Annual Report 2015
Amounts recognized in accumulated other comprehensive loss at March 31, 2015 and 2014 are as follows:
March 31
Unrecognized actuarial loss
Unrecognized prior service cost
Millions of yen
2015
462,980
(26,477)
436,503
¥
¥
2014
479,262
(30,202)
449,060
¥
¥
Thousands of
U.S. dollars
2015
$ 3,858,167
(220,642)
$ 3,637,525
The accumulated benefit obligation at March 31, 2015 and 2014 are as follows:
March 31
Accumulated benefit obligation
Millions of yen
2015
¥ 1,793,308
2014
1,664,330
¥
Thousands of
U.S. dollars
2015
$ 14,944,233
The components of the net periodic pension and severance cost for the years ended March 31, 2015 and 2014 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
2015
67,527
30,277
(32,923)
(3,672)
21,655
82,864
¥
¥
2014
59,304
34,105
(28,322)
(3,659)
27,574
89,002
¥
¥
Thousands of
U.S. dollars
2015
562,725
252,308
(274,358)
(30,600)
180,458
690,533
$
$
Other changes in plan assets and benefit obligation recognized in the other comprehensive income (loss) for the years
ended March 31, 2015 and 2014 are as follows:
Year ended March 31
Current year actuarial (gain) loss
Recognized actuarial loss
Prior service cost due to plan amendments
Amortization of prior service cost
Millions of yen
2015
206
(21,655)
(303)
3,672
(18,080)
¥
¥
2014
(64,617)
(27,574)
(1,589)
3,659
(90,121)
¥
¥
Thousands of
U.S. dollars
2015
$
$
1,716
(180,458)
(2,525)
30,600
(150,667)
The estimated prior service cost and actuarial loss that will be amortized from accumulated other comprehensive loss
into net periodic pension and severance cost over the next year are summarized as follows:
Year ending March 31
Prior service cost
Actuarial loss
Millions of yen
2016
¥
(4,399)
19,907
Thousands of
U.S. dollars
2016
(36,658)
165,892
$
Results for the year ended March 31, 2014 have been restated.
TOSHIBA Annual Report 2015
43
Notes to Consolidated Financial Statements
Toshiba Corporation and Subsidiaries
March 31, 2015
For the year ended March 31, 2015, 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 ¥3,784
million ($31,533 thousand). The Group expects to contribute ¥71,485 million ($595,708 thousand) to its defined benefit
plans, included Cash Balance Plan, in the year ending March 31, 2016.
The following benefit payments are expected to be paid:
Year ending March 31
2016
2017
2018
2019
2020
2021 - 2025
¥
Millions of yen
86,093
84,175
85,605
97,105
99,200
557,440
$
Thousands of
U.S. dollars
717,442
701,458
713,375
809,208
826,667
4,645,333
Weighted-average assumptions used to determine benefit obligations as of March 31, 2015 and 2014 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
2015
1.5%
3.0%
2015
1.8%
2.9%
3.1%
2014
1.8%
3.1%
2014
2.1%
2.9%
3.2%
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.
Results for the year ended March 31, 2014 have been restated.
44 TOSHIBA Annual Report 2015
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.
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, 2015 and 2014 by asset category are as follows:
Level 1
Level 2
Level 3
¥
14,334
¥
−
¥
Millions of yen
March 31, 2015
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, 2015
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
$
119,450
1,895,308
586,058
408,333
1,752,667
−
−
429,567
−
−
−
−
$ 5,191,383
227,437
70,327
49,000
210,320
−
−
51,548
−
−
−
−
622,966
−
−
−
−
−
−
−
−
−
−
−
8,122
189,004
46,137
−
−
243,263
¥
−
−
−
67,683
1,575,034
384,475
−
−
$ 2,027,192
Total
¥
14,334
227,437
70,327
190,552
210,320
346
14,695
213,075
189,004
46,137
79,786
6,276
¥ 1,262,289
Total
$
119,450
1,895,308
586,058
1,587,933
1,752,667
2,883
122,458
1,775,625
1,575,034
384,475
664,884
52,300
$ 10,519,075
−
−
141,552
−
346
14,695
153,405
−
−
79,786
6,276
396,060
−
−
1,179,600
−
2,883
122,458
1,278,375
−
−
664,884
52,300
$ 3,300,500
¥
$
Thousands of U.S. dollars
Level 2
Level 3
−
$
Notes: 1) Pooled funds in equity securities invest in listed equity securities consisting of approximately 7% Japanese companies and 93% foreign companies.
2) Government bonds include approximately 79% Japanese government bonds and 21% foreign government bonds.
3) Pooled funds in debt securities invest in approximately 42% foreign government bonds, 58% municipal bonds and corporate bonds.
Results for the year ended March 31, 2014 have been restated.
TOSHIBA Annual Report 2015
45
Notes to Consolidated Financial Statements
Toshiba Corporation and Subsidiaries
March 31, 2015
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:
Level 1
Level 2
Level 3
Millions of yen
¥
27,551
¥
−
¥
174,925
63,075
34,439
213,417
−
−
37,234
−
−
122,689
−
244
11,363
131,814
−
−
−
−
−
−
−
6,677
Hedge funds
Real estate
Life insurance company general accounts
Other assets
157,247
39,762
−
−
Total
203,686
¥
Notes: 1) Pooled funds in equity securities invest in listed equity securities consisting of approximately 6% Japanese companies and 94% foreign companies.
−
−
78,557
1,477
346,144
−
−
−
−
550,641
¥
¥
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
¥
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.
Results for the year ended March 31, 2014 have been restated.
46 TOSHIBA Annual Report 2015
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, 2015 and 2014 are as
follows:
Purchases, issuances and settlements
Balance at end of year
¥
Year ended March 31, 2015
Balance at beginning of year
Actual return:
Relating to assets sold
Relating to assets still held
Year ended March 31, 2014
Balance at beginning of year
Actual return:
Relating to assets sold
Relating to assets still held
Pooled funds
6,677
¥
Hedge funds
157,247
¥
Real estate
¥
39,762
Total
¥
203,686
Millions of yen
−
1,445
−
8,122
647
30,085
1,025
189,004
¥
(26)
2,558
3,843
46,137
¥
621
34,088
4,868
243,263
¥
Pooled funds
5,672
¥
Hedge funds
105,834
¥
Real estate
¥
29,039
Total
¥
140,545
Millions of yen
Purchases, issuances and settlements
Balance at end of year
¥
−
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
¥
Year ended March 31, 2015
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
55,642
$
Hedge funds
$ 1,310,391
Real estate
$
331,350
Total
$ 1,697,383
Thousands of U.S. dollars
−
12,042
−
67,684
$
5,392
250,708
8,542
$ 1,575,033
(217)
21,317
32,025
384,475
$
5,175
284,067
40,567
$ 2,027,192
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, 2015 and 2014.
Results for the year ended March 31, 2014 have been restated.
TOSHIBA Annual Report 2015
47
Notes to Consolidated Financial Statements
Toshiba Corporation and Subsidiaries
March 31, 2015
13. RESEARCH AND DEVELOPMENT COSTS
Research and development costs are expensed as incurred and amounted to ¥352,685 million ($2,939,042 thousand) and
¥327,913 million for the years ended March 31, 2015 and 2014, respectively.
14. ADVERTISING COSTS
Advertising costs are expensed as incurred and amounted to ¥33,701 million ($280,842 thousand) and ¥33,046 million for
the years ended March 31, 2015 and 2014, respectively.
15. OTHER INCOME AND OTHER EXPENSE
FOREIGN EXCHANGE GAINS
For the years ended March 31, 2015 and 2014, the net foreign exchange gains were ¥19,988 million ($166,567 thousand)
and ¥15,343 million, respectively.
GAINS AND LOSSES ON SALES OF SECURITIES
The gains on sales of securities for the year ended March 31, 2015, were ¥35,534 million ($296,117 thousand). These gains
were mainly related to the sales of equity securities. The gains on sales of securities for the year ended March 31, 2014,
were not significant. The losses on sales of securities for the year ended March 31, 2015, were not significant. The losses on
sales of securities were ¥11,204 million 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.
GAINS AND LOSSES ON SALES OR DISPOSAL OF FIXED ASSETS
For the years ended March 31, 2015 and 2014, the sale and disposal of fixed assets were ¥14,711 million ($122,592
thousand) loss and ¥482 million loss, respectively. Gains on sales of fixed assets were ¥2,518 million ($20,983 thousand),
and losses on disposal of fixed assets were ¥17,229 million ($143,575 thousand) for the year ended March 31, 2015. Gains
on sales of fixed assets were ¥3,703 million, and losses on disposal of fixed assets were ¥4,185 million for the year ended
March 31, 2014.
Proceed from legal settlement with SK hynix Inc.
In December 2014, the Company has reached a settlement with Korea’s SK hynix Inc. (“SK hynix”) in connection with a civil
lawsuit that the Company initiated against SK hynix on March 2014 to seek damages under Japan’s Unfair Competition
Prevention Act. Proceed from legal settlement with SK hynix of ¥32,868 million ($273,900 thousand) was recorded for the
year ended March 31, 2015.
Restructuring Charges of the Lifestyle Products & Services business
In light of the severe business environment of the Visual Products business centering on televisions, its sales resources
were concentrated on the Japanese market where demand for large-screen Ultra HD (4K)-ready LCD TVs is expected to
grow. In addition, the restructuring measures such as closure and consolidation of distribution sites were implemented in
the countries and regions where its profitability was low in order to maintain its stable profitability, which is immune to
sales volume. Consequently, restructuring charges of ¥17,905 million ($149,208 thousand) were recorded for the year
ended March 31, 2015. For the PC business, to ensure its stable profits, the structural shift to Business to Business market
was further accelerated from the Business to Customer market, which is highly volatile due to the market environment, by
its downscale of Business to Consumer market including withdrawal and closure in certain regions. As a result,
restructuring charges of ¥16,114 million ($134,283 thousand) were recorded for the year ended March 31, 2015.
Penalties related to the revision of inappropriate accounting treatments in previous years
In February, 2015, the Company received an order to report from the Securities and Exchange Surveillance Commission
(“SESC”), based on Article 26 of the Financial Instruments and Exchange Act, requiring submission of a report. Through
subsequent investigations by the Special Investigation Committee and the Independent Investigation Committee and
self-checks, inappropriate accounting treatments in previous years to be corrected were identified. Consequently, the
Company may receive a payment order of administrative monetary penalty from the Financial Services Agency for the act
that the Company submitted the financial statements including material misstatements due to inappropriate accounting
treatments pursuant to Article 172-4, Paragraphs 1 and 2 of the Financial Instruments and Exchange Act and the act that
its securities were traded based on the published disclosure documents including material misstatements due to
inappropriate accounting treatments pursuant to Article 172-2, Paragraph 1 of the Financial Instruments and Exchange
Act. For the fiscal year ended March 31, 2015, provision for estimated penalties related to this revision of inappropriate
accounting treatments in previous years amount to ¥8,427 million ($70,225 thousand) were recorded.
Results for the year ended March 31, 2014 have been restated.
48 TOSHIBA Annual Report 2015
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, 2015
were consisted of ¥3,116 million ($25,967 thousand) in the PC business, ¥3,439 million ($28,658 thousand) in the System
LSI business, ¥41,875 million ($348,958 thousand) in the Discrete business, ¥38,869 million ($323,908 thousand) in Home
Appliances business, ¥2,596 million ($21,633 thousand) in the Battery business, and ¥2,387 million ($19,892 thousand) in
the Automotive Applications business. Impairment loss for the Visual Products business for the year ended March 31, 2015
was not significant. Impairment losses recorded in the year ended March 31, 2014 were consisted of ¥1,940 million in the
Visual Products business, ¥4,611 million in the PC business, ¥4,647 million in the Analog and Imaging IC business, and
¥4,423 million in the System LSI business. These impairment losses are included in cost of sales in the consolidated
statements of income. Impairment losses in the Visual Products business, the PC business and the Home Appliances
business are related to Lifestyle Products & Services, those in the Analog and Imaging IC business, the System LSI business
and the Discrete business are related to Electronic Devices & Components, and those in the Battery business and the
Automotive Applications business are related to Energy & Infrastructure.
Results for the year ended March 31, 2014 have been restated.
TOSHIBA Annual Report 2015
49
Notes to Consolidated Financial Statements
Toshiba Corporation and Subsidiaries
March 31, 2015
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 35.6 percent and 38.0 percent for the years ended March 31, 2015 and 2014, respectively.
Amendments to the Japanese tax regulations were enacted into law on March 31, 2015. As a result of these
amendments, the effective statutory tax rate used to calculate deferred tax assets and liabilities was changed from 35.6
percent to 33.1 percent for temporary difference expected to be eliminated during the fiscal year beginning on April 1,
2015, and 32.3 percent for temporary difference expected to be eliminated in and after the fiscal year beginning on April
1, 2016. 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, 2015.
A reconciliation table between the reported income tax expense and the amount computed by multiplying the income
from continuing operations, before income taxes and noncontrolling interests by the applicable statutory tax rate is as
follows:
Year ended March 31
Expected income tax expense
Increase (decrease) in taxes resulting from:
Tax credits
Non-deductible expenses for tax purposes
Net changes in valuation allowance
Net decrease in deferred tax assets by enacted changes
in tax laws and rates
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
2015
2014
¥
48,645
¥
69,288
$
Thousands of
U.S. dollars
2015
405,375
(9,388)
5,916
83,110
17,000
(4,119)
9,601
4,894
155,659
¥
¥
(3,433)
5,471
14,139
9,503
(10,010)
7,123
(36)
92,045
(78,233)
49,300
692,583
141,667
(34,325)
80,008
40,783
$ 1,297,158
The significant components of deferred tax assets and deferred tax liabilities as of March 31, 2015 and 2014 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:
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
Results for the year ended March 31, 2014 have been restated.
50 TOSHIBA Annual Report 2015
Millions of yen
2015
2014
¥
¥
¥
¥
23,117
108,689
164,265
130,151
138,513
64,927
134,286
763,948
(250,207)
513,741
(17,771)
(66,483)
(8,274)
(41,716)
(98,891)
(20,665)
(253,800)
259,941
¥
¥
¥
¥
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
Thousands of
U.S. dollars
2015
$
192,642
905,742
1,368,875
1,084,592
1,154,275
541,058
1,119,050
6,366,234
(2,085,059)
$ 4,281,175
$
(148,092)
(554,025)
(68,950)
(347,633)
(824,092)
(172,208)
(2,115,000)
$ 2,166,175
Deferred tax liabilities included in other current liabilities and other liabilities at March 31, 2015 and 2014 were ¥128,927
million ($1,074,392 thousand) and ¥110,697 million, respectively.
The net changes in the total valuation allowance for the years ended March 31, 2015 and 2014 were an increase of
¥22,472 million ($187,267 thousand) and an increase of ¥7,697 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, 2015 was
not significant. The amount of adjustments for the year ended March 31, 2014 was ¥9,438 million.
The Group’s tax loss carryforwards for the corporate and local taxes at March 31, 2015 amounted to ¥406,696 million
($3,389,133 thousand) and ¥632,571 million ($5,271,425 thousand), respectively, the majority of which will expire during
the period from the year ending March 2016 through 2024. The Group utilized tax loss carryforwards of ¥90,940 million
($757,833 thousand) and ¥124,024 million to reduce current corporate taxes and ¥32,903 million ($274,192 thousand) and
¥73,260 million to reduce current local taxes during the years ended March 31, 2015 and 2014, 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
2015
2014
¥
¥
4,569
352
55
(352)
(35)
(955)
517
4,151
¥
¥
5,349
353
250
(567)
(722)
(575)
481
4,569
Thousands of
U.S. dollars
2015
$
$
38,075
2,933
458
(2,933)
(292)
(7,958)
4,308
34,591
The total amounts of unrecognized tax benefits that would reduce the effective tax rate, if recognized, are ¥1,465 million
($12,208 thousand) and ¥1,472 million at March 31, 2015 and 2014, respectively.
The Group recognizes interest and penalties accrued related to unrecognized tax benefits in income taxes in the
consolidated statements of income. Both interest and penalties accrued as of March 31, 2015 and 2014, and interest and
penalties included in income taxes for the years ended March 31, 2015 and 2014 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, 2015, 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, 2014 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, 2009 with few exceptions.
Results for the year ended March 31, 2014 have been restated.
TOSHIBA Annual Report 2015
51
Notes to Consolidated Financial Statements
Toshiba Corporation and Subsidiaries
March 31, 2015
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, 2015 and 2014 are 4,237,602,026.
RETAINED EARNINGS
Retained earnings at March 31, 2015 and 2014 included a legal reserve of ¥44,165million ($368,042 thousand) and ¥39,232
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, 2015 included the Group’s equity in undistributed earnings of equity method investees
in the amount of ¥105,906 million ($882,550 thousand).
ACCUMULATED OTHER COMPREHENSIVE LOSS
The changes in accumulated other comprehensive loss for the year ended March 31, 2015 are as follows:
Net unrealized gains and
losses on securities
Foreign currency
translation adjustments
Millions of yen
Pension liability
adjustments
Net unrealized gains and
losses on derivative
instruments
Total
Balance at beginning of year
¥
93,924
¥
(110,846)
¥
(248,502)
¥
(2,362)
¥
(267,786)
Other comprehensive income (loss)
arising during year
Amounts reclassified from accumulated
other comprehensive loss
Net current year change
Balance at end of year
36,898
97,158
(3,780)
5,718
135,994
(17,255)
(1,069)
12,110
¥
¥
19,643
113,567
¥
¥
96,089
(14,757)
¥
¥
8,330
(240,172)
¥
¥
(1,317)
4,401
2,039
(7,531)
¥
¥
128,463
(139,323)
Net unrealized gains and
losses on securities
Foreign currency
translation adjustments
Pension liability
adjustments
Net unrealized gains and
losses on derivative
instruments
Total
Thousands of U.S. dollars
Balance at beginning of year
$
782,700
$
(923,717)
$ (2,070,850)
$
(19,683)
$ (2,231,550)
Other comprehensive income (loss)
arising during year
Amounts reclassified from accumulated
other comprehensive loss
Net current year change
Balance at end of year
307,483
809,650
(31,500)
47,650
1,133,283
(143,792)
(8,908)
100,917
(10,975)
(62,758)
$
$
163,691
946,391
$
$
800,742
(122,975)
$
69,417
$ (2,001,433)
$
$
36,675
16,992
$ 1,070,525
$ (1,161,025)
The changes in accumulated other comprehensive loss for the year ended March 31, 2014 are as follows:
Net unrealized gains and
losses on securities
Foreign currency
translation adjustments
Millions of yen
Pension liability
adjustments
Net unrealized gains and
losses on derivative
instruments
Total
Balance at beginning of year
¥
78,165
¥
(219,546)
¥
(301,584)
¥
(973)
¥
(443,938)
Other comprehensive income
arising during year
Amounts reclassified from accumulated
other comprehensive loss
Net current year change
Balance at end of year
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)
153,351
22,801
¥
¥
176,152
(267,786)
Results for the year ended March 31, 2014 have been restated.
52 TOSHIBA Annual Report 2015
Amounts reclassified from accumulated other comprehensive loss for the year ended March 31, 2015 and 2014 are as
follows:
Millions of yen
Thousands of
U.S. dollars
Amounts reclassified from accumulated
other comprehensive loss
2014
2015
2015
Affected line item in Consolidated
Statements of Income
Net unrealized gains and
losses on securities
Foreign currency
translation adjustments
Pension liability adjustments
¥
¥
(27,525)
8,881
(18,644)
(1,389)
(17,255)
(1,069)
−
(1,069)
−
(1,069)
18,424
(5,914)
12,510
400
(3,680)
1,293
(2,387)
(1)
(2,386)
11,712
−
11,712
25
11,687
23,792
(8,446)
15,346
448
74,008
(155,367)
$ (229,375) Other income
Income taxes
Net income before noncontrolling interests
Less:Net Income attributable to noncontrolling
interests
Net income attributable to shareholders of the
Company
(143,792)
(11,575)
(8,908) Other expense
−
(8,908)
−
(8,908)
Income taxes
Net income before noncontrolling interests
Less:Net Income attributable to noncontrolling
interests
Net income attributable to shareholders of the
Company
153,533
(49,283)
104,250
3,333
(Notes 1)
Income taxes
Net income before noncontrolling interests
Less:Net Income attributable to noncontrolling
interests
Net income attributable to shareholders of the
Company
Net unrealized gains and
losses on derivative instruments
12,110
14,898
100,917
(2,172)
758
(1,414)
(97)
(1,317)
(2,420)
890
(1,530)
(132)
(1,398)
6,317
(11,783)
(18,100) Other income
Income taxes
Net income before noncontrolling interests
Less:Net Income attributable to noncontrolling
interests
Net income attributable to shareholders of the
Company
(10,975)
(808)
Total reclassifications-net of tax
and noncontrolling interests
¥
(7,531)
¥
(22,801)
$
(62,758)
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 Statements of Income.
Results for the year ended March 31, 2014 have been restated.
TOSHIBA Annual Report 2015
53
Notes to Consolidated Financial Statements
Toshiba Corporation and Subsidiaries
March 31, 2015
Tax effects allocated to each component of other comprehensive income (loss) for the years ended March 31, 2015 and
2014 are shown below:
For the year ended March 31, 2015:
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, 2014:
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
¥
56,596
¥
(19,698)
¥
36,898
(25,475)
8,220
(17,255)
100,357
(1,069)
(2,362)
17,836
9,082
(2,020)
(3,199)
−
(1,418)
(5,726)
(3,364)
703
97,158
(1,069)
(3,780)
12,110
5,718
(1,317)
¥
152,945
¥
(24,482)
¥
128,463
¥
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)
Other comprehensive income
¥
217,228
¥
(41,076)
¥
176,152
Results for the year ended March 31, 2014 have been restated.
54 TOSHIBA Annual Report 2015
For the year ended March 31, 2015:
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
$
471,633
$
(164,150)
$
307,483
(212,292)
68,500
(143,792)
836,308
(8,908)
(19,683)
148,634
75,683
(16,833)
(26,658)
−
(11,817)
(47,717)
(28,033)
5,858
809,650
(8,908)
(31,500)
100,917
47,650
(10,975)
Other comprehensive income
$ 1,274,542
$
(204,017)
$ 1,070,525
TAKEOVER DEFENSE MEASURE
The Company introduced a plan for countermeasures to any large-scale acquisitions of the Company’s shares (the “Plan”),
and renewed the Plan in June 2009 and June 2012. However, the Company decided not to renew the Plan after careful
consideration on changes in business environment, compliance with the Financial Instruments and Exchange Act, and
opinions of shareholders.
Specific contents of the Plan are as follows.
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.
Results for the year ended March 31, 2014 have been restated.
TOSHIBA Annual Report 2015
55
Notes to Consolidated Financial Statements
Toshiba Corporation and Subsidiaries
March 31, 2015
19. NET EARNINGS (LOSS) PER SHARE ATTRIBUTABLE TO SHAREHOLDERS OF THE COMPANY
The following reconciliation table of the numerators and denominators sets forth the computation of basic net earnings
(loss) per share attributable to shareholders of the Company for the years ended March 31, 2015 and 2014.
Year ended March 31
Income (Loss) from continuing operations attributable to
shareholders of the Company
Loss from discontinued operations attributable to
shareholders of the Company
Millions of yen
2015
2014
Thousands of
U.S. dollars
2015
¥
(37,825)
¥
68,942
$
(315,208)
(0)
(8,702)
(0)
Net income (loss) attributable to shareholders of the Company
¥
(37,825)
¥
60,240
$
(315,208)
Year ended March 31
Weighted-average number of shares of common stock
outstanding for the year
Thousands of shares
2015
4,234,362
2014
4,234,659
Year ended March 31
Earnings (Loss) 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 (loss) per share attributable to shareholders
of the Company:
−Basic
Yen
2015
2014
U.S. dollars
2015
¥
¥
¥
(8.93)
(0.00)
(8.93)
¥
¥
¥
16.28
(2.05)
14.23
$
$
$
(0.07)
(0.00)
(0.07)
Diluted net earnings (loss) per share attributable to shareholders of the Company for the years ended March 31, 2015 and
2014 have been omitted because the Company did not have potential common stock that were outstanding for the
period.
Results for the year ended March 31, 2014 have been restated.
56 TOSHIBA Annual Report 2015
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 2015 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 statements 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 6 years and 2 years,
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 6 years.
The Group expects to reclassify ¥772 million ($6,433 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.
Results for the year ended March 31, 2014 have been restated.
TOSHIBA Annual Report 2015
57
Notes to Consolidated Financial Statements
Toshiba Corporation and Subsidiaries
March 31, 2015
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, 2015 and 2014 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
2015
2014
¥
300,730
251,202
518,976
75,305
876
¥
202,361
159,044
526,038
61,377
7,989
Thousands of
U.S. dollars
2015
$ 2,506,083
2,093,350
4,324,800
627,542
7,300
(2) FAIR VALUE OF FINANCIAL INSTRUMENTS
The fair value of the Group’s financial instruments and the location in the consolidated balance sheets at March 31, 2015
and 2014 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
Liabilities:
Forward exchange contracts
Interest rate swap agreements
Currency swap agreements
Prepaid expenses and
other current assets
Prepaid expenses and
other current assets
Other current liabilities
Other current liabilities
Other liabilities
Other current liabilities
Millions of yen
2015
2014
Thousands of
U.S. dollars
2015
¥
13,105
¥
1,211
$
109,208
42
18
350
(4,291)
(207)
(3,208)
3,897
−
(451)
(2)
−
(28)
(1,727)
−
(2,785)
1,306
65
(770)
−
(11)
−
(35,758)
(1,725)
(26,733)
32,475
−
(3,758)
(17)
−
(233)
Results for the year ended March 31, 2014 have been restated.
58 TOSHIBA Annual Report 2015
March 31
Nonderivatives:
Liabilities:
Millions of yen
2015
2014
Carrying
amount
Fair value
Carrying
amount
Fair value
Long-term debt, including current portion
¥ (1,220,772)
¥ (1,228,573)
¥ (1,208,018)
¥ (1,215,525)
March 31
Nonderivatives:
Liabilities:
Thousands of U.S. dollars
2015
Carrying
amount
Fair value
Long-term debt, including current portion
$ (10,173,100)
$ (10,238,108)
Results for the year ended March 31, 2014 have been restated.
TOSHIBA Annual Report 2015
59
Notes to Consolidated Financial Statements
Toshiba Corporation and Subsidiaries
March 31, 2015
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 statements of income for the year ended March 31, 2015 is as
follows:
Cash flow hedge:
Forward exchange contracts
Interest rate swap agreements
Currency options
Amount of
gain (loss)
recognized in
OCI
Amount
recognized
¥
6,475
(755)
(2)
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
¥
1,317
Location
Other expense
Amount
recognized
¥
(1,854)
Other expense
(23)
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
¥ (928)
Amount of
gain (loss)
recognized in
OCI
Amount
recognized
$
53,958
(6,292)
(17)
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
$
10,975
Location
Other expense
Amount
recognized
$
(15,450)
Other expense
(192)
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
$
(7,733)
Results for the year ended March 31, 2014 have been restated.
60 TOSHIBA Annual Report 2015
The effect of derivative instruments on the consolidated statements 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
Millions of yen
Amount of gain (loss)
recognized in income (loss)
Location
Other expense
Amount
recognized
¥
(1,070)
Results for the year ended March 31, 2014 have been restated.
TOSHIBA Annual Report 2015
61
Notes to Consolidated Financial Statements
Toshiba Corporation and Subsidiaries
March 31, 2015
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, 2015 and 2014 were ¥79,176 million ($659,800 thousand)
and ¥81,140 million, respectively.
The Group also leases certain machinery and equipment which are accounted for as capital leases. As of March 31, 2015
and 2014, the costs of machinery and equipment under capital leases were approximately ¥56,374 million ($469,783
thousand) and ¥64,717 million, and the related accumulated amortization were approximately ¥27,182 million ($226,517
thousand) and ¥29,758 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, 2015 and 2014 were not significant.
Minimum lease payments for the Group’s capital and non-cancelable operating leases as of March 31, 2015 are as
follows:
Year ending March 31
2016
2017
2018
2019
2020
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
Capital
leases
¥
¥
37,871
24,617
15,867
12,319
10,270
28,971
129,915
¥
¥
10,534
8,222
5,107
3,312
2,655
25,259
55,089
(1,282)
(22,299)
31,508
(9,046)
22,462
$
$
87,783
68,517
42,558
27,600
22,125
210,492
459,075
(10,683)
(185,825)
262,567
(75,384)
187,183
Operating
leases
315,592
205,142
132,225
102,658
85,583
241,425
1,082,625
$
$
22. COMMITMENTS AND CONTINGENT LIABILITIES
Commitments for the purchase of property, plant and equipment, long-term service at fixed and variable prices, and
unconditional purchase obligation for license fees outstanding at March 31, 2015 totaled approximately ¥1,160,180 million
($9,668,167 thousand). The Group plans to conclude sales commitments to compensate majority of such commitments.
Results for the year ended March 31, 2014 have been restated.
As of March 31, 2015, contingent liabilities, other than guarantees disclosed in Note 23, approximated ¥224 million
($1,867 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, 2015, recognized revenue from
several claims and unapproved change orders approximated ¥54,745 million ($456,208 thousand), and are included in
prepaid expenses and other current assets on the consolidated balance sheets.
Results for the year ended March 31, 2014 have been restated.
62 TOSHIBA Annual Report 2015
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 2015 to 2023 as of March 31, 2015 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 ¥74,991 million ($624,925 thousand) as of March 31, 2015.
GUARANTEES OF EMPLOYEES’ HOUSING LOANS
The Group guarantees housing loans of its employees. Expiration dates vary from 2015 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 ¥2,889 million ($24,075 thousand) as of March 31, 2015. 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 March 2025. The maximum potential payments by
the Group for such residual value guarantees were ¥6,979 million ($58,158 thousand) as of March 31, 2015.
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 ¥7,158 million ($59,650 thousand)
as of March 31, 2015.
The carrying amounts of the liabilities for the Group’s obligations under the guarantees described above as of March 31,
2015 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, 2015 and 2014:
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
2015
33,385
43,523
(45,019)
2,152
34,041
¥
¥
2014
36,273
44,007
(49,484)
2,589
33,385
¥
¥
Thousands of
U.S. dollars
2015
278,208
362,692
(375,158)
17,933
283,675
$
$
Results for the year ended March 31, 2014 have been restated.
TOSHIBA Annual Report 2015
63
Notes to Consolidated Financial Statements
Toshiba Corporation and Subsidiaries
March 31, 2015
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 ($77,658 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 ($25,142 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.
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 addition, in the United States, purchasers of Cathode-Ray-Tube related products and others filed
lawsuits against the Company seeking damages for violation of the U.S. antitrust laws. The Company believes it has not
infringed any antitrust laws in its Cathode-Ray-Tube business, and it will take any legal measures to respond to such
claims.
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 ($31,300 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.
In November 2014, there was an arbitral award against the Group to find the breach of contracts with clients for the
reason of defect of electricity meter in Europe. In July 2015, new arbitration seeking damages was filed. Going forward,
the Group intends to assert its opinion in the arbitration. It is not possible to reasonably estimate the amount of such
arbitration’s impact.
In February 2015, the Company received an order from the Securities and Exchange Surveillance Commission, based on
Article 26 of the Financial Instruments and Exchange Act, requiring submission of a report. The Company was then
subject to inspection regarding projects that used percentage-of-completion accounting. Later, after establishing the
Independent Investigation Committee and conducting the investigation, it was found that the Company continuously
made inappropriate accountings and, therefore, the Company filed amendments of the past Annual Securities Reports
and other reports. Going forward, the Company may be sued by its shareholders and others with respect to such
inappropriate accountings. It is not possible to reasonably estimate the amount of the impact.
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.
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.
Results for the year ended March 31, 2014 have been restated.
64 TOSHIBA Annual Report 2015
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 ¥7,154million ($59,617
thousand) and ¥7,926 million at March 31, 2015 and 2014, 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 ¥10,384 million ($86,533 thousand) and ¥12,887 million as of
March 31, 2015 and 2014, 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, 2015 and 2014 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
2015
2014
¥
¥
21,922
1,155
(533)
175
(424)
1,944
24,239
¥
¥
18,765
1,071
(271)
711
89
1,557
21,922
Thousands of
U.S. dollars
2015
182,683
9,625
(4,442)
1,459
(3,533)
16,200
201,992
$
$
Results for the year ended March 31, 2014 have been restated.
TOSHIBA Annual Report 2015
65
Notes to Consolidated Financial Statements
Toshiba Corporation and Subsidiaries
March 31, 2015
27. BUSINESS COMBINATIONS
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 runs 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
“Business Combinations” (“ASC No.805”).
The following table summarizes the allocation of the purchase price to the identifiable assets acquired and liabilities
assumed as of the acquisition date:
As of the acquisition date
Purchase price
Current assets
Non-current assets
Intangible assets subject to amortization
Current liabilities
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
9,431
7,637
3,054
4,995
701
14,426
¥
¥
¥
Millions of yen
¥
2,287
434
333
The excess of the purchase price over the fair value of the identifiable assets acquired and liabilities assumed, amounted
to ¥8,739 million, which was recorded as goodwill and allocated to Energy & Infrastructure.
Operating results of Vijai’s T&D businesses are included in the Company’s consolidated statements of income from the
acquisition date. These amounts are not significant.
Results for the year ended March 31, 2014 have been restated.
66 TOSHIBA Annual Report 2015
NuGeneration Limited
The Company entered into an agreement with a Spanish company Iberdrola, S.A. to purchase all of its 50% ownership of
NuGeneration Limited (“NuGen”) on December 21, 2013. The Company also entered into an agreement with a French
company GDF Suez S.A. (“GSZ”) to purchase an additional 10% ownership of NuGen on June 19, 2014, and consequently
acquired a controlling financial interest of NuGen for £102 million in cash on June 26, 2014 (all UK Standard Time). As a
result, Advance Energy UK Limited, a 100% consolidated subsidiary of the Company, holds 60% of the outstanding shares
of NuGen, and NNB Development Company, a 100% consolidated subsidiary of GSZ, holds the remaining 40% of the
outstanding shares.
NuGen has commenced a nuclear power plant construction project at the Moorside site in West Cumbria, North West
England, which is the largest, single proposed nuclear power plant construction project in Europe. As the majority owner
of NuGen, the Company, in collaboration with its group company, Westinghouse Electric Company, intends to move
forward with the construction and the operation of three AP1000 nuclear reactors.
Combining the global expertise and commitment of the Company, GSZ’s pioneering expertise as a European nuclear
operator, and world-leading technology of Westinghouse Electric Company will make a significant contribution to energy
security and long-term employment in the UK.
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
Intangible assets
Current liabilities
Total identifiable net assets acquired
Millions of yen
17,663
11,775
29,438
160
19
3,733
31
3,881
¥
¥
¥
¥
Thousands of U.S. dollars
$
147,192
98,125
245,317
$
$
$
1,333
158
31,109
258
32,342
Identifiable intangible assets acquired are Generation Licence. The fair value of the noncontrolling interests is measured
using valuation of assets and liabilities held by investees and corporate valuation performed by the third parties.
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 ¥25,557 million, which was recorded as goodwill and allocated to
Energy & Infrastructure.
Operating results of NuGen are included in the Company’s consolidated statements of income from the acquisition
date. These amounts are not significant.
Results for the year ended March 31, 2014 have been restated.
TOSHIBA Annual Report 2015
67
Notes to Consolidated Financial Statements
Toshiba Corporation and Subsidiaries
March 31, 2015
The following table summarizes the unaudited pro-forma results of operations, as though the above business
combinations had taken place on April 1, 2013.
Year ended March 31
Net sales
Net income (loss) attributable to shareholders of the Company
Billions of yen
2015
¥
6,655.9
(38.1)
¥
2014
6,496.5
58.6
Millions of
U.S. dollars
2015
$
55,466
(318)
Results for the year ended March 31, 2014 have been restated.
68 TOSHIBA Annual Report 2015
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, 2015 and 2014, the total assets of VIEs on the consolidated balance sheets were ¥47,724 million ($397,700
thousand) and ¥24,376 million, and the total liabilities of VIEs on the consolidated balance sheets were ¥28,652 million
($238,767 thousand) and ¥14,961 million, respectively. The assets consisted primarily of prepaid expenses and other
current assets, and property, plant and equipment. The liabilities consisted primarily of advance payments received. 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, 2015 and 2014, the Group recorded a loss of ¥38,543 million ($321,192 thousand) and ¥30,961 million 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, 2015 and 2014, 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, 2015
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
373,899
¥
130,179
18,311
178,934
VIEs involved in
Energy & Infrastructure
53,604
¥
1,303
0
1,303
Results for the year ended March 31, 2014 have been restated.
TOSHIBA Annual Report 2015
69
Notes to Consolidated Financial Statements
Toshiba Corporation and Subsidiaries
March 31, 2015
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
March 31, 2015
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
Thousands of U.S. dollars
VIEs involved in
Electronic Devices
$ 3,115,825
1,084,825
152,592
1,491,117
VIEs involved in
Energy & Infrastructure
446,700
$
10,858
0
10,858
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 and legal settlement
costs are not included in it.
The Group has 6 business segments, (1)Energy & Infrastructure, (2)Community Solutions, (3)Healthcare Systems &
Services, (4)Electronic Devices & Components, (5)Lifestyle Products & Services and (6)Others, identified in accordance
with the similarities of the nature of the products, the production processes and markets, etc.
Principal products that belong to each segment are as follows.
(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.
(6) Others:
Results for the year ended March 31, 2014 have been restated.
70 TOSHIBA Annual Report 2015
BUSINESS SEGMENTS
Financial information by segments as of and for the years ended March 31, 2015 and 2014 are as follows:
As of and for the year ended March 31, 2015
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
¥ 1,885,102 ¥ 1,356,095 ¥ 409,546 ¥ 1,683,973 ¥ 1,105,519 ¥ 215,659 ¥ 6,655,894 ¥
84,779
− ¥ 6,655,894
−
¥ 2,003,813 ¥ 1,410,686 ¥ 412,515 ¥ 1,768,752 ¥ 1,163,692 ¥ 529,022 ¥ 7,288,480 ¥ (632,586) ¥ 6,655,894
(632,586)
632,586
118,711
313,363
54,591
58,173
2,969
¥
19,569 ¥
53,900 ¥
23,871 ¥ 216,642 ¥ (109,747) ¥
7,471 ¥ 211,706 ¥
(41,267) ¥ 170,439
¥ 2,841,475 ¥ 1,051,521 ¥ 322,200 ¥ 1,377,966 ¥ 515,623 ¥ 413,709 ¥ 6,522,494 ¥ (187,716) ¥ 6,334,778
189,938
263,942
189,938
263,942
67,292
120,022
11,537
11,116
64,966
73,697
28,575
45,433
9,863
12,592
7,705
1,082
−
−
Results for the year ended March 31, 2014 have been restated.
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)
Identifiable assets
Depreciation and amortization
Capital expenditures
¥ 1,705,231 ¥ 1,300,894 ¥ 408,477 ¥ 1,596,720 ¥ 1,252,187 ¥ 226,193 ¥ 6,489,702 ¥
90,565
− ¥ 6,489,702
−
¥ 1,805,527 ¥ 1,356,636 ¥ 410,727 ¥ 1,687,285 ¥ 1,314,617 ¥ 504,016 ¥ 7,078,808 ¥ (589,106) ¥ 6,489,702
(589,106)
100,296
277,823
589,106
55,742
62,430
2,250
¥
6,548 ¥
55,474 ¥
29,892 ¥ 246,801 ¥
(54,644) ¥
11,612 ¥ 295,683 ¥
(38,557) ¥ 257,126
¥ 2,639,459 ¥ 983,079 ¥ 284,589 ¥ 1,373,770 ¥ 618,430 ¥ 419,004 ¥ 6,318,331 ¥ (145,812) ¥ 6,172,519
170,796
280,915
170,796
280,915
59,496
122,204
28,099
33,345
57,657
70,963
6,751
29,722
8,704
10,486
10,089
14,195
−
−
As of and for the year ended March 31, 2015
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
$ 15,709,183 $ 11,300,792 $ 3,412,883 $ 14,033,108 $ 9,212,658 $ 1,797,159 $ 55,465,783 $
706,492
− $ 55,465,783
−
$ 16,698,442 $ 11,755,717 $ 3,437,625 $ 14,739,600 $ 9,697,433 $ 4,408,516 $ 60,737,333 $ (5,271,550) $ 55,465,783
(5,271,550)
5,271,550
2,611,357
989,259
454,925
484,775
24,742
$ 163,075 $ 449,167 $ 198,925 $ 1,805,350 $ (914,558) $
62,258 $ 1,764,217 $ (343,892) $ 1,420,325
$ 23,678,958 $ 8,762,675 $ 2,685,000 $ 11,483,050 $ 4,296,858 $ 3,447,576 $ 54,354,117 $ (1,564,300) $ 52,789,817
1,582,817
2,199,517
1,582,817
2,199,517
560,767
1,000,183
541,383
614,142
238,125
378,608
82,192
104,933
96,142
92,633
64,208
9,018
−
−
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) In connection with management system changes,a part of certain Company-wide R&D expenses and headquarters administration costs, which used to be conventionally distributed fully over
each segment, are no longer distributed over each segment and included in Corporate and Eliminations from the year ended March 31,2015. As a result of this change, segment operating income
increased by ¥6,884 million ($57,367 thousand) in Energy & Infrastructure, ¥3,679 million ($30,658 thousand) in Community Solutions, ¥1,642 million ($13,683 thousand) in Healthcare Systems &
Services, ¥7,343 million ($61,192 thousand) in Electronic Devices & Components, ¥3,913 million ($32,608 thousand) in Lifestyle Products & Services, and ¥19,648 ($163,733 thousand) million in
Others and decreased by ¥43,109 ($359,242 thousand) million in Corporate and Eliminations, compared with the figures under the previous method.Also, the figures of the past year have been
reclassified to reflect this change.
Results for the year ended March 31, 2014 have been restated.
TOSHIBA Annual Report 2015
71
Notes to Consolidated Financial Statements
Toshiba Corporation and Subsidiaries
March 31, 2015
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, 2015 and 2014 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
¥
¥
2015
211,706
(41,267)
170,439
10,886
20,763
118,049
(24,984)
(158,509)
¥
¥
2014
295,683
(38,557)
257,126
13,756
3,254
65,732
(33,696)
(123,836)
Thousands of
U.S. dollars
2015
$ 1,764,217
(343,892)
$ 1,420,325
90,717
173,025
983,741
(208,200)
(1,320,908)
Income from continuing operations, before income taxes and
noncontrolling interests
¥
136,644
¥
182,336
$ 1,138,700
Results for the year ended March 31, 2014 have been restated.
72 TOSHIBA Annual Report 2015
GEOGRAPHIC INFORMATION
Net sales
Net sales by region based on the location of the customer for the years ended March 31, 2015 and 2014 are as follows:
Year ended March 31
Japan
Overseas
Asia
North America
Europe
Others
Total
Millions of yen
2015
¥ 2,705,946
¥ 3,949,948
1,690,119
1,124,721
772,897
362,211
¥ 6,655,894
2014
2,727,415
3,762,287
1,383,640
1,160,489
846,267
371,891
6,489,702
¥
¥
¥
Property, plant and equipment
Property, plant and equipment by region at March 31, 2015 and 2014 are as follows:
March 31
Japan
Overseas
Asia
North America
Europe
Others
Total
Notes: 1) There are no individually material countries which should be separately disclosed.
2) There are no material sales to a single unaffiliated customer.
Millions of yen
2015
566,942
319,381
158,654
79,695
69,471
11,561
886,323
¥
¥
¥
2014
587,811
322,308
163,822
75,591
68,078
14,817
910,119
¥
¥
¥
Thousands of
U.S. dollars
2015
$ 22,549,550
$ 32,916,233
14,084,325
9,372,675
6,440,808
3,018,425
$ 55,465,783
Thousands of
U.S. dollars
2015
$ 4,724,517
$ 2,661,508
1,322,117
664,125
578,925
96,341
$ 7,386,025
Results for the year ended March 31, 2014 have been restated.
TOSHIBA Annual Report 2015
73
Notes to Consolidated Financial Statements
Toshiba Corporation and Subsidiaries
March 31, 2015
30. SUBSEQUENT EVENT
Introduction of defined contribution pension plan
For the purpose of supporting employee’s life plans after retirement and fulfilling diverse needs related to retirement
benefits, the Company, by July 2015, reached a labor-management agreement to introduce the defined contribution
pension plan from October 1, 2015 for approximately 95,000 employees working at 89 domestic Group companies
including the Company. It is planned to gradually introduce the plan into some domestic Group companies, apart from
the above-mentioned 89 companies. In this plan, 50% of future contribution in the existing retirement lump sum grant
becomes the defined contribution pension, which is managed by individual employees. This plan will be introduced
under the approval of the Ministry of Health, Labor and Welfare. The introduction of the system has no material impacts
on the Company’s consolidated financial statements for the following fiscal year.
Sale of shares of KONE Corporation in Finland
On July 22, 2015, Toshiba Elevator and Building Systems Corporation, a consolidated subsidiary of the Company, sold its
entire stake in KONE Corporation in Finland. Accordingly, ¥112,831 million ($940,258 thousand) (before tax) of gains on
sales of shares is scheduled to be recorded for the second quarter of the fiscal year ending March 31, 2016.
Sale of shares of Topcon Corporation
At the board of directors meeting held on August 31, 2015, the Company decided to sell all shares (the “Sale”) of Topcon
Corporation (“TOPCON”), which has been accounted for by the equity method, held by the Company and its consolidated
subsidiary, Toshiba Insurance Service Corporation (“TISCO”). With the Sale, TOPCON will no longer be an affiliate of the
Company accounted for by the equity method. The summary of the Sale is as follows:
1. Summary of the Sale
(1) Number of shares to be offered
Shares of TOPCON held by the Company and its consolidated subsidiary, TISCO
Shares held by the Company (Note)
Shares held by TISCO
Total
32,566,800 shares (30.13% of the outstanding shares)
277,300 shares (0.26% of the outstanding shares)
32,844,100 shares (30.39% of the outstanding shares)
(Note) Includes grant of Greenshoe option (3,150,000 shares) related to the offering by Overallotment by
underwriters, and shares intended for additional right of purchasing (1,050,000 shares) granted to the
underwriters in relation to overseas sales.
(2) Method of the Sale
The Sale will be by way of secondary offering, and Nomura Securities Co., Ltd. and Mizuho Securities Co., Ltd., the
joint lead underwriters, will purchase the shares for the offering. There is a possibility that part of shares will be sold
to overseas investors in overseas markets, mainly in Europe and Asia (excluding the US and Canada).
2. Purpose of the Sale
The Company is currently promoting cash flow management, and decided the Sale in order to improve
efficient utilization of Group assets and to bolster its balance sheets.
3. Outlook
The selling price to the underwriters will be determined on one of the days from September 8, 2015 to September 10,
2015, inclusive.
(Profile of TOPCON)
Company Name: Topcon Corporation
Head Office:
Major Businesses: Positioning (GNSS, Machine control system, Precision agriculture), Smart Infrastructure (Surveying
instruments, 3D measurement, Monitoring), Eye Care (Ophthalmic instruments, Refraction
instruments)
75-1, Hasunuma-cho, Itabashi-ku, Tokyo, Japan
Results for the year ended March 31, 2014 have been restated.
74 TOSHIBA Annual Report 2015
Ernst & Young ShinNihon LLC
Hibiya Kokusai Bldg.
2-2-3 Uchisaiwai-cho
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, 2015, and the
consolidated statements of income, comprehensive income, changes in net assets, and cash flows for the year then
ended and a summary of significant accounting policies and other explanatory information, all expressed in
Japanese yen.
Management’s Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these consolidated financial statements in
conformity with accounting principles generally accepted in U.S., 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, 2015, and
their consolidated financial performance and cash flows for the year then ended in conformity with accounting
principles generally accepted in U.S..
Emphasis of Matter
We draw attention to Note 30 to the consolidated financial statements, which describes that Toshiba Elevator and
Building Systems Corporation, a consolidated subsidiary of the Company, sold its entire stake in KONE Corporation
in Finland on July 22, 2015, and the Company decided at its meeting of the Board of Directors on August 31, 2015 to
sell all the shares of Topcon Corporation. Our opinion is not qualified in respect of this matter.
Convenience Translation
We have reviewed the translation of these consolidated financial statements into U.S. dollars, presented for the
convenience of readers, and, in our opinion, the accompanying consolidated financial statements have been
properly translated on the basis described in Note 3.
September 7, 2015
TOSHIBA Annual Report 2015
75
Public Relations & Investor Relations Office
Corporate Communications Division