2016
Annual Report
Year ended March 31, 2016 Financial Review
Committed to People, Committed to the Future.
1-1, Shibaura 1-chome, Minato-ku, Tokyo,105-8001, Japan
Contacts:
Public Relations & Investor Relations Division
Tel: +81-3-3457-2096 Fax: +81-3-5444-9202
Inquiry page on Investor Relations
URL http://www.toshiba.co.jp/about/ir/en/contact.htm
The production and printing of this report reflect the following considerations :
Paper
Printing
Use of FSC-certified Paper
Use of Forest Thinning Support Paper
Ａ-（2）-060001
Paper certified by Forest
Stewardship Council (FSC)
is used, which is made
from wood from
FSC-certified forests.
Toshiba Group supports forest thinning project
in Misawa City, Aomori prefecture, aiming to
preserve the nature for the next generation.
Tree use cycle mark
We believe that it is important to make
proactive use of domestic wood products
and to grow forests, and we support the
forestry Agency’s efforts to promote “tree
trainer activies”. Domestic timber provided
the raw material for the paper on which this
report is printed, and its use contribused to
increased absorption of CO2 by native forests.
Waterless Printing
Waterless printing, a printing process
that eliminates the use of water, is
adopted, taking advantage of the
characteristics of printing plates made
of ink-shedding material.
Non-VOC Ink
100% vegetable ink containing no
volatile organic compounds (VOCs) is
used.
Management’s Discussion and Analysis
FIVE-YEAR SUMMARY
Toshiba Corporation and Subsidiaries
Years ended March 31
Net sales
Operating income (loss) (Note 4)
Income (Loss) from continuing operations, before income
taxes and noncontrolling interests
Net income (loss) attributable to shareholders of the
Company
Comprehensive income (loss) attributable to shereholders
of the Company
Equity attributable to shareholders of the Company
Total equity (Note 5)
Total assets
Per share of common stock: (Yen) (Note 6)
Earnings (loss) per share attributable to shareholders of the
Company (Yen) (Notes 7 and 8)
−Basic
−Diluted
Shareholdrers’ equity ratio (%) (Note 6)
Return on equity ratio (%) (Note 6)
Price-to-earnings ratio (PER) (Note9)
Net cash provided by (used in) operating activities
Net cash provided by (used in) investing activities
Net cash provided by (used in) financing activities
Cash and cash equivalents at end of year
Number of employees (Note 10)
2016
¥ 5,668,688
(708,738)
2015
¥ 6,114,682
188,409
Millions of yen,
except per share amounts and ratio
2014
¥ 5,904,288
229,364
2013
¥ 5,168,398
72,176
2012
¥ 5,469,119
97,846
(633,145)
156,615
158,546
(460,013)
(37,825)
60,240
51,418
13,425
47,341
3,194
(752,518)
90,638
236,392
179,852
(42,752)
328,874
672,258
5,433,341
77.67
(108.64)
−
6.1
(65.1)
−
(1,230)
653,442
135,747
975,529
187,809
1,083,996
1,565,357
6,334,778
256.01
(8.93)
−
17.1
(3.6)
−
330,442
(190,130)
(125,795)
199,366
198,741
1,027,189
1,445,994
6,172,519
242.58
14.23
−
16.6
6.5
30.72
284,132
(244,101)
(89,309)
171,340
200,260
824,584
1,205,823
6,021,603
194.72
3.17
−
13.7
1.7
148.89
132,316
(196,347)
41,772
209,169
206,087
718,664
1,083,858
5,673,064
169.70
0.75
0.74
12.7
0.4
482.64
337,497
(377,227)
(2,740)
214,305
209,784
Notes: 1) Toshiba Group’s Consolidated Financial Statements are based on US generally accepted accounting princiles.
2) The Healthcare Systems & Services segment and Home Appriances business are classified as discontinued operations in accordance with ASC 205-20 “Presentation of Financial Statements -
Discontinued Operations”. Results of the past fiscal year have been revised to reflect these changes.
3) Consumption tax is not included in the Net sales.
4) Operating income (loss) is derived by deducting the cost of sales, selling, general and administrative expenses and impairment loss on goodwill 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 charged to operating income (loss).
5) Total equity is the sum of Equity attributable to shareholders of the Company and Equity attributable to noncontrolling interests.
6) The calculation of “Per share of common stock”, “Shareholders’ equity ratio” and “Return on equity ratio” is based on Equity attributable to shareholders of the Company of consolidated balance
sheets.
7) 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.
8) Diluted net earnings per share attributable to shareholders of the Company for the years ended on or after March 31, 2013 have been omitted because the Company did not have potential
common stock that were outstanding for the period.
9) Price-to-earnings ratio (PER) for the years ended on March 31, 2016 and 2015 have been omitted because of Net loss attributable to shareholders of the Company.
10) The number of employees are the sum of the workers who are expected to work or have worked over a year between the regular employees and fixed-term emproyees.
2. Management’s Discussion and Analysis 18. Consolidated Balance Sheets 20. Consolidated Statements of Operations
21. Consolidated Statements of Comprehensive Income 22. Consolidated Statements of Equity
24. Consolidated Statements of Cash Flows 25. Notes to Consolidated Financial Statements
83. Independent Auditor’s Report
02 TOSHIBA Annual Report 2016
SCOPE OF CONSOLIDATION
As of the end of March 2016, Toshiba Group (“the Group”) comprised Toshiba Corporation (“the Company”) and 551
consolidated subsidiaries and operated businesses primarily related to five segments, which are the Energy &
Infrastructure, Community Solutions, Electronic Devices & Components, Lifestyle Products & Services and Others, and its
products extend into a wide variety of products. As of the end of March 2016, Healthcare Systems & Services segment
were excluded from primary operations because Healthcare Systems & Services business were classified as discontinued
operations. 144 affiliates were accounted for by the equity method as of the end of March 2016.
According to the revision of business group structure by change of organization as of April 1, 2016, business segments
changed to six segments, which are Energy Systems & Solutions, Infrastructure Systems & Solutions, Retail & Printing
Solutions, Storage & Electronic Devices Solutions, Industrial ICT Solutions and Others from the year ending March 31, 2017.
RESULTS OF OPERATIONS
(1) Overview of Consolidated Results
Year Ended March 31
Net sales
Operating income (loss)
Income (loss) from continuing operations, before income
taxes and noncontrolling interests
Net income (loss) attributable to shareholders of the Company
(* Change from the year-earlier period)
2016
5,668.7
(708.7)
(633.1)
(460.0)
Billions of yen
Change*
(446.0)
(897.1)
(789.7)
(422.2)
The US economy generally saw solid growth. With monetary easing, the Eurozone economy saw moderate growth,
particularly Germany. The Indian economy saw continued high growth. On the other hand, the Chinese economy slowed,
reflecting adjustments in production and investments in sectors with overcapacity, including steel, coal and the real
estate market. International financial markets fell into turmoil last summer and at the beginning of 2016, reflecting sharp
falls in stock prices and the Chinese yuan.
In Japan, as employment prospects and personal income continued to improve, consumer spending patterns generally
remained firm, and capital investment trended toward recovery. Exports varied by sector, showing either a slowdown or
remaining at the same level, due to slowdowns in overseas markets and other factors.
In the current fiscal year, the overall global economy is expected to see moderate growth. The Chinese economy is
expected to continue to slow down, but the US economy is expected to see continued solid growth. The forecast for the
Japanese economy is for relatively weak growth toward a gradual recovery.
The Group, in order to achieve a strong corporate constitution, has implemented decisive measures for structural reforms
of unprofitable businesses, including the PC, Visual Products, Home Appliances, Discrete Semiconductor and System LSI
businesses. The Group has also redefined its focus business areas as the Energy business and the Storage business,
centered on Memories and SSD. In the Healthcare business, the Company sold Toshiba Medical Systems Corporation in
order for the Company to maximize its value and realize its full potential, and also to improve Toshiba’s financial position.
In addition to this, the Company also signed a definitive agreement to transfer certain shares of Toshiba Lifestyle
Products & Services Corporation. As a result, the operating results related to the Healthcare Systems & Services segment
and Home Appliances business are classified as discontinued operations in the Company’s consolidated statements of
operations.
The Group’s net sales decreased by 446.0 billion yen to 5,668.7 billion yen (US$50,165.4 million). While the Energy &
Infrastructure and Community Solutions segments recorded higher sales, the Lifestyle Products & Services segment saw
significantly lower sales, due to structural reforms that redefined sales territories and other factors. The Electronic Devices
& Components segment also recorded lower sales on lower sales prices.
The Group recorded a consolidated operating loss of 708.7 billion yen (-US$6,272.0 million), a decline of 897.1 billion yen,
reflecting significant operating income deterioration in three business segments: Energy & Infrastructure recorded
impairment losses in the Nuclear Power Systems and Transmission & Distribution businesses; Community Solutions
recorded impairment losses in the Retail Information Systems and Office Equipment and the Lighting businesses; and
Electronic Devices & Components had to absorb lower sales prices and the cost of structural reforms. Income (loss) from
continuing operations, before income taxes and noncontrolling interests decreased by 789.7 billion yen to -633.1 billion
yen (-US$5,603.1 million).
Net income (loss) attributable to shareholders of the Company decreased by 422.2 billion yen, after calculating a reversal
of deferred tax assets and recording of gain from sales of Toshiba Medical Systems Corporation, and was minus 460.0
billion yen (-US$4,070.9 million).
TOSHIBA Annual Report 2016
03
Management’s Discussion and Analysis
Consolidated Results by Segment are as follows;
Energy & Infrastructure
Community Solutions
Electronic Devices & Components
Lifestyle Products & Services
Others
Corporate and Eliminations
Total
(* Change from the year-earlier period)
Net Sales
+54.5
+14.5
(163.8)
(373.2)
(48.6)
+70.6
(446.0)
Billions of yen
Change*
+3%
+1%
(9%)
(41%)
(9%)
−
(7%)
2,048.4
1,425.2
1,605.0
542.6
494.6
(447.1)
5,668.7
Operating Income (Loss)
(367.5)
(78.8)
(101.6)
(131.9)
8.6
(37.5)
(708.7)
Change*
(386.7)
(132.7)
(318.2)
(66.0)
+2.7
+3.8
(897.1)
Energy & Infrastructure:
Net sales in the Energy & Infrastructure segment increased by 54.5 billion yen to 2,048.4 billion yen (US$18,127.5 million).
While the Nuclear Power Systems business, Landis+Gyr AG and others recorded higher sales, the Transmission &
Distribution System, Solar Photovoltaic Systems and Railway Systems businesses saw lower sales.
Segment operating income deteriorated by 386.7 billion yen to -367.5 billion yen (-US$3,251.4 million). The Nuclear
Power Systems, Transmission & Distribution System and Solar Photovoltaic Systems businesses recorded significantly
deteriorated operating income, reflecting the impacts of impairments in goodwill and intangible fixed assets. The
Thermal & Hydro Power Systems and Railway Systems businesses also saw deteriorated operating income, reflecting
impacts from recording provisions for unprofitable projects and other factors.
Community Solutions:
Net sales in the Community Solutions segment increased by 14.5 billion yen to 1,425.2 billion yen (US$12,612.8 million).
While the Lighting business saw lower sales, the Community Infrastructure such as Water supply and sewerage systems,
Electric power sources for building and facilities, Elevator and Building Systems, and Commercial Air-Conditioners
businesses recorded higher sales.
Segment operating income decreased by 132.7 billion yen to -78.8 billion yen (-US$697.5 million). Although the
Community Infrastructure, Electric power sources for building and facilities, and Commercial Air-Conditioners businesses
all recorded higher operating income, Elevator and Building Systems saw operating income decrease, and the Retail
Information Systems and Office Equipment such as POS systems, and Lighting businesses saw a significant deterioration
in operating income due to impairments in goodwill and intangible fixed assets.
Electronic Devices & Components:
Net sales in the Electronic Devices & Components segment decreased by 163.8 billion yen to 1,605.0 billion yen
(US$14,203.2 million). In the Semiconductor business, Discretes such as Power devices, System LSIs such as Logic LSIs and
Mixed signal ICs, and Memories recorded lower sales. The Storage Products business recorded significantly lower sales.
Segment operating income decreased by 318.2 billion yen to -101.6 billion yen (-US$899.5 million). In the
Semiconductor business, Memories recorded lower operating income on lower sales price and other factors, and
Discretes and System LSIs recorded significantly deteriorated operating income due to the effects of structural reform,
impairment of fixed assets and other factors. The Storage Products business also recorded significantly deteriorated
operating income, also due to the effects of structural reform, impairment of fixed assets and other factors.
Lifestyle Products & Services:
Net sales in the Lifestyle Products & Services segment decreased by 373.2 billion yen to 542.6 billion yen (US$4,801.2
million), reflecting lower sales in the Visual Products and the PC businesses due to a shift in focus to redefined sales
territories and other factors.
Segment operating loss increased by 66.0 billion yen to -131.9 billion yen (-US$1,167.3 million), reflecting deteriorated
operating income in the Visual Products and PC businesses.
Others:
The Others segment recorded operating income of 8.6 billion yen (US$76.1 million) on sales of 494.6 billion yen
(US$4,377.4 million).
Intersegment sales of 447.1 billion yen (US$3,956.7 million) is included in the above business sales.
04 TOSHIBA Annual Report 2016
(2) Cash Flows
In the fiscal year under review, net cash used in operating activities amounted to 1.2 billion yen, a decrease of 331.6 billion
yen from net cash provided by operating activities of 330.4 billion yen in the previous year due to deterioration of net
income (loss).
Net cash provided by investing activities amounted to 653.4 billion yen, an increase of 843.5 billion yen from -190.1
billion yen in the previous year due to a sale of Toshiba Medical Systems Corporation.
As a result of the foregoing, free cash flow increased by 511.9 billion yen to 652.2 billion yen (US$5,771.8 million) from
140.3 billion yen in the previous year.
Net cash provided by financing activities amounted to 135.7 billion yen, an increase of 261.5 billion yen from -125.8
billion yen in the previous year.
The effect of exchange rate changes was to decrease cash by 11.8 billion yen. Cash and cash equivalents at the end of
the fiscal year increased 776.1 billion yen, from 199.4 billion yen at the end of the previous fiscal year to 975.5 billion yen.
In addition, the balance of cash and cash equivalents in continuing operations amounted to 969.7 billion yen,
deducting 5.8 billion yen of balance of cash and cash equivalents at the end of fiscal year in discontinued operations.
Note:
Toshiba’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
charged to operating income (loss).
The Healthcare Systems & Services segment and the Home Appliances business are classified as discontinued
operations in accordance with ASC 205-20 “Presentation of Financial Statements - Discontinued Operations”. The results
of these businesses have been excluded from net sales, operating income (loss), and income (loss) from continuing
operations, before income taxes and noncontrolling interests. Net income of the Group is calculated by reflecting the
results of these businesses to income (loss) from continuing operations, before income taxes and noncontrolling
interests. In addition, these businesses are also classified as discontinued operations for the Group’s consolidated balance
sheets and are indicated separately. Results of the past fiscal year have been revised to reflect these changes.
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.
It is highly regrettable that the Group posted a record operating loss and net loss for the fiscal year ended March 31,
2016. In light of this situation, the Company decided not to pay dividends of surplus for the fiscal year under review.
TOSHIBA Annual Report 2016
05
Management’s Discussion and Analysis
RESEARCH AND DEVELOPMENT
The Group is aiming to solve social challenges with a focus on Energy, Storage and Social Infrastructure areas and realize a
safe, secure and comfortable society. The Group produces a synergistic effect and generates new value by being among
the first to identify the society’s potential needs and challenges, creating innovative technologies and utilizing the
Group’s wide range of technological assets in many fields.
In the Energy area, further safe and stable supply and efficient use of traditional energy are promoted. In addition, the
Group will control CO2 emissions by providing technologies and services for generating, transmitting and storing clean
energy to the world to contribute to the realization of a low-carbon society. In the Storage area, the Group will contribute
to the creation of infrastructure for the information-driven society by further strengthening large-capacity storage
technologies and providing information systems and cloud foundations based on those technologies in order to deal
with the dramatically increasing information amount. In the Social Infrastructure area, the Group provides highly reliable
technologies and services to a broad range of customers who support the society and the industry in the field of
buildings and facilities, public infrastructure, etc., aiming to realize a secure, safe and reliable society.
The Group’s overall R&D expenditure reached 360.9 billion yen in the fiscal year ended March 31, 2016. Expenditures for
each business segment were as follows:
Energy & Infrastructure
Community Solutions
Electronic Devices & Components
Lifestyle Products & Services
Others
CAPITAL EXPENDITURES
Billions of yen
74.9
53.7
196.9
20.5
14.9
CAPITAL EXPENDITURE OVERVIEW
(1) Overview
For enhancement of competitiveness, the Group continues to invest mainly in its focus businesses in Energy and Storage
areas while carefully selecting the projects for investment. Consequently, the total amount of investment and loan
amounted to 327.1 billion yen. In Electronic Devices & Components, the Group continued to invest in manufacturing
facilities for cutting-edge fine processing with the aim of enhancing the competitiveness of its NAND flash memory
products. At the same time, in preparation for constructing a new manufacturing building in the future, we initiated a
process to acquire the block of land adjoining Yokkaichi Operations. Investments for each business segment is as follows.
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.
In Energy & Infrastructure, 247.6 billion yen of impairment losses of goodwill for Nuclear power business and 47.9 billion
yen of impairment losses of fixed assets including goodwill for Transmission & Distribution systems are disposed, and in
Community Solutions, 88.2 billion yen of impairment losses of fixed assets including goodwill for Retail Information
Systems and Office Equipment business are disposed.
Energy & Infrastructure
Community Solutions
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)
49.8
25.0
202.2
2.0
24.2
303.2
Investments & loans
(billion yen) (Note 2)
0.4
22.3
1.0
0.0
0.2
23.9
Total investments
(billion yen)
50.2
47.3
203.2
2.0
24.4
327.1
06 TOSHIBA Annual Report 2016
(2) Primary Capital Investment
Completed during
the term
Ordered during
the term
Segment
Electronic Devices
& Components
Electronic Devices
& Components
(3) Primary Investment and Loan
Outline
• Manufacturing building, facilities, interior decorating and power equipment, and manufacturing
facilities for NAND flash memory (the Company’s Yokkaichi Operations)
• Manufacturing facilities for NAND flash memory (the Company’s Yokkaichi Operations)
Segment
Community Solutions
Outline
• Acquisition of stake in Toshiba Global Commerce Solutions Holdings Corporation from IBM in the US by
Toshiba TEC Corporation
PLANS FOR CONSTRUCTING NEW FACILITIES AND RETIRING EXISTING FACILITIES
The Group plans to make capital investments, focusing on growth field and rigorously selecting projects for investment,
in view of business environment and demand trends.
At the end of this fiscal year ended March 31, 2016, the amount of planned capital investments for newly-established
facilities and upgrades of equipment is 360.0 billion yen (based on ordering basis and including intangible assets;
hereinafter the same) and the amount of investments and loans is 10.0 billion yen (based on payment basis; hereinafter
the same), and planned total amount is 370.0 billion yen, in the year ending March 31, 2017. This figure includes the
Group’s portion of the investments made by Flash Alliance, Ltd. and Flash Forward, Ltd. and others, which are companies
accounted for by the equity method. The funds for capital expenditures will be financed by the internal funds.
Business Segment
Energy Systems & Solutions
Infrastructure Systems & Solutions
Retail & Printing Solutions
Storage & Electronic Devices Solutions
Industrial ICT Solutions
Others
Total
Investments & loans
Total investments
Billions of yen
Planned Capital Investments for
the year ending March 31, 2016
As of March 31, 2016
Major Contents and Purposes
−
−
−
Manufacturing facilities for NAND flash memories.
−
−
−
26.0
24.0
11.0
285.0
4.0
10.0
360.0
10.0
370.0
Notes: 1) Consumption taxes are not included in these capital investment plans.
2) Sales and retirement of material facilities are not planned except for routine renewal of facilities.
3) The major planned new facilities and equipment upgrades in the year ending March 31, 2016 are as follows:
Name of Company and Office
Place
Business Segment
Type of Facility
As of March 31, 2016
Capacity Improvement
after Completion
of Construction
Flash Forward
Ltd. and others
Yokkaichi,
Mie
Storage & Electronic
Devices Solutions
Manufacturing facilities, Manufacturing
building constructions for
semiconductors, etc.
Production capacity of
3D stacked cell structure
flash memory, etc.
TOSHIBA Annual Report 2016
07
Management’s Discussion and Analysis
TREASURY STOCK
Shares held as of the closing
date of last period:
Shares acquired during the
period:
Demand for purchase of shares
less than one unit from
shareholders
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:
3,394,424
(common stock)
194,973
(common stock)
68,987
(thousand yen)
5,235
(common stock)
1,882
(thousand yen)
3,584,162
(common stock)
08 TOSHIBA Annual Report 2016
MAJOR SUBSIDIARIES AND AFFILIATED COMPANIES
As of March 31, 2016
Consolidated Subsidiaries
Affiliated companies
Flash Alliance, Ltd.
Flash Forward
Flash Partners, Ltd.
Shibaura Mechatronics Corporation
Toshiba Machine 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 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
Taiwan Toshiba International Procurement Corporation
Toshiba America Business Solutions, Inc.
Toshiba America Electronic Components, Inc.
Toshiba America Energy Systems Corporation
Toshiba America Information 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 Electronics Asia, Ltd.
Toshiba Electronics Taiwan 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 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.
WECTEC LLC
Westinghouse Electric Company LLC
The Company has 551 consolidated subsidiaries in total including 55 above and 144 affiliated companies in total including 18 above accounted for
by the equity method.
TOSHIBA Annual Report 2016
09
Management’s Discussion and Analysis
RISK FACTORS RELATING THE GROUP AND ITS BUSINESS
The business areas of energy, infrastructure and storage, on which the Group focuses, 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 June 22, 2016
and involve inherent uncertainties, and, therefore, the actual results may differ.
1. Risks related to management policy
(1) Strategic concentrated investment
The Group now focuses its capital expenditure and its investments and lending on the memory area. However, this area
may not grow as anticipated, the Group may not maintain or strengthen its competitive power in such area, or the
relevant investments may not fully generate the anticipated level of profit.
(2) Success of strategic business alliances and acquisitions
The Group has actively promoted 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, additional capital
expenditures and provision of guaranties may be needed 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, and as a result,
the Group’s operating results and financial condition may be adversely affected.
(3) Business structure reformation
The Group as a whole forced through large scale business structure reform in the fiscal year ended March 31, 2016
(“FY2015”), and the Group has incurred a large amount of expenses for such business structure reform. Now we have
some good prospect that we can complete our business structure reform. However, in the event of 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 Systems & Solutions business
A significant portion of the net sales in the Energy Systems & Solutions business is attributable to sales related to capital
expenditures by the private sector centering on operators of electricity utilities in Japan and overseas. Accordingly, this
business could be affected by trends in such capital expenditures, and 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 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, delays in the work process, or unexpected events specific
to first models and such costs may not be collected, or a dispute may arise over such costs. In fact, there are certain
projects regarding which the Group is taking legal action. With respect to the investments in an operator that promotes a
certain project which investment is made in order to secure the order from such operator, there may be impairments in
investments, increases in the financial burden, delays in payouts depending upon the trends in projects.
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 Infrastructure Systems & Solutions business
The Infrastructure Systems & Solutions business provides diversified solutions for the areas of public infrastructure,
10 TOSHIBA Annual Report 2016
buildings and facilities, and industrial systems.
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 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 Retail & Printing Solutions business
The Retail & Printing Solutions business provides retail solutions for the retail distribution industry and service industry,
offices, manufacturing and logistics industries and particular customers, as well as printing solutions for offices, and
manufacturing and logistics industries. The results of this business may be adversely affected by any changes in political
and economic conditions, taxation, environmental regulations and foreign exchange; and postponement or suspension
of capital expenditure by reason of customers’ earnings deterioration, acceleration of industrial realignment due to
compounding and systemization, more intensified market competition with competitors, new entries into such industry,
and similar events.
(4) Business environment of the Storage & Electronic Devices Solutions business
While the substantial portion of operating income/loss of the Group relies on the Storage & Electronic Devices Solutions
business, the market for this 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 such as changes in the consumer market or in semiconductor
heavy users 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.
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 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 NAND flash memory 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 Industrial ICT Solutions business
A significant portion of the net sales in the Industrial ICT Solutions business is attributable to sales related to private IT
investments by, among others, the financial sector and major manufacturers, as well as national and local government
expenditures on public IT investments. Accordingly, this business could be affected by changes in such investments. Low
levels of private IT investments due to economic recession, and reductions and delays in spending on public IT
investments may have a negative impact on this business. Since the solution services field of this business accepts most
orders by executing service contracts and the term from order to delivery is relatively long, additional costs over original
expectations may be incurred, if, among others, the original estimate is underestimated or a problem occurs in project
management. Furthermore, in the case of delay of delivery or defects of delivered systems, the Group may be required to
pay damages.
(6) Business environment of Others
The market for personal computers and televisions 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, such businesses may be significantly affected by exchange rate fluctuations, wide
availability of alternative products or lower priced products, 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
TOSHIBA Annual Report 2016
11
Management’s Discussion and Analysis
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. Large scale business structure reform was implemented in such
businesses, but in the event where the reform programs fail to produce the expected results, or in case of similar events,
additional measures may be needed.
(7) Financial risk
Apart from being affected by the business operations of the Company or the Group, the Company’s consolidated and
nonconsolidated results and financial condition may be affected by the following major financial factors:
(i) Deferred tax assets
The Group accounted for 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.
In addition, 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.
(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, 2016, 337.3 billion 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, 268.1 billion yen was allocated to the Energy Systems & Solutions 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. In addition to the above annual impairment test, if any event indicating a decline in
corporate value owing to changes in the business environment or other factors arises, and the total of the carrying
amounts exceeds its fair value, an impairment will be recognized. Therefore, additional impairments may be recorded,
depending on the valuation of long- lived assets, the estimate of future cash flow from business related to goodwill, and
12 TOSHIBA Annual Report 2016
changes in the discount rate for the weighted average capital cost.
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.
(v) Shareholders’ equity
The Group recorded a very large operating loss and net loss attributable to shareholders of the Company in FY2015
owing to, among others, the impact of impairment of goodwill and intangible assets, provisions for unprofitable projects,
and expenses incurred for business structure reform, and as a result, substantial consolidated net assets of the Group
decreased. Therefore, when the Company executes an EPC (Engineering, Procurement and Construction) agreement in
overseas markets, 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.
(8) Changes in financing environment and others
The Group has substantial amounts of interest-bearing debt for financing that is highly susceptible to market
environments, including the financial 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 and the continuing deterioration in the operating results, the long-term credit rating assigned by
Moody’s Japan K.K. was downgraded by 7 notches, the long-term credit rating assigned by Standard & Poor’s Ratings
Japan K.K. was downgraded by 6 notches, and the long-term credit rating assigned by Rating and Investment
Information, Inc. was downgraded by 3 notches for the period from the filing date of the Annual Securities Report for the
176th term of the previous fiscal year to June 22, 2016, and the credit ratings may be downgraded further in the future.
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,
TOSHIBA Annual Report 2016
13
Management’s Discussion and Analysis
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 carried out in FY2015 a personnel rationalization through rearrangement of
personnel and early retirement incentive program including re-employment support and is implementing personnel
measures, including the reallocation of human resources to focus on strong and promising businesses, bonus reduction,
reduction of remuneration of the management, revision of various allowances and daily wages, reclaiming jobs that are
outsourced to third parties or conducted by limited-term employees, and reducing the number of limited-term
employees. 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.
In addition, if the Company’s consolidated net assets, consolidated operating income or credit ratings fall below the
respective levels provided for in the contracts with such customers, the relevant guarantees could be required to be
replaced by letters of credit or bonds. In fact, certain contracts have been so replaced.
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.
14 TOSHIBA Annual Report 2016
Additionally, the role of information systems in the Group is critical to carrying out business activities. While the Group
makes every effort to ensure the stable operation of its information systems, there is no assurance that their functionality
would not be impaired or destroyed by computer viruses, software or hardware failures, disaster, terrorism, or other
causes, and in such cases the Group’s business performance may be adversely affected.
(2) Compliance and internal control
The Group is active in various businesses in regions worldwide, and its business activities are subject to the laws and
regulations of each region. The Group has implemented and operates the internal control systems for a number of
purposes, including compliance with laws and regulations and strict reporting of business and financial matters.
However, in FY2015, it was recognized 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. Based on the recommendations by the Independent
Investigation Committee made on July 20, 2015, the Company established a Management Revitalization Committee
which is intended to appropriately operate and implement, among others, a new management structure, reform of the
governance structure and measures to prevent reoccurrence of inappropriate accountings. Under the management
revitalization structure established on September 30, 2015, the Company carried out construction and operation of
appropriate internal control systems, and as a result, the Company has already established and largely implemented the
measures of its improvement plan for rectifying the material weakness in company-level internal controls over financial
report that the Company identified in the fiscal year ended March 31, 2015. However, there are some measures regarding
which the implementation status cannot be verified yet due to constraints in the implementation period, and not all the
implementation status of the improvement measures have been sufficiently verified. Moreover, in connection with the
closing and financial reporting process, certain items for restatement were discovered in the course of the audit of
financial statements. Taking these factors into account, the Company has judged that there is material weakness in
internal controls requiring disclosure as of June 22, 2016.
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. In the past, the Company was imposed fines as administrative sanctions.
(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. Furthermore, if
material product quality claims occur in large projects, and there are long delays in deliveries to customers or reworking
is needed, the Group may be liable for a large amount in expenses or damages.
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
TOSHIBA Annual Report 2016
15
Management’s Discussion and Analysis
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 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 and others was filed. Now,
the Group is asserting 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 (the “Service Agreements”) 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, depending on the movement of crude-oil prices or other prices,
there is a possibility that the Company cannot sell LNG to the users or in the market under conditions (including the price)
the Company expects. Even in that case, fixed service fee payment obligations to such companies continue, and as a
result, the Company may be obligated to bear losses.
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 made
inappropriate accountings and, therefore, the Company filed amendments of the past Annual Securities Reports and
other reports. The Tokyo Stock Exchange (“TSE”) and the Nagoya Stock Exchange (“NSE”) deemed that the Company had
16 TOSHIBA Annual Report 2016
a serious problem in its internal control systems and that improvement of such internal control systems was essential, due
to the fact that the Company made misstatements in such Annual Securities Reports and other reports. Therefore, in
September 2015, TSE and NSE imposed sanctions under which the shares of the Company were designated as “Securities
on Alert”. After a year from the designation of “Securities on Alert”, the Company will be required to submit to stock
exchanges on which the Company is listed a “Whitten Confirmation of Internal Management Systems”, and, if, among
others, it is deemed that the Company has any problems in its internal management systems, the shares of the Company
may be delisted, and such delisting may adversely affect the Group’s operating results and financial condition and may
restrict opportunities for the Company’s shareholders to sell their shares.
In a class action brought against the Company as defendant in the State of California in the U.S. with respect to the
Group’s inappropriate accountings, an order granting a motion to dismiss was issued. However, such order is subject to
an appeal by the plaintiffs, and is not definitive. Several lawsuits have been initiated in Japan. Going forward, the
Company may also be sued by its shareholders and others 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 actions or investigations by Japanese or overseas authorities, including the suspension of
business related to construction. If the Company receives such sanctions, the Group may suffer from opportunity loss
such as nomination stop by governmental authorities, or degradation of social reputation accompanied thereby, and as a
result, the Group’s business, operating results and financial condition may be adversely affected.
The Company was ordered to pay administrative monetary penalty of 7,373.5 million yen by the Financial Services
Agency of Japan in December 2015 with respect to the relevant inappropriate accountings issues, and completed the
payment of such penalty.
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, Hokuriku 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, floods 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 asset value and
production capabilities significantly. The massive flooding was caused by heavy rains that fell on Chennai and its
surrounding region in South India, which forced the flooded factory of the Group to suspend operations on and after
November 2015. Going forward, such suspension may affect the delivery schedule of the products to be produced at that
factory, and penalty charges may be claimed by the relevant customers. In the past, the businesses of the Group were
affected to a certain extent by the Great East Japan Earthquake and the floods in Thailand.
TOSHIBA Annual Report 2016
17
Consolidated Balance Sheets
Toshiba Corporation and Subsidiaries
As of March 31, 2016 and 2015
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 2 and 20)
Current assets of discontinued operations (Note 4)
Total current assets
Long-term receivables and investments:
Long-term receivables (Notes 2 and 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:
Goodwill and other intangible assets (Notes 5,10 and 16)
Deferred tax assets (Note 17)
Other assets
Non-current assets of discontinued operations (Note 4)
Total other assets
Total assets
The accompanying notes are an integral part of these statements.
Millions of yen
2016
2015
Thousands of
U.S. dollars
(Note 3)
2016
¥
969,715
¥
190,182
$ 8,581,549
33,229
1,155,803
(32,473)
729,123
63,303
110,780
360,735
68,370
3,458,585
10,039
266,554
86,953
363,546
91,881
890,659
1,905,122
64,065
2,951,727
(2,157,423)
794,304
639,889
27,921
149,096
−
816,906
35,081
1,333,547
(34,394)
911,009
182,421
179,888
341,057
199,615
3,338,406
9,851
359,445
262,147
631,443
91,242
898,270
1,956,782
77,428
3,023,722
(2,170,180)
853,542
1,094,967
160,479
141,124
114,817
1,511,387
294,062
10,228,345
(287,372)
6,452,416
560,204
980,354
3,192,345
605,044
30,606,947
88,841
2,358,885
769,496
3,217,222
813,106
7,881,938
16,859,487
566,947
26,121,478
(19,092,239)
7,029,239
5,662,734
247,088
1,319,434
−
7,229,256
¥ 5,433,341
¥
6,334,778
$ 48,082,664
18 TOSHIBA Annual Report 2016
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 (Notes 24, 25 and 26)
Accrued income and other taxes
Advance payments received
Other current liabilities (Notes 17, 20, 23 and 24)
Current liabilities of discontinued operations (Note 4)
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, 24, 26 and 27)
Non-current liabilities of discontinued operations (Notes 4 and 12)
Total long-term liabilities
Total liabilities
Equity attributable to shareholders of the Company (Note 18):
Common stock:
Authorized−10,000,000,000 shares Issued:
2016 and 2015−4,237,602,026 shares
Additional paid-in capital
Retained earnings (accumulated deficit)
Accumulated other comprehensive loss
Treasury stock, at cost:
2016−3,584,162 shares
2015−3,394,424 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)
Total liabilities and equity
Millions of yen
2016
2015
¥
410,983
208,629
877,061
520,030
108,152
486,225
365,623
95,306
3,072,009
831,300
629,402
228,372
−
1,689,074
¥
61,987
205,988
1,161,946
488,891
62,662
386,763
376,983
165,648
2,910,868
1,043,021
515,446
208,120
91,966
1,858,553
Thousands of
U.S. dollars
(Note 3)
2016
$ 3,637,018
1,846,274
7,761,602
4,602,035
957,097
4,302,876
3,235,602
843,416
27,185,920
7,356,638
5,569,929
2,020,991
−
14,947,558
¥ 4,761,083
¥
4,769,421
$ 42,133,478
¥
439,901
399,470
(76,782)
(431,828)
(1,887)
−
328,874
343,384
672,258
¥
¥ 5,433,341
¥
¥
¥
439,901
402,008
383,231
(139,323)
−
(1,821)
1,083,996
481,361
1,565,357
$ 3,892,929
3,535,133
(679,487)
(3,821,487)
(16,699)
−
2,910,389
3,038,797
$ 5,949,186
6,334,778
$ 48,082,664
TOSHIBA Annual Report 2016
19
Consolidated Statements of Operations
Toshiba Corporation and Subsidiaries
For the years ended March 31, 2016 and 2015
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, 25 and 26)
Selling, general and administrative (Notes 5, 10, 13, 14, 24, 25 and 26)
Impairment loss on goodwill (Notes 5 and 10)
Interest
Equity in losses of affiliates (Notes 5 and 9)
Other expense (Notes 5, 6, 7, 15, 20, 24 and 25)
Millions of yen
2016
2015
¥ 5,668,688
6,600
−
228,067
5,903,355
4,813,702
1,268,752
294,972
20,753
23,223
115,098
6,536,500
¥
6,114,682
10,267
20,656
116,224
6,261,829
4,703,207
1,223,066
−
23,214
−
155,727
6,105,214
Thousands of
U.S. dollars
(Note 3)
2016
$ 50,165,381
58,407
−
2,018,292
52,242,080
42,599,133
11,227,894
2,610,372
183,655
205,513
1,018,566
57,845,133
Income (loss) from continuing operations,
before income taxes and noncontrolling interests
(633,145)
156,615
(5,603,053)
Income taxes (Note 17):
Current
Deferred
Income (loss) from continuing operations,
before noncontrolling interests
Income (loss) from discontinued operations,
before noncontrolling interests (Note 4)
Net loss before noncontrolling interests
Less: Net income (loss) attributable
to noncontrolling interests
74,269
179,479
253,748
57,930
85,086
143,016
657,248
1,588,310
2,245,558
(886,893)
13,599
(7,848,611)
370,858
(516,035)
(32,614)
(19,015)
3,281,930
(4,566,681)
(56,022)
18,810
(495,769)
Net loss attributable to shareholders of the Company
¥
(460,013)
¥
(37,825)
$ (4,070,912)
Basic net loss per share attributable
to shareholders of the Company (Note 19)
Loss from continuing operations
Earnings (loss) from discontinued operations
Net loss
Cash dividends per share (Note 18)
The accompanying notes are an integral part of these statements.
Yen
U.S. dollars
(Note 3)
¥
¥
¥
¥
(196.47)
87.83
(108.64)
−
¥
¥
¥
¥
(1.15)
(7.78)
(8.93)
4.00
$
$
$
$
(1.74)
0.78
(0.96)
−
20 TOSHIBA Annual Report 2016
Consolidated Statements of Comprehensive Income
Toshiba Corporation and Subsidiaries
For the years ended March 31, 2016 and 2015
Net loss before noncontrolling interests
Millions of yen
2016
(516,035)
¥
2015
(19,015)
¥
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 (loss)
(106,947)
(101,585)
(118,908)
(7,973)
(335,413)
Comprehensive income (loss) before noncontrolling interests
(851,448)
22,664
129,089
5,041
4,785
161,579
142,564
Thousands of
U.S. dollars
(Note 3)
2016
$ (4,566,681)
(946,434)
(898,982)
(1,052,283)
(70,558)
(2,968,257)
(7,534,938)
Less:Comprehensive income (loss) attributable
to noncontrolling interests
Comprehensive income (loss) attributable
to shareholders of the Company
The accompanying notes are an integral part of these statements.
(98,930)
51,926
(875,487)
¥
(752,518)
¥
90,638
$ (6,659,451)
TOSHIBA Annual Report 2016
21
Consolidated Statements of Equity
Toshiba Corporation and Subsidiaries
For the years ended March 31, 2016 and 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
Balance at March 31, 2015
Change in ownership for
noncontrolling
interests and others
Dividends attributable to
noncontrolling interests
Comprehensive loss:
Net loss
Other comprehensive 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
loss
Purchase of treasury stock,
net, at cost
Common
stock
Additional
paid-in capital
Millions of yen
Retained
earnings
(accumulated
deficit)
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 ¥
401,830 ¥
454,931 ¥
(267,786) ¥
(1,687) ¥ 1,027,189 ¥
418,805 ¥ 1,445,994
178
178
18,697
18,875
(33,875)
(37,825)
19,643
96,089
8,330
4,401
(33,875)
(33,875)
(8,067)
(8,067)
(37,825)
18,810
(19,015)
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
439,901
402,008
383,231
(139,323)
(134)
(1,821)
(134)
1,083,996
481,361
(134)
1,565,357
(2,538)
(2,538)
(9,381)
(11,919)
(460,013)
(460,013)
(56,022)
(516,035)
(29,666)
(29,666)
(89,912)
(77,149)
(89,912)
(17,035)
(106,947)
(77,149)
(24,436)
(101,585)
(117,790)
(117,790)
(1,118)
(118,908)
(7,654)
(7,654)
(319)
(7,973)
(752,518)
(98,930)
(851,448)
(66)
(66)
(1,887) ¥ 328,874 ¥ 343,384 ¥ 672,258
(66)
Balance at March 31, 2016
¥ 439,901 ¥ 399,470 ¥ (76,782) ¥ (431,828) ¥
22 TOSHIBA Annual Report 2016
Common
stock
Additional
paid-in capital
Thousands of U.S. dollars (Note 3)
Retained
earnings
(accumulated
deficit)
Accumulated
other
comprehen-
sive
income (loss)
Treasury
stock
Equity
attributable
to
shareholders
of
the Company
Equity
attributable to
non-controlling
interests
Total
equity
$ 3,892,929 $ 3,557,593 $ 3,391,425 $ (1,232,947) $
(16,115) $ 9,592,885 $ 4,259,832 $ 13,852,717
(22,460)
(22,460)
(83,018)
(105,478)
(4,070,912)
(4,070,912)
(495,769) (4,566,681)
(262,531)
(262,531)
(795,682)
(682,734)
(795,682)
(150,752)
(946,434)
(682,734)
(216,248)
(898,982)
(1,042,389)
(1,042,389)
(9,894) (1,052,283)
(67,735)
(67,735)
(2,823)
(70,558)
(6,659,451)
(875,487) (7,534,938)
Balance at March 31, 2015
Change in ownership for
noncontrolling
interests and others
Dividends attributable to
noncontrolling interests
Comprehensive loss:
Net loss
Other comprehensive 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
loss
Purchase of treasury stock,
net, at cost
Balance at March 31, 2016
$ 3,892,929 $ 3,535,133 $
The accompanying notes are an integral part of these statements.
(679,487) $ (3,821,487) $
(584)
(584)
(16,699) $ 2,910,389 $ 3,038,797 $ 5,949,186
(584)
TOSHIBA Annual Report 2016
23
Consolidated Statements of Cash Flows
Toshiba Corporation and Subsidiaries
For the years ended March 31, 2016 and 2015
Cash flows from operating activities
Net loss before noncontrolling interests
Adjustments to reconcile net loss before noncontrolling interests to net
cash provided by (used in) operating activities:
Depreciation and amortization
Provisions for pension and severance costs, less payments
Deferred income taxes
Equity in (earnings) losses of affiliates, net of dividends
Loss from sales, disposal and impairment of property, plant and
equipment and intangible assets, net
Impairment of goodwill
Gain from sales and impairment of securities, net
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
Others
Net cash provided by (used in) 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
Decrease in investments in affiliates
Proceeds from sale of Toshiba Medical Systems Corporation stock
Others
Net cash provided by (used in) investing activities
Cash flows from financing activities
Proceeds from long-term debt
Repayment of long-term debt
Increase (decrease) in short-term borrowings, net
Dividends paid
Purchase of treasury stock, net
Others
Net cash provided by (used in) financing activities
Effect of exchange rate changes on cash and cash equivalents
Net increase in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year
Less: Cash and cash equivalents of discontinued operations at
end of year
Cash and cash equivalents of continuing operations at end of year
Supplemental disclosure of cash flow information
Cash paid during the year:
Interest
Income taxes
Sale of Toshiba Medical Systems Corporation stock:
Assets transferred (net of cash and cash equivalents)
Liabilities relinquished
The accompanying notes are an integral part of these statements.
¥
¥
24 TOSHIBA Annual Report 2016
Millions of yen
2016
2015
Thousands of
U.S. dollars
(Note 3)
2016
¥
(516,035)
¥
(19,015)
$ (4,566,681)
213,869
(44,413)
345,770
33,778
181,279
294,972
(781,807)
157,576
167,432
(271,785)
48,573
130,335
39,226
(1,230)
49,409
157,197
(242,019)
(49,446)
(1,410)
104,493
638,442
(3,224)
653,442
3,106
(215,076)
391,363
(31,848)
(66)
(11,732)
135,747
(11,796)
776,163
199,366
975,529
5,814
969,715
22,779
77,466
245,887
198,303
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
9,184
190,182
28,194
86,846
−
−
¥
¥
1,892,646
(393,035)
3,059,911
298,920
1,604,239
2,610,372
(6,918,646)
1,394,478
1,481,699
(2,405,177)
429,849
1,153,407
347,133
(10,885)
437,248
1,391,124
(2,141,761)
(437,575)
(12,478)
924,717
5,649,929
(28,531)
5,782,673
27,487
(1,903,327)
3,463,389
(281,841)
(584)
(103,823)
1,201,301
(104,390)
6,868,699
1,764,301
8,633,000
51,451
$ 8,581,549
$
201,584
685,540
2,175,991
1,754,894
Notes to Consolidated Financial Statements
Toshiba Corporation and Subsidiaries
March 31, 2016
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)Electronic Devices & Components, (4)Lifestyle Products & Services, and (5)
Others. For the year ended March 31, 2016, sales of Energy & Infrastructure represented the most significant portion of
the Group’s total sales or approximately 33 percent. Electronic Devices & Components, second to Energy & Infrastructure,
represented approximately 26 percent, Community Solutions approximately 23 percent, Lifestyle Products & Services
approximately 9 percent of the Group’s total sales. For the year ended March 31, 2015, sales of Energy & Infrastructure
represented the most significant portion of the Group’s total sales or approximately 30 percent. Electronic Devices &
Components represented approximately 27 percent, Community Solutions approximately 21 percent, Lifestyle Products
& Services approximately 14 percent of the Group’s total sales. The Group’s products are manufactured and marketed
throughout the world with approximately 41 percent and 39 percent of its sales in Japan for the years ended March 31,
2016 and 2015, respectively, and the remainder in Asia, North America, Europe and other parts of the world.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
PREPARATION OF FINANCIAL STATEMENTS
The Company and its domestic subsidiaries maintain their records and prepare their financial statements in accordance
with accounting principles generally accepted in Japan, and its foreign subsidiaries in conformity with those of the
countries of their domicile.
Certain adjustments and reclassifications have been incorporated in the accompanying consolidated financial
statements to conform with accounting principles generally accepted in the United States. These adjustments were not
recorded in the statutory books of account.
BASIS OF CONSOLIDATION AND INVESTMENTS IN AFFILIATES
The consolidated financial statements include the accounts of the Company, its majority-owned subsidiaries and variable
interest entities (“VIEs”) for which the Group is the primary beneficiary in accordance with the Accounting Standards
Codification (“ASC”) No.810 “Consolidation” (“ASC No.810”). All significant intra-entity transactions and account balances
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 income (loss) of such companies after elimination of unrealized intra-entity gains. The proportionate
share of the income or loss of some companies accounted for under the equity method is recognized from the most
recent available financial statements.
USE OF ESTIMATES
The preparation of the consolidated financial statements in conformity with accounting principles generally accepted in
the United States requires management to make estimates and assumptions that affect the reported amounts of assets
and liabilities, disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the
reported amounts of revenues and expenses during the reporting periods. The Group has identified significant areas
where it believes assumptions and estimates are particularly critical to the consolidated financial statements. These are
determination of impairment on long-lived tangible and intangible assets and goodwill, recoverability of receivables,
realization of deferred tax assets, uncertain tax positions, pension accounting measurement, 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 operations.
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
TOSHIBA Annual Report 2016
25
Notes to Consolidated Financial Statements
Toshiba Corporation and Subsidiaries
March 31, 2016
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 net realizable value,
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 in 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 60 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 assigned to reporting units. If the carrying amount of a reporting unit exceeds its fair value, the
implied fair value of goodwill is calculated. If the carrying amount of reporting unit goodwill exceeds the implied fair
value of that goodwill, an impairment loss shall be recognized in an amount equal to that excess. The annual goodwill
measurement dates are October 1 for the reporting unit related to the Nuclear Power Systems business and January 1 for
other reporting units. In addition to the annual impairment test, an impairment test is performed if any situation that
indicates a decline in enterprise market capitalization (for example, adverse change in the business climate, etc.) arises.
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 operations. 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 a law
regarding 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
26 TOSHIBA Annual Report 2016
positions that meet the more-likely-than-not recognition threshold are measured at the largest amount of benefit that is
greater than 50 percent likely of being realized upon settlement.
ACCRUED PENSION AND SEVERANCE COSTS
The Company and certain subsidiaries have various retirement benefit plans covering substantially all employees. Prior
service costs resulting from amendments to the plans are amortized over the average remaining service period of
employees expected to receive benefits. Unrecognized actuarial gains and losses that exceed 10 percent of the greater of
the projected benefit obligation or the fair value of plan assets are also amortized over the average remaining service
period of employees expected to receive benefits.
NET EARNINGS (LOSS) PER SHARE ATTRIBUTABLE TO SHAREHOLDERS OF THE COMPANY
Basic net earnings (loss) per share attributable to shareholders of the Company (“EPS”) are computed based on the
weighted-average number of shares of common stock outstanding during each period.
REVENUE RECOGNITION
Revenue of mass-produced standard products, such as Electronic Devices & Components and Lifestyle Products &
Services, is recognized when there is persuasive evidence of an arrangement, the product has been delivered, the sales
price is fixed or determinable, and collectibility is reasonably assured. Mass-produced standard products are considered
delivered to customers once they have been shipped, and the title and risk of loss have transferred.
Revenue related to equipment that requires installation, such as Energy & Infrastructure, is recognized when the
installation of the equipment is completed, the equipment is accepted by the customer and other specific criteria of the
equipment are demonstrated by the Group.
Revenue from services, such as maintenance service for plant and other systems, that are priced and sold separately
from the equipment is recognized ratably over the contract term or as the services are provided.
Revenue on long-term contracts is recorded under the percentage of completion method. To measure the extent of
progress toward completion, the Group generally compares the costs incurred to date to the estimated total costs to
complete based upon the most recent available information. When estimates of the extent of progress toward
completion and contract costs are reasonably dependable, revenue from the contract is recognized based on the
percentage of completion. A provision for contract losses is recorded in its entirety when the loss first becomes evident.
The Company has recognized revenue from several claims and unapproved change orders where the amounts can be
estimated reliably, realization is probable and there is a legal basis for recognition. Revenue is recorded only to the extent
that costs associated with claims or unapproved change orders have been incurred. Recognized revenue from several
claims and unapproved change orders was approximately ¥8,785 million ($77,743 thousand) in long-term receivables and
¥42,303 million ($374,363 thousand) in prepaid expenses and other current assets on the consolidated balance sheet as of
March 31, 2016, and ¥54,745 million in prepaid expenses and other current assets on the consolidated balance sheet as of
March 31, 2015, respectively.
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 ¥70,552 million ($624,354 thousand) and ¥71,519 million
for the years ended March 31, 2016 and 2015, 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
TOSHIBA Annual Report 2016
27
Notes to Consolidated Financial Statements
Toshiba Corporation and Subsidiaries
March 31, 2016
comprehensive income (loss), net of tax. Changes in the fair value of derivative financial instruments not qualifying as a
hedge are reported in income.
SALES OF RECEIVABLES
The Group has transferred certain trade notes and accounts receivable under several securitization programs. When a
transfer of financial assets is eligible to be accounted for as a sale under ASC No.860 “Transfers and Servicing” (“ASC
No.860”), these securitization transactions are accounted for as a sale and the receivables sold under these facilities are
excluded from the accompanying consolidated balance sheets.
ASSET RETIREMENT OBLIGATIONS
The Group records asset retirement obligations at fair value in the period incurred. The fair value of the liability is added
to the carrying amount of the associated asset. This additional carrying amount is then depreciated over the life of the
asset. The liability increases due to the passage of time based on the time value of money until the obligation is settled.
Subsequent to the initial recognition, the liability is adjusted for any revisions to the expected amount of the retirement
obligation, and for accretion of the liability due to the passage of time.
NEW ACCOUNTING STANDARDS
The Company adopted Accounting Standards Update (“ASU”) No.2014-08 “Presentation of Financial Statements and
Property, Plant, and Equipment - Reporting Discontinued Operations and Disclosures of Disposals of Components of an
Entity” from the fiscal year beginning on April 1, 2015. 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 a company to provide information on cash flows related to its discontinued
operations as well as additional disclosure about disposals of significant components of an entity that do not qualify for
discontinued operations presentation. In response, Note “4. Discontinued Operations” discloses information on
discontinued operations pursuant to ASU 2014-08.
In September 2015, the Financial Accounting Standards Board (“FASB”) issued ASU No.2015-16 “Business Combinations -
Simplifying the Accounting for Measurement-Period Adjustments.” To simplify the accounting for adjustments made to
provisional amounts during a measurement period recognized in a business combination, ASU No.2015-16 eliminates the
requirement to retrospectively account for those adjustments. The amendments in this update require that an acquirer
recognize adjustments to provisional amounts that are identified during the measurement period in the reporting period
in which the amounts of the adjustments are determined. The Company early adopted ASU No.2015-16 from the third
quarter of the fiscal year ended March 31, 2016, which began on October 1, 2015. The Company is currently evaluating the
impact of adoption of ASU No.2015-16 on the Company’s financial position and operating results.
RECENT PRONOUNCEMENTS
In May 2014, the FASB issued ASU No.2014-09 “Revenue from Contracts with Customers.” 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 years 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 financial position and
operating results.
In January 2016, the FASB issued ASU No.2016-01 “Recognition and Measurement of Financial Assets and Financial
Liabilities.” ASU No. 2016-01 has made revisions concerning recognition, measurement, presentation and disclosure of
financial instruments. The amendments in this update require equity investments to be measured at fair value with
changes in fair value recognized in net income or loss. ASU No.2016-01 is effective for fiscal years beginning after
December 15, 2017, and the Company will adopt ASU No.2016-01 effective April 1, 2018. The Company is currently
evaluating the impact of adoption of ASU No.2016-01 on the Company’s financial position and operating results.
In February 2016, the FASB issued ASU No.2016-02 “Leases.” ASU No. 2016-02 requires lessees to recognize lease assets
and lease liabilities in the consolidated balance sheets, with some exceptions, in the lessee’s lease agreements that are
classified as operating leases. ASU No.2016-02 is effective for fiscal years beginning after December 15, 2018, and the
Company will adopt ASU No.2016-02 effective April 1, 2019. The Company is currently evaluating the impact of adoption
of ASU No.2016-02 on the Company’s financial position and operating results.
SUBSEQUENT EVENTS
The Group has evaluated subsequent events up to June 22, 2016 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.
28 TOSHIBA Annual Report 2016
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 ¥113=U.S. $1, the approximate current rate of exchange
at March 31, 2016, has been used throughout for the purpose of presentation of the U.S. dollar amounts in the
accompanying consolidated financial statements.
4. DISCONTINUED OPERATIONS
Healthcare
In the December 21, 2015 press release titled “Toshiba to Execute ’Toshiba Revitalization Action Plan’,” the Company
announced its intention to invite a third party or parties to acquire an ownership interest in Toshiba Medical Systems
Corporation (hereinafter “TMSC”), in order to ensure the future provision of sufficient support and resources for the
Healthcare business to maximize its value and realize its full potential, and for the Company to improve its financial
status. As a result, on March 17, 2016 the Company decided to sell its shares in TMSC (hereinafter the “Transaction”), and
signed a share transfer agreement with Canon Inc. (hereinafter “Canon”). The Transaction was determined to have been
completed on that day, and TMSC is no longer a subsidiary of the Company. However, TMSC will only become a subsidiary
of Canon once Canon receives clearance from the authorities regulating competition law in key countries. Until then, MS
Holding Co., Ltd (hereinafter “MS holding”), which is a third party independent of the Group, holds the voting rights at
TMSC. Subsequent to the Transaction, the Group does not retain significant continuing involvement with TMSC or any of
its subsidiaries. MS Holding and Canon are not related parties of the Company.
As a result of the Transaction, the Company abolished the Healthcare Company, its in-house company unit effective
March 31, 2016.
The above-mentioned decisions represent a strategic shift that will have a major effect on the Group’s business
operation and financial results. Consequently, pursuant to ASC 205-20, the financial position and operating results of the
component that was disposed of are presented separately in the consolidated balance sheets and consolidated
statements of operations as those of discontinued operations.
The financial position and results of operations of the relevant component that was disposed of, reclassified as
discontinued operations, are as follows.
Financial position
March 31
Assets:
Cash and cash equivalents
Notes and accounts receivable, trade
Inventories
Property, plant and equipment
Goodwill and other intangible assets
Deferred tax assets
Other assets
Total assets of discontinued operations
Liabilities:
Short-term borrowings
Notes and accounts payable, trade
Accounts payable, other and accrued expenses
Accrued pension and severance costs
Other liabilities
Total liabilities of discontinued operations
Millions of yen
2016
2015
¥
¥
¥
¥
1,302
6,303
3,637
274
560
283
851
13,210
−
4,903
443
429
2,873
8,648
¥
¥
¥
¥
5,849
88,838
67,386
30,167
29,373
32,950
47,884
302,447
34,947
63,500
37,827
37,119
57,413
230,806
Thousands of
U.S. dollars
2016
11,522
55,779
32,186
2,425
4,956
2,504
7,531
116,903
−
43,389
3,920
3,797
25,425
76,531
$
$
$
$
TOSHIBA Annual Report 2016
29
Notes to Consolidated Financial Statements
Toshiba Corporation and Subsidiaries
March 31, 2016
Intercompany balances between the continuing operations of the Group and the above-mentioned component that was
disposed of, representing discontinued operations, amounted to ¥261 million ($2,310 thousand) and ¥62,168 million as of
March 31, 2016 and 2015, respectively. These elimination amounts are included in the assets or liabilities of the
discontinued operations for presentation in the consolidated balance sheets.
Results of operations
Year ended March 31
Sales and other income
Net sales
Other income
Costs and expenses
Cost of sales
Selling, general and administrative
Other expense
Income from discontinued operations, before income taxes and
noncontrolling interests
Gain from sale of shares of discontinued operations, before income taxes
and noncontrolling interests
Income taxes
Income from discontinued operations, before noncontrolling interests
Less: Net income from discontinued operations attributable to
noncontrolling interests
Net income from discontinued operations attributable to shareholders of
the Company
Millions of yen
¥
¥
2016
432,736
419,961
12,775
413,946
247,779
161,776
4,391
18,790
591,351
223,020
387,121
47
2015
410,052
408,172
1,880
384,909
237,044
145,298
2,567
25,143
−
8,138
17,005
155
Thousands of
U.S. dollars
2016
$ 3,829,522
3,716,469
113,053
3,663,239
2,192,735
1,431,646
38,858
166,283
5,233,195
1,973,629
3,425,849
416
¥
387,074
¥
16,850
$ 3,425,433
The continuing operations of the Group supplied parts and materials and outsourced service to the above-mentioned
component that was disposed of representing discontinued operations. The amounts of such transactions were
eliminated in the consolidated statements of operations. For the fiscal years ended March 31, 2016 and 2015, net sales
from the continuing operations of the Group to the component that was disposed of were ¥33,824 million ($299,327
thousand) and ¥39,421 million, respectively.
Depreciation and amortization and capital expenditures relating to the relevant component that was disposed of,
reclassified as discontinued operations, are as follows.
Year ended March 31
Depreciation and amortization
Capital expenditures
Millions of yen
¥
2016
9,949
13,188
¥
2015
9,822
12,580
Thousands of
U.S. dollars
2016
$
88,044
116,708
Home Appliances business
Additionally, in the December 21, 2015 press release titled “Toshiba to Execute ’Toshiba Revitalization Action Plan’,” the
Company announced that the Group was streamlining the operations of its Home Appliances business, included to date
in the Lifestyle Products & Services business segment, while also pursuing structural reform with a view to potentially
conducting a business reorganization with third parties. As a result, the Visual Products business of Toshiba Lifestyle
Products & Services Corporation (hereinafter “TLSC”) was transferred to the Company effective March 30, 2016, and the
Company signed a share transfer agreement with Midea International Corporation Company Limited (hereinafter
“Midea”), a wholly-owned subsidiary of Midea Group Co., Ltd., on a transfer to Midea of Toshiba’s 80.1% of shares
outstanding in TLSC, retaining the Home Appliances business.
As a result of the above-mentioned share transfer, TLSC will be no longer a subsidiary of the Company effective June
30, 2016 (scheduled), and will be transferred to Midea Group.
30 TOSHIBA Annual Report 2016
The above-mentioned share transfer represents a strategic shift that will have a major effect on the Group’s business
operation and financial results. TLSC and its subsidiaries, including the Home Appliances business, are classified as held
for sale. Consequently, pursuant to ASC 205-20, the financial position and results of operations of the component that
was disposed of are presented separately in the consolidated balance sheets and consolidated statements of operations
as those of discontinued operations.
The financial position and results of operations of the relevant component that was disposed of, reclassified as
discontinued operations, are as follows.
Financial position
March 31
Assets:
Cash and cash equivalents
Notes and accounts receivable, trade
Inventories
Other assets
Total assets of discontinued operations
Liabilities:
Short-term borrowings
Notes and accounts payable, trade
Accrued pension and severance costs
Other liabilities
Total liabilities of discontinued operations
Millions of yen
2016
2015
¥
¥
¥
¥
4,512
33,241
18,112
21,073
76,938
9,118
29,665
28,558
41,095
108,436
¥
¥
¥
¥
3,335
51,548
27,089
28,434
110,406
17,804
37,827
30,106
39,492
125,229
Thousands of
U.S. dollars
2016
$
$
$
$
39,929
294,168
160,283
186,487
680,867
80,690
262,522
252,726
363,673
959,611
Intercompany balances between the continuing operations of the Group and the above-mentioned component that was
disposed of, representing discontinued operations, amounted to ¥21,517 million ($190,416 thousand) and ¥36,253 million
as of March 31, 2016 and 2015, respectively. These elimination amounts are included in the assets or liabilities of the
discontinued operations for presentation in the consolidated balance sheets.
Results of operations
Year ended March 31
Sales and other income
Net sales
Other income
Costs and expenses
Cost of sales
Selling, general and administrative
Other expense
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
¥
¥
2016
370,743
366,871
3,872
387,304
308,528
77,021
1,755
(16,561)
(298)
(16,263)
(1,075)
2015
408,766
407,963
803
453,880
380,929
70,834
2,117
(45,114)
4,505
(49,619)
178
Thousands of
U.S. dollars
2016
$ 3,280,912
3,246,646
34,266
3,427,470
2,730,337
681,602
15,531
(146,558)
(2,638)
(143,920)
(9,513)
¥
(15,188)
¥
(49,797)
$
(134,407)
TOSHIBA Annual Report 2016
31
Notes to Consolidated Financial Statements
Toshiba Corporation and Subsidiaries
March 31, 2016
The continuing operations of the Group supplied parts and materials and outsourced service to, and purchased products
from, the above-mentioned component that was disposed of representing discontinued operations. The amounts of
such transactions were eliminated in the consolidated statements of operations. For the fiscal years ended March 31, 2016
and 2015, net sales from the continuing operations of the Group to the component that was disposed of were ¥175,204
million ($1,550,478 thousand) and ¥235,502, million, respectively.
Depreciation and amortization and capital expenditures relating to the relevant component that was disposed of,
reclassified as discontinued operations, are as follows.
Year ended March 31
Depreciation and amortization
Capital expenditures
Millions of yen
¥
2016
195
5,781
¥
2015
7,928
7,154
Thousands of
U.S. dollars
2016
$
1,726
51,159
32 TOSHIBA Annual Report 2016
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, 2016 and 2015 are as follows:
March 31, 2016
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
Total liabilities
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
Millions of yen
58,997
−
−
−
58,997
−
−
−
¥
¥
¥
¥
232
−
7,632
9
7,873
5,724
6,594
12,318
¥
¥
¥
¥
−
203
−
−
203
−
−
−
¥
¥
¥
¥
59,229
203
7,632
9
67,073
5,724
6,594
12,318
Level 1
Level 2
Level 3
Total
Millions of yen
229,022
−
−
−
229,022
−
−
−
−
¥
¥
¥
¥
1,004
−
16,926
42
17,972
4,742
3,417
28
8,187
¥
¥
¥
¥
−
320
−
−
320
−
−
−
−
¥
¥
¥
¥
230,026
320
16,926
42
247,314
4,742
3,417
28
8,187
¥
¥
¥
¥
¥
¥
¥
¥
TOSHIBA Annual Report 2016
33
Notes to Consolidated Financial Statements
Toshiba Corporation and Subsidiaries
March 31, 2016
March 31, 2016
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
Total liabilities
Level 1
Level 2
Level 3
Total
Thousands of U.S. dollars
$
522,097
−
−
−
522,097
−
−
−
$
$
$
$
2,053
$
−
67,540
80
69,673
50,655
58,354
109,009
$
$
$
$
$
$
−
1,796
−
−
1,796
−
−
−
$
524,150
1,796
67,540
80
593,566
50,655
58,354
109,009
$
$
$
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, 2016
and 2015 are as follows:
Millions of yen
Marketable securities
320
¥
(91)
(29)
3
−
−
−
203
Year ended March 31, 2016
Balance at beginning of year
Total gains or losses (realized or unrealized):
Included in gains (losses):
Other expense
Included in other comprehensive income (loss):
Net unrealized gains and losses on securities
Purchases
Sales
Issuances
Settlements
Balance at end of year
¥
34 TOSHIBA Annual Report 2016
Millions of yen
Marketable securities
4,552
¥
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
¥
Year ended March 31, 2016
Balance at beginning of year
Total gains or losses (realized or unrealized):
Included in gains (losses):
Other expense
Included in other comprehensive income (loss):
Net unrealized gains and losses on securities
Purchases
Sales
Issuances
Settlements
Balance at end of year
$
Thousands of U.S. dollars
Marketable securities
2,832
$
17
200
(5)
133
(4,577)
320
(805)
(257)
26
−
−
−
1,796
At March 31, 2016 and 2015, Level 3 assets measured at fair value on a recurring basis consisted of corporate debt
securities.
TOSHIBA Annual Report 2016
35
Notes to Consolidated Financial Statements
Toshiba Corporation and Subsidiaries
March 31, 2016
Assets and liabilities measured at fair value on a non-recurring basis
Assets that are measured at fair value on a non-recurring basis and the recognized losses at March 31, 2016 and 2015 are
as follows:
Year ended March 31, 2016
Assets:
Equity securities
Investments in affiliates
Goodwill
Long-lived assets held for use
Long-lived assets held for sale
Total assets
Year ended March 31, 2015
Assets:
Investments in and advances to affiliates
Long-lived assets held for use
Long-lived assets held for sale
Total assets
Year ended March 31, 2016
Assets:
Equity securities
Investments in affiliates
Goodwill
Long-lived assets held for use
Long-lived assets held for sale
Total assets
Level 1
Level 2
Level 3
Total
Millions of yen
Fair value
−
13,835
−
−
−
13,835
¥
¥
−
−
−
−
−
−
¥
¥
831
1,398
87,782
75,885
2,324
168,220
¥
¥
831
15,233
87,782
75,885
2,324
182,055
Level 1
Level 2
Level 3
Total
Millions of yen
Fair value
−
−
−
−
¥
¥
−
−
−
−
¥
¥
0
43,651
0
43,651
¥
¥
0
43,651
0
43,651
Level 1
Level 2
Level 3
Total
Thousands of U.S. dollars
Fair value
−
122,434
−
−
−
122,434
$
$
−
−
−
−
−
−
$
7,354
12,371
776,832
671,549
20,566
$ 1,488,672
$
7,354
134,805
776,832
671,549
20,566
$ 1,611,106
¥
¥
¥
¥
$
$
Impairment
losses
4,769
32,478
294,972
163,066
2,962
498,247
Impairment
losses
40,447
53,413
2,284
96,144
¥
¥
¥
¥
Impairment
losses
$
42,203
287,416
2,610,372
1,443,062
26,212
$ 4,409,265
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 year ended March 31, 2016. The impaired securities were classified
within Level 3 as they were valued based on the specific valuation techniques and hypotheses of the Group with
unobservable inputs.
Certain equity method investments in and advances to affiliates were written down to their fair value, resulting in
other-than-temporary impairment for the years ended March 31, 2016 and 2015. 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 or the transfer price of stocks with
unobservable inputs.
Previous equity interests of newly controlled subsidiaries in step acquisitions and retained investment in the former
subsidiary were classified within Level 3 as they were valued based on the specific valuation techniques and hypotheses
of the Group with unobservable inputs for the years ended March 31, 2016 and 2015.
The impaired Goodwill was classified within Level 3 as it was valued based on the discounted cash flow method and
comparable peer company analysis with unobservable inputs for the year ended March 31, 2016.
The impaired long-lived assets held for use were classified within Level 3 as they were valued based on future
assumptions such as discounted cash flows expected to be generated by the related assets with unobservable inputs for
the years ended March 31, 2016 and 2015. The discount rate used for the weighted average cost was 6.8% to 10.9%.
Long-lived assets held for sale were classified within Level 3 as they were valued based on transfer price with
unobservable inputs for the years ended March 31, 2016 and 2015.
As a result, the recognized impairment losses for the years ended March 31, 2016 and 2015 are mainly included in cost
of sales, impairment loss on goodwill, equity in losses of affiliates, and other expense in the consolidated statements of
operations.
36 TOSHIBA Annual Report 2016
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, 2016 and 2015 are as follows:
March 31, 2016:
Equity securities
Debt securities
March 31, 2015:
Equity securities
Debt securities
March 31, 2016:
Equity securities
Debt securities
Cost
Gross unrealized
holding gains
Gross unrealized
holding losses
Fair value
Millions of yen
¥
¥
¥
¥
$
$
25,090
203
25,293
41,654
291
41,945
¥
¥
¥
¥
35,988
−
35,988
189,894
29
189,923
¥
¥
¥
¥
1,849
−
1,849
1,522
−
1,522
Cost
Gross unrealized
holding gains
Gross unrealized
holding losses
Thousands of U.S. dollars
222,035
1,796
223,831
$
$
318,478
−
318,478
$
$
16,363
−
16,363
¥
¥
¥
¥
$
$
59,229
203
59,432
230,026
320
230,346
Fair value
524,150
1,796
525,946
At March 31, 2016 and 2015, debt securities mainly consist of corporate debt securities.
Contractual maturities of debt securities classified as available-for-sale at March 31, 2016 are as follows:
March 31, 2016:
Due within one year
Due after one year within five years
Due after five years within ten years
Due after ten years
Millions of yen
Thousands of U.S. dollars
Cost
Fair value
Cost
Fair value
¥
¥
200
−
−
3
203
¥
¥
200
−
−
3
203
$
$
1,770
−
−
26
1,796
$
$
1,770
−
−
26
1,796
The proceeds from sales of available-for-sale securities for the years ended March 31, 2016 and 2015 were ¥145,180 million
($1,284,779 thousand) and ¥66,449 million, respectively. The gross realized gains on those sales for the years ended March
31, 2016 and 2015 were ¥129,429 million ($1,145,389 thousand) and ¥35,394 million, respectively. The gross realized losses
on those sales for the years ended March 31, 2016 and 2015 were ¥607 million ($5,372 thousand) and ¥520 million,
respectively.
At March 31, 2016, 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 ¥27,013 million
($239,053 thousand) and ¥29,641 million at March 31, 2016 and 2015, respectively. At March 31, 2016 and 2015,
investments with an aggregate cost of ¥26,182 million ($231,699 thousand) and ¥28,209 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 ¥8,697 million ($76,965 thousand) and ¥7,915 million related to other-than-
temporary impairments in the marketable and non-marketable equity securities for the years ended March 31, 2016 and
2015, respectively.
TOSHIBA Annual Report 2016
37
Notes to Consolidated Financial Statements
Toshiba Corporation and Subsidiaries
March 31, 2016
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 ¥817 million ($7,230 thousand) and ¥956 million on the transfers of receivables for the
years ended March 31, 2016 and 2015, 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
¥
2016
726,761
453
246
Millions of yen
¥
2015
1,000,743
645
54
Thousands of
U.S. dollars
2016
$ 6,431,513
4,009
2,177
Quantitative information about delinquencies, net credit losses, and components of securitized receivables as of and for
the years ended March 31, 2016 and 2015 are as follows. Of these receivables, deferred proceeds for the receivables
transferred as of March 31, 2016 and 2015 were ¥7,195 million ($63,673 thousand) and ¥59,216 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
2016
¥ 1,210,091
70,362
1,280,453
(81,382)
¥ 1,199,071
2015
1,553,172
87,127
1,640,299
(261,820)
1,378,479
¥
¥
2016
33,866
0
33,866
¥
¥
2015
47,586
0
47,586
¥
¥
2016
2015
¥
¥
1,531
0
1,531
¥
¥
4,086
0
4,086
Accounts receivable
Notes receivable
Total managed portfolio
Securitized receivables
Total receivables
March 31, 2016
Thousands of U.S. dollars
Amount 90 days
or more past due
$
$
299,699
0
299,699
Total principal amount
of receivables
$ 10,708,770
622,673
11,331,443
(720,195)
$ 10,611,248
Net credit losses
Year ended March 31, 2016
$
$
13,549
0
13,549
38 TOSHIBA Annual Report 2016
8. INVENTORIES
Inventories at March 31, 2016 and 2015 consist of the following:
March 31
Finished products
Work in process:
Long-term contracts
Other
Raw materials
Millions of yen
2016
275,878
¥
71,064
252,529
129,652
729,123
¥
2015
323,012
82,665
340,029
165,303
911,009
¥
¥
Thousands of
U.S. dollars
2016
$ 2,441,398
628,885
2,234,770
1,147,363
$ 6,452,416
TOSHIBA Annual Report 2016
39
Notes to Consolidated Financial Statements
Toshiba Corporation and Subsidiaries
March 31, 2016
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, 2016 were: Shibaura Mechatronics Corporation (39.1%);
Guangdong Meizhi Compressor Ltd. (40.0%); Toshiba Machine Co., Ltd. (22.1%); Toshiba Mitsubishi-Electric Industrial
Systems Corporation (50.0%); and Guangdong Midea Air-Conditioning Equipment Co., Ltd. (20.0%).
Of the affiliates which were accounted for by the equity method, the investments in common stock of the listed
companies were carried at ¥19,709 million ($174,416 thousand) and ¥43,973 million at March 31, 2016 (3 companies) and
2015 (4 companies), respectively. The Group’s investments in these companies had market values of ¥18,335 million
($162,257 thousand) and ¥124,525 million at March 31, 2016 and 2015, 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
2016
¥ 1,589,871
790,154
¥ 2,380,025
¥ 1,447,762
227,126
705,137
¥ 2,380,025
2015
1,513,153
1,128,052
2,641,205
1,305,231
403,830
932,144
2,641,205
¥
¥
¥
¥
Millions of yen
2016
¥ 1,889,271
39,214
¥
2015
1,973,713
69,707
Thousands of
U.S. dollars
2016
$ 14,069,655
6,992,513
$ 21,062,168
$ 12,812,053
2,009,965
6,240,150
$ 21,062,168
Thousands of
U.S. dollars
2016
$ 16,719,212
347,027
A summary of transactions and balances with the affiliates accounted for by the equity method is presented below:
¥
¥
Millions of yen
2016
139,786
184,447
11,685
¥
2015
162,041
171,143
11,244
Millions of yen
2016
2015
36,653
25,109
6,449
38,750
32,982
12,998
8,770
¥
46,652
20,878
2,016
66,706
27,400
11,440
2,371
Thousands of
U.S. dollars
2016
$ 1,237,044
1,632,274
103,407
$
Thousands of
U.S. dollars
2016
324,363
222,204
57,071
342,920
291,876
115,027
77,611
Year ended March 31
Sales
Purchases
Dividends
March 31
Notes and accounts receivable, trade
Other receivables
Advance payments
Long-term loans receivable
Notes and accounts payable, trade
Other payables
Advance payments received
40 TOSHIBA Annual Report 2016
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 recorded
impairment losses of ¥28,096 million ($248,637 thousand) on goodwill attributable to the Community Solutions segment
in the fiscal year ended March 31, 2016. This was due to a decrease in fair value of the reporting unit as a result of revising
the mid-term business plan based on a tendency toward restrained investment by major customers and a growing sense
of uncertainty regarding future demand in the Retail Store Solutions business acquired. The fair value was measured
using the discounted cash flow method and comparable peer company analysis. The measurement date was September
30, 2015.
The Group recorded impairment losses of ¥16,560 million ($146,549 thousand) on goodwill attributable to the Energy &
Infrastructure segment in the fiscal year ended March 31, 2016. This was due to a decrease in fair value of the reporting
unit as a result of revising the mid-term business plan considering a downturn of overseas operations in some emerging
countries and other countries and a growing sense of uncertainty regarding future demand in the Transmission &
Distribution Systems business. The fair value was measured using the discounted cash flow method. The measurement
date was December 31, 2015.
The Group recorded impairment losses of ¥247,600 million ($2,191,150 thousand) on goodwill attributable to the Energy
& Infrastructure segment in the fiscal year ended March 31, 2016. This was due to a decrease in fair value of the reporting
unit of the Nuclear Power Systems business as a result of reflecting deterioration of the Group’s financing environment in
the discount rate. Since the allocation of the purchase price of CB&I Stone & Webster Inc. has not been finalized, as
disclosed in Note 28, this impairment loss was accounted for based on the best estimate as of June 22, 2016. The fair value
was measured using the discounted cash flow method. The measurement date was February 29, 2016.
The Group tested goodwill for impairment and has concluded that there was no impairment for the year ended March
31, 2015.
The Group recorded impairment losses on intangible assets excluding goodwill in the fiscal years ended March 31, 2016
and 2015. Impairment losses on intangible assets excluding goodwill have been disclosed in Note 16.
The components of acquired intangible assets excluding goodwill at March 31, 2016 and 2015 are as follows:
March 31, 2016
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
¥
¥
169,938
52,670
206,060
106,181
48,040
582,889
Millions of yen
Accumulated
amortization
¥
¥
121,809
51,394
89,214
43,487
24,453
330,357
Net carrying
amount
48,129
1,276
116,846
62,694
23,587
252,532
48,204
1,897
50,101
302,633
¥
¥
¥
¥
TOSHIBA Annual Report 2016
41
Notes to Consolidated Financial Statements
Toshiba Corporation and Subsidiaries
March 31, 2016
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, 2016
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
¥
¥
182,901
62,645
240,010
147,268
47,697
680,521
Millions of yen
Accumulated
amortization
¥
¥
112,505
51,415
84,115
36,455
16,479
300,969
Gross carrying
amount
$ 1,503,876
466,106
1,823,539
939,655
425,133
$ 5,158,309
Thousands of U.S. dollars
Accumulated
amortization
$ 1,077,956
454,814
789,504
384,841
216,398
$ 2,923,513
Net carrying
amount
70,396
11,230
155,895
110,813
31,218
379,552
54,740
2,121
56,861
436,413
¥
¥
¥
¥
Net carrying
amount
$
425,920
11,292
1,034,035
554,814
208,735
$ 2,234,796
$
426,584
16,788
443,372
$ 2,678,168
Other intangible assets acquired during the year ended March 31, 2016 primarily consisted of software of ¥19,245 million
($170,310 thousand). The weighted-average amortization period of software for the year ended March 31, 2016 was
approximately 4.7 years.
The weighted-average amortization periods for other intangible assets were approximately 12.7 years and 12.9 years
for the years ended March 31, 2016 and 2015, respectively.
Amortization expenses of other intangible assets subject to amortization for the years ended March 31, 2016 and 2015
are ¥41,788 million ($369,805 thousand) and ¥42,318 million, respectively. The future amortization expense for each of the
next 5 years relating to other intangible assets currently recorded in the consolidated balance sheet at March 31, 2016 is
estimated as follows:
¥
Millions of yen
34,758
31,251
27,148
23,256
20,330
$
Thousands of
U.S. dollars
307,593
276,558
240,248
205,805
179,912
Year ending March 31
2017
2018
2019
2020
2021
42 TOSHIBA Annual Report 2016
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, 2016 and 2015 are as follows:
Year ended March 31
Balance at beginning of year
Goodwill acquired during the year
Impairment losses
Foreign currency translation adjustments
Balance at end of year
Millions of yen
2016
658,554
13,590
(294,972)
(39,916)
337,256
¥
¥
2015
561,789
25,557
−
71,208
658,554
¥
¥
Thousands of
U.S. dollars
2016
$ 5,827,912
120,265
(2,610,372)
(353,239)
$ 2,984,566
As of March 31, 2016 and 2015, goodwill allocated to Energy & Infrastructure is ¥265,905 million ($2,353,142 thousand) and
¥555,680 million, respectively. The rest was mainly allocated to Community Solutions.
Accumulated impairment losses were ¥288,882 million ($2,556,478 thousand) at March 31, 2016.
TOSHIBA Annual Report 2016
43
Notes to Consolidated Financial Statements
Toshiba Corporation and Subsidiaries
March 31, 2016
11. SHORT-TERM BORROWINGS AND LONG-TERM DEBT
Short-term borrowings at March 31, 2016 and 2015 consist of the following:
March 31
Loans and overdrafts, principally from banks, with
weighted-average interest rate of 1.68% at March 31, 2016,
and 2.12% at March 31, 2015:
Secured
Unsecured
Millions of yen
2016
2015
Thousands of
U.S. dollars
2016
¥
¥
−
410,983
410,983
¥
¥
−
61,987
61,987
$
−
3,637,018
$ 3,637,018
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, 2016, the Group had unused committed lines of credit from short-term financing arrangements
aggregating ¥405,000 million ($3,584,071 thousand). The lines of credit expire on various dates from April 2016 through
September 2017. Under the agreements, the Group is required to pay commitment fees ranging from 0.05 percent to 0.35
percent on the unused portion of the lines of credit.
Long-term debt at March 31, 2016 and 2015 consist of the following:
March 31
Loans, principally from banks,
due 2016 to 2030 with weighted-average interest rate
of 0.70% at March 31, 2016, and due 2015 to 2030 with
weighted-average interest rate of 0.69% at March 31, 2015:
Secured
Unsecured
Unsecured yen bonds, due 2016 to 2020 with interest rates
ranging from 0.40% to 2.20% at March 31, 2016, and due
2015 to 2020 with interest rates ranging from 0.25% to
2.20% at March 31, 2015
Capital lease obligations
Less-Portion due within one year
Millions of yen
2016
2015
Thousands of
U.S. dollars
2016
¥
−
713,605
¥
−
850,772
$
−
6,315,089
300,000
26,324
1,039,929
(208,629)
831,300
¥
370,000
28,237
1,249,009
(205,988)
1,043,021
¥
2,654,867
232,956
9,202,912
(1,846,274)
$ 7,356,638
Substantially all of the unsecured loan agreements permit the lenders to require collateral or guaranties for such loans.
44 TOSHIBA Annual Report 2016
The aggregate annual maturities of long-term debt, as of March 31, 2016 and 2015, excluding those of capital lease
obligations, are as follows:
March 31
2016
2017
2018
2019
2020
Thereafter
2021
Thereafter
Millions of yen
2016
¥
−
201,202
239,798
166,536
339,557
−
33,503
33,009
¥ 1,013,605
2015
198,229
208,754
239,430
163,302
340,502
70,555
−
−
1,220,772
¥
¥
Thousands of
U.S. dollars
2016
$
−
1,780,549
2,122,106
1,473,770
3,004,929
−
296,487
292,115
$ 8,969,956
TOSHIBA Annual Report 2016
45
Notes to Consolidated Financial Statements
Toshiba Corporation and Subsidiaries
March 31, 2016
12. ACCRUED PENSION AND SEVERANCE COSTS
All employees who retire or are terminated from the Company and certain subsidiaries 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 a 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.
In addition, for the purpose of supporting post-retirement life plans of employees and responding to diverse needs for
retirement benefits, a defined contribution pension plan was introduced by the Company and some of its subsidiaries in
Japan on October 1, 2015. Under this plan, a portion of the contribution to lump-sum retirement benefits was replaced by
defined contribution pension plan and individual employees take control of their own fund management and direct
investments.
The following figures include effects of the discontinued operations relating to the Healthcare business and the Home
Appliances business.
The changes in the benefit obligation and plan assets for the years ended March 31, 2016 and 2015 and the funded status
at March 31, 2016 and 2015 are as follows:
March 31
Change in benefit obligation:
Benefit obligation at beginning of year
Service cost
Interest cost
Plan participants’ contributions
Plan amendments
Actuarial loss
Benefits paid
Acquisitions and divestitures
Foreign currency exchange impact
Benefit obligation at end of year
Change in plan assets:
Fair value of plan assets at beginning of year
Actual return on plan assets
Employer contributions
Plan participants’ contributions
Benefits paid
Acquisitions and divestitures
Foreign currency exchange impact
Fair value of plan assets at end of year
Funded status
Millions of yen
2016
2015
¥ 1,846,107
68,081
26,700
3,899
46
77,423
(119,435)
(90,293)
(18,821)
¥ 1,793,707
¥ 1,262,289
(65,092)
62,538
3,899
(60,573)
(53,815)
(14,481)
¥ 1,134,765
(658,942)
¥
¥
¥
¥
¥
¥
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)
Thousands of
U.S. dollars
2016
$ 16,337,230
602,487
236,283
34,504
407
685,159
(1,056,947)
(799,053)
(166,557)
$ 15,873,513
$ 11,170,699
(576,036)
553,434
34,504
(536,044)
(476,239)
(128,150)
$ 10,042,168
$ (5,831,345)
Notes: Major acquisitions and divestitures for the fiscal year ended March 31, 2016 represent the effects of the sale of the Healthcare business.
46 TOSHIBA Annual Report 2016
Amounts recognized in the consolidated balance sheets at March 31, 2016 and 2015 are as follows:
March 31
Other assets
Other current liabilities
Accrued pension and severance costs
Non-current liabilities of discontinued operations
Millions of yen
2016
621
(1,174)
(629,402)
(28,987)
(658,942)
¥
¥
2015
−
(1,147)
(515,446)
(67,225)
(583,818)
¥
¥
Amounts recognized in accumulated other comprehensive loss at March 31, 2016 and 2015 are as follows:
March 31
Unrecognized actuarial loss
Unrecognized prior service cost
Millions of yen
2016
589,798
(21,811)
567,987
¥
¥
2015
462,980
(26,477)
436,503
¥
¥
Thousands of
U.S. dollars
2016
$
5,496
(10,389)
(5,569,929)
(256,523)
$ (5,831,345)
Thousands of
U.S. dollars
2016
$ 5,219,452
(193,018)
$ 5,026,434
The accumulated benefit obligation at March 31, 2016 and 2015 are as follows:
March 31
Accumulated benefit obligation
Millions of yen
2016
¥ 1,742,656
2015
1,793,308
¥
Thousands of
U.S. dollars
2016
$ 15,421,735
The components of the net periodic pension and severance cost for the years ended March 31, 2016 and 2015 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
Curtailment and settlement loss recognized
Net periodic pension and severance cost
Millions of yen
2016
68,081
26,700
(37,108)
(3,680)
19,816
27,851
101,660
¥
¥
2015
67,527
30,277
(32,923)
(3,672)
21,655
−
82,864
¥
¥
Thousands of
U.S. dollars
2016
602,487
236,283
(328,390)
(32,566)
175,363
246,469
899,646
$
$
Notes: 1) Net periodic pension and severance cost for the fiscal years ended March 31, 2016 and 2015 includes pension cost related to the income (loss) from discontinued operations of the Healthcare
business and the Home Appliances business in the amounts of ¥32,381 million ($286,558 thousand) and ¥6,858 million, respectively.
2) Curtailment and settlement loss recognized for the fiscal year ended March 31, 2016 includes ¥26,458 million ($234,142 thousand) which constitutes a portion of gain from the sales of the
Healthcare business.
Other changes in plan assets and benefit obligation recognized in the other comprehensive income (loss) for the years
ended March 31, 2016 and 2015 are as follows:
Year ended March 31
Current year actuarial loss
Recognized actuarial loss
Prior service cost due to plan amendments
Amortization of prior service cost
Millions of yen
2016
179,623
(19,816)
46
3,680
163,533
¥
¥
2015
206
(21,655)
(303)
3,672
(18,080)
¥
¥
Thousands of
U.S. dollars
2016
$ 1,589,585
(175,363)
407
32,566
$ 1,447,195
TOSHIBA Annual Report 2016
47
Notes to Consolidated Financial Statements
Toshiba Corporation and Subsidiaries
March 31, 2016
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
2017
¥
(4,335)
29,823
Thousands of
U.S. dollars
2017
(38,363)
263,920
$
For the year ended March 31, 2016, the Group 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 ¥601
million ($5,319 thousand). The Group expects to contribute ¥31,177 million ($275,903 thousand) to its defined benefit
plans, which include the cash balance plan, in the year ending March 31, 2017.
The following benefit payments are expected to be paid:
Year ending March 31
2017
2018
2019
2020
2021
2022 - 2026
¥
Millions of yen
74,021
74,978
82,067
87,565
89,365
496,637
$
Thousands of
U.S. dollars
655,053
663,522
726,257
774,912
790,841
4,395,018
Weighted-average assumptions used to determine benefit obligations as of March 31, 2016 and 2015 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
2016
1.1%
3.5%
2016
1.5%
2.9%
3.0%
2015
1.5%
3.0%
2015
1.8%
2.9%
3.1%
The Group determines the expected long-term rate of return in consideration of the target allocation of the plan assets,
the current expectation of long-term returns on the assets and actual returns on plan assets.
The Group’s investment policies and strategies are to assure adequate plan assets to provide for future payments of
pension and severance benefits to participants, with reasonable risks. The Group designs the basic target allocation of
the plan assets to mirror the best portfolio based on estimation of mid-term and long-term return on the investments.
The Group periodically reviews the actual return on the investments and adjusts the portfolio to achieve the assumed
long-term rate of return on the investments. The Group targets its investments in equity securities at 25 percent or more
of total investments, and investments in equity securities, debt securities and life insurance company general accounts at
70 percent or more of total investments.
The equity securities are selected primarily from stocks that are listed on the securities exchanges. Prior to investing,
the Group has investigated the business condition of the investee companies, and appropriately diversified investments
by type of industry and other relevant factors. The debt securities are selected primarily from government bonds,
municipal bonds and corporate bonds. Prior to investing, the Group has investigated the quality of the issue, including
rating, interest rate, and repayment dates and has appropriately diversified the investments. Pooled funds are selected
using strategies consistent with the equity securities and debt securities described above. Hedge funds are selected
following a variety of strategies and fund managers, and the Group has appropriately diversified the investments. Real
estate is selected for the eligibility of investment and expected return and other relevant factors, and the Group has
appropriately diversified the investments. As for investments in life insurance company general accounts, the contracts
with the insurance companies include a guaranteed interest and return of capital.
48 TOSHIBA Annual Report 2016
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, 2016 and 2015 by asset category are as follows:
Level 1
Level 2
Level 3
¥
1,592
¥
−
¥
Millions of yen
March 31, 2016
Cash and cash equivalents
Equity securities:
Japanese companies
Foreign companies
Pooled funds
Debt securities:
Government bonds
Municipal bonds
Corporate bonds
Pooled funds
Other assets:
154,480
64,390
50,097
218,399
−
−
49,442
−
−
−
−
538,400
−
−
120,800
−
765
16,062
139,585
−
−
81,648
4,826
363,686
−
−
1,069,027
−
6,770
142,142
1,235,264
−
−
722,549
42,708
$ 3,218,460
Hedge funds
Real estate
Life insurance company general accounts
Other assets
Total
¥
March 31, 2016
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
$
14,088
1,367,080
569,823
443,336
1,932,735
−
−
437,540
−
−
−
−
$ 4,764,602
¥
$
Thousands of U.S. dollars
Level 2
Level 3
−
$
Notes: 1) Pooled funds in equity securities invest in listed equity securities consisting of approximately 5% Japanese companies and 95% foreign companies.
2) Government bonds include approximately 78% Japanese government bonds and 22% foreign government bonds.
3) Pooled funds in debt securities invest in approximately 36% foreign government bonds, 64% municipal bonds and corporate bonds.
4) The tables above include the balance of discontinued operations of the Home Appliances business in the amount of ¥8,774 million ($77,646 thousand).
−
−
−
6,375
175,966
50,338
−
−
232,679
¥
−
−
−
56,416
1,557,221
445,469
−
−
$ 2,059,106
−
−
−
−
−
−
−
−
Total
¥
1,592
154,480
64,390
170,897
218,399
765
16,062
195,402
175,966
50,338
81,648
4,826
¥ 1,134,765
Total
$
14,088
1,367,080
569,823
1,512,363
1,932,735
6,770
142,142
1,729,220
1,557,221
445,469
722,549
42,708
$ 10,042,168
TOSHIBA Annual Report 2016
49
Notes to Consolidated Financial Statements
Toshiba Corporation and Subsidiaries
March 31, 2016
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
Level 2
Level 3
¥
14,334
¥
−
¥
Millions of yen
227,437
70,327
49,000
210,320
−
−
51,548
−
−
−
−
622,966
−
−
141,552
−
346
14,695
153,405
−
−
79,786
6,276
396,060
¥
−
−
−
−
−
−
−
8,122
189,004
46,137
−
−
243,263
¥
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
¥
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.
4) The table above includes the balances of discontinued operations of the Healthcare business and the Home Appliances business in the amounts of ¥54,770 million and ¥9,606 million, respectively.
50 TOSHIBA Annual Report 2016
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, 2016 and 2015 are as
follows:
Year ended March 31, 2016
Balance at beginning of year
Actual return:
Relating to assets sold
Relating to assets still held
Purchases, issuances and settlements
Balance at end of year
Year ended March 31, 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
Year ended March 31, 2016
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
¥
8,122
Hedge funds
189,004
¥
Real estate
¥
46,137
Total
243,263
¥
Millions of yen
−
(1,747)
−
6,375
¥
315
(15,704)
2,351
175,966
¥
64
2,430
1,707
50,338
¥
379
(15,021)
4,058
232,679
¥
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
71,876
$
Hedge funds
$ 1,672,602
Real estate
$
408,292
Total
$ 2,152,770
Thousands of U.S. dollars
−
(15,460)
−
56,416
$
2,788
(138,973)
20,804
$ 1,557,221
566
21,504
15,107
445,469
$
3,354
(132,929)
35,911
$ 2,059,106
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, 2016 and 2015.
Defined contribution pension cost for the fiscal years ended March 31, 2016 and 2015 were ¥11,446 million ($101,292
thousand) and ¥5,071 million, respectively.
TOSHIBA Annual Report 2016
51
Notes to Consolidated Financial Statements
Toshiba Corporation and Subsidiaries
March 31, 2016
13. RESEARCH AND DEVELOPMENT COSTS
Research and development costs are expensed as incurred and amounted to ¥360,858 million ($3,193,434 thousand) and
¥309,713 million for the years ended March 31, 2016 and 2015, respectively.
14. ADVERTISING COSTS
Advertising costs are expensed as incurred and amounted to ¥22,917 million ($202,805 thousand) and ¥29,640 million for
the years ended March 31, 2016 and 2015, respectively.
15. OTHER INCOME AND OTHER EXPENSE
FOREIGN EXCHANGE GAINS AND LOSSES
For the years ended March 31, 2016 and 2015, the net foreign exchange gains (losses) were ¥16,417 million ($145,283
thousand) loss and ¥20,120 million gain, respectively.
GAINS ON SALES OF SECURITIES
The gains on sales of securities for the year ended March 31, 2016, were ¥184,949 million ($1,636,717 thousand). They were
mainly related to the sales of securities of KONE Corporation in Finland, Topcon Corporation and NREG Toshiba Building
Co., Ltd. The gains on sales of securities for the year ended March 31, 2015, were ¥35,533 million. These gains were mainly
related to the sales of equity securities.
GAINS AND LOSSES ON SALES OR DISPOSAL OF FIXED ASSETS
For the years ended March 31, 2016 and 2015, the sales and disposal of fixed assets were ¥8,598 million ($76,088
thousand) loss and ¥14,598 million loss, respectively. Gains on sales of fixed assets were ¥4,503 million ($39,850
thousand), and losses on disposal of fixed assets were ¥13,101 million ($115,938 thousand) for the year ended March 31,
2016. Gains on sales of fixed assets were ¥2,302 million, and losses on disposal of fixed assets were ¥16,900 million for the
year ended March 31, 2015.
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 was recorded for the year ended March
31, 2015.
PENALTIES RELATED TO THE REVISION OF INAPPROPRIATE ACCOUNTING TREATMENTS IN PREVIOUS YEARS
On February 12, 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 received 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. The Company paid the penalty in the year ended March 31, 2016. For the fiscal year ended
March 31, 2015, provision for estimated penalties related to this revision of inappropriate accounting treatments in
previous years amounted to ¥8,427 million were recorded.
52 TOSHIBA Annual Report 2016
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 in the year ended March 31, 2016 consisted of ¥60,083 million ($531,708 thousand) in the
POS business, ¥31,324 million ($277,204 thousand) in the Transmission & Distribution Systems business, ¥20,278 million
($179,451 thousand) in the Lighting business, ¥19,060 million ($168,673 thousand) in the Storage Products business,
¥18,088 million ($160,071 thousand) in the Discrete business, ¥11,571 million ($102,398 thousand) in the Mixed Signal IC
business, ¥2,186 million ($19,345 thousand) in the PC business, ¥1,795 million ($15,885 thousand) in the System LSI
business, and ¥1,643 million ($14,539 thousand) in the Visual Products business. Impairment losses recorded in the year
ended March 31, 2015 consisted of ¥41,875 million in the Discrete business, ¥3,439 million in the System LSI business,
¥3,116 million in the PC business, ¥2,596 million in the Battery business, and ¥2,387 million in the Automotive
Applications business. Impairment losses for the Visual Products business for the year ended March 31, 2015 and for the
Automotive Applications business for the year ended March 31, 2016 were not significant.
These impairment losses are included in cost of sales in the consolidated statements of operations. Impairment losses
recorded in the Home Appliances business were ¥4,200 million ($37,168 thousand) in the year ended March 31, 2016, and
¥38,869 million in the year ended March 31, 2015. These results have been reclassified as discontinued operations.
Impairment losses in the POS business and the Lighting business are related to Community Solutions, those in the
Transmission & Distribution Systems business and the Automotive Applications business are related to Energy &
Infrastructure, those in the Storage Products business, the Discrete business, the Mixed Signal IC business, and the System
LSI business are related to Electronic Devices & Components, and those in the PC business and the Visual Products
business are related to Lifestyle Products & Services.
TOSHIBA Annual Report 2016
53
Notes to Consolidated Financial Statements
Toshiba Corporation and Subsidiaries
March 31, 2016
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 33.1 percent and 35.6 percent for the years ended March 31, 2016 and 2015, respectively.
Amendments to the Japanese tax regulations were enacted into law on March 29, 2016. As a result of these
amendments, the effective statutory tax rate used to calculate deferred tax assets and liabilities was changed from 32.3
percent to 30.9 percent for temporary difference expected to be eliminated during the fiscal years beginning on April 1,
2016 and 2017, and 30.6 percent for temporary difference expected to be eliminated in and after the fiscal year beginning
on April 1, 2018. 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 statements of operations for the year ended March 31, 2016.
The components of income tax expense allocated to continuing operations and discontinued operations for years ended
March 31, 2016 and 2015 are as follows:
Year ended March 31
Continuing operations:
Current
Deferred
Discontinued operations:
Current
Deferred
Millions of yen
2016
2015
¥
¥
¥
¥
74,269
179,479
253,748
54,481
168,241
222,722
476,470
¥
¥
¥
¥
57,930
85,086
143,016
11,608
1,035
12,643
155,659
Thousands of
U.S. dollars
2016
$
657,248
1,588,310
$ 2,245,558
$
482,133
1,488,858
1,970,991
$ 4,216,549
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
Impairment of goodwill
Allocation of tax benefits to continuing operations
Other
Income tax expense
Millions of yen
2016
(209,571)
¥
2015
¥
55,755
(16,321)
19,601
532,841
1,720
(699)
8,861
97,710
(171,272)
(9,122)
253,748
¥
¥
(8,650)
6,029
61,237
16,693
(4,119)
9,601
−
−
6,470
143,016
Thousands of
U.S. dollars
2016
$ (1,854,611)
(144,433)
173,460
4,715,407
15,221
(6,186)
78,416
864,690
(1,515,681)
(80,725)
$ 2,245,558
54 TOSHIBA Annual Report 2016
The significant components of deferred tax assets and deferred tax liabilities as of March 31, 2016 and 2015 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
Millions of yen
2016
2015
¥
¥
¥
¥
27,467
73,916
81,330
134,341
109,790
97,508
125,661
650,013
(480,935)
169,078
(17,797)
(13,261)
(7,132)
(29,149)
(95,364)
(23,774)
(186,477)
(17,399)
¥
¥
¥
¥
18,369
97,123
131,067
131,148
129,658
64,570
117,228
689,163
(206,246)
482,917
(17,752)
(62,293)
(8,274)
(39,811)
(98,508)
(19,986)
(246,624)
236,293
Thousands of
U.S. dollars
2016
$
243,071
654,124
719,734
1,188,858
971,593
862,903
1,112,044
5,752,327
(4,256,061)
$ 1,496,266
$
$
(157,496)
(117,354)
(63,115)
(257,956)
(843,929)
(210,389)
(1,650,239)
(153,973)
Deferred tax liabilities included in other current liabilities and other liabilities at March 31, 2016 and 2015 were ¥108,623
million ($961,265 thousand) and ¥106,607 million, respectively.
The net changes in the total valuation allowance for the years ended March 31, 2016 and 2015 were an increase of
¥274,689 million ($2,430,876 thousand) and an increase of ¥3,163 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, 2016 was
¥344,691 million ($3,050,363 thousand). The amount of adjustments for the year ended March 31, 2015 was not
significant.
The Group’s tax loss carryforwards for the corporate and local taxes at March 31, 2016 amounted to ¥248,609 million
($2,200,080 thousand) and ¥338,287 million ($2,993,690 thousand), respectively, the majority of which will expire during
the period from the year ending March 2017 through 2025. The Group utilized tax loss carryforwards of ¥198,857 million
($1,759,796 thousand) and ¥90,296 million to reduce current corporate taxes and ¥201,271 million ($1,781,159 thousand)
and ¥28,169 million to reduce current local taxes during the years ended March 31, 2016 and 2015, respectively.
The amount of benefits due to use of tax loss carryforwards included in income tax expense for the year ended March
31, 2016 was ¥15,907 million ($140,770 thousand). The amount of benefits due to use of tax loss carryforwards included in
income tax expense for the year ended March 31, 2015 was not significant.
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.
TOSHIBA Annual Report 2016
55
Notes to Consolidated Financial Statements
Toshiba Corporation and Subsidiaries
March 31, 2016
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
2016
2015
¥
¥
4,151
1,899
1,081
(30)
(31)
(668)
(393)
6,009
¥
¥
4,569
352
55
(352)
(35)
(955)
517
4,151
Thousands of
U.S. dollars
2016
36,735
16,805
9,566
(265)
(274)
(5,912)
(3,478)
53,177
$
$
The total amounts of unrecognized tax benefits that would reduce the effective tax rate, if recognized, are ¥1,574 million
($13,929 thousand) and ¥1,465 million at March 31, 2016 and 2015, respectively.
The Group recognizes interest and penalties accrued related to unrecognized tax benefits in income taxes in the
consolidated statements of operations. Both interest and penalties accrued in the consolidated balance sheets as of
March 31, 2016 and 2015, and interest and penalties included in income taxes in the consolidated statements of
operations for the years ended March 31, 2016 and 2015 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, 2016, 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.
56 TOSHIBA Annual Report 2016
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, 2016 and 2015 are 4,237,602,026.
RETAINED EARNINGS (ACCUMULATED DEFICIT)
Retained earnings (accumulated deficit) at March 31, 2016 and 2015 included a legal reserve of ¥36,459 million ($322,646
thousand) and ¥44,165 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 shareholders.
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 (accumulated deficit) at March 31, 2016 included the Group’s share in undistributed earnings of
equity method investees in the amount of ¥57,479 million ($508,664 thousand).
ACCUMULATED OTHER COMPREHENSIVE LOSS
The changes in accumulated other comprehensive loss for the year ended March 31, 2016 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
¥
113,567
¥
(14,757)
¥
(240,172)
¥
2,039
¥
(139,323)
Other comprehensive loss arising
during year
Amounts reclassified from accumulated
other comprehensive loss
Net current year change
Balance at end of year
(11,268)
(83,833)
(147,658)
(5,020)
(247,779)
(78,644)
(89,912)
23,655
¥
6,684
29,868
(77,149)
(91,906)
¥
(117,790)
(357,962)
¥
¥
(2,634)
(7,654)
(5,615)
(44,726)
(292,505)
(431,828)
¥
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
$ 1,005,018
$
(130,593)
$ (2,125,416)
$
18,044
$ (1,232,947)
Other comprehensive loss arising
during year
Amounts reclassified from accumulated
other comprehensive loss
Net current year change
Balance at end of year
(99,717)
(741,885)
(1,306,708)
(44,425)
(2,192,735)
(695,965)
59,151
264,319
(795,682)
209,336
$
(682,734)
(813,327)
$
(1,042,389)
$ (3,167,805)
$
(23,310)
(67,735)
(49,691)
(395,805)
(2,588,540)
$ (3,821,487)
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
(17,255)
19,643
113,567
97,158
(1,069)
96,089
(14,757)
¥
(3,780)
12,110
8,330
(240,172)
¥
¥
5,718
(1,317)
4,401
2,039
135,994
(7,531)
128,463
(139,323)
¥
TOSHIBA Annual Report 2016
57
Notes to Consolidated Financial Statements
Toshiba Corporation and Subsidiaries
March 31, 2016
Amounts reclassified from accumulated other comprehensive loss for the years ended March 31, 2016 and 2015 are as
follows:
Millions of yen
Thousands of
U.S. dollars
Amounts reclassified from accumulated
other comprehensive loss
2015
2016
2016
Affected line item in Consolidated
Statements of Operations
Net unrealized gains and
losses on securities
Foreign currency
translation adjustments
¥
(124,508)
37,985
¥
(27,525)
8,881
(7,880)
(94,403)
(15,759)
−
(18,644)
(1,389)
(78,644)
(17,255)
Pension liability adjustments
Net unrealized gains and
losses on derivative instruments
(1,936)
17,373
−
(8,753)
6,684
−
6,684
16,290
(4,994)
19,222
30,518
650
29,868
(3,869)
1,313
(2,556)
78
(2,634)
(1,069)
−
−
−
(1,069)
−
(1,069)
17,720
(5,687)
477
12,510
400
12,110
(2,172)
758
(1,414)
(97)
(1,317)
336,150
$ (1,101,840) Other income
Income taxes
Income (loss) from discontinued operations,
before noncontrolling interests
(69,735)
(139,460)
(835,425) Net loss before noncontrolling interests
Less: Net income (loss) attributable to
noncontrolling interests
Net loss attributable to shareholders of the
Company
(695,965)
(77,460)
(17,132) Other income
153,743
−
Equity in losses of affiliates
Income taxes
Income (loss) from discontinued operations,
before noncontrolling interests
59,151 Net loss before noncontrolling interests
Less: Net income (loss) attributable to
noncontrolling interests
Net loss attributable to shareholders of the
Company
59,151
−
144,159
(44,194)
170,106
(Note 1)
Income taxes
Income (loss) from discontinued operations,
before noncontrolling interests
5,752
270,071 Net loss before noncontrolling interests
Less: Net income (loss) attributable to
noncontrolling interests
Net loss attributable to shareholders of the
Company
264,319
(34,238) Other income
Income taxes
11,619
(22,619) Net loss before noncontrolling interests
Less: Net income (loss) attributable to
noncontrolling interests
Net loss attributable to shareholders of the
Company
(23,310)
691
Total reclassifications-net of tax
and noncontrolling interests
¥
(44,726)
¥
(7,531)
$
(395,805)
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 Operations.
58 TOSHIBA Annual Report 2016
Tax effects allocated to each component of other comprehensive income (loss) for the years ended March 31, 2016 and
2015 are shown below:
For the year ended March 31, 2016:
Net unrealized gains and losses on securities:
Unrealized holding gains arising during year
Less: reclassification adjustment for gains included in net loss
attributable to shareholders of the Company
Foreign currency translation adjustments:
Currency translation adjustments arising during year
Less: reclassification adjustment for losses included in net loss
attributable to shareholders of the Company
Pension liability adjustments:
Pension liability adjustments arising during year
Less: reclassification adjustment for losses included in net loss
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 loss
attributable to shareholders of the Company
Other comprehensive loss
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 loss
attributable to shareholders of the Company
Foreign currency translation adjustments:
Currency translation adjustments arising during year
Less: reclassification adjustment for gains included in net loss
attributable to shareholders of the Company
Pension liability adjustments:
Pension liability adjustments arising during year
Less: reclassification adjustment for losses included in net loss
attributable to shareholders of the Company
Net unrealized gains and losses on derivative instruments:
Unrealized losses arising during year
Less: reclassification adjustment for gains included in net loss
attributable to shareholders of the Company
Pre-tax
amount
Millions of yen
Tax benefit
(expense)
Net-of-tax
amount
¥
(17,503)
¥
6,235
¥
(11,268)
(113,170)
34,526
(78,644)
(86,243)
6,864
(173,337)
43,100
(1,740)
(3,970)
2,410
(180)
25,679
(13,232)
(3,280)
1,336
(83,833)
6,684
(147,658)
29,868
(5,020)
(2,634)
¥
(345,999)
¥
53,494
¥
(292,505)
¥
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)
Other comprehensive income
¥
152,945
¥
(24,482)
¥
128,463
TOSHIBA Annual Report 2016
59
Notes to Consolidated Financial Statements
Toshiba Corporation and Subsidiaries
March 31, 2016
For the year ended March 31, 2016:
Net unrealized gains and losses on securities:
Unrealized holding gains arising during year
Less: reclassification adjustment for gains included in net loss
attributable to shareholders of the Company
Foreign currency translation adjustments:
Currency translation adjustments arising during year
Less: reclassification adjustment for losses included in net loss
attributable to shareholders of the Company
Pension liability adjustments:
Pension liability adjustments arising during year
Less: reclassification adjustment for losses included in net loss
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 loss
attributable to shareholders of the Company
Pre-tax
amount
Thousands of U.S. dollars
Tax benefit
(expense)
Net-of-tax
amount
$
(154,894)
$
55,177
$
(99,717)
(1,001,504)
305,539
(695,965)
(763,212)
60,743
21,327
(1,592)
(741,885)
59,151
(1,533,956)
227,248
(1,306,708)
381,416
(117,097)
264,319
(15,398)
(35,133)
(29,027)
11,823
(44,425)
(23,310)
Other comprehensive loss
$ (3,061,938)
$
473,398
$ (2,588,540)
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.
60 TOSHIBA Annual Report 2016
19. NET 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 loss per
share attributable to shareholders of the Company for the years ended March 31, 2016 and 2015.
Year ended March 31
Loss from continuing operations attributable to
shareholders of the Company
Income (Loss) from discontinued operations attributable to
shareholders of the Company
Millions of yen
2016
2015
Thousands of
U.S. dollars
2016
¥
(831,899)
¥
(4,878)
$ (7,361,938)
371,886
(32,947)
3,291,026
Net loss attributable to shareholders of the Company
¥
(460,013)
¥
(37,825)
$ (4,070,912)
Year ended March 31
Weighted-average number of shares of common stock
outstanding for the year
Thousands of shares
2016
4,234,104
2015
4,234,362
Year ended March 31
Loss from continuing operations per share attributable to
shareholders of the Company:
−Basic
Earnings (Loss) from discontinued operations per share attributable to
shareholders of the Company:
−Basic
Net loss per share attributable to shareholders of the Company:
−Basic
Yen
2016
2015
U.S. dollars
2016
¥
¥
¥
(196.47)
87.83
(108.64)
¥
¥
¥
(1.15)
(7.78)
(8.93)
$
$
$
(1.74)
0.78
(0.96)
Diluted net loss per share attributable to shareholders of the Company for the years ended March 31, 2016 and 2015 have
been omitted because the Company did not have potential common stock that were outstanding for the period.
TOSHIBA Annual Report 2016
61
Notes to Consolidated Financial Statements
Toshiba Corporation and Subsidiaries
March 31, 2016
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 2016 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 operations.
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 5 years and 1 year,
respectively.
The interest rate swap agreements utilized by the Group effectively convert a portion of its floating-rate debt to a
fixed-rate basis for the next 5 years.
The Group expects to reclassify ¥1,019 million ($9,018 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.
62 TOSHIBA Annual Report 2016
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, 2016 and 2015 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
2016
2015
¥
361,440
203,986
581,374
5,363
4,373
¥
299,914
251,202
518,976
75,305
876
Thousands of
U.S. dollars
2016
$ 3,198,584
1,805,186
5,144,903
47,460
38,699
(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, 2016
and 2015 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
Prepaid expenses and
other current assets
Liabilities:
Forward exchange contracts
Interest rate swap agreements
Currency swap agreements
Other current liabilities
Other current liabilities
Other current liabilities
March 31
Nonderivative financial instruments:
Liabilities:
Millions of yen
2016
2015
Thousands of
U.S. dollars
2016
¥
6,109
¥
13,105
$
54,062
9
(4,022)
(201)
(6,393)
1,523
(1,702)
−
−
42
(4,291)
(207)
(3,208)
3,821
(451)
(2)
(28)
80
(35,593)
(1,779)
(56,575)
13,478
(15,062)
−
−
Millions of yen
2016
2015
Carrying
amount
Fair value
Carrying
amount
Fair value
Long-term debt, including current portion
¥ (1,013,605)
¥
(991,890)
¥
(1,220,772)
¥
(1,228,573)
March 31
Nonderivative financial instruments:
Liabilities:
Thousands of U.S. dollars
2016
Carrying
amount
Fair value
Long-term debt, including current portion
$ (8,969,956)
$ (8,777,788)
TOSHIBA Annual Report 2016
63
Notes to Consolidated Financial Statements
Toshiba Corporation and Subsidiaries
March 31, 2016
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 operations for the year ended March 31, 2016 is as
follows:
Cash flow hedge:
Forward exchange contracts
Interest rate swap agreements
Currency options
Amount of
gain (loss)
recognized in
OCI
Amount
recognized
¥
(2,672)
(2,342)
(6)
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
¥
2,634
Location
Other expense
Amount
recognized
¥
(1,379)
Other income
10
Derivatives not designated as hedging instruments:
Forward exchange contracts
Currency options
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
Other expense
Amount
recognized
¥
(3,002)
(5)
Amount of
gain (loss)
recognized in
OCI
Amount
recognized
$
(23,646)
(20,726)
(53)
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
$
23,310
Location
Other expense
Amount
recognized
$
(12,204)
Other income
88
Derivatives not designated as hedging instruments:
Forward exchange contracts
Currency options
Thousands of U.S. dollars
Amount of gain (loss)
recognized in income (loss)
Location
Other expense
Other expense
Amount
recognized
$
(26,566)
(44)
64 TOSHIBA Annual Report 2016
The effect of derivative instruments on the consolidated statements of operations 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
Millions of yen
Amount of gain (loss)
recognized in income (loss)
Location
Other expense
Amount
recognized
¥
(928)
TOSHIBA Annual Report 2016
65
Notes to Consolidated Financial Statements
Toshiba Corporation and Subsidiaries
March 31, 2016
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, 2016 and 2015 were ¥75,082 million ($664,442
thousand) and ¥73,043 million, respectively.
The Group also leases certain machinery and equipment which are accounted for as capital leases. As of March 31, 2016
and 2015, the costs of machinery and equipment under capital leases were approximately ¥43,684 million ($386,584
thousand) and ¥50,158 million, and the related accumulated amortization were approximately ¥21,891 million ($193,726
thousand) and ¥21,953 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, 2016 and 2015 were not significant.
Minimum lease payments for the Group’s capital and non-cancelable operating leases as of March 31, 2016 are as
follows:
Year ending March 31
2017
2018
2019
2020
2021
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
¥
¥
27,866
21,109
17,601
15,329
11,608
27,510
121,023
¥
¥
8,425
6,329
4,544
3,333
2,008
22,774
47,413
(970)
(20,119)
26,324
(7,427)
18,897
$
$
74,557
56,009
40,212
29,496
17,770
201,540
419,584
(8,584)
(178,044)
232,956
(65,726)
167,230
Operating
leases
246,602
186,805
155,761
135,655
102,726
243,451
1,071,000
$
$
22. COMMITMENTS AND CONTINGENT LIABILITIES
Commitments for the purchase of property, plant and equipment and inventories, and long-term service at fixed and
variable prices outstanding at March 31, 2016 and 2015, totaled approximately ¥1,108,627 million ($9,810,858 thousand)
and ¥1,160,180 million, respectively. The Group plans to achieve sales contracts to compensate majority of such
commitments. For commitments, any losses are not expected as of the year-end based on firm contracts and sales
projections.
The amount of commitments expected to be paid in each year of the following five fiscal years and thereafter is as
follows:
Year ending March 31
2017
2018
2019
2020
2021
Thereafter
Total of commitments
Millions of yen
67,226
24,415
11,818
30,914
49,314
924,940
1,108,627
¥
¥
Thousands of
U.S. dollars
594,920
216,062
104,584
273,575
436,407
8,185,310
9,810,858
$
$
As of March 31, 2016 and 2015, contingent liabilities, other than guarantees disclosed in Note 23, approximated ¥112
million ($991 thousand) and ¥155 million, respectively, mainly for recourse obligations related to notes receivable
transferred.
66 TOSHIBA Annual Report 2016
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 2016 to 2023 and from 2015 to 2023 as
of March 31, 2016 and 2015, respectively 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 ¥116,627 million ($1,032,097 thousand) and ¥74,931 million as
of March 31, 2016 and 2015, respectively.
GUARANTEES OF EMPLOYEES’ HOUSING LOANS
The Group guarantees housing loans of its employees. Expiration dates vary from 2016 to 2032 and from 2015 to 2032 as
of March 31, 2016 and 2015, respectively. 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 ¥1,664 million
($14,726 thousand) and ¥2,670 million as of March 31, 2016 and 2015, respectively. 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 October 2025. The maximum potential payments
by the Group for such residual value guarantees were ¥5,094 million ($45,080 thousand) and ¥6,979 million as of March
31, 2016 and 2015, respectively.
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 ¥6,171 million ($54,611 thousand)
and ¥7,158 million as of March 31, 2016 and 2015, respectively.
The carrying amounts of the liabilities for the Group’s obligations under the guarantees described above as of March 31,
2016 and 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, 2016 and 2015:
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
2016
30,706
48,251
(37,342)
(1,478)
40,137
¥
¥
2015
28,391
40,933
(40,642)
2,024
30,706
¥
¥
Thousands of
U.S. dollars
2016
271,735
427,000
(330,460)
(13,080)
355,195
$
$
TOSHIBA Annual Report 2016
67
Notes to Consolidated Financial Statements
Toshiba Corporation and Subsidiaries
March 31, 2016
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 January 2016, the GC upheld the
Commission’s decision to re-impose fines on the Company. After a careful review of the judgment, the Company decided
to file an appeal to the ECJ in March 2016 and the dispute is still ongoing. The Company accrued the reasonably
estimated amount expected to be paid for the fines. 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.
In February 2011, the Ministry of Defense of Japan (the “MOD”) cancelled a contract for development and manufacture
of “reconnaissance system for F-15” between the MOD and the Company. In July 2011, the Company filed a lawsuit against
the MOD to Tokyo District Court seeking payment of approximately ¥9,319 million ($82,469 thousand) including payment
for parts which have been already completed. In October 2012, the MOD filed a counterclaim seeking payment for the
penalty of the cancellation of the contract. In March 2014, the Company expanded seeking payment of approximately
¥3,017 million ($26,699 thousand). In March 2016, the Tokyo District Court handed down a judgment of first instance,
dismissing the Company’s claim. However, as the ruling was deemed unacceptable, the Company filed an appeal to the
Tokyo High Court in the same month. The Company properly executed its duties pursuant to conditions of the contract.
Therefore, the Company thinks that the 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. (“MTPD”) for
infringement of EU Competition Law in the color picture tube (used for Televisions) market. Finding this decision
unreasonable, the Company filed in February 2013 an appeal to the GC, which in September 2015 handed down a verdict,
withdrawing the entirety of the fine of approximately €28 million previously imposed on the Company and reducing the
joint fine imposed on Panasonic Corporation and MTPD and the Company to €83 million. Moreover, the Company filed an
appeal to the ECJ in November 2015, demanding a withdrawal of the joint fine portion related to MTPD. For the fiscal year
ended March 31, 2016, the Company accrued the reasonably estimated amount expected to be paid for the fines. Also in
the U.S., some purchasers of cathode ray tube-related products have filed a lawsuit asking for payment of damages based
on U.S. Antitrust Law. Believing that it has never breached the Law in the cathode ray tube business, the Group will take
any legal actions to demonstrate its assertion.
In November 2013, Japan Post Co., Ltd. (“JP”) filed a lawsuit against the Company and NEC Corporation to Tokyo High
Court for violating the antitrust law concerning a bid for postal code automatic reading and sorting equipment, seeking
payment of approximately ¥3,756 million ($33,239 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 continued to assert its position
in the Court because it considered there was no causal association between its action and damage claimed by JP and that
JP’s claim was unreasonable in the Tokyo High Court. In February 2016, a settlement proposal was issued by the Tokyo
High Court, which was followed by the court settlement being reached between both parties in April 2016, marking the
closing of this litigation.
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 demanding damage compensation was filed.
The Group intends to assert its opinion in the arbitration.
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. Holders of American Depositary Receipts (ADRs) filed a class action lawsuit against the Company in the
State of California, in the U.S. in relation to the inappropriate financial reporting by the Company. While it filed a petition
with the court for rejection of the lawsuit on the grounds that securities laws of the U.S. do not apply to the above-
mentioned securities, among other reasons, the decision to reject the lawsuit was made as of May 20, 2016 (U.S. time).
68 TOSHIBA Annual Report 2016
This decision accepted the Company’s claim. Since the plaintiffs can appeal, the decision has not been finalized. Damage
compensation lawsuits were filed with several courts against the Company in Japan as well with the plaintiffs claiming to
have suffered damage due to inappropriate financial reporting by the Company. The Company accrued the reasonably
estimated amount expected to be paid for the damage compensation. There is a likelihood that shareholders and other
entities will file a lawsuit against the Company in the future.
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.
However 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.
TOSHIBA Annual Report 2016
69
Notes to Consolidated Financial Statements
Toshiba Corporation and Subsidiaries
March 31, 2016
25. BUSINESS STRUCTURAL REFORM
Year ended March 31, 2016
Based on “Toshiba Revitalization Action Plan,” which was issued on December 21, 2015, the Group has implemented
various related measures. Under “Toshiba Revitalization Action Plan,” which focuses on “Decisive Action on Business
Structural Reform,” “Strengthen Internal Controls and Reform the Corporate Culture,” “Review the Business Portfolio and
Operational Structure,” and “Reforming the Financial Base,” the Company hopes to regain the trust of all stakeholders,
and achieve a strong corporate constitution. The main components of the business structural reforms are as follows:
Electronic Devices & Components
The Company has decided to terminate the white LED business in the Discrete business and to exit from the CMOS image
sensor business in the System LSI business. At the same time, promoting personnel rationalization, the Company has
implemented an early retirement incentive program in which provided the special retirement benefits in addition to
regular retirement benefits (hereinafter referred to as the “early retirement incentive program”).
Lifestyle Products & Services
As part of the structural reform of the PC business, the Group concentrates on the BtoB business, and the BtoC business
limits its scope and mainly focuses on the domestic market.
The Visual Products business, primarily televisions, terminates internal development, manufacture and sales in
operations outside Japan and shifts to licensing business of Toshiba brand.
Among these businesses, the early retirement incentive program has also been implemented.
Others
For the headquarters, the Company has implemented personnel repositioning and the early retirement incentive
program to slim down the corporate staff functions and shift to an organizational structure that supports the mission of
concentrating on strategic planning for the future.
Changes in the liability balance related to exit and disposal activities for the fiscal year ended March 31, 2016 are as
follows.
These expenses are usually short term in nature, being completed within one year from the initiation of activities.
The exit and disposal activities were mostly completed as of March 31, 2016, and there is no significant amount of
expenses expected to be incurred in the following years.
Millions of yen
Others
Total
Contract
termination costs
1,137
¥
6,093
(38)
(2,433)
(196)
4,563
¥
¥
¥
3,379
1,681
(756)
(2,638)
(34)
1,632
Thousands of U.S. dollars
Contract
termination costs
10,062
$
53,920
(336)
(21,531)
(1,734)
40,381
$
Others
29,902
14,876
(6,690)
(23,345)
(301)
14,442
$
$
¥
¥
$
$
8,225
71,593
(794)
(42,077)
(634)
36,313
Total
72,787
633,566
(7,026)
(372,363)
(5,610)
321,354
Liability balance as of March 31, 2015
Restructuring charge incurred during the year
Non-cash expenditures
Payments and settlements with cash payout
Foreign currency translation adjustments
Liability balance as of March 31, 2016
Liability balance as of March 31, 2015
Restructuring charge incurred during the year
Non-cash expenditures
Payments and settlements with cash payout
Foreign currency translation adjustments
Liability balance as of March 31, 2016
Retirement-related
expenses
¥
¥
3,709
63,819
−
(37,006)
(404)
30,118
Retirement-related
expenses
$
$
32,823
564,770
−
(327,487)
(3,575)
266,531
70 TOSHIBA Annual Report 2016
Expenses for exit and disposal activities by major segments for the fiscal year ended March 31, 2016 are as follows. These
expenses were recorded at ¥16,316 million ($144,389 thousand) in cost of sales, at ¥52,959 million ($468,664 thousand) in
selling, general and administrative expenses, and at ¥2,318 million ($20,513 thousand) in other expense in the
consolidated statements of operations.
Segments
Electronic Devices & Components
Lifestyle Products & Services
Others (Note)
Total
Segments
Electronic Devices & Components
Lifestyle Products & Services
Others (Note)
Total
(Note) Others include Energy & Infrastructure and Community Solutions.
Retirement-related
expenses
Contract
termination costs
Others
Total
Millions of yen
¥
¥
32,822
19,092
11,905
63,819
¥
¥
2,368
3,222
503
6,093
¥
¥
182
1,179
320
1,681
Retirement-related
expenses
Contract
termination costs
Others
Thousands of U.S. dollars
$
$
290,460
168,956
105,354
564,770
$
$
20,956
28,513
4,451
53,920
$
$
1,610
10,434
2,832
14,876
¥
¥
$
$
35,372
23,493
12,728
71,593
Total
313,026
207,903
112,637
633,566
Year ended March 31, 2015
For the Visual Products business centered on televisions, in order to achieve a stable operation which secures consistent
profit without depending on sales volume in response to a still harsh business environment, the Company implemented
measures including the closing and consolidation of sales bases in countries and regions where the profitability was low
while concentrating sales resources on the Japanese market in which demand for large size Ultra HD (4K) LCD TVs is
expected to grow. As a result, restructuring charges included in other expense were ¥17,905 million in the fiscal year
ended March 31, 2015.
For the PC business, in order to secure consistent profit, the Group further accelerated the structural shift to the BtoB
market and promoted a large contraction of the BtoC market, which is highly variable depending on effects of the market
environment, etc., including the exit from certain regions. Consequently, restructuring charges included in other expense
were ¥16,114 million in the fiscal year ended March 31, 2015.
TOSHIBA Annual Report 2016
71
Notes to Consolidated Financial Statements
Toshiba Corporation and Subsidiaries
March 31, 2016
26. ENVIRONMENTAL LIABILITIES
The Japanese environmental regulation, “Law Concerning Special Measure against poly chlorinated biphenyl (“PCB”)
waste” requires PCB waste holders to dispose of all PCB waste by March 2027. The Group accrued ¥15,732 million
($139,221 thousand) and ¥6,914 million at March 31, 2016 and 2015, 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 ¥7,535 million ($66,681 thousand) and ¥10,384 million as of
March 31, 2016 and 2015, 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.
27. ASSET RETIREMENT OBLIGATIONS
The Group records asset retirement obligations in accordance with ASC No. 410 “Asset Retirement and Environmental
Obligations.”
Asset retirement obligation was related primarily to the decommissioning of nuclear power facilities. These obligations
address the decommissioning, clean up and release for acceptable alternate use of such facilities.
The changes in the carrying amount of asset retirement obligations for the years ended March 31, 2016 and 2015 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
2016
2015
¥
¥
24,025
781
(323)
765
(1,371)
(1,002)
22,875
¥
¥
21,817
1,046
(533)
175
(424)
1,944
24,025
Thousands of
U.S. dollars
2016
212,611
6,911
(2,858)
6,770
(12,133)
(8,867)
202,434
$
$
72 TOSHIBA Annual Report 2016
28. BUSINESS COMBINATIONS
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 ENGIE S.A. (“ENGIE”) 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 ENGIE, 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, ENGIE’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
“Business Combinations” (“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
¥
¥
¥
¥
Identifiable intangible assets acquired are Generation Licence. The fair value of the noncontrolling interests is measured
using the 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. As disclosed in Note 10, impairment losses were recorded on a part of goodwill in the fiscal year
ended March 31, 2016.
Operating results of NuGen are included in the Company’s consolidated statements of operations from the acquisition
date. These amounts are not significant.
The following table summarizes the unaudited pro-forma results of operations, as though the above business
combination had taken place on April 1, 2014.
Year ended March 31
Net sales
Net loss attributable to shareholders of the Company
Billions of yen
2015
6,655.9
(38.1)
¥
TOSHIBA Annual Report 2016
73
Notes to Consolidated Financial Statements
Toshiba Corporation and Subsidiaries
March 31, 2016
CB&I Stone & Webster Inc.
Westinghouse Electric Company LLC (“WEC”), the Company’s consolidated subsidiary, entered into an agreement to
acquire all the shares for a major engineering company in the U.S., Chicago Bridge & Iron Company (“CB&I”), and the
subsidiary of CB&I, CB&I Stone & Webster Inc. (“S&W”), which is engaged in construction and integrated services of
nuclear power plants, on October 27, 2015 (U.S. Time), and completed the procedures for the acquisition of the shares and
acquired S&W on December 31, 2015 (U.S. Time). In line with this, all outstanding claims such as compensation claims
between WEC and S&W were mutually discharged under the agreement concerned prior to the completion of the above-
mentioned share acquisition procedure.
WEC has been engaged in plant design, engineering, procurement, construction and provision of support of AP1000®
nuclear power plants for the Vogtle Electric Generating Plant and the V.C. Summer Nuclear Generating Station, which are
under construction in the U.S. with S&W as the consortium partner. Following the acquisition, S&W will continue to
proceed with the construction work as a subsidiary of WEC. In addition, WEC agreed with Southern Co., which is the
owner of the Vogtle Electric Generating Plant project mentioned above, and SCANA Corporation, which is the owner of
the V.C. Summer Nuclear Generating Station project respectively to revise the current EPC contracts. Under these
agreements, all the claims existing between the owner and the consortium on each project at the time of the acquisition
of the shares including litigations were also mutually discharged. Since S&W became WEC’s subsidiary, the service
business that the subsidiary has worked on other than construction of nuclear power plants (such as services related to
decommissioning, project management, environment services, and service business for government that the subsidiary
will newly work on) was added to WEC’s business line. This will lead to further growth of WEC.
The Company is in the process of allocating the purchase price to the assets acquired and liabilities assumed in
accordance with ASC No.805, but the process has not been finalized as of June 22, 2016. Under the above share
acquisition agreement, payments from WEC to CB&I are to be made at the time of completion of the construction and
achievement of certain milestones, and so on for the continuous supply of equipment and others from CB&I to WEC for
the above projects of the plants that are under construction in the U.S. Of the payments, approximately $145 million,
which is the present value of deferred payment of consideration, is treated as the purchase price. As a result of deducting
approximately $30 million, provisional fair value related to the discharge of pre-existing claims between WEC and S&W,
from $145 million mentioned above, the purchase price provisionally estimated as of June 22, 2016 is approximately $115
million. Since the purchase price under the agreement is being examined in detail, the amount may change in the future.
The following table summarizes the purchase price and the provisional value of identifiable assets acquired and liabilities
assumed as of the acquisition date:
As of the acquisition date
Purchase price
Current assets
Non-current assets
Current liabilities
Total identifiable net assets acquired
Millions of yen
13,870
49,426
21,939
57,495
13,870
¥
¥
¥
Thousands of U.S. dollars
$
$
122,743
437,398
194,150
508,805
122,743
$
Operating results of S&W are included in the Company’s consolidated statements of operations from the third quarter of
the fiscal year ended March 31, 2016. S&W’s net sales and net income included in the Company’s consolidated statements
of operations for the year ended March 31, 2016 were ¥72,228 million ($639,186 thousand) and ¥1,036 million ($9,168
thousand), respectively.
The unaudited pro-forma results of operations as though the above business combination had taken place on April 1,
2014 have not been presented, because it is difficult to obtain accurate financial figures excluding intercompany net sales
of S&W to the Group before the acquisition.
74 TOSHIBA Annual Report 2016
29. VARIABLE INTEREST ENTITIES
The Group recognizes entities, in accordance with ASC No.810, as VIEs that have either (a) equity investors whose voting
right is limited and not having an ability to control it effectively or (b) insufficient equity to permit the entity to finance its
activities without additional subordinated financial support. The Group retains variable interests through equity
investments, loans and guarantees. In evaluating whether the Group is the primary beneficiary of the VIE and
consolidates it, the Group assesses if the Group has both (a) the power to direct the activities of the VIE that most
significantly impact the VIE’s economic performance and (b) the obligation to absorb losses or the right to receive
benefits that could potentially be significant to the VIE.
Consolidated Variable Interest Entities
VIEs, of which the Group is the primary beneficiary, are involved in 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, 2016 and 2015, the total assets of VIEs on the consolidated balance sheets were ¥34,718 million
($307,239 thousand) and ¥47,724 million, and the total liabilities of VIEs on the consolidated balance sheets were ¥20,239
million ($179,106 thousand) and ¥28,652 million, respectively. The assets consisted primarily of machinery and equipment.
The liabilities consisted primarily of long-term debt and 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. For the year ended March 31, 2015, the Group recorded a loss of ¥38,543 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.
The Group entered into an agreement for natural gas liquefaction, Liquefaction Tolling Agreement (“LTA”) with a U.S.
company, FLNG Liquefaction 3, LLC (“FLIQ3”), which is an entity related to Energy & Infrastructure. This agreement has
come into effect from April, 2015. Under the LTA, the Group has secured a commitment for the liquefaction of 2.2 million
tons of natural gas produced in the U.S. per annum over 20 years from 2019. Procurement of natural gas and
transportation of liquefied natural gas are not included in this agreement. Because the Group is obliged to purchase the
service for liquefying natural gas of 2.2 million tons per annum due to the LTA coming into effect and holds variable
interests in FLIQ3, FLIQ3 was evaluated as a variable interest entity. The Group is not the primary beneficiary of this VIE
because the Group does not have the power to direct the activities that most significantly affect the VIE’s economic
performance. In addition, the Group has not incorporated operating results of FLIQ3 into the consolidated financial
statements.
TOSHIBA Annual Report 2016
75
Notes to Consolidated Financial Statements
Toshiba Corporation and Subsidiaries
March 31, 2016
As of March 31, 2016 and 2015, 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:
With regard to FLIQ3, since the Group is a party to the LTA and it is difficult to obtain information on the variable
interest entity, only maximum exposures to losses are included in the following summary table. The maximum exposures
to losses are included in commitments and the unconditional purchase obligation disclosed in Note 22.
March 31, 2016
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
March 31, 2016
Total assets of VIEs
Carrying amounts of assets that relate to the Group’s variable interests in the VIEs
Carrying amounts of liabilities that relate to the Group’s variable interests in the VIEs
Maximum exposures to losses
VIEs involved in
Electronic Devices
402,069
¥
132,328
31,170
211,518
VIEs involved in
Electronic Devices
373,899
¥
130,179
18,311
178,934
Millions of yen
Millions of yen
VIEs involved in
Energy & Infrastructure
60,208
¥
12,717
8,633
971,384
VIEs involved in
Energy & Infrastructure
53,604
¥
1,303
0
1,303
Thousands of U.S. dollars
VIEs involved in
Electronic Devices
$ 3,558,133
1,171,044
275,841
1,871,841
VIEs involved in
Energy & Infrastructure
532,814
$
112,540
76,398
8,596,319
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,
guarantees and commitments, 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. With regard to FLIQ3, the portion
corresponding to the purchase obligation for 20 years is deemed as the maximum exposure to losses at the moment, and
represents the amount of losses that may arise if the Company cannot receive any natural gas liquefied in this project
over 20 years due to own convenience.
76 TOSHIBA Annual Report 2016
30. 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, selling, general and administrative
expenses and impairment loss on goodwill from net sales. A part of restructuring charges and legal settlement costs etc.
are not included in it.
The Group has 5 business segments, (1)Energy & Infrastructure, (2)Community Solutions, (3)Electronic Devices &
Components, (4)Lifestyle Products & Services and (5)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.
(3) Electronic Devices & Components: Semiconductors, Hard disk drives, etc.
(4) Lifestyle Products & Services:
(5) Others:
Personal computers, Visual products, etc.
Cloud Solutions, Logistics Service, etc.
In line with the review of the business group structure due to the reorganization as of April 1, 2016, the business
segments will be changed to six segments, “Energy Systems & Solutions,” “Infrastructure Systems & Solutions,” “Retail &
Printing Solutions,” “Storage & Electronic Devices Solutions,” “Industrial ICT Solutions” and “Others” from the fiscal year
ending March 31, 2017.
BUSINESS SEGMENTS
Financial information by segments as of and for the years ended March 31, 2016 and 2015 are as follows:
As of and for the year ended March 31, 2016
Net sales
(1) Unaffiliated customers
(2) Intersegment
Total
Segment operating income
(loss)
Energy &
Infrastructure
Community
Solutions
Electronic Devices
& Components
Lifestyle Products
& Services
Others
Total
Corporate and
Eliminations
Millions of yen
Consolidated
¥ 1,948,208
100,194
¥ 2,048,402
¥ 1,388,527
36,722
¥ 1,425,249
¥ 1,564,557
40,406
¥ 1,604,963
¥
¥
506,604
35,931
542,535
¥
¥
260,792
233,852
494,644
¥ 5,668,688
447,105
¥ 6,115,793
¥
−
(447,105)
¥ 5,668,688
−
¥ (447,105) ¥ 5,668,688
¥ (367,404) ¥
(78,820) ¥ (101,640) ¥ (131,910) ¥
8,601
¥ (671,173) ¥
(37,565) ¥ (708,738)
Identifiable assets
Depreciation and amortization
Capital expenditures
¥ 2,428,266
73,468
91,347
¥
859,776
31,530
28,542
¥ 1,016,066
89,262
150,493
¥
164,587
1,145
4,242
¥
904,488
8,320
4,564
¥ 5,373,183
203,725
279,188
¥
(8,212) ¥ 5,364,971
203,725
279,188
−
−
As of and for the year ended March 31, 2015
Net sales
(1) Unaffiliated customers
(2) Intersegment
Total
Segment operating income
(loss)
Identifiable assets
Depreciation and amortization
Capital expenditures
Energy &
Infrastructure
Community
Solutions
Electronic Devices
& Components
Lifestyle Products
& Services
Others
Total
Corporate and
Eliminations
Millions of yen
Consolidated
¥
¥
¥
¥
1,887,742
106,169
1,993,911
19,245
2,842,069
64,966
73,701
¥
¥
¥
¥
1,379,723
30,963
1,410,686
53,900
1,063,957
28,575
45,433
¥
¥
¥
¥
1,690,524
78,228
1,768,752
216,642
1,380,509
67,455
120,030
¥
¥
¥
¥
¥
¥
¥
¥
888,017
27,733
915,750
(65,947)
409,412
3,609
3,685
268,676
274,591
543,267
5,836
413,723
7,583
1,082
¥
¥
¥
¥
6,114,682
517,684
6,632,366
229,676
6,109,670
172,188
243,931
¥
¥
¥
¥
−
(517,684)
(517,684)
(41,267)
(89,324)
−
−
¥
¥
¥
¥
6,114,682
−
6,114,682
188,409
6,020,346
172,188
243,931
TOSHIBA Annual Report 2016
77
Notes to Consolidated Financial Statements
Toshiba Corporation and Subsidiaries
March 31, 2016
As of and for the year ended March 31, 2016
Thousands of U.S. dollars
Energy &
Infrastructure
Community
Solutions
Electronic Devices
& Components
Lifestyle Products
& Services
Others
Total
Corporate and
Eliminations
Consolidated
Net sales
(1) Unaffiliated customers
(2) Intersegment
Total
Segment operating income
(loss)
$ 17,240,779
886,673
$ 18,127,452
$ 12,287,850
324,973
$ 12,612,823
$ 13,845,637
357,575
$ 14,203,212
$ 4,483,221
317,973
$ 4,801,194
$ 2,307,894
2,069,487
$ 4,377,381
$ 50,165,381
3,956,681
$ 54,122,062
$
− $ 50,165,381
−
$ (3,956,681) $ 50,165,381
(3,956,681)
$ (3,251,363) $ (697,522) $ (899,469) $ (1,167,345) $
76,115
$ (5,939,584) $ (332,434) $ (6,272,018)
Identifiable assets
Depreciation and amortization
Capital expenditures
$ 21,489,080
650,159
808,381
$ 7,608,637
279,027
252,584
$ 8,991,734
789,929
1,331,796
$ 1,456,522
10,133
37,540
$ 8,004,319
73,628
40,389
$ 47,550,292
1,802,876
2,470,690
$
(72,672) $ 47,477,620
1,802,876
2,470,690
−
−
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) Business results in the segment information are presented on the basis of the current organizational structure.
4) The table represents the amount excluding the discontinued operation for the previous fiscal year.
5) Assets related to discontinued operations for the fiscal years ended March 31, 2016 and 2015 were ¥68,370 million ($605,044 thousand) and ¥314,432 million, respectively, and are not included in
the above assets.
A reconciliation table between the total of the segment operating income (loss) and the income (loss) from continuing
operations, before income taxes and noncontrolling interests for the years ended March 31, 2016 and 2015 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
Equity in losses of affiliates
Other expense
Millions of yen
¥
¥
¥
¥
2016
(671,173)
(37,565)
(708,738)
6,600
−
228,067
(20,753)
(23,223)
(115,098)
2015
229,676
(41,267)
188,409
10,267
20,656
116,224
(23,214)
−
(155,727)
Thousands of
U.S. dollars
2016
$ (5,939,584)
(332,434)
$ (6,272,018)
58,407
−
2,018,292
(183,655)
(205,513)
(1,018,566)
Income (loss) from continuing operations, before income taxes and
noncontrolling interests
¥
(633,145)
¥
156,615
$ (5,603,053)
78 TOSHIBA Annual Report 2016
GEOGRAPHIC INFORMATION
Net sales
Net sales by region based on the location of the customer for the years ended March 31, 2016 and 2015 are as follows:
Year ended March 31
Japan
Overseas
Asia
North America
Europe
Others
Total
Millions of yen
2016
¥ 2,300,677
¥ 3,368,011
1,554,179
1,010,791
555,904
247,137
¥ 5,668,688
2015
2,409,504
3,705,178
1,632,963
1,046,255
710,071
315,889
6,114,682
¥
¥
¥
Property, plant and equipment
Property, plant and equipment by region at March 31, 2016 and 2015 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.
3) The table represents the amount excluding the discontinued operation for the previous fiscal year.
Millions of yen
2016
511,711
282,593
104,845
87,356
86,577
3,815
794,304
¥
¥
¥
2015
558,135
295,407
139,501
77,299
67,433
11,174
853,542
¥
¥
¥
Thousands of
U.S. dollars
2016
$ 20,359,974
$ 29,805,407
13,753,797
8,945,053
4,919,504
2,187,053
$ 50,165,381
Thousands of
U.S. dollars
2016
$ 4,528,416
$ 2,500,823
927,832
773,062
766,168
33,761
$ 7,029,239
TOSHIBA Annual Report 2016
79
Notes to Consolidated Financial Statements
Toshiba Corporation and Subsidiaries
March 31, 2016
31. TRANSACTION WITH RELATED PARTIES
Transactions between the Company’s consolidated subsidiaries and related parties
Transactions between the Company’s consolidated subsidiaries and related parties as of and for the years ended March
31, 2016 and 2015 are as follows.
As of and for the year ended March 31, 2016
Type
Name or name of
Company
Location
Capital or investments in capital
(Millions of yen)
Business discription
Holding ratio of voting rights
(Owned)
Companies whose
majority of voting rights
are owned by a director,
officer of a close family
members (including
subsidiaries of such
companies) of the
Company.
Hasegawa Konpo
Koun Corporation
Shinagawa-ku, Tokyo
¥
70
Warehouse and cargo
packing business
0.00%
(Indirect ownership)
Hasekon Unyu
Corporation
Ibaraki-shi, Osaka
¥
11
Transportation
business
−
Type
Name or name of
Company
Relationship
Transaction
Amounts
(Millions of yen)
Accounts
Ending balance
(Millions of yen)
Companies whose
majority of voting rights
are owned by a director,
officer of a close family
members (including
subsidiaries of such
companies) of the
Company.
Hasegawa Konpo
Koun
Corporation
Warehouse rent
and commissions
for cargo packing
and packaging
Warehouse rent
and related fees
for cargo packing
and packaging
Hasekon Unyu
Corporation
Commissions for
transportation
Payment of
transportation
fees
¥
180
Accounts payable,
trade
¥
26
¥
127
Accounts payable,
trade
¥
40
As of and for the year ended March 31, 2015
Type
Name or name of
Company
Location
Capital or investments in capital
(Millions of yen)
Business discription
Holding ratio of voting rights
(Owned)
Companies whose
majority of voting rights
are owned by a director,
officer of a close family
members (including
subsidiaries of such
companies) of the
Company.
Hasegawa Konpo
Koun Corporation
Hasekon Unyu
Corporation
Shinagawa-ku, Tokyo
¥
70
Warehouse and cargo
packing business
0.00%
(Indirect ownership)
Ibaraki-shi, Osaka
¥
11
Transportation
business
−
Type
Name or name of
Company
Relationship
Transaction
Amounts
(Millions of yen)
Accounts
Ending balance
(Millions of yen)
Companies whose
majority of voting rights
are owned by a director,
officer of a close family
members (including
subsidiaries of such
companies) of the
Company.
Hasegawa Konpo
Koun
Corporation
Warehouse rent
and commissions
for cargo packing
and packaging
Warehouse rent
and related fees
for cargo packing
and packaging
Hasekon Unyu
Corporation
Commissions for
transportation
Payment of
transportation
fees
¥
490
counts payable,
trade
¥
31
¥
318
Accounts payable,
trade
¥
24
80 TOSHIBA Annual Report 2016
As of and for the year ended March 31, 2016
Type
Name or name of
Company
Location
Capital or investments in capital
(thousands of U.S. dollars)
Business discription
Holding ratio of voting rights
(Owned)
Companies whose
majority of voting rights
are owned by a director,
officer of a close family
members (including
subsidiaries of such
companies) of the
Company.
Hasegawa Konpo
Koun Corporation
Shinagawa-ku, Tokyo
$
619
Warehouse and cargo
packing business
0.00%
(Indirect ownership)
Hasekon Unyu
Corporation
Ibaraki-shi, Osaka
$
97
Transportation
business
−
Type
Name or name of
Company
Relationship
Transaction
Amounts
(Thousands of U.S. dollars)
Accounts
Ending balance
(Thousands of U.S. dollars)
Companies whose
majority of voting rights
are owned by a director,
officer of a close family
members (including
subsidiaries of such
companies) of the
Company.
Hasegawa Konpo
Koun
Corporation
Warehouse rent
and commissions
for cargo packing
and packaging
Warehouse rent
and related fees
for cargo packing
and packaging
Hasekon Unyu
Corporation
Commissions for
transportation
Payment of
transportation
fees
Notes: 1) Of the above amounts, consumption tax is not included in the amounts but is included in the ending balance.
$ 1,592
Accounts payable,
trade
$
230
$ 1,123
Accounts payable,
trade
$
354
2) Transaction amounts involving related parties are recorded on an arm’s-length basis considering market prices, standard procedures and terms and conditions.
3) With regard to Hasegawa Konpo Koun Corporation, the majority of voting rights are directly owned by Keizo Maeda, who was an officer of the Company (Executive Officer from June 25, 2013, until
August 31, 2015), and a close family member. The transaction amount represents the amount up to the last day of the period during which he was an officer of the company, and the ending
balance for the fiscal year ended March 31, 2016 represents the balance as of the day he ceased to be an officer of the Company.
4) Hasekon Unyu Corporation is a subsidiary of Hasegawa Konpo Koun Corporation.
TOSHIBA Annual Report 2016
81
Notes to Consolidated Financial Statements
Toshiba Corporation and Subsidiaries
March 31, 2016
32. SUBSEQUENT EVENT
Reduction in common stock and transfer of other capital surplus to accumulated deficit
The Company resolved at its Board of Directors’ meeting held on May 23, 2016, to submit a proposal for ¥239,901 million
($2,123,018 thousand) of reduction in common stock pursuant to Article 447, Paragraph 1 of the Corporation Law of Japan
to the Ordinary General Meeting of Shareholders for the 177th fiscal period held on June 22, 2016, and to transfer
¥462,049 million ($4,088,929 thousand) of other capital surplus (including the amount of the increase due to the
reduction in common stock) to accumulated deficit pursuant to Article 452 of the Corporation Law of Japan. The
reduction in common stock was approved at the above Ordinary General Meeting of Shareholders.
82 TOSHIBA Annual Report 2016
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 sheets as at March 31, 2016 and 2015, and
the consolidated statements of operations, comprehensive income, equity, and cash flows for the years then ended
and a summary of significant accounting policies and other explanatory information, all expressed in Japanese yen.
Management’s Responsibility for the Consolidated Financial Statements
Management is responsible for the preparation and fair presentation of these consolidated financial statements in
accordance with accounting principles generally accepted in the United States of America, 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 audits. We
conducted our audits 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, 2016 and
2015, and their consolidated financial performance and cash flows for the years then ended in conformity with
accounting principles generally accepted in the United States of America.
Emphasis of Matter
We draw attention to Note 32 to the consolidated financial statements, which describes that the Company resolved
at its Board of Directors’ meeting held on May 23, 2016, to submit a proposal for reduction in common stock to the
Ordinary General Meeting of Shareholders for the 177th fiscal period held on June 22, 2016, which was
subsequently approved at the Ordinary General Meeting of Shareholders, and to transfer other capital surplus to
accumulated deficit. 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.
June 22, 2016
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TOSHIBA Annual Report 2016
83
2016
Annual Report
Year ended March 31, 2016 Financial Review
Committed to People, Committed to the Future.
1-1, Shibaura 1-chome, Minato-ku, Tokyo,105-8001, Japan
Contacts:
Public Relations & Investor Relations Division
Tel: +81-3-3457-2096 Fax: +81-3-5444-9202
Inquiry page on Investor Relations
URL http://www.toshiba.co.jp/about/ir/en/contact.htm
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Use of FSC-certified Paper
Paper certified by Forest
Stewardship Council (FSC)
is used, which is made
from wood from
FSC-certified forests.
Use of Forest Thinning Support Paper
Toshiba Group supports forest thinning project
in Misawa City, Aomori prefecture, aiming to
preserve the nature for the next generation.
Ａ-（2）-060001
Tree use cycle mark
We believe that it is important to make
proactive use of domestic wood products
and to grow forests, and we support the
forestry Agency’s efforts to promote “tree
trainer activies”. Domestic timber provided
the raw material for the paper on which this
report is printed, and its use contribused to
increased absorption of CO2 by native forests.
Waterless Printing
Waterless printing, a printing process
that eliminates the use of water, is
adopted, taking advantage of the
characteristics of printing plates made
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Non-VOC Ink
100% vegetable ink containing no
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